Canada and B.C. are losing head offices and staff
Our latest Policy Perspectives examines the declining presence of head offices and head office jobs in British Columbia and Canada over the last decade. The results are troubling amid rising direct investment outflows, energy sector consolidation and a steady decline in Canada’s North American “market share” in most traded goods.
Report Highlights
The presence of corporate head offices plays important roles in the economy: creating demand for high value-added activity, high-paying jobs and ancillary services; contributing to an innovation ecosystem; generating significant tax revenues; and supporting university research, the arts and charities.Clusters of head offices tend to locate near deep pools of high-skilled labour to benefit from specialisation, efficiencies, and innovation through cross-fertilisation of ideas across workers and companies. Examples include Silicon Valley (San Francisco), Wall Street (New York), Martin Place (Sydney), Bay Street (Toronto), and West Georgia Street (Vancouver).Canada and B.C. are losing head offices. Between 2012 and 2021, one-in-twenty-five Canadian head offices closed or merged with other companies. There was also a decline in the average size of the remaining corporate headquarters, with a one-in-twenty decline in head office staff.Most Canadian head offices are found in the four largest provinces of Ontario, Quebec, Alberta and, to a lesser extent, British Columbia. Almost all provinces saw a decrease in head offices over 2012-2021, with the largest losses occurring in Alberta, Ontario and Quebec.Although B.C. is Canada’s strategic gateway to trade with the Asia Pacific region, and despite representing 14% of Canada’s population, B.C. is home to only 12% of its head offices. The province has lost 9 head offices since 2012.B.C. punches even further below its weight on head office employment with only 8% of Canadian head office jobs. In other words, B.C.’s corporate head offices tend to be smaller than those in other provinces – as well as being proportionately fewer in number.There is little prospect of enticing companies based elsewhere to shift their headquarters to B.C. We are aware of no evidence indicating that this is a promising strategy for a small subnational jurisdiction like B.C.Instead, the focus to nurture corporate headquarters in the province should be on retaining existing head offices and creating favourable business operating conditions that encourage local small-to-medium firms to scale into large, successful, global enterprises.
