Economic report offers glimpse into business sector’s mindset

  • Business   Friday, March 11, 2022   Matt Harris

The Ontario Chamber of Commerce released its sixth-annual report on the provincial economy and economic outlook, and the 72-page document indicates that while business confidence is rebounding and some priorities are shifting in new directions, there is still lots of ground to make up.

The report indicates that business confidence increased following a record low in 2021, even amid continuing health restrictions. And in 2021, 56 per cent of businesses reported they had shrunk – that number dropped to 38 per cent this year. Labour shortages, shifting policy priorities and supply chain disruptions filled the pages of the report, but those in the local business sector had their own input.

In the early part of the report, it details that among the most pessimistic sectors include arts and entertainment, agriculture and forestry, and retail trade. While those are relatively broad categories and the levels of pessimism can range greatly, they still hit close to home. Councillor Martin Ritsma, whose HAY WEST program has been impacted by various factors, said that while he has been blessed with generous support in terms of hay to ship and monetary donations, finding transportation to move his shipments has been challenging.

“Two suggestions that I have to address the supply chain challenges involved truck and rail: first, the provincial government should support the truck licensing training program,” he began. “As in many sectors there is a great shortage of workers, and in the trucking industry there is a huge shortage of drivers. The average age of current drivers is very advanced, but the cost of some obtaining a transport truck licence has become very restrictive to those wishing to get into the industry – in some cases, that cost could exceed $15,000.

“The second piece around addressing the supply chain issue would involve continued support of adequate rail service. Currently in Western Canada, rail service cannot keep up with the feed demands of farmers trying to import cattle and swine feed. This demand has been vastly increased because of the very poor crop production caused by the severe drought last summer.”

Ritsma also touched on the limited internet connectivity in rural parts of the province. With his ties to education still very much intact, he sees how difficult it is for rural students trying to connect for online learning.

“This undeserved necessity has been crazy stressful for students, parents and teachers,” he said. “I would agree that we certainly need a large investment in the infrastructure required for rural (internet) needs.”

Perth-Wellington MPP Randy Pettapiece agreed with Ritsma and said the pandemic has only highlighted the problem of rural connectivity and made it an even more pressing issue. The Ford government’s $20 million announcement in August last year gave hope of high-speed internet for as many as 2,700 households in the riding, and Pettapiece is hoping for more.

“The province is also partnering with Southwestern Integrated Fibre Technology (SWIFT) – a non-profit broadband expansion project led by rural municipalities across Southerwestern Ontario,” he said. “In its 2021 budget, the province committed to invest nearly $4 billion to connect every region in Ontario to high-speed internet by the end of 2025. This is the largest single investment in high-speed internet, in any province, by any government in Canadian history.”

The other two sectors that were prominent in this part of the report are of more interest to Shelley Windsor, vice-president of Windsor Hospitality Inc. It’s been a rough two years, and that’s being polite about it, but Windsor said they remain cautiously optimistic that the last of the lockdowns has already passed us by and that the hospitality sector can find a ‘new normal’ – whatever that happens to be.

“Just like we have throughout the pandemic, it will always be our goal to serve our guests and protect our staff with the utmost of care and safety in mind, regardless of whatever restrictions are lifted or in place,” she said. “We truly feel grateful and appreciative of our staff for sticking with us and our customers, who have been there throughout, either picking up takeout, dining in when possible and staying overnight in our hotels.”

A popular answer when it came to policy priorities was a reduction in certain costs, particularly electricity. Windsor would welcome it, but damage by the pandemic has already left its scar.

“A reduction in electricity costs, while always welcome of course, will not be able to fully repair the financial impact of more than two years’ worth of pandemic closures and restrictions,” she said. “Our industry has been hit hard and it will take some time to reboot, recover and rebound.”

Pettapiece added that reduced costs like this and reducing or simplifying business taxes are priorities the government shares, as well as investing in workforce development opportunities.

Another section of the report states that small businesses are less confident on average than their larger counterparts. One of the largest ‘small’ businesses in town is the Festival Marketplace, which relies on other small businesses to even exist. Taking a walk through its concourse these days is a reminder that not everyone made it to the other side of this economic whirlpool, but the Marketplace remains committed to doing what it can to help keep their tenants going.

MJ Thomson, the Marketplace’s property manager, detailed how they helped as much as they could when it came to things like curbside pick-up options and making each customer’s shopping experience as easy as possible.

“Local retail businesses saw a significant shift in online spending during the worst of this pandemic, and those companies that did not have an online presence struggled with their market share with the many closures we have endured,” she said. “We did work with our stores to provide curbside pick-up that was convenient and available and encouraged them to connect directly with their customer base if they had the ability to do so. We are now finding that retailers are trying to connect both the instore and online shopping experience to integrate the two to make the shopping experience seamless for the customer. In our community, we have consistently stressed the shop local experience, and we have found that this approach will help all of us survive and thrive.”

Eddie Matthews knows a lot about the drive to have people shop local. The Stratford and Area Chamber of Commerce general manager is the unofficial cheerleader for many local businesses, and he maintains the believe that Stratford has everything right here to succeed and foster growth.

“The role of the Chamber has been a voice to help support the amazing businesses we have in Stratford and around this area, so why should we always be promoting or feeling that we need to go beyond our borders when we can be self-sufficient in this area,” he said. “It seems to be a Canadian thing – many downplay our own until they make it outside our borders. Recently, we’ve seen that feeling change and people have discovered what great businesses we have in this area.”

One of the best ways things could improve even more is getting rid of as much red tape as possible, Matthews said. By doing that, he believes that some good ideas that have been sidelined because of bureaucracy would be allowed to better prosper. And when it comes to business recovery, Matthews says we have to look at it sector by sector to really understand what the report is saying. When asked, 38 percent of those businesses surveyed reported shrinking (compared to 56 per cent the year before). The report goes on to forecast a growth rate of 57 per cent, but Matthews says to dig deeper.

“You have to look at different sectors – the travel industry has been hit so hard, but hopefully will make a dramatic comeback,” he said. “The term I heard was ‘revenge travel’. People have been sitting on money for over the past two years and just want to get away. Manufacturing has remained strong, but could do better, however they haven’t been able to get enough staff to keep up with the demand for their product.”

A table in the report talked about policy priorities, and reducing or simplifying business taxes led the popular vote, with reduced electricity costs right behind it. Matthews points out that the third item on the list (encouraging buy/travel local) has been done a lot, but those first two haven’t yet been addressed.

“Provincially, many targeted supports ended months ago, and federally, they have been greatly reduced, leaving businesses to fully absorb rising operating expenses, including rent and electricity,” he said. “Many businesses have suffered greatly throughout this crisis and continue to face unprecedented cash flow constraints and uncertainty as the impacts of the pandemic continue to hobble the economy. In addition, due to travel restrictions and the prolonged closure of the US-Canada border, tourism has been at an all-time low, disproportionally impacting some sectors and regions of our province. This is why the chambers were asking the governments to consider further grants, targeted support programs, and other direct measures to support impacted businesses and their workers.”

With some of those travel restrictions beginning to lift, there is hope that ‘revenge travel’ will actually become a thing and breathe desperately needed energy back into Stratford’s economy. One area that has had a better time of it is transportation, which was tied with government for the most confident sector in the report. Virin Maharaj owns the Stratford/Woodstock Driveseat franchise and reports the company overall has experienced significant growth since 2019. Where charter tours and wedding bookings fell off, employee, cross-country and COVID-related transportation calls have increased. Maharaj said that Driveseat experienced a 69 per cent spike in year-over-year revenue, benefitting from companies looking for safe ways to get their employees to work.

“As many companies looked for safer ways to get employees to the workplace, Driveseat provided an employee shuttle, taking as many as 450 employees per day to single worksites,” he said. “We also supplied mobile vaccination units, transporting nurses to those that couldn’t leave their homes. It was important for our business to not only find other streams of revenue, but to help flatten the curve during the pandemic. Our CEO, Brian Basely, called on all of our franchise locations to ensure that any service provided did just that. Using the same vehicles, with modifications to create safety barriers, and the same chauffeurs, we updated training guidelines and worked with local, provincial and federal health departments and government to assist.”

With a new Festival season rapidly approaching, Maharaj said things on his front have gotten very interesting; airport and charter tours (things like craft beer and winery tours) have increased, and wedding bookings are at their highest rate they’ve seen in a decade. Stratford’s numbers are strong. He believes the comeback has begun.

“Our data shows the same thing, that the tourism industry is rebounding and consumer confidence is high,” he said. “As tourism continues to come back, we will be able to support with charter tours to wineries and craft breweries and, of course, airport transportation.”

There is much in the report that won’t make it into the pages of this newspaper, but Claudia Dessanti – the one who authored the report – indicated that much of what was included shows that Ontario is headed back in a positive direction, however slowly that may be. Things like the renewed optimism of a strong tourism bounce-back year have many people excited, and she believes we as a society have adapted enough to be able to push ahead regardless of the roadblocks that appear.

Specifically, a section of the report that details the labour market forecast for Stratford-Bruce Peninsula as ‘being favourable’ includes the line, “…as well as expectations for a strong rebound in the region’s tourism industry”. Dessanti said she couldn’t speak to the specific assumptions that BMO used in their forecasting models, current trends indicate this could very well be accurate.

“Warmer weather will allow for more outdoor activities, and with testing kits becoming more widely available and with tourism anticipated to pick up once again, we can safely assume that employment will see strong rebounds for the Stratford-Bruce Peninsula given the importance of the tourism industry to the region’s economy,” she said. “The unemployment rate may be higher or lower than forecasted in light of ongoing risks and uncertainties around supply chain issues, labour shortages, and inflation. Immigration is expected to improve in the year ahead, which will help grow the labour pool, but it will be important for the region to continue prioritizing access to and retention of talent to address job vacancies. And now that we are more than two years into the pandemic, many businesses have learned to adapt to the ongoing pandemic, finding new and innovative ways to operate and market their goods and services. This remains to be a source of optimism for Ontario for 2022 and beyond.”

The report closes by listing three things: the need for more predictability, the need for a pro-growth strategy for economic recovery, and the threats posed by economic disparity. Using a local lens to assess these, Matthews was very blunt in his response.

“The predictability is the wild card – governments have never had to deal with something like this, which is why as current and future variants continue to hamper economic activity, we hope the Government of Ontario will work to reduce uncertainty for business by developing a consistent plan that outlines how the province intends to respond to any possible future stages of the pandemic and support those impacted by public health measures,” he said. “Clarity and consistency are important for business confidence and continuity.”