COVID-19: Affect On Business And Industries In Canada
The growing outbreak of the coronavirus has led to a global health crisis along with grappling world economy. The commercial hit can be felt around the globe, as the virus is crossing all the borders and leaving no nation aloof. According to Fortune reports, “94% of the Fortune 1000 is seeing coronavirus supply chain disruptions.” The backbone industries for business and continuity of life are mainly consumer networks. The telecom and media companies are moving swiftly to catch up with the massive demand-driven due to COVID-19.
It has become indispensable to ensure that your business or industry is ready to thwart the effects of COVID-19 or any other future outbreak. Business leaders need to have proper plans to develop an overall resilience strategy to face such threats boldly. The current situation has a significant impact on the economy of Canada, as well. Along with millions of people losing their jobs, bankruptcies, offices shut- down, we need to consider the speed of recovery as well to see how long it will take to return to the normal. Let us know the impact of coronavirus pandemic on various industry sectors in Canada and around the world.
Factors Leading to Economy Downfall
With the emergence of COVID-19, certain risk factors have contributed to the low economic conditions currently in Canada. Let’s see how they lead to a financial breakdown.
1. Proximity with others
Several events were canceled, considering the proximity of participants in the events, as in case of educational or sports activities. Restaurants have been shut down, and the delivery of goods and services has been canceled to maintain social distancing.
2. Type of Production Environment
At times, the Production Unit needs its employees to work together, close-by, which is entirely unfavorable to check the spread of coronavirus. This has led to closing down the production unit of non-essential goods or their delivery services.
3. Reduced demand for certain Goods and Services
With most of the Canadians staying at home, there has been a drastic dip in demand for non-essential products and services. The Provincial Government is making decisions to determine which industry should be considered as essential to ease out the needs of people further and help the businesses to run, as well.
4. Lack of Workforce
People with a sensitive immune system and especially the senior citizens prefer to keep them in self-isolation for the safety of themselves and their children. So, there is a decline in workforce availability, and some sectors are under-staffed.
5. Vulnerable Industry Sectors
SMEs or Small and Medium Enterprises, may not have the proper cash flow to sustain the current and emerging revenue losses, for a long time.
Affected Business Sectors
Based on the assessment done on 26th March, the level of confidence of SMEs has been depicted graphically, in the Business Barometer, by the Canadian Federation of Independent Business (CFIB). Many SMEs reported a massive drop in their level of confidence, from 60.5 to 30.8, from February to March 2020. Information, Arts, and Recreation sector have been significantly impacted by falling from 60 to 20. Industries like Retail, Manufacturing, and Natural Resources have been hit badly, whereas the transportation and the Hospitality sector are still quite a bit in demand, due to the prevailing conditions.
There have been many layoffs in Canada, while some employers have cut wages. According to Maclean’s, COVID-19: Canada layoff tracker, aerospace and rail manufacturing company, Bombardier, has laid off 12,400 employees, and automobile manufacturer, Fiat Chrysler Automobiles has laid off 8,900 people. WestJet and Air Transat, air transportation companies, have fired 10,500 people, in total, from their jobs.
Based on the data obtained from Statistics Canada, the country is dependent on mainly the following sectors, which contribute to approximately 29% of employment and 25% of output in the entire economy-
● Accommodation and Food Services
As per the Hotel Association of Canada (HAC) and a survey conducted by Restaurants’ Canada, the restaurant, accommodation, and tourism industry has been hit badly, with foodservice companies are heading towards permanent closure, due to COVID-19. The hotel occupancy is less than 10%, and the tourism sector is estimated to lose around $6 billion per month during the coronavirus outbreak. This adds to a loss of about 778,000 jobs in total, in this sector. However, if after the pandemic, the Canadians spend their summer holidays in Canada, then the domestic tourism would account for 80% of the economic growth.
● Art, Entertainment and Recreation
The sudden emergence and outbreak of coronavirus led to postponement or cancellation of many important events, scheduled in the cultural sector. The Juno Awards that was supposed to be held in March 2020 was believed to attract $9 million earlier. Employees at the Winnipeg Symphony Orchestra and the Banff Centre for Arts and Creativity have been laid off.
● Retail Trade
As people make sure they stay safe at home, grocery stores are overwhelmed as the consumers have stopped eating out and prefer home-cooked meals. The majority of consumers are stocking up more, in panic, which is benefitting the retailers. Online shopping is also trending due to the current situation. Industries, with no consumers, have bleak future in the coming days.
Weaker global demand and to ensure the safety of their workers, major auto companies have temporarily halted their production in Ontario. Many other companies, all over in Canada, have ceased operations as well. It is believed that the manufacturing sector may be less affected than other sectors, as the manufacturers can build inventories.
Thousands of employees in the airline sector have been laid off. The ridership of some taxi companies has fallen by around 75% since the onset of the pandemic. On the other hand, road transportation is majorly used by truckers to deliver freight between the United States and Canada, during the crisis. Online orders have also increased significantly over the past few months.
● Oil and Gas Extraction
The significant decline in oil prices is due to the decreased demand for petroleum products used in transportation. There is a price war between Russia and Saudi Arabia, which are significant producers of oil, which further adds to reduced oil prices.
Leaders all over the world are working out on strategies and organizational changes, on a temporary and permanent basis, to keep a check on the economic downfall and ways to revive it. Tele-working, e-Commerce, telemedicine, and distance education are some of the prospering domains shortly. The world is hoping for sustainable recovery after the health crisis ends, and the economy can grow in the future.