Think Canada can't be home to globally competitive industries outside the resource sector?
They may be few in number and somewhat obscure, but a report by the Conference Board of Canada identifies five industries where Canadian companies are taking on the world and winning – cosmetics, pet food, synthetic rubber, pulp bleaching agents and optics devices.
"Canada does have some hidden gems operating in diverse and unexpected industries," according to the report, Canada's Hidden Success Stories.
Amid all the gloom and doom about Canada's recent poor export performance, author and Conference Board economist Kristelle Audet concludes that with the right environment the country can produce global players.
The report found that these globally competitive companies build their success on factors such as ready access to key suppliers or customers, the presence of industry clusters, the ability to develop and commercialize innovative products and by playing up the made-in-Canada brand.
The downside is that too few Canadian companies strive to be globally competitive. Ms. Audet blamed "a lack of global ambition" for the dearth of these companies in Canada. Too few Canadian chief executives make innovation a top priority or see market potential beyond their home province, she said.
"As they have little interest in selling their products abroad, most Canadian companies do not feel the pressing need for offering innovative products to be able to compete in world markets," the report said.
The Conference Board applied a series of metrics to select the winning sectors, including a minimum of $400-million (U.S.) in annual exports, export growth of at least 20 per cent since 2008 and at least 20 per cent exports destined for markets beyond the U.S. It then winnowed down a list of more than 1,000 products to the five best performers.
For example, Canada is the 10th largest producer of cosmetics in the world, exporting nearly $900-million worth in 2012 and specializing in private label brands and higher-end products.
The industry, clustered in Ontario and Quebec, owes its success to its proximity to the U.S. market and strong partnerships with major North American brands and retailers, according to the report. Among the leading manufacturers are Cosmetica Laboratories, Apollo Health and Beauty Care, Aquatech Skin Care, Hunter Amenities and Lise Watier.
Likewise, Canadian pet food companies such as Elmira Pet Products, PLB International, Champion Petfoods and OmniPET Nutrition have helped make Canada the 9th largest produce in the world, with about 3.5 per cent of global trade. The report cites the sector's ties to large North American retailers and Canada's reputation for producing safe products for its success.
In synthetic rubber, German-based Lanxess' plant in Sarnia, Ont., makes up the entire Canadian industry and 15 per cent of global trade. The plant takes advantage of the area's oil refiners to get its feedstock for making butyl rubber and the proximity of North American auto makers.
Canada is also the world's leading producer of sodium chlorate, an essential chemical used to bleach chemical pulp, accounting for two-thirds of global trade. Companies such as Canexus, Eka Chemicals and Erco Worldwide owe their success to low electricity costs and proximity to key pulp producers.
Finally, Canada is the world 10th largest exporter of optics or photonic devices, including imaging machines, 3-D scanners and mapping systems. The industry is made up numerous small Canadian manufacturers and subsidiaries of big foreign-owned players, such as Huawei, Alcatel Lucent, Ericsson, Ciena and Cisco. The report said Canada's photonics industry relies on generous R&D tax credits and the ability to develop and commercialize a wide range of highly specialized products.
Editor's note: An earlier online version of this story misspelled Cosmetica Laboratories and Aquatech Skin Care.