**Mike Greenley, chief executive of MDA Space Ltd.**

Canada needs stronger incentives to keep and attract corporate headquarters if it hopes to address its long-standing productivity gap, says Mike Greenley, chief executive of MDA Space Ltd.

“It’s generally been proven that where a headquarters is located will affect where the R&D occurs, and it’ll affect a lot of the supply chain,” Greenley told The Globe and Mail. “And it certainly is going to affect where you register your intellectual property.”

Greenley, who has led one of Canada’s top space companies since 2018, said successive governments have overlooked the importance of headquarters in driving innovation and economic growth. “In Canada, we get very enamoured with foreign direct investment. We try to get large foreign corporations to set up a branch plant in Canada,” he said. “That creates jobs and it’s good for our economy, but it’s not necessarily going to be a productivity driver.”

His comments come amid a slow but persistent decline in the number of corporate head offices in Canada — down 0.3 per cent in 2023 from the previous year, and 4.9 per cent since 2012, according to Statistics Canada.

Greenley argues that governments at all levels should create targeted policies to reverse the hollowing out of corporate Canada. His proposals include a two-tier investment tax credit favouring companies with domestic head offices, temporary income tax breaks for executives relocating to Canada, and a more competitive corporate tax rate for Canadian-headquartered firms.

“We could give people advantages in their income tax for their first three or five years in Canada,” he told The Globe. “We need to be able to attract experienced executives to help Canadian companies scale and run a head office.”

The stakes are high: labour productivity in Canada lags well behind the U.S., with Canadian workers contributing about $100 to the economy for every hour worked, compared with $130 for their American counterparts, according to the Canadian Chamber of Commerce.

Greenley points to MDA’s own experience as proof that a “head-office mindset” can yield results. The Brampton, Ont.-based company, maker of the Canadarm, was repatriated to Canada in 2020 from U.S. ownership, went public in 2021, and has nearly doubled its revenue per permanent employee to $436,000 since then. It has also tripled its registered patents over the same period.

At the end of its second quarter, MDA’s backlog of signed contracts totalled $4.6-billion, with projected 2025 revenues between $1.57-billion and $1.63-billion. The company is eyeing further growth through new contracts and potential acquisitions in the U.S. or Europe.

“It’s a good time to be a Canadian company that’s headquartered in Canada and is looking to do international business,” Greenley said.