Vancouver and Corporate Headquarters: An Exodus
Vancouver's economy is booming, employment levels have never been higher and the Olympics are just three years away.
So why are corporate headquarters fleeing Vancouver for Calgary, Toronto and Montreal?
The contrast couldn’t be more telling.
In Calgary, energy giant EnCana plans to build a spectacular $1-billion, 59-storey office tower headquarters that will be the second highest in Canada. That’s assuming Imperial Oil, not yet out of the starting gate, doesn’t one-up them with its own new Calgary headquarters.
In Greater Vancouver, homegrown Boston Pizza is also planning a new head office building, in either Richmond or Vancouver. This will be a modest affair by Calgary standards, between five and 10 storeys, of which Boston Pizza will occupy, at most, three floors.
Be grateful for Boston Pizza. The rest of the head-office picture in Greater Vancouver is bleak. The region’s HQ status has been in decline for more than a decade, both in number of headquarters and, more importantly, in the number of jobs those head offices represent.
Blame it on several factors. Consolidation is a big one; when Teck merges with Cominco, Barrick Gold takes over Placer Dome and Canfor merges with Slocan, six head offices become three. When Terasen is purchased by Texas-based Kinder Morgan and Westcoast Energy is bought by North Carolina-based Duke Energy, two head offices vanish.
But consolidation and foreign takeovers happen in Calgary, Toronto and Montreal, too. Yet these cities are all outstripping Greater Vancouver in every facet of the head-office game.
Why, then, such an aversion to Vancouver? Unfortunately, you’ve heard this one before. The leadership and vision needed to execute a cohesive regional economic development strategy – covering everything from a fix for our traffic backlogs to a coordinated game plan for retaining head offices – is sorely lacking in the Lower Mainland.
The head-office exodus is just the latest, and perhaps the most stark, reminder of a problem that continues to dog the region’s growth.
In a survey that Business Council of B.C. executive VP Jock Finlayson called “alarming,” Statistics Canada last summer put out some new numbers on Greater Vancouver’s slide. Of 3,784 Canadian head offices identified by StatsCan, Ontario holds 39 per cent, Quebec 22 per cent, Alberta 15 per cent, and B.C. 11.8 per cent (down from 13.1 per cent in 1999).
“Of greater interest, and also concern,” says Finlayson in his own analysis of the StatsCan numbers, “is the trend in head-office employment.” Between 1999 and 2005, employment at the B.C.-based head offices included in the StatsCan study tumbled by 29 per cent from 18,817 jobs to just 13,441. In metropolitan Vancouver, the same picture was apparent: head-office employment there also declined by 29 per cent over the 1999-2005 period.
Meanwhile, over the same time period, those employment numbers climbed by a whopping 64.4 per cent in Calgary, 19.1 per cent in Toronto, 15.5 per cent in Edmonton and 28.4 per cent in Ottawa. Montreal broke even.
“Greater Vancouver stands out as by far the worst performer among major Canadian metropolitan regions in terms of what’s been happening to head-office jobs,” says Finlayson in his analysis. But what really irks him is what appears to be complacency across the region – the lack of leadership on the economic front – and Finlayson doesn’t hold back his criticism.
The StatsCan survey “did not elicit much commentary from most of the municipal or regional officials in Greater Vancouver,” he says in an interview. “They’d rather spend their time talking about air quality, which is already good here, or fighting with the province. The local political leadership is really missing in action at the regional level on all the items that touch on economic development.”
Colin Hansen, B.C.’s minister of economic development, chooses his words a bit more carefully, but the message about lack of leadership is similar.
“Yes, that’s an issue,” he says. “I sat through a
presentation in Chicago last spring by a panel made up of the mayors of Edmonton, Montreal and Mississauga, talking about economic opportunities in their munici¬palities. It would be very difficult for Greater Vancouver to present itself in a similar way, because there is not the ability to speak with one voice when it comes to economic development in the Lower Mainland.”
While Hansen recognizes the problem, he doesn’t think the province can do much beyond friendly persuasion to change the approach.
“It is an area where I think the province can play a supportive role, and I’ve had discussions with various mayors and others interested in developing more of a regional thrust,” he says. “But as I’ve pointed out to them, if it was to be driven by the provincial government I don’t believe it would succeed. It needs to be driven by leaders at the local and regional level.”
All the region’s major municipalities, with the City of Vancouver at the front of the pack, have economic development initiatives under way as individual municipalities, but there’s no one regional voice.
Hansen is hoping that the newly established Greater Vancouver Economic Council will provide part of the solution to that fragmented approach. A private-sector-driven agency formed specifically to address the lack of a ¬regional approach to economic development, the council points out in its business case that Greater Vancouver is virtually the only region in North America that does not have an effective regional approach to economic development.
Unfortunately, at the moment, the council is going nowhere. Launched just under a year ago, it’s still without a CEO and is waiting for federal and provincial funding before it can begin to address the problem.
Elve del Bianco, a researcher at Vancity Savings Credit Union (one of the private-sector sponsors of this organization), is ¬helping the board of directors get it up and running.
“We should start moving in mid-January,” he says, conceding that the council is behind schedule. “This is taking longer than we anticipated, but this is a very fractured regional area with 21 municipalities in a catchment area of Whistler to Chilliwack. Everyone is lined up at the pool; it’s just a question of who will jump in first.”
Someone needs to. Finlayson thinks the need is urgent: “To be brutally candid, regions like Houston, Phoenix, Calgary, Ottawa – all with less desirable quality of life attributes – are much more effective. They are out there trying to attract these kinds of companies and jobs. As a region we are not, and that’s got to be part of the explanation [for the head-office slump]. In a global economy Surrey, Port Coquitlam, or whatever – are meaningless.”
Should we care about this? Life is good, the provincial economy is booming (for now, anyway), employment levels have never been higher and the Olympics are coming. Do we really need more head offices?
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