Hurricane Juan's strong winds and lashing rains ripped apart buildings, downed power lines, and left three people dead in Halifax in late September 2003. A day later, still reeling from the storm's catastrophic impact, the city's business community was hit with another shock: insurance giant Manulife Financial Corp. announced it would acquire Boston-based John Hancock Financial Services, putting the future of Hancock-owned Halifax-based Maritime Life in question. With 1,050 employees and a 240,000-square-foot office at risk, Haligonians were understandably concerned. “Maritime Life was a foundation company for our community,” says Fred Morley, vice-president of the Greater Halifax Partnership, a local business development agency. “It was not one you wanted to lose.”
So while the rest of the city cleaned up in Juan's wake, the partnership teamed up with the Halifax Chamber of Commerce and government-backed Nova Scotia Business Inc. and ironed out a business case to ensure Manulife wouldn't move. “I spoke with the president of Manulife Canada, Bruce Gordon, many times over many months,” says Stephen Lund, president and CEO of Nova Scotia Business. “We even invited him down and arranged a dinner with 20 local business executives to have them tell Halifax's story.”
The people of Halifax did not need to worry. Almost no jobs have been lost since the merger was finalized in April. “From the get-go, Manulife was committed to having a significant presence in Halifax,” says Murray Coolican, who has lived in Nova Scotia's capital for 22 years and is now vice-president of corporate affairs for Manulife. Of course, it didn't hurt that the city wooed Manulife. “A lot of communities might have reacted in a more negative way,” says Coolican. “Halifax didn't.”
Staying put makes more than emotional sense for Manulife. For one thing, the costs of doing business in Halifax, although regionally high, are lower than any other city its size in North America, according to KPMG. Another reason: the people. Coolican likes the positive outlook and can-do attitude of East Coasters, who also tend to make dedicated and loyal employees. “It's hard to predict what will happen, but Manulife is growing, and I expect the company will find Halifax is a great place to increase operations,” says Coolican. “I expect growth in employment.”
Manulife's allegiance to Halifax is encouraging other companies to expand there, too. Take CGI Group Inc. The information technology and business-process outsourcing company has been in Halifax since 1991, but significantly bumped up operations after winning a six-year contract with Manulife in June. In fact, when CGI's new International Systems Development Centre opened in September, its first 300 employees were recruited from the old Maritime Life crowd when Manulife decided to outsource its local IT operations. CGI expects to hire at least 200 more employees over the next 24 months to serve other clients.
Doug McCuaig, CGI's senior vice-president and general manager for the Greater Toronto Area and Atlantic Canada, is especially satisfied with Halifax's large pool of talented IT professionals — 2,300 students graduate from IT programs in the area every year — and its low staff turnover rate. Plus, salaries are approximately 15% lower than in Toronto. “You can still do labour arbitrage in Canada,” says McCuaig. Adds Lund with characteristic local pride: “Everybody knows Halifax is one of the best places to live in North America.” L.B.
The official line when Imperial Oil Ltd. announced in late September that it was moving 500 head-office employees from Toronto to Calgary was that the relocation would put the energy giant closer to its assets and help it meet “Canada's growing energy needs.” In fact, it is merely the latest in a long line of energy companies — including Enbridge Inc. and Shell Canada Ltd. — that have moved operations there.
Calgary is gaining steam. Statistics Canada reports the city has the most head-office employees per capita in the country. And it's not just about powdery ski hills and fresh mountain air. Imperial Oil stands to save nearly $3 million in operating costs by moving, according to a study by Princeton, N.J.-based location consultants Boyd Co. Inc. and Canadian Business.
Not only are labour, electricity and corporate travel costs all cheaper; Alberta also boasts Canada's second-lowest corporate tax rate at 11.5%, behind only Quebec at 8.9%. (Ontario's corporate tax rate, by comparison, is 14%.) And once the relocation is complete in August 2005, Imperial Oil will be Calgary's largest company by revenue. The city is chuffed by the news. Calgary's Economic Development office estimates Imperial Oil's move will create 560 spinoff jobs, and a tax boon of nearly $1.2 million. The new citizens are also expected to pour $38 million in household spending into the economy.
Employees, meanwhile, will see their personal costs decrease significantly. For example, provincial sales tax will drop to zero from 8%, and total provincial taxes for a two-income family of four earning $60,000 a year are about $800 less in Alberta than in Ontario. In total, the cost of living in Calgary is about one-fifth lower than it is in Toronto.
With a population of just over one million and 3,700 downtown businesses, Calgary has everything a corporation would need, says Bruce Graham, president and CEO of Calgary Economic Development. All the major accounting and law firms have offices there, and almost all professional services are concentrated within one square mile in the city's downtown core. Graham also points to Calgary's 33-million square feet of downtown office space, along with its young, highly educated population as pluses. It is also emerging as a major distribution centre, says John Boyd, president of Boyd Co., with the advent of Canamex, a NAFTA-inspired trade corridor between Canada, the United States and Mexico.
Boyd says Imperial Oil's decision could prompt others to shift their headquarters. If they're paying attention to the numbers, Calgary could soon see a corporate stampede. C.G.
For a company synonymous with bargains, setting up its fourth international support centre in suburban Vancouver seems a bit out of character. After all, the city is the most expensive place to do business in Canada. But, with more than US$2 billion in 2003 net revenue, online auctioneer eBay Inc. of San Jose, Calif. — the most expensive North American city according to a 2004 KPMG report — doesn't seem to mind the cost. “EBay chose Burnaby and the greater Vancouver area for a number of reasons, including its educated, tech-savvy workforce and quality of life,” says Alexandra Brown, director of communications at eBay Canada.
EBay's not the only one. Greater Vancouver is becoming a tech hotbed, with companies such as PeopleSoft Inc., the Pleasanton, Calif.-based enterprise software developer, and Samsung Electronics Canada Inc. setting up new offices there in the past two years. For the past two years, Mercer Human Resource Consulting has placed Vancouver in the Top 3 in its annual international quality-of-life list. That reputation is part of what attracted eBay to the area. “We have a lot of amenities in Burnaby,” says Chad Turpin, deputy city manager. “There are lots of trails, lots of pools, lots of rinks. There are things to do here.”
Another draw for high-tech employers are Vancouver's many universities, institutes and colleges. The economic development department also boasts that Vancouverites speak 90 languages, and the region has the highest ratio of foreign-born residents in the world.
Vancouver is perfect for Californian companies looking to move away from the state's difficult and litigious business climate and other challenges such as energy shortages, says John Boyd. Plentiful energy, lower overall costs, good air service and the same time zone means more Californian businesses might be looking north. “California is the sixth-largest economy in the world, so this corporate migration from the Golden State to B.C. has legs — big legs,” says Boyd. For eBay, Burnaby's central location within B.C.'s Lower Mainland also makes it a convenient site to both San Jose and the company's Salt Lake City support centre.
British Columbia has also become much more business friendly. The province, under NDP rule for 10 years until Gordon Campbell's Liberals took over in 2001, has had a history of labour strife, which has concerned some businesses. “But a softened economy and some tough love with the public-sector unions have led to a vast improvement in the tenor of overall labour-management relations,” Boyd says.
Maybe eBay is onto something, especially since Vancouver is still cheaper than most international locations. “EBay is well-known as a company that makes very judicious business decisions,” says Boyd. “Decisions that are often ahead of the curve and trend-setting.” B.G.