Findings

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Rural geography: Dividing rural Canada
Rural firms and population
Rural firms: Industry sector
A closer look: Size and sector
Conclusion
Appendix tables

Rural geography: Dividing rural Canada

The four MIZ types cover the rural areas of Canada outside of the three territories of Yukon, Northwest Territories and Nunavut (see Map). The map limits the display of MIZs to the populated parts of Canada.

Map Metropolitan Influenced Zones (MIZ) in Rural and Small Town Canada, 2006 using the Statistical Area Classification

In 2006, there were just over 31.5 million people in Canada. Of these, just under six million resided in RST Canada  (Bollman and Clemenson, 2008). Strong MIZ was home to just over 1.3 million of these individuals while another 2.2 million resided in Moderate MIZ. Strong MIZ is concentrated in Ontario and Quebec although smaller patches are associated with the larger urban centres in each of the other provinces.

Not surprisingly, given that it is defined according to the (large) share of the population that commutes to urban centres, Strong MIZ tends to form rings around Canada's major urban centres in Ontario and Quebec. However, in the Prairie Provinces, British Columbia and Atlantic Canada, Moderate MIZ forms the bulk of the rural areas adjacent to urban centres.

In contrast to Strong MIZ and Moderate MIZ, Weak MIZ occupies those areas more distant from urban centres. In 2006, just over 2 million individuals resided in Weak MIZ.

Areas that are not linked to larger urban centres (No MIZ) tend to form small, isolated pockets within the occupied area of Canada. In 2006, just under 300,000 people called No MIZ home.

Rural firms and population

There were just under 1.1 million businesses with payroll employees in Canada in 2007 (Table 1). Less than one-quarter of these were located in RST areas.  In Canada's larger urban centres (LUCs) there were 331 firms with payroll employees for every 10,000 people (Table 2). In Canada's RST areas there were 371 firms for every 10,000 population. This suggests that firms were actually more intensive with respect to population in rural areas.

The proportion of firms located in RST areas varied according to firm size. A little over one-fifth of Canada's firms with 1 to 4 employees were located in RST areas compared to one-in-ten of all firms with 200 or more employees. Firms with fewer employees were more intensive relative to population in RST Canada compared to larger urban centres. There were 257 firms with 1 to 4 employees per 10,000 people in RST Canada compared to 186 per 10,000 in larger urban centres. However, the situation was reversed when it came to firms with 200 or more employees. There was one firm of this size per 10,000 people in RST Canada compared to four per 10,000 in larger urban centres.

Table 1 Rural and urban firms with payroll employees, by size category, Canada, 2007

Moderate MIZ and Weak MIZ each contained a little over one-third of the 233,000 firms located in RST Canada (Figure 1). This figure was higher than the one-in-five RST firms that were located in Strong MIZ and very much higher than the one-in-twenty that were located in No MIZ.

Almost one-half of rural firms with 200 or more employees are located in areas with weak links to urban centres (Weak MIZs). This outstrips the 31% found in Moderate MIZ and 16% found in Strong MIZ. In contrast to the results for firms with 200 or more employees, 37% of rural firms with 1 to 4 employees were found in Moderate MIZ and 36% were found in Weak MIZ.

The differences between Strong MIZ and Weak MIZ are striking. Not only are more RST firms located in Weak MIZ, but the pattern according to the size of firm is different. Strong MIZ contains relatively more firms with 1 to 4 employees and relatively fewer firms with 200 or more employees whereas the opposite pattern pertains in Weak MIZ.

Table 2 Rural and urban firms with payroll employees relative to population, Canada, 2007

Figure 1 Within rural and small town Canada, nearly one-half of firms with 200 or more employees are in areas that are weakly linked to larger urban centres

The spatial arrangement of rural firms speaks to the characteristics of Strong MIZ. By definition, a relatively large proportion of the population commutes to an urban centre for employment and is therefore less reliant on local firms.

In contrast, a very small proportion of Weak MIZ residents commute to an urban centre. Therefore, Weak MIZ residents are more reliant on local business enterprises for employment opportunities and this may help to explain the higher concentration of firms. It must be kept in mind, however, that relatively few (10%) of Canada's large firms are located in RST areas.

Comparing the number of firms per capita in each region to the number of firms per capita throughout Canada as a whole produces a numerical measurement of the intensity of firms relative to population throughout Canada.

If the intensity measurement for each firm size in Canada as a whole (all areas) is taken as 1.00, rural regions are one-half as intensive (0.5) with respect to firms with 200 or more employees, while urban centres are more intensive (1.11) (Table 2). Among those firms with 1 to 4 employees, the intensity pattern is reversed – RST areas are more intensive than Canada as a whole (1.32) while urban centres are less intensive (0.93).

This measurement of firm intensity relative to population can be extended to compare the different MIZs to that of RST Canada as a whole. In this case, the intensity of firms in RST Canada is 1.00 and each MIZ is shown relative to this number (bottom of Table 2).

Figure 2 Within rural and small town areas, firms with 200 or more employees are more intensive relative to population in weak metropolitan influenced zones than in any other type of metropolitan influenced zone, Canada, 2007

Irrespective of the size of firms, those located in Weak MIZ have a higher intensity relative to population than is found throughout RST Canada as a whole (Figure 2). In contrast, firms in both Moderate MIZ and Strong MIZ have a lower intensity. This is perhaps not surprising given the number of firms in these regions. No MIZ has practically the same intensity of firms relative to population as seen in rural Canada as a whole despite containing a very low share of all rural firms.

Firms with 1 to 4 employees areslightly more intensive in Weak MIZ, and slightly less intensive in Moderate MIZ and Strong MIZ, compared to RST Canada as a whole. Despite the low absolute number, when population is taken into account, firms of this size are actually slightly more intensive in No MIZ than in RST Canada as a whole.

The difference between the rural regions is more pronounced when it comes to firms with 200 or more employees. In Weak MIZ, these firms are nearly one-and-a-half times more intensive relative to population compared to RST Canada as a whole. In comparison, Moderate MIZ (0.8) and Strong MIZ (0.7) are less intensive.

In contrast to the results seen for firms with 1 to 4 employees, No MIZ has a low intensity of firms with 200 or more employees. In No MIZ, firms of this size were 0.7 times as intensive as they were in RST Canada as a whole.

Rural firms: Industry sector

The industrial sector in which a firm operates can provide an insight into the type of employment opportunities available to the local population. As previously seen, 22% of Canada's firms are located in rural regions. However, this proportion varies according to industry sector. Almost two-thirds of firms in the primary industry sector are located in RST Canada (Table 3). In contrast, a little under one-in-eight of all the firms in the producer services sector are located in RST Canada. Moreover, a little less than one-quarter of firms in the construction sector and about one-fifth of firms in the manufacturing sector, the distributive services sector and the social and personal services sector call RST Canada their home.

Table 3 Rural and urban firms with payroll employees by industry sector, Canada, 2007

Looking at the distribution of firms by industry sector within each type of area, just under one-in-five of allfirms in RST Canada were in the primary sector compared to 3% of firms in urban centres. Meanwhile, 15% of all RST firms were in the producer services sector while 28% of all firms in LUCs were in this sector. There was little difference in the rural/urban split for firms in the other industrial sectors.

This section emphasizes those industry sectors that are particularly important to rural Canada. Firms in the primary sector and manufacturing sector tend to produce exportable products. Having an exportable product means that a firm is not limited to selling its products or services in the immediate area. Consequently, it has more potential to grow as it is less constrained by the size and spending ability of the local population (a critical factor in much of rural Canada). However, producing an exportable product is a double-edged sword. While the potential to grow is enhanced, the firm is subject to competition from firms that are located at a distance. This competition is increasingly of a global nature in which the firm often has to compete with producers in low-wage economies around the world.

Firms in the producer services sector provide services to other businesses (including the self-employed) and may indicate the presence of rural 'service centres'.

Figure 3 Rural and small town manufacturing firms have a greater affinity to areas with stronger linkages to larger urban centres than those in the primary and producer services sector, Canada, 2007

Among the 42,000 primary sector firms that were located in Canada's rural regions, just under one-fifth were found in Strong MIZ while Moderate MIZ and Weak MIZ accounted for over one-third each (Figure 3). Less than one in ten rural primary sector firms were found in No MIZ.

The pattern was different for rural manufacturing firms. There were approximately 11,500 manufacturing firms located in rural Canada. Their presence was strongest in Moderate MIZ which accounted for 40% of the total. Weak MIZ contained 30% of rural manufacturing firms while a further one-quarter were situated in Strong MIZ. Manufacturing firms appear to be associated slightly more with rural areas that have a higher degree of linkage to larger urban centres compared to those in the primary sector and the producer services sector. This pattern of rural manufacturing accords with the findings of Baldwin et al. (2001). The proportion of manufacturing sector firms in both Strong MIZ and Moderate MIZ was higher than that seen for firms in the primary sector and the producer services sector.

There were 34,000 rural firms in the producer services sector. Of these, the largest share (39%) were located in Weak MIZ, followed by Moderate MIZ (33% and Strong MIZ (24%).

A closer look: Size and sector

In the primary sector, just over 65% of firms with 200 or more employees in RST Canada were located in Weak MIZ (Figure 4 and Appendix Table A). In contrast, less than 20% were found in Moderate MIZ and less than one-in-ten were located in Strong MIZ. This is an exaggeration of the pattern by size that was seen earlier for rural firms in all industry sectors. Primary sector firms with 200 or more employees are overwhelmingly concentrated in those rural areas that have fewer linkages to urban centres.

Figure 4 Within rural and small town Canada, primary sector firms with 200 or more employees are overwhelmingly concentrated in areas weakly linked to larger urban centres, Canada, 2007

The pattern for RST firms in the manufacturing sector contrasted with that of firms in the primary sector. Forty-one percent of rural manufacturing firms with 200 or more employees were located in Moderate MIZ (Figure 5 and Appendix Table B).  This was followed by Weak MIZ (38%) and Strong MIZ (16%).

As seen earlier, rural manufacturing firms have a greater affinity for those rural areas more strongly linked to urban centres as compared to firms in the primary sector and the producer services sector.

However, this pattern is nuanced according to firm size. While over one-quarter of all rural manufacturing firms were found in Strong MIZ, the majority of these were firms with 1 to 4 employees. Just 16% of all rural manufacturing firms with 200 or more employees were located in Strong MIZ. Weak MIZ, the home of 30% of all rural manufacturing firms, contained 38% of firms of this size.

Figure 5 In rural and small town Canada, the strong metropolitan influenced zone contains one-quarter of all manufacturing firms, but just 16% of manufacturing firms with 200 or more employees, Canada, 2007

In the producer services sector located in RST Canada, firms with 200 or more employees were most often found in areas with weaker linkages to urban centres. Weak MIZ contained over one-half of producer services sector firms of this size (Figure 6 and Appendix Table C) while Strong MIZ was home to less than one-quarter of these firms. This suggests that the producer services firms with 200 or more employees that were found in Weak MIZ were far enough from a LUC that they were able to capture a sizeable rural clientele.

Figure 6 Weak metropolitan influenced zones contain more than one-half of all rural and small town producer services sector firms that have 200 or more employees, Canada, 2007

Conclusion

This paper has portrayed the number and size of firms in rural and small town Canada and has compared those areas with stronger linkages to urban centres to those areas that have weaker linkages to urban centres. In addition, the number of firms in each rural region has been related to the number of people living in the same region. Finally, the number of firms in each industry sector was also examined with emphasis placed on the primary services sector, manufacturing sector and producer services sector.

The share of Canada's firms with payroll employees located in RST areas is slightly higher than the share of Canada's population living in RST. Nearly 22% of all Canada's firms were located in RST areas.  In comparison, RST Canada is home to 19% of Canada's population. This overall pattern was nuanced according to firm size. One-quarter of all Canada's firms with 1 to 4 employees were located in RST areas compared to one-in-ten firms with 200 or more employees.

RST Canada may have more firms per capita and a higher share of firms with 1 to 4 employees than larger urban centres due to the dispersed nature and relatively small size of its communities. This pattern tends to encourage the establishment of more but smaller firms.

Rural and small town areas that had strong links to larger urban centres (Strong MIZ) contained just over one-in-five of all rural firms. This is lower than the 23% of the RST population that reside in Strong MIZ. In addition, this share was lower for firms with 200 or more employees to the extent that 16% of large rural firms were located in Strong MIZ.

Rural regions that had weak links to urban centres (Weak MIZ) had relatively more firms than their share of the RST population. Weak MIZ was home to 38% of all rural firms but 34% of the RST population. Moreover, this share of firms increased with size to the extent that almost one-half of all firms with 200 or more employees in rural Canada were located in Weak MIZ. However, it should be remembered that one-in-ten of all firms of this size are located in RST areas.

The share of manufacturing firms in Weak MIZ (30%) trailed that of firms in both the primary sector (38%) and the producer services sector (39%).

Rural firms in these three industry sectors that had 200 or more employees were strongly represented in Weak MIZ. The most dramatic example was furnished by the primary sector where the share of RST firms in Weak MIZ was 36% for firms with 1 to 4 employees and fully 65% for firms with 200 or more employees. As noted, Weak MIZ had more firms per capita than any other rural region in Canada and this situation was most apparent amongst firms with 200 or more employees. There were nearly 1.5 times as many large firms per capita in Weak MIZ compared to rural Canada as a whole.

The relatively high share of RST firms that were found in Weak MIZ, and particularly the high share of those firms with 200 or more employees, suggests that some towns in Weak MIZ are single-enterprise towns that are relatively more reliant on one larger employer.

There are two aspects to the relative concentration of rural firms in Weak MIZ.  First, the concentration of firms in the primary sector, as well as the concentration of firms with 200 or more employees in the manufacturing sector, is important. These sectors tend to produce exportable products. As a result, businesses in these sectors are less constrained by the limited size of the local market.

Second, the relatively high share of firms overall, and the relatively high share in the producer services sector, in Weak MIZ may provide evidence for the presence of rural 'service centres.' These centres provide services for the surrounding rural population and businesses for whom the nearest urban centre is simply too far away.

Appendix tables

Appendix Table A  Rural and urban firms with payroll employees in the primary sector, Canada, 2007

Appendix Table B  Rural and urban firms with payroll employees in the manufacturing sector, Canada, 2007

Appendix Table C  Rural and urban firms with payroll employees in the producer services sector, Canada, 2007