BCBC is collaborating with other business organizations to survey how companies are managing through the COVID-19 pandemic. Previous blogs discussed the results from the first survey: see Part I, Part II and Part III.
A second survey was conducted on our behalf by the Mustel Group between 9-17 April. This blog examines the latest responses from BCBC members. Respondents are mostly large and medium-sized employers operating in B.C. across a range of industries: around 47% of respondents have more than 500 employees; and another 26% have 50-200 employees (Figure 1).
Sales volumes are still declining
There are few signs of sales stabilizing or improving. In fact, sales volumes continue to decline for most large employers (Figure 2):
- Two-thirds of firms have seen falling sales volumes over the past fortnight. This is only slightly less widespread than in our previous survey;
- Only one-third of B.C. firms said they had seen little or no impact or increased sales volumes over the past fortnight.
Operating costs are rising as sales fall
Large employers were asked about the impacts of COVID-19 on their business to date (Figure 3). As in Survey 1, the most pervasive impacts were decreased sales volumes, increased operating costs, and deferments and cancellations of capital projects, marketing projects, contracts and tenders, and research and development (R&D) projects. The widespread decrease in business spending on capital projects and R&D portends lasting damage to the economy’s future growth potential. About half of firms have ramped up their digital-based or e-commerce activities, mostly as a survival strategy. About one-in-six large employers have had to close temporarily.
Mixed views about whether governments are adequately supporting large employers
More than half of large employers view the provincial government support measures as somewhat or very helpful in sustaining business operations (Figure 4). These measures include: extension of tax filing and payment deadlines for the provincial sales tax, employer health tax, carbon tax and other taxes; a 50% reduction on the School Tax for Class 4, 5, 6 property classes; waived or deferred B.C. Hydro bills; and the B.C. Emergency Benefit for Workers (a one-time tax-free payment of $1,000 to employees whose work has been impacted by COVID-19). Among firms who describe the provincial measures as not very or not at all helpful, the most common reasons were that the firm did not qualify, was not receiving enough cash flow relief or was not receiving adequate tax relief.
Views about the federal government
support measures are slightly less positive (notwithstanding Ottawa is spending vastly more to support business and employees than B.C.). Less than half of large B.C. employers view federal measures as somewhat or very helpful. The federal measures include: the Canada Emergency Wage Subsidy (CEWS); the Canada Emergency Business Account (up to $40,000 interest free loan for one year); Work Share program; and the deferral of income tax and GST payments, duties, and other remittances. Ottawa also recently announced subsidies for commercial rent for small firms. Firms describing the federal measures as not very or not at all helpful said they did not qualify, were not receiving enough cash flow relief or were not receiving enough support for wages.
Which government actions are working well or not so well?
As in our previous survey, the majority of large employers surveyed view the B.C. government’s guidance around workplace operations to be clear and effective in allowing for business activity to occur in a practical and safe manner. Large employers also tend to view as effective the federal government’s efforts to keep supply chains functioning. About half of firms view the Canada Emergency Response Benefit and B.C. Emergency Benefit for Workers as effective. However, they are less impressed with the various government efforts to provide bridging cash flow to businesses, measures to prevent redundancies (including the slow, iterative roll-out of the CEWS), and opportunities for businesses to assist in the COVID-19 response.
Surveys 1 and 2 confirm that the COVID-19 shutdown is causing tremendous damage to economic activity and to large employers. Of particular concern, widespread declines in business spending on capital projects, marketing, contracts and tenders and R&D portend lasting damage to the economy’s future potential. We also anticipate large numbers of business insolvencies and permanent closures in the coming weeks and months, which may further reduce the B.C. economy’s supply-side capacity going forward.