Canadian Imperialism Doing: Just Fine, Thanks

by Barry Weisleder / December 2006

Corporate giants headquartered in Canada are significantly larger and more numerous than they were 20 years ago, according to the University of Toronto’s Institute for Competitiveness and Prosperity (don’t ya just love the name?).

In 1985, thirty-three Canadian companies ranked among the top five in the world in their particular business. Now, the Canadian corporate elite has more than doubled its global impact, with 72 companies that lead the world.

In a study to be released early in 2007, the business school also found that average annual revenue for Canada's leading companies is $3.7 billion, up from $2 billion in 1985, after adjusting for inflation.

Canadians concerned about the foreign takeover of household names such as Hiram Walker, Hudson's Bay Co., and more recently, Inco and Falconbridge, need not worry. James Milway, the institute's director, argued that those folks frequently don't notice the ascendance of global players such as auto parts maker Linamar and health sciences giant MDS Inc.

"There's a lot of renewal and churn going on in Corporate Canada," he said. "We ought not to get fixated on the big announcements."

The conclusions are the result of an extensive examination of all the ups and downs of Canada's leading companies over the past 20 years. Roger Martin, dean of the U of T's Rotman School of Management and head of the institute, argues that rather than dwelling on companies that have been taken over by foreign investors, business and political leaders should focus on fostering new world-class entities to take their place in specific, albeit narrower, market niches.

Twenty years ago, Canadian firms led in basic fields such as spirits and wines, nickel, asbestos, solid waste management and real estate. Today, according to the study, Canadian companies lead in environmental compliance technology, postage stamps, gastrointestinal products and wollastonite, a mineral fibre used in ceramics, auto parts and concrete.

That trend will likely persist into the future, Mr. Martin said. As globalization speeds up, big countries with big markets produce global companies that gobble their smaller competitors -- unless the smaller competitors develop dominance in their own market niche, he said.

To survive, the idea is to ‘specialize’, and then acquire others in your field -- what ever may be the cost to workers and consumers. A case in point is Chemtrade Logistics Income Fund. Since the Toronto-based company became an income trust in 2001, it has bought interests in Switzerland and the United States. It is now a global leader in sulphuric acid, liquid sulphur dioxide, and sodium hydrosulphite.

"What's happening is an industrial revolution-like transformation . . . a global rearrangement of industries," Mr. Martin said. "Some of each nation's companies are going out and buying companies and going global, and some are getting bought up. That's just the nature of the beast."

Indeed it is.