While B.C. remains a resources powerhouse, 2015 continued a decade-long shift in the provincial economy, with loggers and miners joined on the Top 100 by shoe sellers and car dealers. Get those cash registers ringing!
Vancouver’s official motto—etched onto the city’s coat of arms, along with an axe-bearing logger and net-toting fisherman—is “By sea, land and air we prosper.” It speaks to the historic importance of natural resources to British Columbia’s economy—and to that of its biggest city, where 57 per cent of the Top 100 companies are now based.
But with lacklustre global growth hitting commodities hard, B.C. is finding new fortunes elsewhere. Yes, a review of the top of this year’s list shows the ongoing prominence of miners, forestry companies and those in oil and gas, which account for a third of the Top 10. But increasingly, the list is being infiltrated by giants of non-resources sectors—tech, retail, real estate—that are slowly but surely helping to shift the balance in B.C.’s economy.
Who were some of the big success stories in 2015? It runs the gamut from Shoes.com, an online footwear vendor that debuts on the list this year with annual revenue growth of 188.6 per cent, to Open Road Auto Group, a dealership group offering everything from Audis to Volkswagens that posted 50 per cent growth in revenues. Cars and shoes were hot sellers that helped B.C. retail sales lead the country last year, and the explosion of the tech sector has put money in the hands of young people willing to spend. While an acquisition has removed semiconductor maker PMC-Sierra, formerly of Burnaby, from the list, and social media startup Hootsuite has yet to disclose its revenues, tech companies are growing, and many are steadily working their way up the list.
Then, of course, there’s real estate. With housing starts topping 31,446 in 2015 and set to top 34,000 this year, B.C. builders have been active. A lack of land has pushed some to Alberta where, despite the downturn, projects in the major cities continue to sell. Anthem Properties Group and Polygon Homes, two of the stars on this year’s Top 100, saw revenues rise 84.4 per cent and 36.2 per cent, respectively.
Resource companies, while still titans, are undeniably suffering, with both Teck and Goldcorp posting losses in the billions of dollars last year. Companies supplying the resource sector felt the pinch as well, with equipment supplier Finning International Inc. taking a 10.5 per cent hit to revenues and the parent of CHC Helicopter Corp. seeking bankruptcy protection in May.
Stephen Peel is vice-president, operations, with Ironside Design Manufacturing Inc. in Chilliwack and interim vice-chair, B.C., with the Canadian Manufacturers and Exporters. Ironside sells a machine that transforms steel coil into culverts for buyers from India to South America. The downturn in commodities, and the resource sector generally, has meant lower demand for Ironside, says Peel. It’s a pain felt across the manufacturing sector. “A lot of manufacturing that was happening in B.C. in the last couple of years was going to the oil fields, so with them shutting down and slowing down, the manufacturing industry’s been hit fairly hard,” he says, noting that any benefit from a weaker loonie has been undercut by higher prices for inputs.
Still, when you look at the aggregate, a manufacturing and resources slump hasn’t been enough to cool the B.C. economy, which RBC Economics expects to lead the country with 2.9 per cent GDP growth in 2016. While that lags the 3.2 per cent we logged in 2014, it’s the envy of other provinces in a country where growth has been below two per cent for the past two years, thanks to weakness in the resource sector.
Much of the credit for the province’s strong showing goes to its resilient service sector, which fares very well on the Top 100. That’s no surprise to James Brander, an economics professor with UBC’s Sauder School of Business. “This is just normal,” he explains. “The service sector has been growing long-term, and the goods sector has been, in relative terms, shrinking long-term in B.C., in Canada—really, throughout the developed world.”
Brander points to an aging population and a fundamental shift in the economy toward jobs that depend on brains rather than brawn for success. “There’s only so many trees out there. So if the population doubles, we can’t double the size of the forest sector,” he says. “When the population of B.C. was a quarter of what it is now, a big part of the population had high-paying jobs in the resource sector. The world has changed, and it’s changed in a way that means we have to rely on other things than the resource sector.”
The big question for Brander and other economists is: what kinds of services will B.C. provide? While the revenues of retailers such as London Drugs and H.Y. Louie increase largely as a result of population growth, the consulting firms and the tech sector provide high-value services that are more than the proverbial McJob at the local burger joint. “It’s all part of the service sector, but we’re talking about the difference between jobs that pay $15,000 a year and jobs that pay $150,000 a year,” Brander quips.
Lindsay Meredith, a marketing strategy professor with SFU’s Beedie School of Business who specializes in the estimation of market demands, isn’t counting out the resource sector. But he concurs with Brander that the trendline is clear. “When you factor in the service economy versus everything else in British Columbia, you’ve got to look at services and say, ‘Oh my God, this is one of the juggernauts.’ And as such, our job economically is to make damn sure we make it a high-end juggernaut.”
This is where the good-paying jobs in the financial services and tech sectors, not to mention healthcare and biotech, play a role, he adds. “Any jackass can cut taxes and give tax breaks and pull in business. What they can’t copy quickly or easily is a workforce that is well trained in an area that’s hard to replicate quickly. That is the kind of stuff you want to encourage, because that’s the stuff that’s hard for the other guys to copy.”
Resource companies and retailers have the scale needed to maintain their commanding position among the province’s top companies, but watch out—in a post-industrial world, B.C. has staked a digital claim on future riches.