Large companies lead growth

The growth of large firms — those with more than 500 employees — outstripped the growth in medium-sized and small firms between 2001 and 2008.

According to Statistics Canada’s December Economic Insights, entitled “The growth of large firms in Canada,” large firms grew at an average annual rate of 6.5%, increasing their total GDP to $554.2 billion in 2008 from $356.6 billion in 2001. By comparison, medium-sized firms — 100 to 499 employees — grew at an annual rate of 3.5%, taking total GDP to $133.0 billion in 2008 from $104.2 billion in 2001. Small firms — those with less than 100 employees — enjoyed 5.1% growth; their total GDP increased to $469.5 billion in 2008 from $331.7 billion in 2001.

It seems the resource boom that started in 2002 did much to boost the contribution of mining and oil and gas companies to Canada’s economic landscape. According to authors Danny Leung and Luke Rispoli, within the mining and oil and gas industry, 91.3% or $87 billion of the $95.3-billion increase in nominal GDP came from the same large businesses. In fact, on a percentage basis, large firms made up 82.9% of the sector’s nominal GDP in 2008, vs 69.4% in 2001.

Manufacturing did not fare as well. An appreciating Canadian dollar, along with higher costs, knocked Canada’s large manufacturing companies hard. Nominal GDP in the manufacturing sector fell by $6.3 billion between 2001 and 2008. “This decline,” report the authors, “can be accounted for entirely by the $12.9-billion fall in manufacturing GDP in the large-business category, which contains the manufacturing firms most likely to be exporters.”

Small manufacturing firms, on the other hand, managed to grow their GDP by an average of 3.1% a year.

The business sectors with the largest concentration of large firms by percentage of nominal GDP in 2008 were:

Utilities                                    92.6%
Mining and oil and gas        82.9%
Information                             82.1%
Manufacturing                        56.2%
Transportation                       53.8%
Arts and entertainment         49.9%
Finance                                    48.3%