Statistic after statistic points to the debilitating state of commerce in Canada. But what exactly do all those pandemic-fuelled business closures mean for cities like Winnipeg, Vancouver or Toronto?
Data released this week by the Canadian Federation of Independent Business shows the situation is dire. More than one in six businesses — at least 239,000 across Canada and 5,601 in Manitoba — are at the risk of permanently disappearing because of COVID-19, or have already closed.
Economists, public policy stakeholders and municipal planners are split on how exactly this will affect the future of downtown cores and surrounding areas.
In interviews with the Free Press, experts described how jarring shifts in local economies will cause hypercompetition in some sectors, while others might completely disappear. It could also cause fewer jobs overall, less walkable areas, limited shopping options, and a rapid loss of the “biz village” concept, they said, along with severe population declines.
One in six businesses at risk — at least 239,000 across Canada and 5,601 in Manitoba
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2.4 MILLION PEOPLE likely be out of work — a staggering 20 per cent of private sector jobs, or just about ONE IN SEVEN of all employment in Canada
47% of businesses are fully open, as of Jan. 22 — down from 62 per cent at the end of November
36% fully staffed, as of Jan. 22 — down from 41 per cent at the end of November
22% businesses currently making normal sales, as of Jan. 22 — down from 29 per cent at the end of November
Source: Canadian Federation of Independent Business
If there’s one thing they can all agree on, however, it’s that Canadians cities will likely never look the same again. And if governments plan on bringing things back to a sustainable “new normal,” analysts believe preparation for it should begin as soon as possible.
“I think there’s an implicit assumption that we’re in a sort of snow globe right now and that everything’s suspended so that one day soon we’ll all go back to normal,” said Vass Bednar, a policy expert who’s held several public and private sector leadership roles, including at Airbnb and Queen’s Park in Toronto.
“Those assumptions are almost certainly wrong,” she said. “The fact is, everyone will quickly notice how different things already are when they go on a walk around their cities to see not just closed signs, but also the larger store or restaurant signs taken off to indicate permanent closures for so many of their favourite places. And it will only get more severe.”
CFIB’s latest figures suggest that at least 58,000 businesses have already permanently closed their doors following pandemic-related lockdowns and restrictions in 2020.
Sylvain Charlebois, a leading supply chain expert, said shifts toward more consolidation and amalgamation will cause city demographics themselves to change. (Supplied)
Based on a survey of its members done between Jan. 12 and Jan. 16, the organization now says a mid-range of at least 181,000 small business owners are also considering to close down or declare bankruptcy on top of last year’s numbers, adding up to 239,000 in total.
But should things remain unchanged, by the end of this year, closures could rise up to 280,117 across Canada. In Manitoba, that’s roughly 6,645 storefronts — with even the lowest estimates suggesting at least six per cent (5,601 businesses) will be lost.
That means more than 2.4 million people will likely be out of work — a staggering 20 per cent of private sector jobs, or just about one in seven of all employment in Canada.
“They’re all very scary figures,” said Jonathan Alward, Prairies director for CFIB. “I really, truly hope we’re wrong on this. But it just doesn’t seem like we are, at least not right now.
“In an ordinary time, businesses would never want to be rescued with help from the government. But right now, I think creating pathways for safe openings by tax breaks, subsidies and other strategies to provide easier access is just as important for communities themselves than the business owners.”
Fletcher Baragar is an economics professor at the University of Manitoba who’s extensively researched how bankruptcies and bailouts affect societies and communities. He said he’s never seen more closures than this past year — not during the 2008-09 financial crisis, or even in his studies of recessions that occurred before the turn of the millennium.
“It’s a common thing to see exits and entries all the time in the market — healthy changes are the whole point of an entrepreneurial marketplace,” said Baragar. “But when that business change happens so rapidly, it certainly affects everything else… and it’s incredibly uneven in the type of areas and sectors it affects when some benefit from it and others die out of it.”
Hospitality and arts are two of the hardest-hit sectors, CFIB data indicates, with 33 per cent and 28 per cent of businesses in those sectors expected to close up shop. In the retail sector, it’s 15 per cent of companies.
At the other end of the spectrum, agriculture and natural resources are the lowest-impacted of any sector — still, with six per cent of businesses expected to close. Next is construction, at nine per cent, and manufacturing, at 12 per cent.
Provincial breakdowns show Newfoundland and Labrador will see the most severe impact, with a high-end estimate of 28 per cent of all businesses to close. That’s followed by Alberta at 25 per cent and Ontario at 24. Manitoba is right in the middle at 18 per cent, and Nova Scotia is least-impacted at 14 per cent.
Retail locations, including those in Winnipeg’s Osborne Village, are either closed or have only offered curb-side pick-up and delivery since province-wide code red restrictions were declared in mid-November. (Mike Deal / Winnipeg Free Press)
That’s why business owners have begun to ask themselves tough questions, said Baragar, about whether it’s even worth opening up when they’re allowed to and if it’s something they can afford financially.
“Of the ones remaining, I think there’s going to be a lot more consolidation and amalgamation internationally and from one side of the country to the next,” he said. “And that means fewer buying and service options for quite literally everything — restaurants, clothing, you name it.”
Sylvain Charlebois, a leading supply chain expert, said these shifts will also cause city demographics themselves to change. Pointing to recent Starbucks coffee shop closures, he said food companies are making note of this, and will “always go where the money is” — which he doesn’t believe is in urban centres anymore.
“Of course, the cost of city dwelling is a cruel barrier anyway,” said Charlebois, who’s a professor at Dalhousie University in Halifax. “More than that, there’s other reasons that are also important. When businesses close in areas where they were supposed to be forming villages or walkable communities, it impacts the kind of people that want to live in those cities and how much they actually spend. It’s a cycle.”
Loren Remillard, president and CEO of the Winnipeg Chamber of Commerce, said that’s something he’s already seen with Osborne Village in Winnipeg before, when storefronts began to abruptly shut down a few years ago.
“We realized during that time, just how much businesses are more than businesses for livable communities — they’re really the fabric of what binds them together,” he said. “You couldn’t have Little Italy or Little India or even Sage Creek without the actual biz village concept thriving for those ethnographic neighbourhoods.”
Remillard said a continuous push is being made to get larger companies to headquarter in Winnipeg, “so that if and when acquisitions or mergers happen during devastating economic periods, we risk little when their main office is here.”
But as a policy expert, Bednar believes messaging from government has been a crucial part of what makes the future for urban business so frazzled. “It was so much easier just to tell everyone to move online and give them some subsidies to string along,” she said.
“Eventually, when this is finally over, what happens when we’re offline again? Can you actually market or promote tourism if you don’t have physical stores? It might be time to start changing how we’re thinking and talking about these things.”
Twitter: @temurdur
Temur.Durrani@freepress.mb.ca
Temur Durrani Reporter
Temur Durrani reports on the economic impact of the coronavirus pandemic for the Winnipeg Free Press. Funding for this Free Press reporting position comes from the Government of Canada through the Local Journalism Initiative.
Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.
I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.
Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.
Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.
NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.
Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.
The air transportation increase, it further states, will be implemented over a longer period.
It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.
Gasoline and heating fuel prices approached $5 a litre at the start of this month.
Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.
“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.
The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.
“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.
Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.
Additionally, she said the government has donated $150,000 to the Norman Wells food bank.
In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.
It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.
This report by The Canadian Press was first published Oct. 21, 2024.
TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.
The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs
It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.
The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.
Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.
Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.
This report by The Canadian Press was first published Oct. 22, 2024.
