Why do Canadian firms invest and operate abroad?

Chart 5 shows that the sectors that have contributed the most to the recent wave are the transportation equipment industry and the “other manufacturing” category.10 The data thus justify a case study of the automotive parts industry (a significant part of the transportation sector) and a representative from the “other manufacturing” category – the forest products industry. [...] We conduct a case study on 15 firms in two industries, which is a larger sample size than the recommended minimum and closer to the sample of 22 firms covered in Globerman (2012).17 The selection criteria for the inclusion of firms in the sample were as follows: their size in terms of sales; the firms were based in Canada; and their annual financial information was available. [...] In other words, we chose the largest Canadian, publicly traded firms in the industry.18 Canadian sales by the 12 firms in the forest products industry represented about 13 per cent of sales in Canada in 2012, while the three auto parts firms’ Canadian sales represented 37 per cent of the sector’s sales in Canada that same year. [...] Table 5 shows that six firms saw the proportion of sales in Canada declining, while five saw the proportion of sales in Canada increasing.24 Thus, while the trend to move production capacity out of Canada may be explained by the desire to be closer to product markets for some firms, the shift in capacity appears more pronounced than the shift in sales, suggesting that other factors were at play. [...] Concretely, to justify the closure or sale of several operations over the 2000–13 period, one firm cites the steep decline in commodity paper markets and the necessity to adjust to the reality of the domestic marketplace, and overall unfavourable economic factors.