The ranks of Canada’s billionaire club are swelling, but too many new entrants have oil on their boots according to a new report from the Centre for Digital Entrepreneurship + Economic Performance (DEEP) examining the country’s billion-dollar firms.
Canada’s Billion Dollar Firms: Contributions, Challenges and Opportunities examined the change in the country’s top-tier companies from 2003 to 2012, comparing figures to five mature economies. “We found that on a per-capita basis we outperform Germany, the UK and the US in the creation of billion dollar companies,” explains Anthony Williams, DEEP co-founder and president. “Sweden and Australia and Canada are pretty close; Sweden is maybe slightly ahead on a per-capita basis, that’s a very small country population-wise compared to Canada.”
Unsurprisingly, much of the growth in domestic top-tier companies has been in the energy and utilities area, while manufacturing has taken the biggest hit:
The resources boom has boosted Alberta’s share of the country’s mega-large corporations; the Energy Province now was 52 billion-dollar firms, almost as many as traditional economic powerhouse Ontario:
The report, produced in collaboration with the Business Development Bank of Canada, the Canadian Digital Media Network, Export Development Canada and Industry Canada, suggest that it’s been a good decade for Canada. But Williams cautions that the country’s economy needs to diversify, highlighting life sciences and technology two sectors of strategic importance in which Canada under-performs. “We’ve seen some changes in who the players are, because of the evolution of those particular industries. So Nortel has disappeared since, but OpenText has come into the fray as an example,” he explains.”And we only have one billion-dollar life sciences company in all of Canada, despite pretty significant investment in those sectors in Ontario and Quebec.”
READ: How understated software titan OpenText plans to accelerate its growth »
The list of firms that qualified for DEEP’s scrutiny is a who’s-who of Corporate Canada: Air Canada, Barrick Gold, Magna International and Blackberry all lead their respective sector listings. But there are also some innovative new entrants, including market darling Dollarama in consumer retail and movie giant Cineplex Inc.
There’s a set of companies just under the billion-dollar mark ready to make the jump, with a significant number in the beleaguered manufacturing sector. But there are only 83 firms in the $500–999 million category, compared to 169 in the $1 billion-plus range, suggesting that Canada’s impressive top-tier growth may soon stall.
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A broad base is important for future economic prosperity, Williams insists:
Canada has leveraged its strength and its natural endowments in natural resources to boost economic growth in this country and to create new billion-dollar enterprises but we lack diversity in the sources of growth across the country. If we want to diversify our growth in the future, and we want to see broad-based regional growth and not just growth concentrated in one province or one area of the country then we need to think about how we’re going to boost the success of other sectors and in particular think about life sciences, technology.
DEEP recommends closer collaboration between the private and public sectors to boost corporate growth. Among its suggestions are the development of industry-academic partnerships to foster research commercialization and the establishment of a nation-wide network of collaborative research and innovation centres.
READ: Shortage of science grads poses an impending innovation problem for Canada »
Corporate Canada will rightly celebrate a positive decade of company growth, but the DEEP report suggests that continued innovation and investment are essential to maintaining that success.