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Nov 26, 2009

Summary of Kelowna Chamber & Meyers Norris Penny Economic Review and Outlook Survey Results

ARTICLE

Date ArticleType
11/26/2009 General
Summary of Kelowna Chamber & Meyers Norris Penny Economic Review and Outlook Survey Results

    

Media Report

November 26, 2009

Summary of Kelowna Chamber &

Meyers Norris Penny

Economic Review and Outlook Survey Results

With the onset of 2009, Okanagan businesses prepared to face one of the most challenging economic downturns in recent history. As the end of the year approached, the Kelowna Chamber of Commerce and Meyers Norris Penny (MNP) initiated an anonymous survey of the Chamber members to gauge how the businesses fared and how they feel heading into 2010.  

Between September 29th and November 1, 2009, 1394 Chamber members were contacted by MNP.  The majority (approximately 80%) of the Chamber members received the survey by email, while others were contacted by phone. The response rate was 24% with 334 responses. The last economic poll that was conducted by the Chamber in December 2008, garnered 89 responses.

General Overview of Results

Despite the poor economy, the majority of respondents reported positive results for 2009, most meeting or exceeding their expectations. The majority of respondents are also optimistic in their forecasts for 2010 with 70% expecting to perform better than 2009. Despite the optimism, only half of the respondents plan to make capital investments in their business in 2010. Close to 20% of respondents reported having difficulty finding qualified staff in 2009. The majority of the respondents feel that the minimum wage needs to be increased and that the HST will have a negative impact on their business and the Okanagan economy as a whole.

The survey consisted of five sections:

1. General classification

2. Business performance and key obstacles (2008, 2009, 2010)

3. Staffing levels

4. Capital investments

5. Provincial economic topics: Minimum wage, HST

General Classification

Using the Chamber classification of business types, the majority of the respondents were contractors / consultants (10.7%), financial service providers (9.5%), and business service providers (8.8%). 

The distribution of the respondents by size of company was reflective of the size of businesses in the Okanagan with 63.6% of the respondents from businesses of 10 or fewer staff and a further 12.5% from businesses of 11-20 people.

82% of the respondents classified themselves as “expanding” or “mature” businesses as opposed to “start up” or “winding down”. Despite the negative economic outlook, there were 49 companies who considered themselves in the start up phase.

Business Performance and Key Obstacles

83% of the respondents reported being profitable in 2008 and an impressive 73.6% of the businesses performing as expected or better than expected in 2009. Given the economic forecasts for 2009, businesses may have reduced their own performance goals and have consequently been able to meet or exceed expectations. Nevertheless, 69% of the businesses expect to be profitable in 2009, 42 (13%) fewer companies than in 2008.

The number of unprofitable companies remains virtually unchanged from 2008 to 2009 at 55-56.

Over a quarter (26.4%) of the respondents are faring worse than expected in 2009. The key obstacles cited as inhibiting performance were:

• Economic slow down

• Downturn in consumer confidence & spending

• High level of competition

• Difficulty finding qualified employees

• Lack of tourists

70% of respondents are optimistic about 2010 and expect to perform better than in 2009, with an additional 26% expecting to perform the same as in 2009.

The largest obstacles for 2010 are expected to be:

• Economic slowdown

• Decreased consumer confidence & spending

• Increased level of competition putting extra pressure on pricing levels

• HST

• Availability of qualified people

• Lack of capital

Staffing Levels

The majority (53.2%) of the respondents employ the same number of people they did in 2008 and 62.4% will remain at the same level in 2010. 34% will be hiring new people in 2010, covering a wide spectrum of types of positions including: sales, technical, clerical and within the “other category”, general labourers, tradespeople, technicians.

For those who wanted to expand their staff in 2009, 19% had difficulty finding qualified new employees.

Capital Investments

While 83% of the respondents’ businesses were profitable in 2008, 64% of the total did not plan to make capital investments in 2009, indicating a conservative approach to spending in the unpredictable economy. 36% (119) had planned to make investments and 107 of the 119 (90%) actually did go forward with the plans. The outlook for 2010 capital investments is closely split with 46.5% responding yes and 53.5% saying no. For those who will be investing in their company, the majority of the expenditures will be in equipment and technology.

Provincial Economic Topics

Chamber members were asked about the BC minimum wage and HST. 23% of respondents felt that an increase in the minimum wage from $8.00 would have a negative impact on the BC economy, while the remainder of the respondents were split between the increase having a positive impact or no impact. If increased, the majority thought the minimum wage should go to a rate of $9.00 to $10.00. While an increase of $1.00 - $2.00 would be a significant increase for business owners, BC does have the lowest minimum wage in Canada and so the increases would bring BC closer to the other provincial levels:

BC

AB

SK

MA

ON

QC

NB

NS

PEI

NF

NWT

YK

 NV

8.0 8.80 9.25 9.00 9.50 9.00 8.25 8.60 8.40 9.00 8.25 8.89 10.00

Source: About.com – Canada On Line – Updated October 1, 2009

Feedback regarding the implementation of the Harmonized Sales Tax (HST) was mixed. Half of the respondents feel it will have a negative impact on their business and 64% feel it will have a negative impact on the Okanagan economy as a whole. Less than 10% feel that the HST will have a positive impact on their business or the local economy and an average of 17% of respondents don’t know what impact the HST will have.

Please note that some respondents skipped some questions, so percentages are on a per-question basis.

For further information, please contact:

Shelley Brodeur

Regional Marketing Manager

Meyers Norris Penny LLP

250-763-8919

Shelley.brodeur@mnp.ca

Weldon LeBlanc

CEO

Kelowna Chamber of Commerce

250-469-7356

Weldon@kelownachamber.org