Alberta's small, medium-sized businesses to slash spending: survey

CALGARY -- A new survey shows small and medium-sized businesses in Alberta will slash spending more than expected this year as the oil downturn hits every level of the province's economy.

See Full Article

The government-owned Business Development Bank of Canada says smaller businesses in the province plan to invest about $11 billion this year, 27 per cent less than last year.

That compares with a 14 per cent increase in planned spending in British Columbia, and either flat or modest growth in spending across the rest of Canada.

BDC chief economist Pierre Cleroux says he expected spending to go down in Alberta, but was "surprised by the magnitude of the drop."

The BDC survey heard from roughly 4,000 executives of companies across Canada with between one and 499 employees.

Cleroux said this year will be worse than last year as the reality of low oil prices fully sinks in, with 66 per cent of survey respondents in Alberta saying a lack of confidence in the economy was their main barrier to investing.

"Last year was the first year (of the downturn in oil prices) and a lot of people thought that the oil price would come back quickly," Cleroux said. "I think people are getting used to this new reality."

RefineCo Inc., a business-focused tech firm in Calgary, is one of the many companies being more careful about spending, says company CEO Eric Veenendaal.

"On the capital side, I would say we are certainly being cautious," Veenendaal said. "As a professional IT services company, we are largely at the will of what clients are doing in terms of their own capital spending."

That spending in the oil and gas sector has dropped considerably, forcing RefineCo to look elsewhere for contracts in sectors such as agriculture and the government.

Two years ago, RefineCo relied on oil and gas for 60 to 70 per cent of its work but now it's less than 10 per cent, and Veenendaal isn't betting on any short-term bounce in oil.

"Our plans extending out three years down the road basically don't account for any kind of a spike," Veenendaal said.

The Village Brewery in Calgary is growing well, but co-founder Jim Button says it's still feeling the headwinds of the downturn.

"You used to be able to say beer is recession-proof, but I think "recession-resistant" is the word they've come up with in the last bunch of years," Button said.

The restaurants he supplies have seen overall sales drop by 20 to 30 per cent, cutting into Button's own sales growth. That's been partially offset by people drinking more at home, boosting retail sales, he said.

The company is still going ahead with about $750,000 in capital investments this year to boost efficiencies and quality, but that's down from earlier plans. The company also won't be able to do as much with that money because the equipment it needs is priced in U.S. dollars, and there are no plans to hire more staff, said Button.



Advertisements

Latest Economic News

  • CN Rail beats forecasts with $1B profit in Q2

    Economic CTV News
    MONTREAL -- Canadian National Railway beat analyst expectations as its profits grew 20 per cent to $1.03 billion in the second quarter on higher revenues. The Montreal-based railway (TSX:CNR) earned $1.36 per diluted share, up from $1.10 a year earlier when it posted $858 million in net income. Source
  • Spending from Trump, Trudeau on infrastructure could drive up costs: documents

    Economic CTV News
    OTTAWA -- The Trump administration's fledgling promise to spend US$1 trillion on repairing American roads and bridges may have some unintended ripple effects in Canada. Newly released documents show that top civil servants in Ottawa worried earlier this year that Donald Trump's ambitious infrastructure program that he talked about on the campaign trail could end up driving up the construction costs in Canada. Source
  • U.S. senate committee pressures Trump administration on quotas in softwood deal

    Economic CTV News
    MONTREAL - The United States Senate finance committee has increased pressure on the Trump administration to include quotas in a softwood lumber agreement with Canada. Seven Democratic and Republican senators expressed their demands in a letter sent this week to U.S. Source
  • A timeline of B.C.'s cancelled Pacific NorthWest LNG project

    Economic CTV News
    VANCOUVER -- Here is a look at how the Pacific NorthWest LNG project evolved over the last several years before the announcement of its demise Tuesday: Feb. 19, 2013: Pacific NorthWest LNG submits its project description to the Canadian Environmental Assessment Agency. Source
  • Canadian airlines aiming to become biofuel superpower, reduce carbon footprint

    Economic CTV News
    MONTREAL -- The country's top airlines say resource-rich Canada has the potential to become a biofuel superpower by transforming forest residue and agricultural crops into energy that can help the industry reduce greenhouse gas emissions. Source
  • Baggage handlers threaten strike at Toronto's Pearson Airport

    Economic CTV News
    TORONTO - The union representing 700 workers at one of the largest baggage and ramp handling companies at Toronto's international airport could be in a strike position on Thursday. Christopher Monette, spokesman for Teamsters Local 419, says the union will encourage its members to vote down Swissport's final offer. Source
  • Toronto's Pearson Airport could be hit by baggage handlers' strike on Thursday

    Economic CTV News
    TORONTO -- Ground crew for 45 airlines at Pearson International Airport could be walking a picket line Thursday, potentially delaying flights. Airlines that would be affected include Canjet, Air Transat, Air France, British Airways and KLM Royal Dutch. Source
  • Pacific NorthWest LNG project scrapped by Petronas, partners

    Economic CBC News
    The Pacific NorthWest liquid natural gas (LNG) project in Port Edward, B.C. will no longer go forward. A release from Petronas said the decision to cancel the $11.4 billion project was made after "a careful and total review of the project amid changes in market conditions. Source
  • Petronas cancels $36B Pacific Northwest LNG project

    Economic CTV News
    VANCOUVER -- Petronas and its partners have cancelled the $36-billion Pacific NorthWest liquefied natural gas megaproject they had planned to build in British Columbia. Anuar Taib, chief executive of Petronas's oil and gas production division, said Tuesday the decision to scrap the project came after a careful review of changes in market conditions. Source
  • $1 soda sales promo helps boost McDonald's sales in U.S.

    Economic CBC News
    McDonald's says a promotion for $1 sodas and a new line of premium burgers helped boost sales in its flagship U.S. market. The company said Tuesday that domestic sales rose 3.9 per cent at established locations during the second quarter. Source