“Head offices do show strong clustering effect…” – Conference Board of Canada, August 2016.
In seeking to diversify its economy, Calgary is focused on boosting one of the city’s well-established core strengths.
Calgary has the highest concentration of corporate head offices in the country – it’s the same with small- and medium-sized businesses too – and part of the 10-year economic strategy to purposely diversify the economy is adding to that cluster of headquarters.
When global diamond miner De Beers moved its Canadian headquarters to Calgary from Toronto this summer it amounted to far more than relocating a few dozen employees. Corporate head offices are crucial contributors to a local economy. They stimulate growth of small businesses and encourage the creation of industry clusters that attract, or incubate, more head offices.
Head offices are crucial contributors to an economy.
De Beers estimated it will add $24 million per year for Calgary’s economy over the next decade through direct activities from the company, its wider supply chain, employment income and consumer spending it facilitates.
De Beers and fellow miner Dominion Diamonds – which moved its head office to Calgary in November –joined 134 companies in the FP500 in Canada based in Calgary. The emergence of a world-scale diamond mining industry in the Northwest Territories makes Calgary an attractive location close to the operations and connected to cities worldwide.
Calgary has historically been the home to major oil and gas producers including Imperial Oil and Suncor Energy and pipeline companies such as Enbridge and TransCanada but the list of companies based here extends well beyond energy.
Shaw Communications, Big Rock Brewery, CP Rail and FGL Sports are among the companies that have helped make Calgary home to more headquarters in Canada after Toronto. Those firms generated business for financial, legal, IT and other corporate services.
When De Beers selected Calgary for its main office in Canada it was the logistics hub, talented workforce available and reputation for an active, outdoor lifestyle that made the case. The declining cost-of-doing business was an added bonus.
“The current vacancy rate was an unexpected bonus for us,” says Tom Ormsby, head of external and corporate affairs for De Beers Canada.
Calgary Economic Development has a headquarters’ attraction strategy that aims to bring 70 companies here over three years. In September, Alberta Economic Development and Trade provided $2 million and Western Economic Diversification Canada in announced $1 million to help attract head offices, regional offices and branch plants.
The funds help market and promote Calgary, conduct research, support international trade missions and generate new leads.
“From our low taxes to the cost of doing business, to our well-educated workforce and the economical office space, and the quality of life, Calgary has a great story to tell,” says Mary Moran, President and Chief Executive Officer of Calgary Economic Development.
When the Conference Board of Canada released its report Stronger Together on the financial services in August it noted the propensity for head office clusters.
Among the factors that make Calgary attractive for top executives is the city’s livability is key, says Jyoti Gondek, Director of the Westman Centre for Real Estate Studies at the University of Calgary’s Haskayne School of Business.
“Companies are comprised of people, and a company that can attract and retain really good people will be successful,” Gondek says. “One of the most important things for companies to consider is will the people they wish to employ be able to enjoy a great quality of life.”
The excitement and sense of optimism in Calgary is another draw for businesses.
“We tend to have something that’s not easy to measure and that’s the idea of an entrepreneurial spirit,” says Gondek.
Deron Bilous, Alberta’s Minister of Economic Development and Trade, is another champion of Calgary’s headquarters’ attraction effort and led multiple trade and investment attraction missions to Asia in the past year.
“Attracting more headquarters to Calgary will bring long-term economic benefits — not only to the municipality but to Alberta as a whole — through creating jobs, building stronger trade and investment relationship," Bilous has said.
He notes Calgary has lower commercial property taxes compared to other major centres as well as the infrastructure to support international trade and business.
Hainan Airlines announced a non-stop flight between Beijing and Calgary last summer and just before Christmas Aeromexico announced non-stop flights between Mexico City and Calgary. Both new flights support tourism as well as trade, investment and expanded business ties.
The proximity to immense oil and gas reserves first attracted energy companies here and it helped to incubate businesses in supporting industries, from manufacturing to finance. A large number of head offices creates its own advantages.
“One of the great things about having a good network of head offices is you have very senior people in companies able to interact, and not just in a business setting but also in a philanthropic sense,” Gondek says. “Those networking effects are absolutely critical.”
There’s a definite get-down-to-business attitude, says Bob Dhillon, President and Chief Executive Officer at Calgary-based MainStreet Equity, a residential real estate company with 10,000 apartment units in Western Canada.
“I love the culture of Calgary’s business community,” he says. “It’s dynamic, it’s giving, it’s very entrepreneurial, and it’s very open. What I mean by that is it’s not snooty.”
Calgary has all the amenities of a big city, Dhillon says, without many of the hassles. Traffic is reasonable and he values all the many ways the city is connected, such as Plus-15 system downtown, the bike paths, and walkable areas.
The connections among Calgarians are also strong.
“One of the things I love here is the concentration of educated people in a very small radius, because of all the headquarters,” he says. “It generates unique synergy.”