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How low can oil go?

by Admin 15. December 2014 09:57
Oil prices have plummeted by 40% since June and the severity of the decline caught almost everyone by surprise. What suddenly changed about the oil market? How low can oil prices go? And what does it mean for Canada?
For the past four years, oil prices have remained stuck above $85 per barrel, often much higher, and in spite of dramatic increases in global production. The United States saw a transformative boom in shale oil with energy production growing 80% from five million barrels per day (bpd) to just over nine million bpd since 2008. Canada’s oil sands production has added one million bpd since 2005. And there have been increases in many other important suppliers.
These high prices were sustained because, until recently, demand for oil had been rising faster than supply, even though consumption in the U.S., Europe and Japan had been flat or dropping since 2006. In fact, the only countries where we have seen significant increases in oil demand were fast-growing emerging markets, particularly China, which accounted for half the world’s demand growth in 2011 and 2012.
The big shocker in oil markets was the slow-down in emerging markets that caused the International Energy Agency to slash its 2015 demand forecast to a teensy 1.1 million bpd increase. Oil traders were looking at huge production increases in 2015 (an extra 1.2 M bpd from North America alone) that would absolutely swamp the increase in demand.
That’s why the world turned to OPEC expecting to see a production cut that would offset the falling demand. But the cartel did nothing, and the Saudi oil minister said publicly that he wanted to drive down prices in order to force production cuts in shale and oil sands. This won’t work. In fact, production will continue to rise because most of the long-term investments can tolerate significant variation in revenues over the (often) 30-year lifespan of the project. New projects may be delayed, and indeed some big ones have been cancelled, but prices would have to be really low for a very long time in order to reduce production.
What does it mean for the economy? The Bank of Canada warned that falling oil prices could subtract 0.25% from GDP growth. Even the grimmest forecasts have Alberta’s GDP growing at 2.5% next year, down from 4% over the past two years. The province would still be among the leaders in Canada, but without the inflationary pressures of breakneck growth.
Cheaper gas is also a welcome boost for consumers. If prices continue at current levels, a typical U.S. household could save $1,100 and a Canadian family could save $1,300. That’s about $85 billion dropped into the pockets of North American consumers, a welcome stimulus. Globally, lower oil prices could transfer nearly $1 trillion from producers to consumers.
We are likely to have an oversupply in 2015, which will put further downward pressure on prices, so it's possible that oil could temporarily dip as low as $50 per barrel. Over the longer term, oil prices will depend heavily on a resurgence of demand driven by a healthier global economy. The Canadian Chamber expects it will pick up with the U.S. economy expanding at 3.5% and emerging markets growing 4.8%. This will provide healthy support to oil demand, pushing prices back towards the $70 range. This would put the Canadian dollar somewhere 83-85 cents, providing a nice boost to manufacturing exporters and generating more balanced growth in Canada.

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The State of the Global Economy

by Admin 25. November 2014 12:02

U.S. Economy is Booming

The U.S. economy is firing on all cylinders as third quarter growth came in at 3.5% last week, following on the heels of spectacular 4.6% growth in the previous quarter. The U.S. economy added 214,000 jobs in October, bringing the total to 2.3 million jobs created so far in 2014. Wi th unemployment down to 5.8%, wages are picking up and headed higher. This is great news for consumers, and retailers are smacking their lips in expectation of a very merry Christmas season. This is also good news for Canada: exports to the U.S. are up 13% so far this year in spite of lower energy and commodity prices. All of the leading indicators point to continued strength in the U.S. economy in the months ahead. Get ready for growth!

Loonie Headed Lower

A combination of tumbling commodity prices and weak economic numbers in Canada set against a resurgent U.S. economy pushed the loonie to 88 cents on Tuesday. Wall Street expects that U.S. interest rates could start rising sooner than expected, pushing up investor demand for the greenback while weakness in Canada’s domestic economy means that our rate hikes could be much further away. The Canadian Chamber is forecasting that the Canadia n dollar will average 85 cents in 2015. 

Canada Slows in August as Retail Sales Edge Down

The Canadian economy contracted by 0.1% in August after remaining essentially flat in July, the weakest results since last December. The big energy sector declined but this was mainly because of summer maintenance related shut-downs in the oil sands. On the consumer side, Canadians shopped less in August , with retail sales falling an unexpected 0.3 %, the second consecutive month of decline. Softer domestic spending is expected this year and next as highly indebted Canadians put their credit cards away. Exports and business investment will have to be the sources of growth in the years ahead.

China Intervenes to Prop up Real Estate Market

China is now in the midst of a serious housing correction with October’s home prices falling for the sixth straight month and sales down 11% from a year earlier. China cut interest rates and down payment levels for the first time since the 2008 global financial crisis in a sig n that the government is worried that further fall in home prices could threaten the economy. This could spell trouble for commodity prices because China is the world’s biggest metal consumer, accounting for almost half of global demand for copper and two - thirds of the world’s iron ore, where prices have fallen 22% and 40% respectively.

Japan Falls into Recession

The Japanese economy contracted by 1.6% in the third quarter, after a 7.3% decline in Q2, as the country’s sales tax increase hammered the economy and pushed the country into its fourth recession since 2008. Japanese Prime Minister Shinzo Abe called snap elections in order to postpone an other imminent rise in Japan’s consumption tax. Japan’s economy should return to positive growth in Q4, but more volatility should be expected as the yen continues to decline.



-Hendrick Brakel, Canadian Chamber of Commerce

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Being CEO of your life – a lesson from Carlos Fox

by Admin 17. November 2014 12:14

It may seem like a pretty straightforward topic, but it’s something that we all seem to struggle with in one form or another: Work-life balance. Spending more time with our kids, regularly going to the gym, having “me time.” These are all things that we are aware we need. Sometimes we make time for them, other times we do not.

At our last TEC event, speaker Carlos Fox spoke to this point exactly, and though it may only be one man’s opinion, it is the opinion of a man who has spent 7,000+ hours coaching CEO’s. Carlos says, “Those who are the best CEOs of their life also happen to be the best CEOs of their business. You not only have to be good at running your company, but you have to be great at running ‘ME Inc.’ and you have to be intentional about it too.”  

So how do we get better at this practice? Treating our personal lives with the same level of importance as our careers? Our companies?

Carlos broke it into a few easy steps:

1.       Seek Self awareness

Are you really as good as you think you are? This is the good, the bad, and the ugly. What are your strengths? What do you need to improve on? Be honest with yourself! How do you show up as a leader: do you know your leadership style, your strengths, and your weaknesses?’ It is important to be aware of yourself, your personal brand, to key into your values and the things that you really find important. To understand how you handle stress and the things you need in order to combat it most effectively. You must know your blind spots and how to actively minimize their impacts.

2.       Adopt the ability to navigate

Carlos suggests taking a look each month at where you are going, how you are getting there, and if that is realistic or not. There is never enough time, money, or resources in the world – this is where we must become the chief priority officer of our lives. Do you need to spend more time with your family, your kids, on your health, re-connecting with your pillow and sleeping at night? Carlos suggests taking each area of your life and evaluating it using a scale of red, yellow, and green. This gives you an actual idea of what you are doing well, and where you may or may not be lacking. And it really goes back to point #1 – self-awareness.

3.       Be Intentional

Work towards these life goals as you would with the goals of your own company. Execute them, evaluate them. Learn and grow from them.

If we do these three things, and we do them well, we can see several things happen. We will have more time, more energy, less stress, and actually be able to create a balance in our lives – tuning in to that inner ‘Zen’ all these people are talking about. So why not give it a shot? What do you need to do to become CEO of your life? 

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Is China Slowing Down or Charging Ahead?

by Admin 12. November 2014 13:15

In recent weeks, we’ve seen many stories in the media about a major slowdown in China. As Canada’s second largest trading partner with $70 billion per year in bilateral trade, it could have a big impact here at home. Should we be worried or is China charging ahead? Official figures show China growing at around 7.3%, a decline when you consider that for the 20 years up to 2007, the country’s average real GDP was rising by an average of 11% per year. But that’s OK. China’s economy is now US$9 trillion, so that 7.5% increase is on a much larger pie and is a much bigger boost to the global economy. The growth is also more balanced, shifting away from investment and export dependence towards a more broad-based expansion of consumption, thanks to rising wages. Are there vulnerabilities in China? Certainly, China has high debt levels, but the banks are well capitalized and with $4 trillion in foreign exchange reserves, there is more than enough of a safety cushion to weather any downturn. China also has soaring real estate prices and areas that are overbuilt. But don’t forget that two million people per month move from rural areas to the cities. This means that China has to add the equivalent of three New York Cities every year to keep up with the rise in urban dwellers. China’s government has been trying to clamp down on rising home prices by raising mortgage rates and downpayment requirements, although they’ve eased off recently. A consumer revolution is underway. So what does it all mean for business? China’s economy is changing dramatically but growth will remain over 7% for the foreseeable future. More importantly a consumer revolution is underway. Each year, almost 30 million people, a population roughly the size of Canada, join the Chinese middle class. And they love to spend online. In 2013, China surpassed the U.S. as the world’s largest ecommerce market. By 2015, KPMG is forecasting that China’s ecommerce transactions could reach USD 540 billion, roughly 10% of total retail transactions. By 2020, the firm estimates that China’s ecommerce market will be larger than those of the U.S., Britain, Japan, Germany and France combined. Here at the Canadian Chamber of Commerce, we’ve been lobbying hard to establish a renminbi trading hub right here in Canada to make it easier to do business in China’s currency. Last week in Hangzhou, our President, Perrin Beatty, and the Prime Minister of Canada met with Jack Ma, the head of Alibaba, to talk about boosting trade. What is Alibaba? It’s only the world’s largest ecommerce company, roughly twice the size of Amazon. Alibaba’s transactions last year totaled nearly $250 billion, compared with $116 billion for Amazon. Every second, Alibaba handles an average of 500 orders, worth more than $9,000. Ecommerce is the best way to penetrate the Chinese consumer market because it’s more developed and trusted than the traditional bricks and mortar retail networks. Mr. Ma often says that “in the U.S., ecommerce is dessert. But in China, it’s the main course.” It’s time to feast.

Canadian companies looking to list their products on Alibaba should click here

Want to Discover China on an all-inclusive trip with the Kelowna Chamber for as low as $2725? Business meetings available... 

 

-KCC Contributor 

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The Loonie's Decline... Is it here to stay?

by Admin 6. November 2014 10:50

The loonie has fallen below 89 cents, a sharp decline for a currency that was stubbornly stuck around parity for almost three years. Is this a temporary tumble or is the loonie going south for a prolonged period of time? Here at the Canadian Chamber of Commerce, we think the dollar is headed lower, likely to average 85 cents in 2015 and it could fall even below that because of three reasons. Weaker oil prices because of surging U.S. production The Canadian dollar is often called a ‘petro-currency’ because its movements track so closely with oil prices. The rule of thumb was that a $10 increase in the price of a barrel of oil would push the loonie up by three cents. But oil prices are headed lower, mainly because a new drilling technology, hydraulic fracturing, has caused an astonishing boom in U.S. crude oil production, now surging to a 45-year high. In 2011, the U.S. had to import almost half of the oil it consumed. By next year, imports will only account for 21% of American oil consumption, and within a few more years, the world’s largest consumer of oil will become a major exporter. Thus, a massive increase in global oil supplies while demand growth has been fairly weak.

The U.S. economy is booming, so American interest rates will rise sooner There is a sea change in investor perceptions about the outlook for inflation and interest rates. With the U.S. economy roaring ahead at 4.6% GDP growth in the second quarter and the unemployment rate down to 5.9%, investors are expecting inflation could pick up very quickly and the U.S. Federal Reserve will have to raise interest rates in July 2015 or earlier. Meanwhile, Canada’s domestic economy remains soft and there are few signs of inflation, so little need for the Bank of Canada to raise interest rates anytime soon, a point Governor Poloz has made repeatedly. This makes American securities far more appealing to investors. Markets are nervous about Canadian vulnerabilities A torrent of investor funds flowed into Canada from 2009 to 2012 because the country was seen as a safe haven and this drove up the dollar. The Canadian economy fared better than any other G7 country during the great recession and our banks did not require any bailouts. But now, Canada is starting to show vulnerabilities, particularly our soaring consumer debt and a potential housing bubble, right when the U.S. is getting back on track. Investors have no need for a Canadian safe haven in the midst of the booming U.S. economy and so we have seen rising net outflows, particularly from Canada’s government bonds. Next year, when U.S. interest rate hikes become a certainty, while Canada’s remain unchanged, the flow of investment funds will accelerate and the loonie will head lower. Overall, it’s not Canadian weakness that’s causing the loon to swoon, it’s American strength. The Canadian economy and Canadian consumers held up extraordinarily well during the past five years, but we need a slow-down to fix some of our debt imbalances, and this is happening right as the U.S. heads into overdrive. The tired old loonie is missing a few feathers and needs a rest while the American eagle is hungry after a long hibernation and is about to take flight. We wish her Godspeed.

-Hendrik Brakel, CCC 

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Changing a Community based on what we Buy

by Admin 24. October 2014 07:52

Business is changing. Is this a bad thing? Heck no! There’s been a serious trend towards blended value return on investment and large social impact. We’re seeing collaboration from multiple sectors. We’re seeing sponsor dollars being spent towards engagement, as opposed to signage, and we’re taking an added consideration into our purchasing.

How do we incorporate social and financial practices into our bottom line? How do we change a community based on what we buy? This morning at the Okanagan Changemakers Buy Social Breakfast, we talked about social purchasing and the idea of moving towards a blended value business model, incorporating price and quality, as well as green and social practices. So, how can our supply chain and what/how we buy really effect out community, and by how much?

Buying local keeps 2.6x the money in the economy. To put a dollar figure on things – for every $100 spent locally, $46 stays in the local economy, whereas the alternative, we only see $18 staying local. That’s a huge leap!

So what exactly is “local”? Local comes in 3 different forms:

1.       Local

Local refers to those businesses that are directly supporting the local economy. Those sole proprietorships, farmers markets, those who support local artisans in their organizations as often as they can.

2.       Largely local

These are bigger operations, still based in BC but are businesses that may have branched out or expanded into other locations.

3.       Local champions

These are businesses that support local through B2B interactions. This could be ordering your office supplies through a local company.

 

By supporting local purchasing, we can make an impact. “If you can get front lines to buy in, the rest is just enabling them,” as put by Roger Wheeler, attendee. Local purchasing, and encouraging this, is not only going to change at the CEO level. This shift needs to be both a change in leadership goals, as well as a change in awareness for those making the daily purchases. Educating administrative and support staff, anyone who takes care of ordering, and having the front line employees backing this end goal is what is going to make this happen.

With more demand, there will be more orders. With more orders, we will see more social impact. Can it really be that easy?

We want to hear your thoughts! #BCBuylocal and join the discussion.

For more information on buying Local: http://locobc.com/

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Playing "Matchmaker" to Young Professionals and their Futures

by Admin 21. October 2014 10:47

Kelowna: arguably one of the most beautiful cities in BC. With rolling hills full of vineyards and bike paths, and an incredible entrepreneurial spirit -  it’s no wonder that so many students and young professionals are choosing to call it home.

There’s just one problem; an associated stigma that in order to get a job in Kelowna, you have to leave Kelowna. Though this may not be entirely true, it is in fact, a handshake community. And for some young professionals this can be detrimental during their post-grad decisions.

So why not break through that stigma then? Do we really want these students leaving to Alberta?

                                         

With Launch Students into Business, the Kelowna Chamber will be playing ‘matchmaker’ to young professionals and their futures.

“Having that interaction with business professionals is crucial. At the end of the day it really comes down to who you know, not just what you know,” says an Alumni student from Okanagan College. “There’s a benefit to the professionals too; It allows them to be seen in the eyes of these young professionals and is a great tool for recruitment and learning who the upcoming talents are.”

Becoming a connector for the Launch Students into Business program is easy. You give 45 minutes of your time to a student for one-on-one meetings that they they steer, and afterwards provide them with two referrals to other industry professionals you feel they should know.

If it’s such a handshake community, why not give these students the opportunity for the handshake? 

Furthering the effort to get students connected, UBCO will be holding an event on November 4th promoting jobs in the Okanagan. Career Days is a way for UBC to offer transformative learning experiences for students while developing meaningful, mutually beneficial partnerships with the community.

The Speed-Networking & Social will be this year’s biggest networking event at UBC’s Okanagan campus. You’ll discover how UBC students and soon-to-be graduates can be an ideal addition to your workplace—either in internship, co-op, or long-term roles: they’re bright, motivated, hard-working, and educated in the latest theories and technologies. More generally, this event is about engaging UBC students with surrounding communities.

To register for Career Days

ubc.ca/okanagan/management/community/connecthire/involvement/ubco-careerdays/participating-organizations/registration.html

To learn more about Launch Students into Business: http://www.kelownachamber.org/chamber/launch.aspx

We are so lucky, being surrounded with so much innovation and inspiration on a daily basis. Whether it be your morning commute over the lake, or looking out onto the rolling hills of vineyards and biking trails, it’s hard to argue that the Okanagan’s beauty isn’t worth fighting for. 

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Women in Leadership – What does it mean to you? Who do you think of?

by Admin 17. October 2014 11:25

It’s not about how “anything he can do, she can do better,” nor is it a battle of the sexes. It’s asking the question and taking the time to see what needs to change in order to enable more and more women to take the leap and rise into these positions.

The Kelowna Chamber of Commerce Women Leadership Network is taking on this challenge with help of a research student at Okanagan College.  We are looking to develop that helping hand and encouraging peer mentoring.

One of our initiatives, the Inspire Series, will be a catalyst to foster this nurturing environment. Throughout the year we will be hosting a circuit of events bringing women in leadership together in small, intimate groups. We’ll hear from women who have inspiring lessons to share, the events that shaped their lives, what they learned about themselves and being a leader.

Casual exchanges vary as we get to know each other beyond our job titles. Before and during dinner, new acquaintances strike conversations that are as diverse and varied as the professional women attending.  After our speaker, there is an opportunity to ask questions and talk about women in leadership, the challenges we face, and the remarkable journeys taking place all around us.

Who are the women in leadership that you look up to? We’ve all had mentors, or those who have provided the leg up. What was it they did that furthered you along, what is it about their leadership style that allowed for the culture of growth? Every journey has variables, but its collaboration and peer mentoring that will bring us together.

So, I pose you the question: what do you feel needs to change? 

-KCC Contributor 

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Throwback Thursday! Kelowna Chamber Past Presidents Remember the year of their Reign

by Admin 9. October 2014 08:00

Recently the Past Presidents of the Kelowna Chamber got together over a nice hot breakfast at Deli-City to discuss the current initiatives of the Chamber, past accomplishments and milestones, and discussed our goals for the future. They had some great insight and advice, and reminisced about the community as it was, while they were Presidents of the Chamber.

Read on to meet some of the Kelowna Chamber's Past Presidents, learn of the highlights of their terms as presidents, and realize the changes they advocated for. You will likely recognize many of the names, as these individuals are still influential in our community, proving their leadership is not one-dimensional and that their title was well earned:


Nick Frost- President in 1983. One highlight from Nick’s time was the relocation of the Chamber from a little office building on the other side of the bridge to where we are now. The position of Vice President was also created during this time. Walter Gray was his Past President.

David McLean- President in 2005. The University of British Columbia’s Okanagan campus was being launched during this time and the Chamber put in a lot of work to help make that happen. David said that Ken Bessason was his Past President and was a great mentor.

James Patterson- President in 2008 which was also the 100th anniversary of the Kelowna Chamber. A few highlights from James’ year were the opening of the bridge, passport office and the removal of the Coquihalla tolls. Laura Thurnheer was his Past President.

Laura Thurnheer- President in 2007. A highlight from Laura’s year was the passing of the second crossing. Kevin Crookes was her Past President

Ken Bessason- President in 2004. Ken was on the board for the Chamber for 6 years and was also on the BC Chamber board for a couple of years. He is now selling real estate. His Past President was Ken Ficocelli.

Steve Thompson- President in 1997 and is a current MLA. Steve said the Chamber was a great training ground and that strong advocacy is critical. He is pleased to continue representing the community. Lorne Ettinger was his Past President.


Wes Shields- President in 2010. Wes was successful in taking issues that were unpopular with the Canadian Chamber but were very beneficial for our community, to the AGM and having them passed. Norm LeCavalier was his Past President.

Lawrence Salloum
- President in 1973. One of Lawrence’s main influences during his time was having the Chamber play a major role in the development of the Coquihalla.

Catherine Comben- President in 1996. Focused on partnerships during her time. She has recently been elected into UBCO Senate. John Merritt was her Past President.

Lorraine McGrath- President in 2001. Lorraine was particularly proud of the wine resolution that was passed unanimously at the Canadian Chamber Annual General Meeting during her year. Todd Sanderson and David Rush were her Past President’s and they worked on a 3 year strategic plan. Lorraine also sat on the board for the Chamber.

      Paul Mitchell- President in 1988. A couple of highlights from Paul’s year included encouraging and forming better relationships with First Nations and the agreement to build the Connector.

      David Bond- Past President and current Partner at KPMG.  

      Curtis Darmohray- Current Chamber President and Partner at Pushor Mitchell. Curtis still has a busy 6 months remaining on his term as President. 

      Current CEO of the Chamber, Caroline Grover thanked all of the Chamber Board Presidents for their hard work and expressed that she couldn’t imagine what life would be like if all of their efforts and accomplishments weren’t in place today. Can you?  

 -KCC Contributor 

410 Businesses visited by Business Walkers from EDC, Chamber and City

by Admin 7. October 2014 08:40

October already!  WOW. Several of the staff, Board and Ambassadors kicked off small business month by participating in the Business Walk yesterday. Approximately 410 businesses were visited!

 

It was a great day to be out visiting local businesses for the purpose of gathering information from owners and managers about the general state of commerce, specific to their area of town.

  • The Business Walk is an annual regional initiative coordinated by the Central Okanagan Economic Development Commission.  Business organizations and stakeholders throughout the Central Okanagan come together for a common purpose: to gather information from a large number of businesses in a short period of time. 
     
  • The surveys are treated confidentially and entered into a database which is used to create reports around four specific questions.  The reports will be used to identify areas for program development, action and improvement. 

Detailed results of the Business Walk will be released by the COEDC

 

If we didn't come knocking at your door - we hope to catch you next year.

 

-KCC Contributor 

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