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Global Position

Activities of Canadian majority-owned affiliates abroad in 2013

Ottawa - Total dollar sales by Canadian majority-owned foreign affiliates rose by 5.7% in 2013 to $509.8 billion, reflecting both increased activity in the United States and Europe as well as the upward revaluation effects of a weaker Canadian dollar.

Foreign affiliate sales in the United States increased 6.9% in 2013 to $275.0 billion. In Europe, sales were up 8.4% to $101.2 billion, led by Germany and France. The Canadian dollar declined 3.1% against the US dollar and 6.5% against the euro in 2013, which increased the Canadian-dollar value of foreign affiliate sales.

Following a 5.5% increase in 2012, employment levels at Canadian majority-owned foreign affiliates continued to rise in 2013, up 2.8% to 1.2 million. Over this two-year period, Germany recorded the largest increase in employment (+25.8%), followed by the United Kingdom (+21.1%) and Mexico (+13.3%).

In addition to generating significant levels of foreign sales and employment, Canadian majority-owned foreign affiliates also controlled $2.8 trillion worth of assets abroad in 2013, which was equal to about four times the value of Canadian direct investment abroad.

Canadian majority-owned foreign affiliate activity concentrated in select countries

On a regional basis, 60% of the sales and 56% of employment of all Canadian majority-owned foreign affiliates in 2013 was generated by affiliates located in North America and the Caribbean, primarily the United States and Mexico. In the case of assets, around two-thirds were held by affiliates in North America and the Caribbean. Europe and Asia/Oceania were the next largest regions in terms of overall activity.

The United States remained the primary investment destination for Canadian majority-owned foreign affiliates in 2013, accounting for around half of overall employment, sales and total assets. Other countries with significant foreign affiliate activity included Mexico, the United Kingdom, Brazil, Germany and China.

While Canadian firms have established majority-owned foreign affiliates in over 100 countries, activity in most of these countries is still fairly limited. As of 2013, fewer than 20 countries outside of the United States had more than 10,000 employees working for Canadian majority-owned foreign affiliates.

Sales data paint a similar picture, with six countries outside the United States recording total sales by Canadian majority-owned foreign affiliates exceeding $10 billion a year, namely the United Kingdom, Mexico, Brazil, Chile, Germany and Australia.

The United States accounted for $1.6 trillion or 56% of the assets of Canadian majority-owned foreign affiliates at the end of 2013.

Manufacturing accounts for largest share of foreign affiliate sales and employment

The manufacturing sector was the largest sector for foreign affiliate employment and sales. This sector accounted for 35% of employment and 29% of sales in 2013, followed by the mining and oil and gas, and finance and insurance sectors. Conversely, most assets were held by foreign affiliates in the finance and insurance sector, which had a 73% share of total assets.

Second straight year of strong growth in the service sector

On an industry basis, service sector industries posted the strongest sales growth from 2011 to 2013, up 16.1%, much of which was the result of increased merger and acquisition activity by Canadian firms.

The service sector also accounted for most of the employment growth during this period, led by the retail trade sector, with most of the remaining growth divided among the manufacturing, professional, scientific and technical services, mining and oil and gas extraction and other services sectors.

The activities of Canadian foreign affiliates led by goods industries in most regions
On a regional-sector basis, in the North American and Caribbean region, the manufacturing industry generated the most foreign affiliate sales and employment, accounting for 25% of sales and 29% of employment in 2013. The region also had significant foreign affiliate activity in the service sector, most notably in the other services and finance and insurance sectors. Foreign affiliate assets in North America and the Caribbean were also concentrated in the finance and insurance sector. This was in contrast to the rest of the world, where most of the activity of Canadian majority-owned foreign affiliates was in the goods sector (primarily manufacturing and mining).

In Europe, foreign affiliate activity in the manufacturing sector accounted for the largest shares of both sales and employment in 2013, with the remaining activity divided among a number of different sectors. Foreign affiliate activity in both South and Central America and Asia/Oceania was concentrated in the manufacturing and mining and oil and gas extraction sectors. In Africa, foreign affiliate activity was heavily focused in the mining and oil and gas extraction sector, accounting for 91% of sales and 83% of employment.

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