BC Business
After 2020 delivered mixed results for the players in our annual ranking of B.C.'s biggest companies by revenue, a thriving tech sector points the post-pandemic way forward.
AbCellera Biologics, a contender for next year’s Top 100 list, is one of the province’s recent tech-driven success stories
The economies of B.C. and the world may never be the same after the watershed events of 2020. Public health protocols accelerated a new, digital era as face-to-face dealings became risky business. Thanks to pandemic-related closures and disruptions, the greatest shock since the 2008 financial crisis clipped the province’s real gross domestic product by 5.3 percent.
Governments stepped up with billions in support, though, helping keep the economy rolling. Aggregate revenue for the province’s Top 100 companies grew 0.5 percent despite the slowdown. Consumers worried about COVID-19, but their confidence was muzzled, not maimed. RBC Economics forecasts a 5.1-percent rebound in economic growth for B.C. this year and another 5.2 percent in 2022 as restrictions lift and people—and their cash—start circulating.
But consumers spent money differently last year. Although Telus Corp., Jim Pattison Group and Teck Resources maintained their firm hold on the list’s top three positions, many forestry companies posted higher revenue as people invested in home improvements that made them feel comfortable.
Consumer goods businesses also benefited as retail spending continued online if not in person. Clothing brands Aritzia and Lululemon Athletica chalked up big gains, while Trade Mango Solutions—better known as online furniture purveyor Article—ranked among the province’s fastest-growing companies as e-commerce flourished among locked-down citizens.
At the same time, staycations hit the province’s tourism and travel sector hard. Revenue at British Columbia Ferry Services increased marginally—in-province travel wasn’t limited for most of last year—but restrictions on international travel and reduced domestic service pared traffic through Vancouver International Airport, cutting revenue by 51 percent. Suppliers to the air sector, such as KF Aerospace and Longview Aviation Capital Corp., felt the knock-on effects.
Yet the chaos caused by the pandemic created opportunities for mergers, acquisitions and corporate reorganizations. Takeovers announced in 2019 removed Catalyst Paper Corp. and Leagold Mining Corp. from the Top 100 list, while MDA, spun out of Maxar Technologies in 2019, went through another transformation that took the former Richmond tech company to Ontario. Resources companies enjoyed particularly brisk business, with SSR Mining merging with Alacer Gold Corp. and moving to Colorado.
Other transitions reflected sectorial issues. In retail, a private equity firm from California snapped up the province’s iconic purveyor of outdoor goods, Mountain Equipment Co-op (MEC), now called Mountain Equipment Co. Cannabis consolidation saw list contenders Zenabis Global and Tilray, the largest B.C.-based pot producer, absorbed earlier this year.
What remains as a new normal settles over the province are companies built on stability and innovation. On one hand are the homegrown providers of the basics—telecommunications, utilities, and critical infrastructure such as health care and transportation. On the other: providers of goods and services that have adapted to a clicks-and-mortar world.
“It’s omnichannel,” says Andrew Harries, Tom Foord Professor of Practice in Entrepreneurship and Innovation with SFU’s Beedie School of Business, pointing to Aritzia. The clothing retailer saw in-store sales drop in 2020 compared to the previous year, but it reaped the rewards of an online sales platform whose business surged 90 percent.
“Some have gotten really good at that,” Harries says. “And some haven’t innovated. They’re the ones we read about that are closing down.”
While retailers were the poster child for the shift, Harries expects consumers to return to pre-COVID habits when they’re allowed. But the pandemic confirmed the wisdom of embracing technology. “Despite the challenges, we benefited from earlier investments in our digital capabilities,” heavy equipment dealer Finning International noted in its annual report. “We improved our execution in South America, reduced our cost base in Canada, built a strong backlog of projects in the U.K. and significantly lowered our finance costs.”
AbCellera Biologics, whose market capitalization stood at more than US$6 billion in mid-June, is using data science and machine learning to speed up the discovery of drug treatments for COVID and other diseases. Cymax Group Technologies, an e-commerce platform provider 71-percent-owned by Plenty of Fish founder Markus Frind, has the kind of backing that bodes well for success. Legal software maker Themis Solutions, which operates as Clio, and bricks-and-clicks care specialist Well Health Technologies Corp. are other examples of rising stars. Clio recently achieved unicorn status, with a billion-dollar valuation on revenue of $103 million.
READ MORE: Entrepreneur Of The Year 2021: Carl Hansen
Harries, co-founder of Sierra Wireless, hopes Clio will be one of the companies that stay in Vancouver and become beacons for the local tech industry. Just as Intrawest Resorts Holdings did for real estate and Lululemon did for apparel, larger tech firms help smaller outfits by setting the tone for the sector. They also incubate new businesses.
READ MORE: The Innovators: Themis Solutions wants to make legal services cheap and universal
Scaling up the industry requires more than cultivating a pool of talented engineers; it also means building executive smarts, Harries explains. During the dotcom boom, much hand-wringing took place over the flight of talent to Microsoft Corp. and other U.S. companies. Now those businesses are heading north for skilled workers.
“I don’t think that incentivizing the likes of Microsoft and Amazon to open up big development shops here helps,” Harries says. “It just drives up the cost of engineers, but you’re not training good business managers. And people get trapped there because they get paid so well.”
As one of the most expensive parts of Canada, B.C. needs good-paying jobs. But it also needs strong business leadership as the next generation of companies comes to the fore in the brave new world emerging from the pandemic.