With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/1071224
34 BCBUSINESS FEBRUARY 2019 ABACUS DATA AND THE BC CHAMBER OF COMMERCE benefited from a global appetite for its residential real estate, but such purchases typically create few spinoff jobs. On the other hand, investing in research centres and factories delivers large-scale economic benefits by employing many people, directly and indirectly. At the heart of more-productive direct investment, Dietz explains, is a big company moving its headquarters to a city. Besides creating high-productivity jobs as well as indirect employment—what's called a multiplier effect — such businesses often become part of the community's academic and social life and donate to local charities. Vancouver isn't getting very good results in that department, Dietz says. Data from D&B Hoovers, Statistics Canada and other sources show that in 2016, the ratio of market capitalization to regional GDP for lo c a l ly headqu a r tered Metro Vancouver companies was 103 percent. By contrast, the ratio for Canadian and U.S. peer cities was 248 percent and 316 percent, respectively. The gulf between Vancouver and the 193-percent peer average: $250 billion in market cap. Luckily, some major companies have headquarters in Vancouver, Dietz says, citing Lululemon Athletica and Telus Corp. "But the number of these compa- nies is extremely low compared to what you would expect from a metropolitan area of two and a half million people." It's bad enough that Vancouver is weak on high-productivity investment, but that also creates much bigger woes, Dietz says. "This is a major driver of our housing affordability problem because the amount of investment going into retail real estate in most markets tends to be offset by the amount of investment going into highly paid jobs. This is not the case in Vancouver." In the 2017 edition of the annual international hous- ing survey by U.S. research firm Demographia, Vancou- ver was the third least affordable metropolitan region with more than 2 million residents, behind only Hong Kong and Singapore. Vancouver's ratio of median home price to median income: a whopping 12.6. As Dietz sees it, though, house prices aren't the issue; they're in line with those of comparable cities in the U.S and Europe. The real concern is incomes, which would rise if Vancouver had more corporate headquarters. A BIG SHORT Vancouver is home to few major headquarters FOR BETTER OR WORSE Asked what was helping and hurting their business in 2018, BC Chamber of Commerce members put these factors at the top CANADA'S IMAGE B.C. AS A TOURIST DESTINATION APPEAL OF B.C. TO FOREIGN INVESTORS ACCESS TO CAPITAL EASE OF DOING BUSINESS WITH CHINA HOUSING COSTS COST OF LABOUR PROVINCIAL TAXES FEDERAL TAXES ACCESS TO LABOUR 66% 59% 57% 54% 53% 48% 45% 31% 29% 20% W H A T ' S H U R T I N G W H A T ' S H E L P I N G