B.C.'s recovery economy: Assessing the damage done

Special report: Government programs helped protect many B.C. sectors from pandemic recession

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Vancouver’s Trump Hotel, MEC, Army & Navy and Ronsons Shoe Stores    these were some of the bigger bankruptcies, restructurings and business closures in B.C. in 2020.

Roughly 25 businesses in B.C. have been forced to seek creditor protection since the beginning of March 2020, according to Insolvency Insider.

While some of these businesses were in financial trouble before the pandemic, the lockdowns that forced closures in the spring were either a contributing factor or a direct cause of several bankruptcies.

Nightclubs and pubs were hit hard by the pandemic. In October, Dubh Linn Gate Partners, which owned the popular Dubh Linn Irish Pub in Vancouver, declared bankruptcy.

Dine Under the Stars, an event company that hosted pop-up dinners at outdoor events, restrictions on public gatherings, also declared bankruptcy in November.

And international travel restrictions appear to have pushed One Ocean Expeditions Inc., which specialized in mini-cruises to the Arctic and Antarctica, to seek creditor protection in April.

Surprisingly, however, overall business insolvencies in B.C. were down in 2020 compared with 2019, according to BC Stats. There were 20 insolvencies in B.C. in the third quarter of 2020, for example, compared with 28 in Q3 2019.

“What I’m hearing from the banks is that if you look at … bankruptcies – household or businesses – they’re  down,” said Pedro Antunes, chief economist for the Conference Board of Canada.

Federal and provincial supports to business helped keep many that would have otherwise succumbed to lockdowns stay afloat through the maelstrom of 2020, Antunes said.

“Despite the fact that labour income and employment and wages are down, we’ve actually seen so much support in terms of programs like the CERB [Canada Emergency Response Benefit] or the wage subsidy program, and many others that we’re … actually going to see a very strong year in terms of household income growth this year.”

In general, B.C. businesses have weathered the pandemic-induced recession better than many in other provinces. One exception is hospitality and tourism. For sectors of the B.C. economy that rely on travel, the pandemic has been savage.

“B.C. is very dependent on tourism,” Antunes said. “It’s the gateway for trade with Asia. And so those segments, which are very important for the province, have been hard hit.”

A year without cruise ships has been devastating for commercial districts like Gastown and for tourist attractions like the Vancouver Aquarium. Airlines were hit with a 90% decline in business in 2020, which has had an impact on the Vancouver International Airport.

“Components of the Vancouver International Airport expansion project have been cancelled in response to the dramatic decline in air travel this year,” the Conference Board said in its most recent provincial outlook.

Other sectors of the B.C. economy have held up comparatively well, partly because B.C. managed to contain the spread of the COVID-19 virus better than some other provinces, during the first wave, sparing some sectors the kinds of lockdowns seen elsewhere.

Construction in B.C., for example, was deemed essential, whereas in Quebec the construction sector was temporarily shut down in the spring of 2020.

“In general, residential activity has been so strong, new housing construction has continued, and this is [mitigating] some of the losses that were seen elsewhere,” Antunes said.

Resource industries in B.C. generally kept people working, and the B.C. forestry industry was particularly busy in 2020. Tree planters planted a record number of trees in 2020 in B.C., and sawmills that had been curtailed towards the end of 2019 and early 2020 had shifts returned when lumber prices hit record highs.

Meanwhile, several energy megaprojects in B.C. employed thousands throughout 2020. Only recently have those megaprojects been forced to scale back their workforce temporarily, as a result of COVID-19 outbreaks at work sites and in work camps just prior to Christmas.

“British Columbia remains well-positioned to ramp up its recovery [in 2021],” the Conference Board says in its provincial outlook. “Megaprojects – such as the LNG Canada, the Coastal GasLink pipeline, the Site C hydroelectric dam, and the extension of the SkyTrain in Vancouver – will boost the economy for several years to come. “

The Conference Board estimates B.C.’s real GDP dropped by 6.1% in 2020, and will grow by 4.9% in 2021.  •