sdm
Oct 1, 2008, 12:02 PM
So what does it mean to us?
We asked business leaders what they were doing to deal with the financial turmoil. Here’s what they had to say:
Wed. Oct 1 - 6:39 AM
Danny Chedrawe
Colin MacDonald
Scott McCrea
STOCK COMPANIES:
COLIN MacDONALD,
Clearwater Seafood Partnership
Colin MacDonald has no time for politicians who insist the Canadian economy is strong and that Canadians don’t have to worry.
"What, are you kidding me? What kind of naive statement is that?" he said Tuesday.
"Eighty-five per cent of our economy is based on exports and our biggest single partner is down there right below us in the U.S.A. All these exports we do, the price is going to go down by the looks of it."
Ninety per cent of Clearwater’s products are exported. About 35 per cent of its product goes to the U.S., 30 per cent to Europe and 25 per cent to Asia.
"If our customers, people in the U.S., don’t have money, or don’t feel they have money, or have lost confidence in the economy . . . they won’t spend.
"All the world economies are intertwined. The U.S. sneezes, everybody gets a cold."
Mr. MacDonald pointed to the recent collapse of banks in Europe.
He said he has seen a number of ups and downs in the markets in his life and knows things will eventually settle down. People will also learn from the experience, as they did in the Great Depression, he said.
A bailout of Wall Street would restore confidence and take some of the uncertainty out of the system, Mr. MacDonald said
"The financial system is the engine of our economy. That is why the desire is to repair the engine, as distasteful as it may seem to everyone in the world and the taxpayers. It is critical that you have the engine of growth there."
KELLY NELSON,
CFO of Lunenburg’s
High Liner Foods Inc.
Money worries are making Americans eat at home, but so far, Canadians are still eating out.
Economic turmoil in the United States has already caused a drop in High Liner’s sales to restaurants and food service operators in the U.S. but a boost in sales of its frozen products that consumers can eat at home, Mr. Nelson said.
Half of High Liner’s operations and sales are in the U.S.
"We are well-positioned in that we have both a very significant retail as well as a food service presence," Mr. Nelson said.
"When people move back and forth between eating out and eating at home, we do get just some shift in where our profits and sales come from."
High Liner, a Nova Scotia processor and marketer of frozen seafood and pasta, has not seen the same shift in sales from food service to retail in Canada, he said.
"It is hard at this stage to see how much of an impact this is going to have on the Canadian economy," Mr. Nelson said
There are many reports that U.S. companies are now finding it difficult to renew credit lines.
"Our credit lines are with Canadian institutions mostly and are fixed for the next two to three years," he said.
"We are not anticipating any issues at High Liner.
"With Canadian banks, as well, they are probably not doing the big bank deals that we have seen for the past little while. But for local Canadian companies, it is, for the most part, business as usual."
SCOTT McCREA,
CEO, Overland Realty
"If I didn’t read the newspapers or watch television every day, I would tell you my business is in the best shape ever," the real estate developer said.
"I’ve got 98 per cent occupancy and rents are going up every year. If I didn’t follow the media, I would say it was a great year."
He believes the Maritimes are in great shape, and although businesses will feel the impact of tightening credit markets, no one will be in "dire straits."
For his company, he said the terms that are available for getting money from financiers are prohibitive, so Overland won’t be buying properties at the pace it did last year and may look instead at development options.
DEVELOPERS
BEN McCREA,
founder, Armour Group
The longtime Halifax developer said the crisis means virtually no mortgage capital is available. For at least a short while, big projects will go on the back burner.
Smaller projects, like his proposed Waterside Centre redevelopment near Historic Properties, could go ahead but the risk would increase.
Companies looking for office space will want to control their operating costs, so they might think twice before settling on a high-end space.
"It’s a concern for the project, it creates anxiety, but it’s not fatal," Mr. McCrea said.
DANNY CHEDRAWE,
Westwood Developments
The uncertainty in the economy means the Halifax developer will be sitting on the sidelines at least until the second quarter of 2009. He was going to start developing a boutique hotel on Spring Garden Road later this year, but that’s on hold.
"Because of the credit crisis, there is no money in the region," he said.
"Where there is money, the terms are impossible."
He said absolutely nothing is wrong with the local economy, and job creation remains strong, but with so much bad news spilling out of the U.S., people are psychologically hunkering down in anticipation of trouble.
With a potential development slowdown in the making, he said there is an opportunity for planners and city officials to get their house in order so they are prepared when things turn around and development takes off again.
MANUFACTURING and EXPORTING
ANN JANEGA,
vice-president of the Nova Scotia
division of Canadian
Manufacturers and Exporters
Nova Scotia manufacturers and exporters send a whopping 75 per cent of their goods south of the border, down from 87 per cent in 2002.
"Our members have been really trying hard to diversify, especially with the appreciation of the Canadian dollar," Ms. Janega said. "They have been looking at global markets.
"Having said that, the conditions in the U.S. are a real serious cause for concern and worry for our firms."
Manufacturers have already been hit hard over the past couple of years with the rise of the Canadian dollar, the spike in the cost of fuel and other commodities and a general slowdown in the U.S.
Recent developments in the U.S. mean Canadian manufacturers are now worried about tightening credit conditions in this country, Ms. Janega said.
"That is something that could have an impact on the flexibility and the ability of our manufacturers to respond and kind of branch out."
DAN MacDONALD,
president, CEO of InNOVAcorp
The downturn, like every other in history, will correct itself in time, but with the subprime fiasco, crushing debt and uncertainty in the U.S. election, this downturn will last longer than most, Mr. MacDonald said.
The U.S. feds, he said, have shifted from calm and confident to almost a panic state.
For the next while, it will be especially tough to be an exporter. Those businesses are already facing slowed decision-making, price pressure because of currency fluctuations, creeping protectionism and skyrocketing energy prices.
For the next two to five years, he said, those businesses will shift more of their focus to overseas markets. That will mean it will be more important than ever to network and leverage the expertise of others who have successfully entered markets, and to tap into programs such as those offered by Export Development Canada and various Canadian consulates around the world.
"All of this is easier said than done, but is now absolutely necessary," Mr. MacDonald said.
BUSINESS ORGANIZATIONS
KIM WEST, chairwoman,
Halifax Chamber of Commerce
The massive financial crisis will mean job cuts and a slowdown in orders south of the border that will have a spillover effect in Canada. But Nova Scotia will be shielded from the blow to some extent because of our diversity and the size of our public sector, Ms. West said.
Most local businesses are small and nimble and have been adjusting their business plans for 18 months to reflect deteriorating conditions, so "there wasn’t any shock and awe" like there has been in the U.S. since the financial crisis hit.
On the export front, she said, there has been a move afoot to strengthen ties with Europe and the Mediterranean and those efforts will likely be expedited.
DAVID CHAUNDY,
senior economist, Atlantic
Provinces Economic Council
In November, the council is hosting a session on the future of the U.S. economy and its impact on Atlantic Canada. It probably comes as no surprise that, given the recent turmoil, Mr. Chaundy is on his fourth draft of a major presentation that will guide the session.
"The situation keeps changing, so our forecast keeps changing," he said. "There will be some point where we will have to get our views into print and hope the next round of change isn’t as dramatic as they have been the last few days."
In a nutshell, the picture isn’t pretty. Exports are down 12 per cent, tourism visitation is down, especially from the U.S., and capital markets are tightening up, which means it’s tougher for major projects to get the financing to move forward.
Although there has been no direct impact on the financial sector that has been developing in Halifax, Mr. Chaundy said that with banks collapsing in the U.S., it’s possible the backroom services local companies provide may be less in demand.
If consumers, already concerned by high energy prices, begin to get nervous about their RRSPs and start shutting their wallets, the ripple effects could be significant, he said.
DAVID APLIN,
president David Aplin Recruiting
In Halifax for a workforce seminar, Mr. Aplin said the demand for employment search services in Ontario started to soften six to eight weeks ago and he’s certain that some companies will shut down some of their search work. His company had planned to expand into three new cities, but those plans are on hold until the markets settle.
"We’ve seen recessions before, but this is truly breaking new ground and frankly I have no idea where it’s going or when it will come back," he said.
LUC ERJAVEC,
vice-president of the Canadian
Restaurant and Food Services
Association Atlantic
It is already tough for restaurants and food service operations in Canada to get financing from banks. Now, local operators fear that the economic turmoil in the U. S. could cause Canadian banks to further tighten their purse strings, Mr. Erjavec said.
"They are worried about the credit crunch," he said.
"If it gets any tighter, that could really be trouble. . . . Cash flow is always important, and if you can’t get credit, it could lead to bankruptcies."
The restaurant industry thrives when consumer confidence is high and consumers have disposable income.
"You get concerned if disposable income starts to decline or people are worried about their jobs or financial situation," Mr. Erjavec said.
"Have (operators) seen a dramatic downturn yet? No," he said. "You do hear a little bit from the high-end sector. The bankers, the lawyers, the deal-makers don’t seem to be spending like they used to, so maybe there is some sort of ripple effect. It is something we are watching very, very closely."
The food service and restaurant industry is worth $1.4 billion annually in Nova Scotia and employs 32,000 people,.
We asked business leaders what they were doing to deal with the financial turmoil. Here’s what they had to say:
Wed. Oct 1 - 6:39 AM
Danny Chedrawe
Colin MacDonald
Scott McCrea
STOCK COMPANIES:
COLIN MacDONALD,
Clearwater Seafood Partnership
Colin MacDonald has no time for politicians who insist the Canadian economy is strong and that Canadians don’t have to worry.
"What, are you kidding me? What kind of naive statement is that?" he said Tuesday.
"Eighty-five per cent of our economy is based on exports and our biggest single partner is down there right below us in the U.S.A. All these exports we do, the price is going to go down by the looks of it."
Ninety per cent of Clearwater’s products are exported. About 35 per cent of its product goes to the U.S., 30 per cent to Europe and 25 per cent to Asia.
"If our customers, people in the U.S., don’t have money, or don’t feel they have money, or have lost confidence in the economy . . . they won’t spend.
"All the world economies are intertwined. The U.S. sneezes, everybody gets a cold."
Mr. MacDonald pointed to the recent collapse of banks in Europe.
He said he has seen a number of ups and downs in the markets in his life and knows things will eventually settle down. People will also learn from the experience, as they did in the Great Depression, he said.
A bailout of Wall Street would restore confidence and take some of the uncertainty out of the system, Mr. MacDonald said
"The financial system is the engine of our economy. That is why the desire is to repair the engine, as distasteful as it may seem to everyone in the world and the taxpayers. It is critical that you have the engine of growth there."
KELLY NELSON,
CFO of Lunenburg’s
High Liner Foods Inc.
Money worries are making Americans eat at home, but so far, Canadians are still eating out.
Economic turmoil in the United States has already caused a drop in High Liner’s sales to restaurants and food service operators in the U.S. but a boost in sales of its frozen products that consumers can eat at home, Mr. Nelson said.
Half of High Liner’s operations and sales are in the U.S.
"We are well-positioned in that we have both a very significant retail as well as a food service presence," Mr. Nelson said.
"When people move back and forth between eating out and eating at home, we do get just some shift in where our profits and sales come from."
High Liner, a Nova Scotia processor and marketer of frozen seafood and pasta, has not seen the same shift in sales from food service to retail in Canada, he said.
"It is hard at this stage to see how much of an impact this is going to have on the Canadian economy," Mr. Nelson said
There are many reports that U.S. companies are now finding it difficult to renew credit lines.
"Our credit lines are with Canadian institutions mostly and are fixed for the next two to three years," he said.
"We are not anticipating any issues at High Liner.
"With Canadian banks, as well, they are probably not doing the big bank deals that we have seen for the past little while. But for local Canadian companies, it is, for the most part, business as usual."
SCOTT McCREA,
CEO, Overland Realty
"If I didn’t read the newspapers or watch television every day, I would tell you my business is in the best shape ever," the real estate developer said.
"I’ve got 98 per cent occupancy and rents are going up every year. If I didn’t follow the media, I would say it was a great year."
He believes the Maritimes are in great shape, and although businesses will feel the impact of tightening credit markets, no one will be in "dire straits."
For his company, he said the terms that are available for getting money from financiers are prohibitive, so Overland won’t be buying properties at the pace it did last year and may look instead at development options.
DEVELOPERS
BEN McCREA,
founder, Armour Group
The longtime Halifax developer said the crisis means virtually no mortgage capital is available. For at least a short while, big projects will go on the back burner.
Smaller projects, like his proposed Waterside Centre redevelopment near Historic Properties, could go ahead but the risk would increase.
Companies looking for office space will want to control their operating costs, so they might think twice before settling on a high-end space.
"It’s a concern for the project, it creates anxiety, but it’s not fatal," Mr. McCrea said.
DANNY CHEDRAWE,
Westwood Developments
The uncertainty in the economy means the Halifax developer will be sitting on the sidelines at least until the second quarter of 2009. He was going to start developing a boutique hotel on Spring Garden Road later this year, but that’s on hold.
"Because of the credit crisis, there is no money in the region," he said.
"Where there is money, the terms are impossible."
He said absolutely nothing is wrong with the local economy, and job creation remains strong, but with so much bad news spilling out of the U.S., people are psychologically hunkering down in anticipation of trouble.
With a potential development slowdown in the making, he said there is an opportunity for planners and city officials to get their house in order so they are prepared when things turn around and development takes off again.
MANUFACTURING and EXPORTING
ANN JANEGA,
vice-president of the Nova Scotia
division of Canadian
Manufacturers and Exporters
Nova Scotia manufacturers and exporters send a whopping 75 per cent of their goods south of the border, down from 87 per cent in 2002.
"Our members have been really trying hard to diversify, especially with the appreciation of the Canadian dollar," Ms. Janega said. "They have been looking at global markets.
"Having said that, the conditions in the U.S. are a real serious cause for concern and worry for our firms."
Manufacturers have already been hit hard over the past couple of years with the rise of the Canadian dollar, the spike in the cost of fuel and other commodities and a general slowdown in the U.S.
Recent developments in the U.S. mean Canadian manufacturers are now worried about tightening credit conditions in this country, Ms. Janega said.
"That is something that could have an impact on the flexibility and the ability of our manufacturers to respond and kind of branch out."
DAN MacDONALD,
president, CEO of InNOVAcorp
The downturn, like every other in history, will correct itself in time, but with the subprime fiasco, crushing debt and uncertainty in the U.S. election, this downturn will last longer than most, Mr. MacDonald said.
The U.S. feds, he said, have shifted from calm and confident to almost a panic state.
For the next while, it will be especially tough to be an exporter. Those businesses are already facing slowed decision-making, price pressure because of currency fluctuations, creeping protectionism and skyrocketing energy prices.
For the next two to five years, he said, those businesses will shift more of their focus to overseas markets. That will mean it will be more important than ever to network and leverage the expertise of others who have successfully entered markets, and to tap into programs such as those offered by Export Development Canada and various Canadian consulates around the world.
"All of this is easier said than done, but is now absolutely necessary," Mr. MacDonald said.
BUSINESS ORGANIZATIONS
KIM WEST, chairwoman,
Halifax Chamber of Commerce
The massive financial crisis will mean job cuts and a slowdown in orders south of the border that will have a spillover effect in Canada. But Nova Scotia will be shielded from the blow to some extent because of our diversity and the size of our public sector, Ms. West said.
Most local businesses are small and nimble and have been adjusting their business plans for 18 months to reflect deteriorating conditions, so "there wasn’t any shock and awe" like there has been in the U.S. since the financial crisis hit.
On the export front, she said, there has been a move afoot to strengthen ties with Europe and the Mediterranean and those efforts will likely be expedited.
DAVID CHAUNDY,
senior economist, Atlantic
Provinces Economic Council
In November, the council is hosting a session on the future of the U.S. economy and its impact on Atlantic Canada. It probably comes as no surprise that, given the recent turmoil, Mr. Chaundy is on his fourth draft of a major presentation that will guide the session.
"The situation keeps changing, so our forecast keeps changing," he said. "There will be some point where we will have to get our views into print and hope the next round of change isn’t as dramatic as they have been the last few days."
In a nutshell, the picture isn’t pretty. Exports are down 12 per cent, tourism visitation is down, especially from the U.S., and capital markets are tightening up, which means it’s tougher for major projects to get the financing to move forward.
Although there has been no direct impact on the financial sector that has been developing in Halifax, Mr. Chaundy said that with banks collapsing in the U.S., it’s possible the backroom services local companies provide may be less in demand.
If consumers, already concerned by high energy prices, begin to get nervous about their RRSPs and start shutting their wallets, the ripple effects could be significant, he said.
DAVID APLIN,
president David Aplin Recruiting
In Halifax for a workforce seminar, Mr. Aplin said the demand for employment search services in Ontario started to soften six to eight weeks ago and he’s certain that some companies will shut down some of their search work. His company had planned to expand into three new cities, but those plans are on hold until the markets settle.
"We’ve seen recessions before, but this is truly breaking new ground and frankly I have no idea where it’s going or when it will come back," he said.
LUC ERJAVEC,
vice-president of the Canadian
Restaurant and Food Services
Association Atlantic
It is already tough for restaurants and food service operations in Canada to get financing from banks. Now, local operators fear that the economic turmoil in the U. S. could cause Canadian banks to further tighten their purse strings, Mr. Erjavec said.
"They are worried about the credit crunch," he said.
"If it gets any tighter, that could really be trouble. . . . Cash flow is always important, and if you can’t get credit, it could lead to bankruptcies."
The restaurant industry thrives when consumer confidence is high and consumers have disposable income.
"You get concerned if disposable income starts to decline or people are worried about their jobs or financial situation," Mr. Erjavec said.
"Have (operators) seen a dramatic downturn yet? No," he said. "You do hear a little bit from the high-end sector. The bankers, the lawyers, the deal-makers don’t seem to be spending like they used to, so maybe there is some sort of ripple effect. It is something we are watching very, very closely."
The food service and restaurant industry is worth $1.4 billion annually in Nova Scotia and employs 32,000 people,.