Canada’s Innovation Sector: Alive, Well and the Place To Be

Branham300 Lays Out the Numbers (for the ICT sector)

Contributed by Michael Darch, President of Consider Canada City Alliance

The 2016 Branham300 results, Canada’s growing trade and investment relationships and the continued expansion of multinational R&D facilities in Canada lead to one important question: can you afford not to invest in Canada!

The twenty third edition of the Branham300 demonstrated the depth of Canada’s ICT sector and its continued resilience. Fiscal 2015 saw the top 250 Canadian companies reach record revenues of $96.1 billion with a year over year increase of 5.7%. Three quarters of the top 250 recorded growth and over half, double or triple digit growth. One notable new entrant at 37 was Ottawa-based Shopify with revenue of $262.5 million, a one year growth rate of 95%.

Branham300, 2016 Edition

Branham300, 2016 Edition

Multinationals also had a good year in Canada. The top 25 Multinationals saw their revenue grow to $30.4 billion in 2015 from $$26 billion in 2014. Leading the pack were IBM Canada, Alphabet (Google), HP Canada; Cisco Systems Canada and Microsoft Canada. European companies take note, these are all U.S. headquartered companies. Could be a good time to position for the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, expected to be in place by early 2017.

Consider Canada City Alliance (CCCA) members dominate the Branham300 lists. Of the 250 companies in the Canadian list, 64% are headquartered in six of the member cities and 100% of the top multinationals have their Canadian headquarters in four member cities.  

Source: Invest Ottawa, Branham300 (2016 Edition)

Source: Invest Ottawa, Branham300 (2016 Edition)

Source: Branham300 (2016 Edition)

Source: Branham300 (2016 Edition)

Canada is far more than a market for ICT products and services, it is a research hot spot. According to RESEARCH Infosource, five of Canada’s top 10 corporate R&D spenders are in the ICT sector and two of those are foreign multinationals, IBM Canada and Ericsson. The five companies executed over $2.5 billion of research in Canada in FY2014.

 
Source: Research Infosource, Canada's Top 100 Corporate R&D Spending

Source: Research Infosource, Canada's Top 100 Corporate R&D Spending

 

In a report last month, the McKinsey Global Institute made an interesting observation “The rapidly growing flows of international trade and finance that characterized the 20th century have flattened or declined since 2008. Yet globalization is not moving into reverse. Instead digital flows are soaring—transmitting information, ideas, and innovation around the world and broadening participation in the global economy.” Canada, with its best of breed globally competitive software companies like QNX, Hootsuite and Open Text, is in an excellent position to capitalize on this shift. 

 
Source:  McKinsey Global Institute, "Digital Globalization: The New Era of Global Flows"

Source:  McKinsey Global Institute, "Digital Globalization: The New Era of Global Flows"

 

To capture those growing opportunities in globalization, a company needs global platforms in countries that embrace international trade, investment and finance opportunities. The present election in the U.S. is seeing an extended debate over globalization and its merits. The Brookings Institute, in its Rethinking Metropolitan America series, squarely puts this in context.  It argues that cities in America “must accept that their economies are globalizing” and “proactively adapt to these forces”.

Canada has just elected a new government that is committed to opening up world markets to those companies choosing Canada. Canada’s Minister of International Trade Chrystia Freeland noted last month in Brussels “(CETA) is going to set a new bar for progressive Trade agreements internationally.” With the European and the Trans Pacific agreements in place, Canadian and foreign companies operating in Canada will have access to markets having a combined GDP of over $50 trillion.

 
Source: The National Bank

Source: The National Bank

 

Canada is most known for its abundant natural resources. But Canada is far more than a resource based economy. It has a triple strength for companies looking to innovate: a strong domestic market; an expanding access to high growth sectors of global markets and a research capacity to allow competitiveness in a rapidly changing global marketplace. 

A recent Financial Times article mused over whether Toronto was moving to take over London’s crown as the global FinTech capital. Note to Canary Wharf, move now to join us before our neighbours to the South. We would welcome your entry into the Branham300 top 25 Multinationals to break up the US dominance.

Michael Darch is the Founding President of Consider Canada City Alliance.


About Consider Canada City Alliance (CCCA)
As a united front, Canada’s large cities – Vancouver, Calgary, Saskatoon, Winnipeg, London, Waterloo Region, Toronto, Ottawa, Greater Montréal, Québec City and Halifax – help international companies determine the best strategies for business expansion and continually improve Canada’s ability to attract new investment and trade opportunities. Together, Consider Canada’s eleven members represent approximately 52.5% of Canada's population, 56.8% of its GDP and 68.3% of GDP growth in Canada between 2010 and 2015.

For more information on the Consider Canada City Alliance, please visit:
www.considercanada.com or www.canadaentete.com (in French).