by Neville Gilfoy

In the mid 1970s after René Lévesque’s separatist government was elected in Quebec, the exodus of head offices out of Montreal began. Banks, insurance companies, manufacturers, and other sectors moved people, capital, and decision making out of Canada’s former financial capital and into the new one, Toronto.

For us, the consequences are worth a review. To go from global financial player to plain old Montreal was painful to say the least. For a time the city lost its vibrancy and the economy lay in ruins. Repair was costly and took what must have seemed an eternity. 

Thirty years later and in a different paradigm (globalization) the Atlantic region is beginning to experience something similar.

Head offices have an impact that branch offices don’t. Management likes the shortest supply chains possible and that encourages buying from close to home. Head offices develop senior management, which helps feed other firms. Decisions are made based on knowledge of the local market and therefore more business for local firms. Local charities, cultural groups, and sports and fitness communities are supported. Head offices pay more taxes. Head offices employ more people at all levels.

In recent years we’ve witnessed the acquisition of many great local firms by national or international companies. Engineering firms Jacques Whitford and Neill and Gunter, manufacturers Larsen Packers, Sarsfield Foods, and Hub Meat Packers have all been acquired and head office functions moved out of the region.

These transactions have been right for both the buyers and the sellers. The combination of aging entrepreneurs with companies needing scale to compete is driving the trend. The challenge is what do we do to replace the contribution those companies have made to our economy, our community, and our society?

We must be more aggressive than ever in encouraging the growth of our entrepreneurs and their companies. We need to encourage our companies to acquire offshore targets and we must flow more capital into companies to make them more competitive and resilient in international markets. 

Regional development agencies will have to sell harder and more aggressively to attract firms to move head offices here. Politicians need to resist criticism and spend more time in international markets selling the benefits of the region.

This challenging situation has arisen and no one is at fault. But the implications are real. And it is a problem that touches every community, every organization, and every home.

And everyone has a stake in getting it right.