Winnipeg Free Press - PRINT EDITION

City needs more bolster, less booster

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Local boosters often cling to every positive headline as proof of Winnipeg's success, without stopping to weigh both the good and the bad in every statistic. So it was last week when Statistics Canada released its 2011 data on corporate head offices. Winnipeg ranks third in Canada in the number of corporate head offices per capita, the headline read.

The presence of several corporate HQs in one city is a strong positive for any local economy. Corporate HQs concentrate managers and white-collar workers into a single, job-dense location. Corporations often spend millions on event and facility sponsorships in their home city. There are countless indirect benefits, too. For example, a national or multinational corporate HQ can act as a magnet for routine business travel, drawing visitors to local hotels.

Last week's StatsCan study confirmed what a few Winnipeggers already knew. On paper, thanks to firms such as Cargill, Great-West Life, Winpak and the North West Co., Winnipeg does better than you'd expect in Canada's intercity race for corporate HQs. And that is good news. But it's worth digging further.

One challenge: Crown corporations were included in the study, as in other similar rankings (such as the Financial Post 500). Winnipeg is rich in Crown HQs. Crown corporations distort the picture because most of their commercial activity is restricted to domestic markets; it's not as if the Manitoba Liquor Control Commission or Manitoba Public Insurance will ever be a significant draw for export revenues. In our isolated, export-dependent province, the more Crown HQs we have in relative terms, the more limited the benefits of having so many corporate headquarters in our local economy.

But the data also hint at an important private-sector challenge. Ranking us as third per capita puts the best possible spin on the StatsCan data. So what's the worst possible spin? Winnipeg falls to sixth place if you rank cities by per-HQ employment. The average corporate HQ in Winnipeg employed 71 managers and staff, while the average corporate HQ in Calgary employed nearly twice as many (132).

As noted, that's partly due to our collection of relatively small Crown corporations. But it's also because older, middleweight companies lopsidedly dominate our private-sector roster.

What do local firms such as Pollard Banknote, Paterson GlobalFoods, Palliser Furniture and the Price Group have in common? Aside from the letter "p" and their shared longevity, each company's founding family is still at the helm. Many mid-size Winnipeg-based players in old-economy sectors such as construction, development, transportation and manufacturing are family-owned or family-managed as well. One of our largest corporate HQs is James Richardson & Sons Ltd. It's here because the Richardson family made its fortune on our grain market, not because we're an ideal home for an agro-financial conglomerate.

The presence of so many loyal mid-size companies is a great asset, but it has a downside, too. Whether they're family-owned or not, few Winnipeg middleweights become heavyweights from our local base. Ambitious local firms often blow themselves up when they finance rapid expansion (think CanWest). Others sell to a company headquartered elsewhere (think Moffatt Communications or Standard Aero), diluting their local impact in the process. Occasionally, a firm tries to solve its growth problem by moving outright to another city (think IMRIS).

It's as if Winnipeg-based corporations have their own glass ceiling.

Here's one idea to counter this problem: It's not unusual for western governments to experiment with new corporate forms: corporations for public benefit, "mutuals," co-ops and so on. One asset Manitoba hasn't surrendered or squandered (yet) is control over securities and incorporation laws. It's within our power to design a new kind of corporation explicitly for expanding, family-owned firms, with innovative investment rules to match.

A new, family-friendly corporate model could appeal to investors searching for stability. It could attract entrepreneurial migrants from cultures where family enterprise is more prevalent. And it could help us build on one of Manitoba's strong suits -- helping local family firms grow with less pressure to sell up, sell out or move away from Winnipeg to do it.

Whether this is a good idea or a bad idea isn't the point. What matters is that there's plenty of data on our strengths and weaknesses out there, and yet so little candid conversation on any real ideas to adapt to either. Sadly, local leaders seem to be just fine with that as long as they can name-drop IKEA to get through any economic conversation. New ideas won't be in demand as long as we believe our economy is already as good as it has to be.

Brian Kelcey is a public-policy consultant with experience as a senior political adviser at city hall and the Ontario legislature.

Republished from the Winnipeg Free Press print edition April 3, 2013 A9

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