TOP The 100


BC Business Magazine - - Front Page - By P E T E R MI T H AM

Who’s stick­ing around, who’s pop­ping up, who’s on the bub­ble...

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 pro­cycli­cal—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 fastest­grow­ing 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.”

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