An update on how area businesses are doing from a recent COVID-19 Impact Assessment and Recovery Project

·5 min read

On Monday, June 28, Whitecourt Town Council heard their findings. Josh Burger, Manager, Government Relations and Public Affairs with Ballad walked Council through the details.

"Town-led outreach in the early stages of the pandemic found that COVID-19 was impacting 92 percent of the town's businesses. At that time, there was a lot of uncertainty on whether these effects would be temporary or permanent and how this pandemic would impact businesses."

Burger stated the obvious. "The impact of COVID has been massive whether at the regional level, provincially, nationally or internationally. There is a lot of uncertainty remaining about the impacts of the pandemic. We know it will be felt for years to come, and there's going to be a need for durable solutions to these challenges from all levels of government."

Ballad reached out to almost 300 businesses, and of those, 75 completed the full interview. "The engagement concentrated on key industries to the town, oil and gas, the resource sector, and consumer-facing industries such as retail, trade, and personal services. There was a roughly 40/60 split between vary small businesses, those with fewer than five employees, and those on a larger scale," he explained.

Burger said that many businesses were forced to close due to provincial health guidelines and that falling energy prices directly or indirectly impacted many. He said that the regional unemployment was significant and that it started from a base that was already higher than the province, around ten percent. "Many small and medium-sized businesses indicated a real uncertainty around their ability to pay back emergency loans which is something that we flagged as pretty critical."

He said that sales and revenue had fallen across the Town's business community since the onset of the pandemic. "The direct effects are that following multiple rounds of public health restrictions, workers were laid off, while consumers could not access the services they wanted. Indirectly it resulted in widespread concerns over the state of the global economy and energy demand. Adding to high crude oil inventories and no decrease in production meant a decline in energy prices." He mentioned that they do see early signs of recovery in the energy sector.

Burger said that 71 percent of businesses saw their sales decrease. "Some saw higher losses than others. Pretty much everything was impacted with just a small minority, just twelve percent of businesses interviewed, saying they saw an increase in sales. That was really pandemic-driven. Restrictions on foreign travel meant people were spending on recreational products like ATVs and RVs. There was an increase in residential investment in some areas, which led to a strong year for lumber producers. We also had lower residential financing costs," said Burger. In Whitecourt's case, he said that it translated to more robust sales in the upper end of the residential sales market.

For businesses deemed essential services, demand remained. "Pharmaceuticals, compliance and safety services, wellness products, many of those companies had a good year, but this is a small minority in the overall business community. And even smaller minority were able to proactively target new markets with some pivoting their business." Burger said that many businesses repurposed equipment for other uses or offered curbside pickup and delivery in response to decreasing revenues. Only 29 percent of companies described their sales as highly resilient to more public health restrictions even with those changes.

Shifting to online retailing showed uncertainty, especially for small businesses. Barriers included shipping and delivery costs and the limited discounting capacity for smaller companies compared to big box stores. "As we begin to see an increase in demand, there is a challenge with supply chain constraints more than anything, so it's kind of a double hit," said Burger. "We hear of significant shipping problems, and that's just compounded further from when the Suez Canal was blocked off, which created a backlog that we still see today."

Burger provided an example. "One business I spoke with, their pre-pandemic shipping container cost was $2,500 to bring in a container full of product. The current pricing is $16,000. So, an exponential increase in shipping costs makes many products unviable for sale. In that case, they simply stopped bringing those containers in."

One thing that was vital for keeping business afloat was public support. "We are really happy to see the town proceeding with recommendations on micro-grant funding and business visitation. You are doing pretty much everything you can in terms of supporting these businesses that are struggling," said Burger. "Once the dust settles, we have to determine what this looks like in terms of debt repayment. A significant share of businesses indicated that their closure or downsizing risks are elevated in the region of 40 percent. Their capacity to repay loans is impacted."

He said that despite issues with funding supports, it was clear that the money was a vital lifeline for many businesses. "For some sectors, especially those that saw multiple closures during the pandemic, financial assistance has ensured their survival." Burger said that building up the resiliency of the region is essential moving forward. He noted that more regional supply chains and boosts to the labour market with local skill development are two ideas.

"I hear this time and time again whether, from smaller businesses or larger employers, there's so much more success in hiring local people that are going to stay in the area versus people that come from outside, stay one to two years and then move on. To leverage that local talent through RAP programs, internships, co-ops and pairing with local high schools and post secondaries, all that will be very important going forward."

For viability, 35 percent of businesses view their risk of closing as moderate or high. "During our May and June engagement, the number of businesses started to expand on that and indicated that they would not survive another lockdown," said Burger. "We had some very heavy conversations, and my heart goes out to the business owners."

In wrapping up his presentation, Burger said he felt that Whitecourt could become a model for other resource-based municipalities seeking to make similar shifts with proactive approaches. He commended the steps already taken to identify and address barriers to growth.

Serena Lapointe, Local Journalism Initiative Reporter, Whitecourt Press

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