As the bar for admission to the Top 100 reached a new high, B.C.’s biggest companies by revenue showcased the province’s broad-based economic strength in 2016 (see the complete list Top 100: 1 to 50, Top 100: 51 to 100).
British Columbia entered 2016 with confidence and never looked back. The Urban Land Institute’s B.C. chapter helped set the tone with a November 2015 gathering in Vancouver, where speaker Andy Warren of PwC told a crowd of local real estate developers and urban planners that business optimism had reached levels not seen since before the 2008-09 global financial crisis.
Bullishness as a prelude to meltdown doesn’t offer much comfort, but B.C.’s economy was on the money last year. It soared above Alberta’s woes to outpace every other province in job creation and serve as a beacon of openness and stability when—appropriately for Year of the Monkey—Donald Trump won the U.S. presidency.
But if one story dominated the economic chatter in B.C. through 2016, it was high housing costs and how government efforts to address them would play out. There was plenty of action, between crackdowns on so-called shadow flipping and increases in the property transfer tax on homes worth $2 million and up, plus August’s snap imposition of a foreign buyer tax on residential purchases in Metro Vancouver. Observers feared that housing starts would stall (they didn’t) and that foreign investment and international workers, facing another obstacle to buying already expensive local real estate, would be scared off.
But the workers kept coming. B.C. posted a net increase of almost 62,000 residents in 2016, the biggest percentage gain since 2009—even as residential real estate purchases, at least those from China, cooled. Meanwhile, slower growth in China and many other parts of the world let B.C. keep shining brightly in relative terms.
And therein lies the key to the success the province’s biggest companies enjoyed in 2016: despite efforts to hitch B.C.’s wagon to the galloping economies of other countries, B.C. hauled those nations forward by delivering the resources they needed and providing a destination for their goods and services. Gross domestic product growth was estimated at 2.9 per cent (Business Council of British Columbia), 3.3 per cent (Royal Bank of Canada) or 3.5 per cent (Central 1 Credit Union); in any case, it led the rest of Canada as natural resource and technology players saw their fortunes rise.
A glance at the 10 fastest-growing names on our Top 100 list of B.C.-based companies by revenue shows the breadth of the province’s economy. Half are miners, but electronics manufacturer Creation Technologies, marine services firm Seaspan ULC, forest products specialist Hardwoods Distribution Inc. and even transit provider TransLink (formally the South Coast British Columbia Transportation Authority) make the grade. Close behind those frontrunners by revenue expansion, Great Canadian Gaming Corp., representing the hospitality and entertainment sector, posted 30 per cent growth, while retailer Aritzia Inc. grew 26.9 per cent.
Posting the biggest revenue losses (which were more modest than the largest gains) were some mining and energy companies—Powerex Corp., FortisBC Energy Inc. and Westcoast Energy Inc. But the most remarkable drop was Best Buy Canada Ltd., whose 38.2 per cent decrease showed the effects of its 2015 retrenchment.
Although the province’s retail sales enjoyed a strong year, with 6.4 per cent expansion, according to RBC, consumer habits kept retailers on guard. The shift to click-and-order from bricks-and-mortar continued, but it wasn’t enough to save Shoes.com, a former darling of the online economy, or the much smaller Ingledew Shoes Inc., which cited the difficulties of bridging both worlds as a factor in its demise. Brian Hill, scion of the Kerrisdale family of couturiers, has fared better with Aritzia, perhaps the most notable business to join this year’s list, even as rising retail star Kit and Ace, which has yet to generate the revenue needed to make the Top 100, closed its international stores after an aggressive expansion.
The challenges retailers face even in a year with strong sales highlight an aspect of the list that might otherwise go unnoticed. The big keep getting bigger, while the mid-sized outfits you’d expect to grow into their place among the province’s largest face headwinds.
Organizations at the top of the list saw minimal growth—overall revenue for the Top 100 companies rose just 2 per cent, to $170 billion, over last year’s tally—but the threshold for membership leapt above $300 million for the first time. This was its biggest lift in two decades—perhaps ever. Left behind were several companies that might have made the list in past years, including British Columbia Investment Management Corp., Westport Innovations Inc. and Whistler Blackcomb Holdings Inc.
Still, the multidimensional character of the top-end growth is hard to deny—and tougher to explain. It’s easy to point to a business-friendly provincial government, a competitive tax regime and a strategic West Coast location between power centres in the U.S. and Asia. But Ken Peacock, chief economist and vice-president of the Business Council of B.C., believes the whole is greater than the sum of its parts.
“Something’s going on in B.C.; it’s a good place to be right now,” Peacock says. “There’s no doubt we are much more diversified. The past five, seven, eight years have just reinforced that trend.”
Diversification has made the province more resilient, not only in the Lower Mainland, with its booming port and vibrant science and cultural sectors, but in the Okanagan, where agriculture and real estate have been going strong, and the Peace, where construction of the Site C dam and other infrastructure projects have offset slower times in the oil and gas sector. The depth of the gains will stand B.C. in good stead as China’s growth shifts into lower gear. “When the U.S. economy was weaker, our exports were being driven by China,” Peacock says. “Now we barely see an increase, and it actually follows a couple of years of decreases. So the China story fuelling B.C.’s prosperity and expansion has largely run its course.”
Instead, smaller economies like India, Japan and South Korea are picking up the slack, a trend that will help if softwood lumber duties precipitate extended trade turmoil with the U.S. “Our Asia-Pacific exposure would provide some resiliency and some cushion, so I would say it would be less challenging in the British Columbia context,” Peacock says.
Meanwhile, exports to the U.S. constitute a smaller share of the B.C. economy than those of other provinces, minimizing the negative impact of any hardballs from Washington.
“[We’re] in a better position to weather any substantial trade barriers that the U.S. recommends,” Peacock argues. “Having said that, I’m fairly optimistic we’re not going to get hit too hard by whatever the Trump administration decides it wants to do. I think we would come out OK in a NAFTA renegotiation.”
Barring a dramatic change in the global economic environment, B.C. will keep delivering what the world wants. Its political system remains stable, notwithstanding an election that yielded a minority government. The province remains an attractive destination for people and capital when they see what other jurisdictions have to offer. The growth of the Top 100 companies shows just how much is possible in good times, and what will carry B.C. through any change in the international environment.