Executive summary

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All industries

In 2006, enterprises operating in Canada held $5.8 trillion in assets, generated $3.0 trillion in operating revenues, and earned $285.6 billion in operating profits. The corresponding shares under foreign control were 20.9%, 29.8%, and 26.6%, respectively.

From 2005 to 2006, the growth rate of assets under foreign control was 13.7%—the highest growth rate recorded for assets under foreign control since 1999—and 5.5 percentage points higher than the growth rate for assets under Canadian control (8.2%). This double-digit growth rate was driven by acquisitions of firms formerly under Canadian control, especially in mining, manufacturing, retail, and accommodation. As for revenues, the growth rates for foreign-controlled and Canadian-controlled firms were comparable, at 5.9% versus 5.5%. Meanwhile, profits under Canadian control grew 14.7%—nearly four times faster than those under foreign control (3.7%)—boosted especially by double-digit growth rates in construction and in oil and gas.

In terms of large firms (i.e., those with revenues greater than or equal to $75 million dollars), for every two firms that were under foreign control in 2006, there were approximately three firms under Canadian control. Still, large foreign-controlled firms generated, on average, 1.2 times more revenues than large Canadian-controlled firms.

Non-financial industries

The shares of assets and revenues under Canadian control in the non-financial industries remained relatively stable from 2001 to 2006, although from 2005 to 2006 these shares did drop slightly, by 1.2 and 0.1 percentage point, respectively, due in part to acquisitions by firms under foreign control. However, the share of profits under Canadian control increased, by 2.8 percentage points.

Assets held by domestic-controlled firms rose 6.5% from 2005 to 2006, reaching $2.1 trillion, nearly triple the $733.3 billion held under foreign control. However, foreign-controlled assets grew at least twice as fast, at 13.4%. In terms of operating revenue, foreign-controlled firms generated $827.7 billion—less than half the $1.9 trillion posted by enterprises under Canadian control. The growth rates for revenues of foreign-controlled and Canadian-controlled firms were comparable, at 5.0% versus 4.7%. In addition, profits in the non-financial industries topped the $200 billion mark for the first time since 1999, reaching $204.3 billion in 2006. Profits of domestic-controlled firms reached $146.9 billion, up 14.5% from the previous year. By contrast, the $57.3 billion in earnings under foreign control was $0.1 billion shy of the previous year’s mark, dropping 0.2% from 2005 to 2006.

Finance and insurance industries

Canadian-controlled firms continued to dominate, by a wide margin, the market share in the finance and insurance industries, accounting for 83.9% of all assets, 77.4% of all revenues, and 76.9% of all profits in 2006. These shares translated into $2.4 trillion worth of assets, $237.9 billion in revenues, and $62.5 billion in profits for domestic-controlled firms, compared with $469.6 billion in assets, $69.4 billion in revenues, and $18.8 billion in profits for foreign-controlled firms. The shares under Canadian control have remained relatively stable since 2001—largely due to regulations governing foreign control—although foreign control is increasing. The growth rates for assets, revenues and profits in the finance and insurance industries were 9.7%, 12.2% and 15.2%, respectively for domestic-controlled firms, all lower than the foreign-controlled growth rates of 14.1% for assets, and 17.6% for each of revenues and profits.

U.S. control

In the non-financial industries, enterprises under U.S. control continued to dominate the economic activity of all foreign-controlled enterprises operating in Canada, accounting for 60.6% of assets, 60.1% of revenues and 56.7% of profits under foreign control in 2006. However, these shares were down from the previous year, by 3.9, 2.6 and 9.4 percentage points for assets, revenues and profits, respectively. The shrinkage in U.S.-controlled asset and revenue shares came largely at the hands of firms under the control of the Netherlands and other foreign countries, while the shrinkage in U.S.-controlled profit share was partly offset by firms under the control of Germany and other foreign countries. Despite the shrinkage in shares, U.S.-controlled assets and revenues nonetheless grew from 2005 to 2006, by 6.4% and 0.6%, respectively. However, U.S.-controlled profits dropped over this same period, by 14.5%.

In the finance and insurance industries, firms under U.S. control posted growth rates of 14.8% for assets, 19.2% for revenues, and 8.6% for profits from 2005 to 2006. These growth rates translated into 0.3 and 0.7 percentage point increases for asset and revenue shares under U.S-control within the foreign-controlled group, but a drop of 4.1 percentage points in the corresponding profit share. Consequently, U.S.-controlled firms accounted for 46.9% of assets, 49.0% of revenues, and 49.7% of profits under foreign control. The shrinkage in U.S.-controlled profit shares was more than offset by firms under the control of the United Kingdom.

Specific industries

In 2006, the foreign-controlled mining industry made headlines with the high-profile acquisitions of enterprises formerly under Canadian control. Combined with additional growth of firms under the control of the European Union, the growth rates of assets, revenues and profits under foreign control rose by triple digits, respectively at 287.2% and 320.9% and 163.4%. Correspondingly, mining firms under Canadian control saw decreases of 20.8%, 40.6%, and 33.0%, respectively. For foreign-controlled mining firms, these growth rates translated into a 39.7% share of assets and, for the first time since 1999, the majority (58.7%) in revenues, and over 60% (64.3%) in profits.

Oil and gas Canadian-controlled firms posted the largest asset gain among all the non-financial industries from 2005 to 2006. Canadian-controlled firms saw assets grow 20.3%—nearly double the 10.2% rate for assets under foreign control; their revenues grew over three times faster—19.2% compared with 5.9% for revenues under foreign control; and their profits were up 21.1%, compared with a decline in foreign-controlled profits of 19.9%. These growth rates translated into a share of assets under Canadian control of 63.8%, pushed the corresponding share of revenues over the half-way mark (51.3%) for the first time since 1999, and marked a four-year high of 58.3% in profit share. However, with the exception of foreign-controlled assets, the growth rates in 2006 moderated relative to those of 2005.

In manufacturing, assets under foreign control grew 3.9% in 2006, while those under Canadian control declined 9.7%. In terms of revenue, both foreign-controlled and Canadian-controlled manufacturers posted negative growth rates of 1.0% and 1.3%, respectively. However, Canadian-controlled firms enjoyed double-digit growth in profits at 12.0%, compared with a decline of 3.3% for foreign-controlled firms. The manufacturing shares under foreign control were roughly equal to those under Canadian control in 2006, with the former taking a slight majority in revenues and profits, and the latter taking it in assets (47.3%, 51.5% and 51.4% for asset, revenue and profit shares, respectively, under foreign control versus 52.7%, 48.5% and 48.6% for the corresponding shares under Canadian control).

In construction, operating profits for Canadian-controlled enterprises continued to show double-digit gains, rising 37.5% in 2006 following increases of 24.6% and 31.4% in the previous two years. Like domestic-controlled enterprises, those under foreign control saw gains (17.5%) in 2006; however, their share of total industry profits was relatively small at 6.1%.