VANCOUVER (miningweekly.com) – Mining-focused midmarket enterprises (MMEs) are the leading contributors to gross value-add (GVA) to Canada’s economy, a new report by international banking group HSBC has found.

Published on Thursday, and authored by HSBC and Oxford Economics, the ‘Entrepreneurial heartland of MMEs' report found that the GVA contribution of the MME sector is mainly driven by mining, manufacturing and business services, each of which contribute between one-quarter and one-fifth of MMEs' direct contribution to Canadian GVA.

While mining accounts for the largest share of MME GVA, labour productivity in the sector is extremely high and it makes a much smaller employment contribution than the other sectors.

In employment terms, manufacturing is the largest MME sector, providing jobs for over 480 000 people. Business services and wholesale and retail are also significant sources of employment.

"Canadian MMEs have an entrepreneurial approach and beyond their economic value, they have much to teach us. These companies are often privately owned specialists in their field that maintain a direct line to their customer base and as such contribute to the diversity and dynamism of the wider economy," stated HSBC Bank Canada executive VP and country head of commercial banking Linda Seymour.

The report found that exports currently account for only 11% of revenues at Canadian MMEs – a significantly smaller percentage than their global peers which trend at 29%, or $200-billion.

The study also estimates that, globally, if MMEs boosted their export-based revenues by just 1%, they would increase their economic impact by $12.5-billion across the economies surveyed in the study.

MMEs in Canada employ more than 2.5-million people, which is relatively high compared with other countries surveyed. The country's 6 800 MMEs contribute $350-billion of market sector GVA, which together with supply chain and consumption effects is 40% of Canada's GVA. Their direct contribution to GVA grew by 7% between 2012 and 2014, slightly faster than the market economy as a whole, according to the report.

"MMEs are the unsung heroes of the global economy – not large enough to influence government policy, but too big to benefit from incentives and support afforded to smaller companies," said Seymour.

The report explored the views of 1 400 MME senior executives in 14 countries, including Canada, and looked at in-depth economic analysis.

The study found that, compared with their global peers, Canadian MMEs have the same level of confidence in both their local and global economies, and they find it easier to export (47% versus the global average of 36%). They are also now finding it easier to export than they did just three years ago.

Compared with other nations, Canadian MMEs are less concerned with domestic economic uncertainty (48% versus the global average of 55%) and expanding into new domestic markets (15% versus the global average of 18%); more likely to believe that entry into new international markets would be one of the main contributors to their financial performance over the next three years (15% versus the global average of 11%); more likely to believe sustainable business practices will improve growth and profitability (66% versus global average of 59%); more aware of customers demanding more customised products (64% versus the global average of 54%); and less concerned about a growing threat of competition from large companies (49% versus the global average of 65%) or small companies (26% versus the global average of 41%).

Canadian MMEs have very strong trading links to the US, which received an estimated 70% of Canadian MME exports, much of that from the mining sector. At the same time, one-quarter of MME supply chain purchases come from overseas with just under half of these purchases originating from the US.

"Canadian MMEs are resilient and flexible", added Seymour. "However, they need to diversify into foreign markets if they want to continue to drive their productivity."