B.C.'s largest companies by revenue anchor a diverse economy that keeps charging ahead, but smaller businesses play a key role, too
SMALL STARTSJust 2 percent of companies in B.C. have more than 50 employees
Since the subprime mortgage disaster of 2007 and the fall of Lehman Brothers Holdings in October 2008 unleashed the financial crisis upon the world, British Columbia has prided itself on economic stability and diversity. Shaken by the Great Recession, B.C. tacked with the winds of change to forge trade ties with Asia and become a safe haven for global investors. Our exports weren’t limited to the U.S. like those of so many other provinces, and our multicultural population helped to keep international capital flowing.
Heading this year’s list of the top 100 B.C.-based companies by revenue are familiar names that continue to post steady growth—sometimes beyond steady, if commodity markets permit. Telus Corp., Teck Resources and Jim Pattison Group return to the top three. Heavy equipment dealer Finning International takes the No. 4 spot, while BC Hydro and Power Authority hums along in fifth place. With the minor shuffling in ranking, these businesses define the province as one of innovation, natural resources and retail savvy.
They also head a list of companies that rang up more than $180 billion worth of sales in 2017, the eighth straight year of expansion for the province’s biggest enterprises.
But topline variety aside, just how diverse is the B.C. economy? Those five companies represent more than 26 percent of the business done by the Top 100 in 2017. Comparing this year’s list to 2008’s brings the consolidation in who’s driving the economy into sharper focus.
B.C. may pride itself on weed overtaking wood, and on clean, green entrepreneurs in lumberjack chic edging out the men who moil for gold, but the province’s largest businesses still make most of their money from old-fashioned industries like forestry, mining, manufacturing and transport. That group has gone from 48 percent of the list in 2008 to 59 percent today. In fact, natural resources is the only sector that boosted its representation over the past decade. While tech companies such as PMC-Sierra and retailers like Thrifty Foods and T&T Supermarkets were acquired, resource players kept proliferating, driven by demand for commodities.
“The resource sector is quite pro-cyclical—it does particularly well when the economy is expanding and quite poorly when the economy is contracting,” explains Jim Brander, Asia Pacific professor in international business and public policy at UBC’s Sauder School of Business.
Also, the capital-intensive nature of mining, forestry and power generation and distribution means that the companies engaged in these activities need to be big.
“California is not a resource economy, but [power utility] Southern California Edison is one of the largest companies in California,” Brander says. “So in B.C., it’s kind of a double effect: a) in B.C. the natural resource sector is very important, and it is the major source of our exports, and b) the natural resource sector has substantial economies of scale, so it’s natural for companies to get big.”
The result: newcomers are more likely to be the kinds of companies that eventually win a spot on the list, whereas successful startups in other sectors get acquired.
The ongoing prominence of resource and distribution companies isn’t necessarily a bad thing, either. It underscores the stable character of a provincial economy that keeps building on its strengths.
“It’s been a strong economy across all sectors. We’ve had strong provincial growth, and I think the BCBusiness Top 100 list reflects that,” says Walter Pela, regional managing partner for Metro Vancouver with KPMG. “[But] it doesn’t tell the entire story because B.C. has an issue, that it doesn’t have enough scaled businesses,” Pela continues, noting that 98 percent of companies in the province have fewer than 50 employees.
Technology is one sector where the situation is most pronounced. Although provincial statistics show that tech employed some 106,000 people in 2017—more than natural resources—the locally based companies doing the hiring tend to be small.
“They employ a lot of people, they drive creativity, they drive innovation, and they’re great contributors to the local economy,” Pela says. The flip side: “You may not see them on the Top 100.”
The province’s biggest tech employers tend to be based elsewhere, setting up shop in B.C. because of favourable tax policies and an established talent pool. This also allows them to keep tabs on and acquire rising stars fostered by the tech ecosystem. With roughly 1,000 employees, Hootsuite is a locally based exception, but the Vancouver-headquartered social media management company doesn’t divulge revenue, and KPMG, which counts it as a client, isn’t telling.
Natural resources, manufacturing and transportation may not be the sexiest businesses, but they’re the bedrock of the province, creating jobs that attract people and fuel the need for housing. The two B.C.-based companies with the fastest-growing revenue in 2017 are in the shelter business—developers Polygon Family of Companies, which saw sales more than double as units came to completion, and the BC Housing Management Commission, whose revenue surged by 111 percent as the provincial government wrestled to address the housing crisis.
The picture that emerges is of a province firing on all cylinders, with plenty of momentum as it moves through 2018. It’s also a province that’s working to ensure—even more since last spring’s election—that everyone participates in the boom.
Collaboration also lies behind the stable composition of the Top 100. “The idea of what a company is has actually changed a bit over the years,” UBC’s Brander says. “What used to be all in one big company is now separated out into a bunch of smaller companies, so that means just looking at a company doesn’t give you the full picture of what’s going on.”
Rather, behind every great sector are several others enjoying the benefits. This is particularly true of manufacturing and tech, which feed into and off the success of the province’s largest companies.
“If we just look at which companies are bigger, we miss that phenomenon,” Brander says. “I think that has become a more relevant question as opposed to simply, What’s a big company?’ The world is somewhat different now.”