In 2007, Apple launched its first iPhone. This week, it surpassed Coca-Cola as the world’s most valuable brand. In that same period, rival BlackBerry has gone from world beating tech firm to just plain beaten.
The sheer speed and scope of BlackBerry’s collapse has a Nortel-like feel to it, and offers a sad reminder of just how few companies of BlackBerry’s calibre exist in Canada. In Interbrand’s list of the top 100 brands, which Apple now tops, the only Canadian firm is Thomson Reuters, at number 47 (better known for its U.K.-based Reuters arm). Nowadays, Canada’s most successful (i.e. profitable) companies are banks, which thrive mostly because they are protected from outside competition, not because they’re particularly competitive. You can count on one hand the number of truly innovative Canadian companies—the kinds that are creating new markets, new products and fuelling R & D. Bombardier is one. Magna International another. That’s about it.
This is a dangerous trend. It’s companies like BlackBerry that ultimately create jobs and lift the economy. Hundreds of tech firms and thousands of jobs now exist in the region of Waterloo, Ont., because of it—whether or not they’ll survive in the absence of BlackBerry is a subject of debate. As of August, unemployment in Kitchener-Waterloo was at eight per cent, up from 6.6 per cent a year ago.
But the problem in recent years runs even deeper than a dearth of innovative, globally competitive firms. As Bank of Canada governor Stephen Poloz noted in a recent speech, for every new company that was created between 2008 and 2012, another one failed— and if the number of companies isn’t growing, neither are exports or the economy as a whole. Poloz was, however, optimistic that Canada is “turning the corner,” with new companies suddenly being created at a stronger pace than expected. In September, there were 40,000 more companies than at the same time last year. These new firms are the “natural engine for growth,” said Poloz, creating new products, ideas and an “outsized proportion” of jobs.
Here’s hoping one or two of those companies are Apples, or even BlackBerrys, in the making.
|The good news
||The bad news
Stock Signs: Go small or go home
- The Russell 2000 index hit an all-time high last week. The index tracks the stocks of smaller U.S. companies with a market valuation of around $1 billion. Investors, it seems, are expecting big things from smaller firms.
- New York Attorney General Eric Schneiderman is calling for a crackdown on high-frequency traders who pay to get key economic data a few minutes before everyone else. He called it “insider trading 2.0” because “these guys are moving the starting line halfway to the finish before their competitors even have their feet in the blocks.”
- The market for IPOs appears to be heating up. Chrysler, Hilton Worldwide Holdings and Twitter all have offerings planned this fall. There are also rumours that King, the company behind the smartphone game Candy Crush Saga, is preparing for an IPO, suggesting tech firms are once again taking aim at the public markets.
- Lockheed Martin has tripled the size of its share-buyback program and boosted its dividend. With Washington in the grips of another budget showdown, the defence giant is preparing its shareholders for a period of subpar growth.
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