Too early to predict economic toll from COVID-19

While the economic death toll from COVID-19 isn't yet clear, recent layoff announcements likely foreshadow bad news in the coming months, say some business leaders.

Figuring out how many businesses won't survive the pandemic is "a really elusive target that we do need to get a handle on," said John Wishart, the chief executive officer of the Chamber of Commerce for Greater Moncton.

Wishart said it's important to track the casualties in order to "respond accordingly."

He said his chamber is part of a larger regional group trying to track the numbers and, so far, a clear picture isn't emerging.

"I think it's just a complete shot in the dark in terms of the number of business closures," said Wishart.

He suspects it'll take another six to 12 months to really see what kind of toll COVID-19 has taken on New Brunswick businesses.

The first real test will come after government funding comes to an end in the coming weeks, said Wishart.

"Can you survive without that wage support? Or will it mean having to re-lay off some people perhaps permanently this time around."

He suspects recent layoffs may offer a hint of financial trouble ahead. Irving Oil just announced 250 job cuts, while Organigram previously announced 220, WestJet nearly 280, and Atlantic Lotto, 60.

"I'd love to say that's the end of it, but we know it's not," Wishart said. "We can probably expect to see other announcements maybe not the same size for the next six months or so."

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If businesses survive at the cost of huge job losses, Wishart wonders if the economy is any better off.

At one point, he said, 50,000 New Brunswickers were out of work "some of them temporarily, but that's still a huge percentage of the overall workforce.

"There is a domino effect through all this. If good-paying jobs disappear, then that's tough on retail shops, on restaurants and grocery stores. So it still has a net cumulative negative impact on the economy."

And if companies can't get back on fiscal track after laying off employees, the outcome usually isn't good, said Wishart.

"I think what we're seeing is a retrenchment in terms of the size of operations and the number of people that are employed as a first step or first wave of impact.

"And if that doesn't work the next step will be probably permanent closure."

The Canadian Federation of Independent Business's director of provincial affairs for New Brunswick and Prince Edward Island said "it's way too early" to know how many businesses will fall victim to COVID-19.

But Louis-Philippe Gauthier said business owners are definitely worried about it.

In a recent survey, 15 per cent of respondents in New Brunswick said they were "actively considering bankruptcy/winding down my business as a result of COVID-19."

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While 68 per cent of businesses are open, 70 per cent of these say they are operating below normal revenue.

"How much of that is going to translate over the next six to 12 months into business failures is something that we're actively looking at," said Gauthier.

"When you look at 14 to 15 percent of our members in New Brunswick saying they're potentially considering closing down their businesses or declaring bankruptcy, those are numbers that, even if they're small, they're very important and something that we have to be mindful of."

Looking for help

The CEO of the Saint John Region Chamber of Commerce said it's likely too early to gauge the economic falloutbecause businesses are still exploring the funding available to them.

"I don't think we know what that number will look like, but I estimate that it's going to be high in our region," said David Duplisea.

"People are looking for information and advice and they're looking for ways to reinvent themselves," he said.

While he's not sure it's a positive sign at this stage, he hasn't heard of any businesses that have already decided to call it quits.

He said certain industries will be particularly hard hit, including those based on hospitality and tourism. Restaurants, for example, have been faced with a "multi-dimensional dilemma," he said.

They already operate on slim margins and are forced to reduce capacity to enable physical distancing. Add to that, consumer reluctance to dine out, and reduced tourism numbers, and the future looks pretty bleak, said Duplisea.

Any business that found itself struggling before COVID-19, will likely not survive, he said.