Regina Executive Leadership Outlook Quarterly Report March 2018
Table of Contents Executive Summary
3
Economic Outlook Summary
3
Additional Topic: Economic Priorities Summary
3
Economic Outlook
4
The Executive Confidence
4
Current Conditions
5
Economic Outlook Highlights
5
Additional Topic: Economic Priorities
7
Conclusion
13
About the Report
14
Survey
14
Executive Interviews
14
Executive Summary Economic Outlook Summary
Additional Topic: Economic Priorities Summary
The Executive Confidence Index is 2.60, the highest it has ever been in the Greater Regina Area, since the inception of RELO in 2016. This is a 24 point increase over Q4 – 2017 and is 30 points above the historical average. It is clear that the confidence of our business executives is strong.
Two times per year RELO asks additional questions to the standard economic outlook questions. This edition asked GRA executives to identify their short and long-term economic priorities for the Saskatchewan Provincial Government. Almost half (43.2%) of GRA respondents believe that supporting entrepreneurs and business owners should be the top long-term priority for provincial leadership. Looking at the short term, GRA respondents believe that the development of entrepreneurs, Agri-value, and Agriculture sectors should be the top three priority sectors.
The current conditions index is 2.44. The current conditions index rates how Regina’s business executives feel about the economy today. This score is 10 points higher than the previous high of Q3 – 2017, and 19 points over Q4 – 2017. Moving forward, Regina’s executives are optimistic. Forty-three percent (43.2%) of respondents believe that the economy will perform better in the next 12 months. Almost half (48.7%) of respondents believe the current economy is performing about the same as compared to one year ago, 27.0% believe the economy will perform better. A large majority (91.6%) of respondents expect their total fixed investments to remain the same or increase over the next twelve months. 58.3% of respondents expect to employ more people over the next year.
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Forty-three percent (43.2%) of respondents believe that the economy will perform better in the next 12 months.
Economic Outlook The Executive Confidence
The Executive Confidence Index is 2.60, the highest to-date over the two years.
This number represents an increase of 24 points (2.36) from the fourth quarter of 2017. This is also a 39-point increase from the same time last year (2.21). This quarter’s index is much higher than the index average.
The Executive Confidence Index is a single statistic calculated to gauge leadership confidence in the future economy. It is an average taken from a series of questions asking executives to look ahead 12 months. These questions ask executives about the future of the GRA’s economy, their business’ future investments, future number of employees, future sales revenue, and future profitability. In each question, a numeric value is assigned to a verbal response. A value of ‘1’ indicates an expected decrease. A value of ‘2’ indicates an expectation of the status quo, while a value of ‘3’ indicates an expected increase.
3.0
2.0
2.31 2.23 2.08
2.11
2.23
2.21
2.36 2.30
1.5
This statistic assumes equal weight across all five economic questions. The result is an average of all responses. In this calculation, the lowest possible result is 1.0 and the highest possible result is 3.0. A result above 2.0 means that executives are optimistic about the economic outlook for their business, while a result under 2.0 means that executives are pessimistic about the economic outlook for their business.
1.0
2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 Confidence Index Index Average
In the first quarter of 2018, the Executive Confidence Index is 2.60, the highest confidence index to-date over the past two years, indicating very positive optimism from GRA respondents.
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2.60
2.55 2.5
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Current Conditions
Economic Outlook Highlights
A calculation similar to the Executive Confidence Index reports executivesâ&#x20AC;&#x2122; perception of todayâ&#x20AC;&#x2122;s economic conditions as compared to one year ago. In the first quarter of 2018, executives believe the current economic condition of their business has improved compared to one year ago (2.24). Not only is this above the neutral mark, but it is the highest rating observed to date, indicating that executives believe the economic conditions are better than a year ago. To date, the confidence index and current index are strongly correlated (r=.912, p < .001), indicating that a rise in current conditions is likely to be accompanied by a stronger future confidence.
Regina Executives optimism is driven by 43.2% of respondents who believe that the economy will perform better in the next 12 months, as well as the 51.4% believe that the economy will remain the same. Executive Confidence Index has climbed to a new high of 2.60, up 24 points from the previous quarter results. This is the highest confidence index since inception of RELO (past six quarters) and indicates growing optimism in the future economy. Slightly less than half (48.7%) of the respondents believe the current economy is performing about the same as compared to one year ago. Approximately one quarter (27.0%) believe the economy will perform better.
3.0
2.60
2.55 2.5
2.23 2.08
2.0
1.98
2.11
2.23
2.01 1.87
1.85
2.21
2.36
2.31
2.14 1.91
A large majority ( 91.6%) of respondents expect their total fixed investments to remain the same or increase over the next twelve months.
2.24 2.05
Over half (58.3%) of respondents expect to employ more people over the next year. This is an increase of 13.6% over the last quarter. 38.9% of respondents anticipate having the same number of employees over the next 12 months.
1.88
1.5
1.0 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1
Forty-seven percent (47.2%) of respondents report an increase in revenue compared to 12 months ago, 19.4% report decreased revenue.
Confidence Index Current Conditions
Almost three quarters (72.2%) of respondents expect sales revenue to increase in the next 12 months. This is an 11.7% increase from last quarter. Over half (61.1%) of respondents expect their business profitability to increase over the next year. Only 5.6% expect a decrease, which is lower than last quarter, when 14.3% expected a decrease.
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Tables 1 – 4 compare responses from the previous quarter (Q4 2017) to the current quarter (Q1 2018).
Increase Stay the Same Decrease
In the next 12 months, will your firm’s total FIXED INVESTMENTS…
In the next 12 months, will your firm’s sales REVENUE…
10 0
10 0
80
47.2%
80
58.3%
60.5% 60
60
40
40
33.3% 33.3%
29.0% 20
20
19.4% 0
2017 Q4
25.0% 10.5%
8.3%
0
2018 Q1
2017 Q4
In the next 12 months, will the number of people your firm EMPLOYS…
In the next 12 months, will your firm’s PROFITABILITY…
10 0
10 0
80
44.7%
80
58.3%
61.1%
31.4% 38.9%
2017 Q4
33.3%
20
2.8%
15.8%
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2018 Q1
40
39.5%
20
0
54.3%
2.8%
60
60
40
72.2%
5.6%
14.3% 0
2018 Q1
6
2017 Q4
2018 Q1
Additional Topic: Economic Priorities
INTERVIEW QUESTION:
For your top priority, describe what actions you believe should be taken by the new leader.
This edition of RELO asked GRA executive leadership to share their thoughts on economic priorities.
GRA respondents identified policies to minimize regulatory and tax burdens as well as initiatives to enhance local business investment / development to be the primary methods of supporting entrepreneurs and business owners. Other noteworthy activities included targeting value added initiatives and sector for investment attraction / growth and competitive corporate tax rates.
INTERVIEW QUESTION:
What priorities do you believe require the immediate attention of the new Sask Party and NDP leadership? Please provide a rank for each priority area where 1 is the highest priority and 5 is the lowest.
KEY THEMES:
Supporting Entrepreneurs ˙ Make
When considering the average rank of the identified priority areas, GRA respondents clearly believe supporting the development and success of entrepreneurs and business owners through specific policy initiatives should be the highest priority of Provincial Leadership. The other priority areas identified are very closely ranked around the mid point of 3, suggesting they are all noteworthy priorities for consideration.
AVERAGE RANK
PERCENT OF RESPONDENT #1 RANKS
Support the development and success of entrepreneurs and business owners through specific policy initiatives
1.89
54.1%
Diversify the economy by seeking out new or underdeveloped sectors for development
3.19
13.5%
Attract investment and businesses to the province using business friendly policy designed for large institutional investors
3.27
18.9%
Specifically target a few supply chains for growth rather than taking a broad growth approach
3.27
10.8%
Build a pool of trained labour to meet the demands of the labour market
3.38
2.7%
PRIORITY AREA
it easy to invest in Saskatchewan start-ups
˙ Minimize
regulatory burden
˙ Create
a tax framework that benefits entrepreneurs (e.g. local hiring, indigenous employment, reverse PST changes, etc.)
˙ Support
programs and initiatives that assist new and existing business growth
˙ Improve
government networking with business leaders to leverage the knowledge that exists in the province
˙ Develop
a broad policy that assists all entrepreneurs
˙ Maintain
minimum wages
˙ Reverse
the tax changes that effect small business
˙ Establish
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a dynamic cannabis industry
GRA respondents clearly believe supporting the development and success of entrepreneurs and business owners through specific policy initiatives should be the highest priority of Provincial Leadership.
Target Specific Supply Chains
INTERVIEW QUESTION:
˙ Identify supply chains in which Saskatchewan could effectively participate and assist local business participation
Now, consider longer term, (5 years+), what do you believe should be the most important long-term economic priority of the new Sask Party and NDP leadership?
˙ Target
valued-add opportunities / sectors
GRA respondents clearly believe that supporting the development of entreprneurs and business owners is the top priority for immediate and long-term action. Almost half (43.2%) of GRA respondents believe that this should be the top long-term priority for provincial leadership. This was followed by investment attraction and building a labour pool.
˙ Identify
the largest purchases by the Crowns and other government departments and engage in a specific Saskatchewan Supplier Development Program
Investment Attraction
Almost half (43.2%) of GRA respondents believe that supporting the development of entreprneurs and business owners is the top priority for immediate and long-term action.
˙ Provide
competitive corporate tax rates
˙ Demonstrate
stability for investors
PRIORITY AREA
˙ Enhance value-add initiatives in the agriculture sector
Support the development and success of entrepreneurs and business owners through specific policy initiatives
INTERVIEW QUESTION:
Diversify the economy by seeking out new or underdeveloped sectors for development
Are there any other priorities not mentioned in this ranking question that you would like to mention?
Attract investment and businesses to the province using business friendly policy designed for large institutional investors
Additional priorities that should be considered by the Provincial Government are strategic investment in infrastructure, leadership in the cannabis industry, and educational and economic development support for First Nations.
Specifically target a few supply chains for growth rather than taking a broad growth approach
KEY THEMES: ˙ Strategically ˙ Show ˙ Be
Build a pool of trained labour to meet the demands of the labour market
invest in infrastructure
leadership in the cannabis industry
strategic about Carbon Tax
˙ Support
our educational programs at all levels (on-reserve included) to enhance the attractiveness of the GRA for young people to stay and live. This includes health, arts, and cultural programs
˙ Enhance
competitive access within Saskatchewan as well as to supply markets
˙ Environmental
and sustainability leadership
˙ Support
First Nations economic development, help reconcile the economic divide
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PERCENT OF RESPONSE
43.2%
8.1%
21.6%
8.1%
10.8%
Other
5.4%
Unsure
2.7%
54.1% 43.2%
Support the development and success of entrepreneurs and business owners through specific policy initiatives
18.9% 21.6%
Attract investment and businesses to the province using business friendly policy designed for large institutional investors Build a pool of trained labour to meet the demands of the labour market
Support the development of entrepreneurs
10.8% 8.1%
Diversify the economy by seeking out new or underdeveloped sectors for development
13.5% 8.1%
14%
27%
Agri-value Sector
38%
16%
38%
3%
Agriculture Sector
2.7% 10.8%
Specifically target a few supply chains for growth rather than taking a broad growth approach
19%
19%
14%
14%
Information Technology Sector
16%
5%
19%
Oil and Gas Sector
Other Unsure
16%
3% 11% Manufacturing Sector
14%
5.4%
3% 5%
Professional Services Sector
2.7%
5% 5% 3% Mining Sector
0% 10% 20% 30% 40% 50% 60%
3% 5% 5% Immediate Top Priority
Metal Fabrication Sector
Future Top Priority
5% 3% Tourism Sector
INTERVIEW QUESTION:
3% 5%
If you were the new leader, where would you focus growth initiatives over the next 1-3 years? Please rank your top three in order of priority (where 1 is the highest priority).
Other
3% 0%
When asked where provincial leadership should focus growth initiatives, most GRA executives (60%) believe the development of entrepreneurs should be in the top three priorities for growth initiatives. This is followed by the Agri-value (57%) and Agriculture (47%) sectors. Commentary from respondent interviews suggested the GRA is well positioned to develop businesses which add value to the resources produced in Saskatchewan.
10% Rank 1 Rank 2 Rank 3
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20%
30%
40%
50%
60%
INTERVIEW QUESTION:
Support entrepreneurship
What specific tools, policies or interventions do you believe could expedite economic growth within the GRA?
˙ Loans
GRA respondents believe there are multiple policy, program changes, or government interventions that could aid economic growth in the GRA.
˙ Mentorship
˙ Small
program for entrepreneurs business incentives
programs and making people available to assist businesses with start-up
MAIN THEMES ARE:
Enhance Cross-Sector Communication and Collaboration
˙ Reduce
˙ Open
government involvement in business to expedite business processes;
˙ Financial
communication between businesses of all sectors in order to find means to collaborate and plan
incentives, including changes to the tax environment; and,
˙ Encourage
˙ Labour market development.
˙ Explore
KEY THEMES:
Other
Reduce Government Involvement
˙ Focus
˙ Government
‘clustering’ sectors through zoning to enhance collaboration
on the downtown and cultural core, following the ‘Design Regina’ OCP
should be a ‘champion for growth’
˙ Better
˙ Eliminating
the divide between First Nation & Metis citizens and broader provincial society/economy
˙ Connect
˙ Engage
˙ Reduce
˙ Adopt
communicate policy so that businesses can take advantage of what currently exists business leaders with policy decision makers to allow discussion about real issues
˙ Speed
˙ Tax
to trained, qualified talent pool
˙ Increase
graduation rates and overall funding for First Nations students at all levels investment in upskilling our Saskatchewan workforce
˙ Incentives
to bring new graduates here and help them stay (bursaries, tax credits)
˙ Connecting
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credit for employing local talent in targeted sectors (i.e., IT)
˙ Incentives
Labour Development
˙ Continued
with business leaders to identify best growth opportunities
policies that encourage development, such as recent modifications to development fees for industrial land
the amount of bureaucracy when dealing with city hall
up processes to meet business timelines and expectations
˙ Access
locals businesses to use local suppliers
educational institutions to business.
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for research and development
Procurement
INTERVIEW QUESTION:
What single policy, program change, or government intervention would assist your organization and/or sector to capitalize on growth opportunities?
˙ Encourage
Crown Corporations to use Saskatchewan suppliers whenever possible
˙ Change
procurement practices to support development of local businesses rather that importing capabilities from out of province
When asked what policy, program change, or government intervention would best assist their organization capitalize on growth GRA respondents echoed the key themes seen throughout this edition of RELO. Primary methods to assist GRA businesses include:
Positive Investment and Development Environment ˙ Regulatory
relief for entrepreneurship investing
˙ Easier
access & support for capital investments and development
˙ Supporting
local businesses through various policies and programs including encouraging local procurement and reducing the cost of doing business in the GRA; and,
Greater Regina Area Promotion
˙ Incentives to support business development and sustainability, mainly changes to taxation.
˙ “Shout
KEY THEMES:
˙ Boast
Incentives
Infrastructure Investment
˙ Provide
˙ Rejuvenate
from the rooftops that Saskatchewan / Regina is THE place to be.”
direct cash incentives for new plant, equipment, and job creation
˙ Support
˙ Invest
to increase the focus on creating a vibrant downtown
˙ Building
performance targets such as zero net energy use and deep energy retrofits as well as rebates/incentives for renewable energy sources
˙ Tax
incentives to invest in new equipment.
˙ Changes
infrastructure
in GRA transportation infrastructure (Uber, public transportation, direct flights, etc.)
for product research and development
˙ Incentives
about the great businesses that operate here
to taxation including:
˙ Reverse PST changes made last spring ˙ Tax incentives for growth ˙ Lower property taxes ˙ Larger research and development tax credits ˙ Reduction in corporate tax
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GRA respondents believe there are multiple policy, program changes, or government interventions that could aid economic growth in the GRA.
INTERVIEW QUESTION:
INTERVIEW QUESTION:
Do you believe there is sufficient qualified labour in Saskatchewan to meet your current resourcing needs? Please rate on a scale between 1 and 5; where 1 = strongly disagree and 5 = strongly agree.
Do you believe that there will be sufficient qualified labour in Saskatchewan to meet you future resourcing needs over the next 5 years? Please rate on a scale between 1 and 5; where 1 = strongly disagree and 5 = strongly agree.
Approximately one third (35.1%) of GRA respondents believe there is sufficient qualified labour to meet their current resourcing needs, 27% do not believe there is sufficient qualified labour, and the remainder (37.8%) are neutral. The average numeric response was 3.11. This is marginally above the neutral point suggesting slight agreement that there is currently sufficient labour.
Again, approximately one third (35.1%) of respondents believe there will be sufficient labour in Saskatchewan over the next 5 years. Another third (32.4%) do not believe there will be sufficient labour. The remaining respondents were neutral (24.3%), or unsure (8.1%). The average numeric response (3.08) was marginally above the neutral point. This suggests slight agreement that there will be sufficient labour in the future.
Due to the very similar response rate between positive, neutral, and negative responses we investigated the response at the sectoral level. Sector segmentation analysis demonstrated that there is no singular position held by any sector.
Due to the very similar response rate between positive, neutral, and negative responses we investigated the response at the sectoral level. Further segmentation analysis demonstrated that there is no singular position held by any sector. Further research should be conducted into the rationale and subsequent needs of the neutral and negative responses.
10.8%
Strongly agree
24.3%
Agree
10.8%
Strongly agree Neutral
37.8%
Disagree
18.9%
Strongly disagree
Agree
24.3%
Neutral
24.3% 27.0%
Disagree
8.1%
5.4%
Strongly disagree 0%
5%
10%
15%
20%
25%
30%
35%
40%
8.1%
Unsure
0%
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5%
10%
15%
20%
25%
30%
35%
40%
Conclusion While steps can always be taken to improve and advance our community, this positive outlook desmonstrates the opportunities currently available in the Greater Regina Area. With suggested improvements, the GRA will continue to grow and provide avenues for future business leaders and investments to find success within Regina.
This Quarter business leaders were incredibly optimistic. Once again, this quarter displayed an all-time high Executive Confidence Index rating of 2.60, a 24 point increase from the previous quarter. This edition of RELO looked to identify the short and long-term economic priorities for the provincial government. The respondents believe that supporting the development of entrepreneurs and business owners should be the primary long-term priority. Respondents also identified the Agri-value (57%) and the Agriculture (47%) sectors as high priority focus areas.
The GRA will continue to grow and provide avenues for future business leaders and investments to find success within Regina.
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About the Report The survey is distributed to a list of approximately 90 senior business leaders. The survey has an additional component entitled “The Economic Outlook”. This is a set of static questions asked each quarter that inform a unique Executive Confidence Index. This index is used to measure how confident executives are in Regina’s overall economy across each quarter.
Economic Development Regina (EDR), in partnership with Praxis Consulting (Praxis), began a quarterly publication entitled, “Regina Executive Leadership Outlook” in September 2014 that captures the thought leadership of senior business leaders in the Greater Regina Area (GRA) on key issues facing Regina and surrounding areas. Each quarter, Praxis and EDR pick a specific topic as the focus of the publication. Praxis then develops a survey questionnaire to gather quantitative data and an interview questionnaire to gather qualitative data using the chosen topic.
Interviews
Survey
Praxis and EDR also request in-person interviews with Regina area-based executives to supplement the survey responses. Individuals are selected for an interview when their perspective, industry, or background aligning closely \with the survey topic. All interviewee data remains confidential unless otherwise agreed upon by the interviewee for media use.
Fieldwork for this project included 37 surveys completed by CEOs and senior executives in Regina’s business community. Survey responses were received via an online survey, delivered to each participant by email. Responses were collected February 5 – 16, 2018. A total of 81 survey invitations were sent; the response rate is 45.7%. Margins of error cannot be applied to this type of non-probability sample. ˙ On
this scale, responses of 1 or 2 are negative; a response of 3 is neutral, and responses of 4 or 5 are positive.
˙ This
report shows frequency of response at every option in the response set, along with a mean, to indicate the overall level of response.
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About EDR
About Praxis
Economic Development Regina Inc. (EDR) is the economic development agency for the Greater Regina Area.
Praxis Consulting is Saskatchewan’s largest locally-based management consulting firm.
EDR is a not for profit economic development corporation, governed by a volunteer board of directors. EDR provides leadership to the community to support industry growth and diversification through retention and expansion of existing business and encouraging investment, development of industry and tourism.
Praxis works collaboratively with clients in the facilitation of growth and excellence. Leveraging an unmatched wealth of experience across multiple sectors, Praxis adds value to their clients through:
In collaboration with key stakeholders, we work to identify, develop and promote opportunities that advance economic prosperity and ensure the Greater Regina Area offers a vibrant and diversified economy for investors, is a positive destination experience for visitors and offers a high quality of life for residents.
˙ Strategy:
David Froh, Vice President E: dfroh@economicdevelopmentregina.com P: 306-789-5099 ext 230
˙ Research:
Information gathering and data analytics.
Thought-leadership, rigorous planning, and pragmatic strategies.
˙ Results:
Cascading strategy and culture within the organization.
Val Sluth, Managing Principal E: info@praxis-research-strategy.ca P: 306-545-3755