Findings

More export intensive
Manufacturing accounts for largest share
Greater number of export destinations
Establishments concentrated in the manufacturing sector
Large number of countries controlled Canadian exporters
Diverse set of destinations
Ontario has highest amount of foreign control

More export intensive

Based on Statistics Canada’s 2002 Exporter Register, there are 3,597 foreign controlled exporting establishments operating in Canada, or around 9% of the total number of exporters on the Register. While the number of exporting establishments that are foreign controlled is quite small, their contribution to the value of total exports is significant.

In fact, these exporting establishments accounted for over $155 billion in exports in 2002. This represents almost half of total exports from Canada. This would seem to indicate that foreign controlled exporting establishments were more export intensive than Canadian exporting establishments.

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Manufacturing accounts for largest share

In 2002, foreign controlled exports were concentrated in the manufacturing sector. Manufacturing accounted for 70% of the total export value of exporting establishments. Overall, 51% of the value of total manufacturing exports in 2002 came from foreign controlled establishments. The Transportation equipment manufacturing industry had the greatest proportion of foreign control in 2002; 80% of the value of exports came from foreign controlled exporting establishments.

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Greater number of export destinations

Ninety-one percent of the Canadian controlled exporting establishments accounted for only 55% of the total value of Canadian exports. With the exception of U.S. controlled exporting establishments, only a small amount of the value of foreign controlled exports were destined for the original country of control.

Foreign controlled exporting establishments exported to a greater number of destinations. In 2002, 18% of foreign controlled exporting establishments sent goods to five or more countries compared to just 6% of Canadian controlled enterprises.

In addition, the proportion of foreign controlled exporting establishments that exported to non-U.S. destinations (45%) in 2002 was significantly higher than that of Canadian controlled exporting establishments (29%). However, Canadian controlled exporting establishments sent a greater share of the value of their exports to non-U.S. destinations; 16% compared to 10%.

This article will examine differences between industries, variation between countries of control, the diversity of export destinations and foreign control by province.

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Establishments concentrated in the manufacturing sector

In 2002, 45% of the value of Canada’s exports was from foreign controlled exporting establishments; however, not all industries reflected this proportion to the same degree. Foreign controlled exporting establishments were concentrated in industries where the value of overall export activity was higher. There was a greater concentration of foreign controlled exporting establishments in the manufacturing industries; in 2002 manufacturing accounted for 70% of the total value of Canadian exports and 51% of the total manufacturing exports from Canada were foreign controlled. In contrast, exports of the non-manufacturing industries accounted for only 30% of total Canadian exports and only 32% were from foreign controlled exporting establishments.

Eighty percent of the value of exports from the Transportation equipment industry came from foreign controlled exporting establishments in 2002. This is not surprising, given that this industry is dominated by the large, foreign controlled automotive companies. In 2002, this industry accounted for 6% of all foreign controlled establishments and 46% of the total value of exports from foreign controlled firms.

Exports from the Electrical equipment appliance and component industry had the second highest proportion of foreign control; 65% of these exports by value came from foreign controlled exporting establishments in 2002. However, unlike the Transportation equipment industry, which accounted for 21% of the total value of exports in 2002, the Electrical equipment appliance industry accounted for a relatively small proportion, just under 2% of Canada ’s overall exports in 2002.

The value of exports from the Transportation and warehousing industry was 97% Canadian controlled in 2002 and this industry accounted for 3% of total exports in 2002.

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Large number of countries controlled Canadian exporters

In 2002, there were a total of 39 countries that controlled exporting establishments in Canada . The G7¹ (excluding Canada ) accounted for 85% of foreign controlled exporting establishments and 92% of the value of foreign controlled exports. The U.S. accounted for 59% of all foreign controlled exporting establishments and 63% of total foreign controlled export value. Second in terms of number of exporting establishments controlled was the U.K., with 8% of all foreign controlled exporting establishments, while Germany was second in terms of value of exports, with 12% of the foreign controlled total.

A total of 26 countries with foreign controlled exporting establishments in Canada exported back to their country of control in 2002. However, other than U.S. controlled exporting establishments, the value exported was quite small. Excluding the U.S., just over $1 billion was sent back to these countries of control. This represented less than 1% of the total foreign controlled exports in 2002.

Japan was second in terms of the proportion of their exporting establishments that shipped back to Japan with 47% doing so and in terms of value as well, with 3.5% of Japanese controlled exports being sent back to Japan.

Almost all of the U.S. controlled exporting establishments sent goods back to the U.S. In fact, they shipped 91% of the value of their total exports back to the U.S. and accounted for 30% of Canada ’s total exports to the U.S. in 2002. However, two other major exporting countries controlling Canadian exporting establishments, Germany (95%) and Japan (93%), exported a greater proportion of their goods to the U.S. than the American controlled exporters. This underscores the earlier contention that foreign controlled exporting establishments are locating in Canada to access the North American market.

In 2002, almost half (47%) of Canadian exports to the U.S. were from foreign controlled exporting establishments. By comparison, of the major Canadian export markets, 54% of Canadian exports to Belgium were from foreign controlled exporting establishments and 25% of Canadian exports to Japan were from foreign controlled exporting establishments.

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Diverse set of destinations

Foreign controlled exporting establishments had a more diverse set of export destinations than Canadian controlled exporting establishments. In addition, foreign controlled exporting establishments export a greater proportion of the value of their exports to U.S. destinations than their Canadian controlled counterparts.

In 2002 a greater proportion of foreign controlled exporting establishments (45%) exported to non-U.S. destinations than their Canadian controlled counterparts (29%). In terms of value however, Canadian controlled exporting establishments sent a greater proportion of their exports to non-U.S. destinations: 16% compared to 10% for foreign controlled exporting establishments. In addition, only 38% of foreign controlled exporting establishments exported exclusively to the U.S. in 2002, compared to 48% of Canadian controlled exporting establishments. A total of 60% of foreign controlled exporters sent goods to both U.S. and non-U.S. destinations compared to 46% of Canadian controlled exporting establishments.

In terms of the number of export destination countries, there was also some variation according to ownership. Canadian controlled exporting establishments were more likely to export to just a single destination in 2002 than were their foreign owned counterparts. Foreign controlled exporting establishments exported to a greater number of destinations. In 2002, 18% of foreign controlled exporting establishments sent goods to five or more countries compared to just 6% of Canadian controlled enterprises.

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Ontario has highest amount of foreign control

While nationally, 45% of the value of exports from Canada in 2002 was from foreign controlled exporting establishments, there were significant variations among the provincial results. In general, however, foreign controlled exporting establishments were significantly larger exporters. In every province, foreign controlled exporting establishments represented a small percentage of the total exporting establishments but were responsible for a large percentage of the value of exports in 2002.

In 2002, Ontario had the largest amount of foreign control of provincial exports. Ontario’s foreign controlled exporting establishments represented a mere 11% of all their exporting establishments but accounted for 61% of the value of their total exports. On the other hand, 4% of New Brunswick’s exporting establishments were foreign controlled and their exports amounted to only 6% of New Brunswick ’s total exports.

In terms of destinations, with the notable exception of Saskatchewan , the greatest proportion of exports from foreign controlled exporting establishments went to the United States . Less than half (45%) of the foreign controlled exports from Saskatchewan were destined for the U.S.

The destination region for the provincial foreign controlled exporters generally followed a North - South geographical pattern. Quebec and New Brunswick sent the greatest proportion of their foreign controlled exports to the U.S. East region.² Moving further West, foreign controlled exporting establishments in Ontario sent 62% of their exports to the U.S. Heartland. In the West, as mentioned earlier, Saskatchewan ’s foreign exporting establishments sent more than half of the total value of their exports to non-U.S. destinations, the bulk of which was destined for the Pacific Rim.³ Alberta and Manitoba shipped the greatest proportion of their goods to the U.S. Midwest region. British Columbia’s foreign controlled exporters sent the largest proportion of their exports to the U.S. West region.

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Notes

1. G7 – Group of Seven: Britain, Canada, France, Germany, Italy, Japan and the United States.

2. For a complete list of the individual states in the U.S. West, East, Mid-West and Heartland, refer to. A Profile of Canadian Exporters, Statistics Canada , International Trade Division. Catalogue 65-506-X.

3. A complete list of Pacific Rim countries can be found in Merchandise Trade Statistics: Exports. Statistics Canada, International Trade Division Catalogue 65-202-X.