"If you build it, they will come," was the promise made to movie actor Kevin Costner in A Field of Dreams.
In a similar vein, "If we cut taxes, they will come," was the promise made by Gordon Campbell and his B.C. Liberals when they won election to government in 2001. Lower corporate tax rates, they vowed, would staunch the outflow of company head-offices from British Columbia and lure new firms to the province.
But where Costner's "dreams" were rewarded when long-dead Shoeless Joe Jackson and his 1919-era Chicago White Sox teammates showed up to play baseball in an Iowa cornfield, B.C.'s tax cuts -- which now cost the provincial treasury more than $1 billion annually in foregone revenue -- have proved spectacularly unsuccessful.
An analysis of the latest Financial Post 500 rankings of Canada's largest corporations in 2001 and 2005 shows that the number of corporate head offices in B.C. actually has declined since the Campbell Liberals gained power. (That analysis is provided in detail, company by company, later in this story.)
Disappearing head office jobs
Further evidence that B.C. is fading in the head office sweepstakes is buttressed by Statistics Canada, which found that the number of corporate head-office jobs in British Columbia plummeted by nearly 2,400 during the Campbell Liberals' first four years in office. Moreover, B.C. head-offices now have the dubious distinction of employing the fewest number of people, on average, anywhere in the country.
According to the recent Statistics Canada study, Head Office Employment in Canada, 1999 to 2005, British Columbia in 1999 could claim 18,817 head-office jobs. By 2001 -- when the province's NDP government was defeated by Campbell's Liberals -- that number was down to 15,820.
Four years later, head-office employment in B.C. had eroded further to just 13,441 -- a loss of 2,379 jobs while Gordon Campbell occupied the premier's office.
Meanwhile, Alberta continues to race ahead of the Pacific province. In 2001, our eastern neighbour had 2,120 more head-office jobs than B.C.; by 2005, that gap had widened nearly five-fold.
As well, B.C. head offices employ fewer people than do competitors elsewhere in the country. Across Canada, the average number of staff at corporate head offices is 46; in B.C., the comparable number is 30.
It's all further confirmation that, despite slashing corporate taxes and introducing a raft of business-friendly policies, Campbell and his Liberals not only have been unable to attract new firms to British Columbia, they have also been unable to retain the head-office jobs that existed when they first formed the government.
Breaking it down, firm by firm
The Financial Post 500 is the traditional source for information on the location of corporate head offices in Canada. Published annually by the National Post, it ranks, by annual revenues, the country's largest 500 businesses. The FP500 tables also show the 300 next-largest Canadian companies, and provide the location of each firm's head office.
To calculate the head-office gains and losses since the Campbell Liberals took power four years ago, the FP500 for 2001 was compared to the rankings for 2005 (published, respectively, in June 2002 and June 2006).
At first glance, it appears that the B.C. Liberals' policies have produced positive results. Whereas 47 of the FP500 companies had their head offices in British Columbia in 2001, four years later that number has climbed to 53 -- a gain of six.
But closer examination reveals that at least seven B.C. companies in the 2005 compilation were inexplicably omitted from the 2001 rankings, despite meeting the criteria for inclusion.
Moreover, the 2005 list includes at least four B.C. firms whose head offices have since disappeared.
Let us start with the B.C.-headquartered companies that made the FP500 in both 2001 and 2005. Twenty-eight firms meet this criteria, the three largest of which are Telus Corporation, the Jim Pattison Group and Finning International.
As one might expect, several natural-resource/commodity companies made both lists: six from the forest sector: Canfor, West Fraser Timber, Weyerhaeuser, Ainsworth Lumber, International Forest Products and TimberWest; three in mining/material: Teck Cominco, Placer Dome and Mitsubishi Canada; and one each from pipelines and chemicals: Westcoast Energy and Methenex Corp.
Two financial firms made both rankings: HSBC Bank Canada and VanCity Credit Union, as did three retail/food/service companies: Pharmasave Drugs, A&W Food Services and Vancouver Island's Thrifty Foods.
Then there are two corporations with a focus on technology: Macdonald, Dettwiler of Richmond, and Burnaby-based Creo Inc, plus two more from the real estate/property development sector: ski-hill operator Intrawest Corp and realty-franchiser Charlwood Pacific Group, and an import-export firm, Marubeni Canada.
Finally, four province-owned Crown corporations made the rankings for both 2001 and 2005: ICBC, B.C. Hydro, B.C. Liquor Distribution and B.C. Lottery Corporation.
Another eight B.C. companies also made both lists, albeit with name changes over the four-year period. Minor alterations in nomenclature were made to Taiga Forest Products, now Taiga Building Products, and Ledcor Industries, which has become the Ledcor Group of Companies.
Similarly, B.C. Ferry Corp, a provincial Crown, changed its structure (but remains publicly-owned) and now is called B.C. Ferry Services.
More substantial alterations occurred at B.C. Gas Inc, which changed its name to Terasen Inc; Norske Skog Canada became Catalyst Paper Corp; and Vopak Canada (which began operations in B.C. in 1950 as Van Water and Rogers) now is known as Univar Canada Ltd.
Two companies underwent significant ownership changes and continue operations under new names: Future Shop Ltd was purchased by an American retail giant and now is known as Best Buy Canada Ltd, while a financially-troubled forest company, Duncan-based Doman Industries, was bought by eastern Canadian financiers and operates as Western Forest Products Inc.
In total, 36 of Canada's 500 largest businesses, operating with either identical or altered names, had their corporate headquarters in B.C. in 2001 and 2005.
Since there were 47 companies with B.C. head offices on the earlier list, and 53 on the latter, that means the province lost 11 firms (47 minus 36) over the four-year period, but gained 17 (53 minus 36).
Yet, in looking at those corporations "new" to B.C. -- that is, those that were not on the 2001 FP500 but appear on the 2005 list -- it becomes evident that seven long-established firms were inexplicably omitted from the earlier rankings.
For example, H.Y. Louie Co Ltd, the giant food distributor that owns London Drugs and co-owns IGA Canada, was founded in B.C. in 1903. Four years ago, the company had revenues in excess of $2 billion (as estimated by B.C. Business magazine), which should have been good enough for a spot among Canada's top 100 corporations, but the Burnaby firm was strangely absent from that year's FP500.
The Oppenheimer Group is even older, having been founded by Fraser River gold-rush pioneers in 1858 -- the same year Queen Victoria established the mainland colony of British Columbia. The company's sales in 2001, estimated at $500 million, should have placed it among in the top 400 Canadian companies, but it too failed to make the FP500. Other strange omissions from the 2001 FP500 include the Workers' Compensation Board of B.C., a provincial government entity founded in 1919; the Washington Marine Group, which in 1996 purchased Seaspan International (established in 1950); Tolko Industries, the fast-growing, Vernon-based forestry powerhouse started in 1961; Inland Kenworth, the truck distributor whose B.C. roots go back to 1949, and Futura Corporation, a conglomerate which got its start two decades ago in the Doman family's forest-products and building-supplies operations.
All seven companies, despite having more than sufficient revenues, were excluded from the FP500 in 2001, but finally were included in the 2005 rankings.
Not new to BC
That leaves 10 B.C.-headquartered companies that are "new" to the 2005 FP500. Five of these, however, are fast-growing B.C. firms that in 2001 had insufficient revenues to make the senior list, but were included on the "next 300."
Graduating to the senior list are Lions Gate Entertainment (#505 in 2001), Boston Pizza International (#511), Coast Capital Savings Credit Union (#526), Canaccord Capital (#561) and First Quantum Minerals (#720). All have long histories in British Columbia.
That leaves five firms which, similarly, all have historic roots in British Columbia, but for different reasons are on the 2005 FP500 after failing to make the list in 2001.
For example, CanWel Building Materials Income Fund was founded in B.C. in 1988, and a decade later was purchased by Amar Doman of the aforementioned Futura Corp. In 2001 it had sales of nearly $500 million, easily enough to be included on the FP500, but because it was a Futura subsidiary, it was omitted. Two years ago, Doman converted CanWel into an income trust, and although he continues to be chair and owns a controlling interest, the publicly traded fund is now listed in the rankings because it no longer is regarded as a subsidiary.
Also new to the 2005 listings as a B.C. company is Goldcorp, which last year merged with Vancouver's Wheaton River Minerals. The restructured gold mining company retained Goldcorp's name, but kept Wheaton's Vancouver offices where it operates under the stewardship of Wheaton boss, Ian Telfer.
Then there is CHC Helicopter, which moved its headquarters from Atlantic Canada to B.C. in 2004. The company's B.C. roots, however, go back to the founding of Okanagan Helicopters Ltd in 1947. It merged in the 1990s with Newfoundland and Ontario helicopter companies, and now is located in Richmond.
Golder Associates is an employee-owned engineering-consulting firm with over 80 offices worldwide. In previous years, the FP500 showed Golder as based in Mississauga, but the latest rankings put the head office in Burnaby. Interestingly, a company official asserts that the Burnaby office has assumed no special designation. (The 2005 FP500 tables show Golder's Canadian operations with revenues of $617 million, yet the more-comprehensive rankings of B.C. companies by publications Business in Vancouver and B.C. Business do not list the firm.)
Finally, a relatively recent arrival in B.C. is TeeKay Shipping (Canada) Ltd, a Bahamas-based company that owns and operates nearly 200 ships. The firm specializes in transporting oil and liquefied natural gas across the world's oceans, and in 2005 had revenues of nearly $2.7 billion. Ironically, the company opened its Vancouver office in 1991, the year that the New Democratic Party won election to government (although the decision to locate to Canada was based on changes to federal tax laws).
It is evident that none of the 17 B.C.-headquartered companies "newly-listed" on the FP500 are in fact "newly-arrived" to the province. Certainly, none relocated to British Columbia because the Campbell Liberals slashed corporate taxes.
All of the "new" arrivals (with the possible exception of CHC Helicopters) were long-established in B.C. and either inexplicably omitted from the 2001 list, or had insufficient revenues to be ranked among Canada's top 500 corporations, or (like CanWel) lost is subsidiary status.
Left or disappeared
Remember, however, that 11 B.C.-headquartered corporations have disappeared from the FP500 between 2001 and 2005.
Three of these companies did not actually leave B.C.; they simply dropped from the "top 500" to the "next 300" because of declining revenues (or faster-growing competitors). B.C. Buildings Corp, a provincial Crown, slipped to #510; PMC Sierra dropped to #539; and Premium Brands fell to #697.
That leaves eight firms, six of which vanished in corporate mergers or acquisitions, and two more that simply packed up and left.
In the former category was B.C. Rail, the provincially owned Crown corporation. Before becoming premier, Campbell vowed to "not sell or privatize" the money-making Crown, but he promptly sold it to Canadian National Railways.
The year 2004 saw a flurry of acquisitions in the forest sector, and the subsequent disappearance of three long-established companies. Slocan Forest Products, Weldwood of Canada and Riverside Forest Products were purchased, respectively, by Canfor, West Fraser and Tolko Industries.
Acetex, a chemical company, was bought by the Celanese Corporation (which is owned by one of the world's largest private-equity firms, the Blackstone Group). And a large realty concern, Colliers International, was acquired by Toronto-based FirstService Corp.
The two firms that up and moved their head-office operations were Sumitomo Canada (which left for Toronto) and Chevron Canada (now in Calgary), although each still retains a Vancouver office.
More out the door
Unfortunately, more bad news looms on the horizon, as the 2005 Financial Post 500 lists a handful of B.C. companies that have disappeared in the past year. One is a Crown corporation, B.C. Buildings, which was dismantled by the Campbell government and its operations contracted out to an Ontario company.
Placer Dome, the global gold-mining concern based in Vancouver, was bought by Toronto's Barrick Gold Corporation; Creo Inc. of Burnaby went to Eastman Kodak Company of Rochester, New York; and Vancouver's Terasen was devoured by Houston's Kinder Morgan Inc. More recently, Third Avenue Management, a New York investment firm, announced plans to expand its share ownership in Catalyst Paper. And, as headlines blared just last Friday, Intrawest Corp. announced it had been acquired by a private equity firm headquartered in New York.
The bottom line
Hollywood movies often have happy endings, and so it was that Costner's efforts in A Field of Dreams concluded with the miraculous appearance of Shoeless Joe and the Sox. But real life can be disappointing, and the dreams of Gordon Campbell and the B.C. Liberals that billions of dollars in corporate tax-breaks would spark a resurgence of head offices so far has proved a bad sleep for provincial taxpayers.
Veteran political advisor and analyst Will McMartin is a regular contributor to The Tyee. Read more of his columns here.
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