Sitting pretty

This year’s Top 100 numbers back up economists’ claims that B.C. is well positioned to weather any economic downturn associated with the U.S. housing crisis. Aggregate revenues for the Top 100 companies were $122.2 billion, an increase of 8.9 per cent over last year’s tally. The surge outpaces the 6.2 per cent rise in the province’s nominal GDP. And the threshold for making the list this year inched up to $223.9 million in annual revenues, $40 million more than last year.

A glance at the companies reporting the strongest growth over the past year shows just how broad-based the momentum is for B.C.’s economy. While perennial economic stalwarts head the list – telecommunications giant Telus Corp. (T-T), the Jim Pattison Group and miner Teck Cominco Ltd. (TCK-N) – the five companies leading in growth represent five different sectors: technology, mining, real estate, retail and food. The next 10 and 20 companies bear out the trend of diversified growth.

“A strong fiscal turnaround in B.C.’s economy is a great underpinning to what’s going on right now, so it puts [B.C.] in a better position to weather what’s going on south of the border,” says Amy Goldbloom, an economist with RBC Financial Group (RY-T) in Toronto. She says that the province has recovered from the economic woes of the late 1990s to become a more attractive place to do business. Goldbloom goes on to say that, while an economic downturn stateside would hurt Canada as a whole, RBC doesn’t believe the U.S. is recession-bound, and she notes that domestic economic growth has “certainly provided a buffer” to B.C. “The domestic side is powering the economy forward.”

Complementing the province’s strong fiscal position is a construction boom (and associated economic activity) that is providing consumers with additional pocket money to spend on goods and services. Employment growth is advancing at just under three per cent in B.C., while
retail sales were up more than seven per cent last year. The growth has benefited companies such as clothing retailer Lululemon Athletica Inc. (LLL-T) and electronics retailer Best Buy Canada Ltd. (BBY-N), which saw their sales rise 75 per cent and 18 per cent, respectively. The companies don’t depend solely on B.C. customers for their business, but good times here – and the ability to target demand elsewhere – have kept the cash flowing through the local economy even as a slowdown in

The companies posting the greatest losses this year are drawn exclusively from the resource and technology sectors. The majority reported in U.S. dollars, a fact that underlines the role of exchange rates in sapping the life from local companies. While some of the technology companies managed to pare their losses, the year’s biggest losers in the forestry, mining and energy sectors – Canfor Corp. (CFP-T), Lundin Mining Corp.(LUN-T) and Ivanhoe Energy Inc. (IE-T) – went deeper into the red. A similar story could be told among companies who saw revenues drop. Save for government-related ventures – Powerex Corp. and WorkSafeBC – companies posting lower revenues were involved almost exclusively in primary resources and pharmaceuticals.

Nevertheless, there are signs that B.C. is weaning itself from dependence on U.S. trade. A decade ago, Goldbloom notes, U.S. sales accounted for 70 per cent of B.C. exports. Today they account for just 60 per cent – a decline whose significance goes far beyond the 10 percentage points involved. Not only has the lowered dependence on U.S. markets cushioned the B.C. economy from the full brunt of stateside turmoil, but the diversification has given the province a new confidence. The buzz about Canada’s decoupling from the U.S. economy – which gained credence as the loonie crept up to $1.10 against the U.S. dollar last year – still rings true on the West Coast.

Companies in B.C. are developing relationships with Europe and Asia, meaning that the U.S. isn’t the only option for exporters. Wireless technology firm Sierra Wireless Inc. (SW-T), which launched a number of new products in fiscal 2007, tapped demand outside North America, boosting its revenues by 88.4 per cent – the most of any company on the list (save for Flight Centre North America, which got a shot in the arm from a U.S. acquisition by its Australian parent). Trade with Alberta and other provinces is also helping boost the B.C. economy. “If it’s a business that’s basically targeting the domestic marketplace or is selling products to the rest of Canada – for example, selling to the Alberta market – times have been very, very good,” says Craig Alexander, deputy chief economist for TD Bank Financial Group (TD-T).