By Marvin Ryder
The biggest business and economic stories of 2020
The dominant business story of 2020 involved the economic damage caused by the pandemic “hurricane” of COVID-19. When the year began, COVID-19 was a disease in Wuhan, China. The world attempted to contain the disease, but it leaked, first to Korea and then to Iran, and quickly spread globally. Canada identified their first cases in late February. Still, by the middle of March, Canada’s federal government encouraged people to either work from home or declared some businesses as non-essential and suggested they be temporarily closed. The government introduced several new programs: CERB – Canada Emergency Relief Benefit; CEWS – Canada Emergency Wage Subsidy; CEBA – Canada Emergency Business Allowance; CECRA – Canada Emergency Commercial Rental Allowance; and CERS – Canada Emergency Rent Subsidy. The Canadian economy shrank in the first two quarters of 2020 at the fastest rate since the Great Depression of the 1930s.
The country fell into recession. However, by June, the economy’s sectors started to re-open. The third quarter saw the fastest economic growth recorded in the last 80 years. Even with a second wave of COVID-19 in the fall, lockdowns were smaller and more targeted. Growth continued in the fourth quarter. The Canadian economy shrank a little more than 5% for the year, but the numbers were far worse halfway through the year. There was a debate about whether there would be a V-shaped recovery. It has now become clear that we are witnessing a “leaning V” recovery. The economic activity of three sectors – travel, tourism, and hospitality – has remained severely depressed (Air Canada has cancelled 90% of its flights). 2021 should be a year of resiliency and recovery. Buoyed by the distribution of many vaccines, the expectation is higher than average economic growth in the year ahead.
The Hamilton/Burlington area experienced a “hot” housing market, with prices growing by 10% to 15% over the last year.
There is a perfect storm behind this growth:
As the economy was locked down in April, Premier Doug Ford declared both the Easter Bunny and Tooth Fairy as “essential services” to reassure children.
In October, Unifor (the Union that represents Canadian autoworkers) began contract negotiations with Ford, Chrysler, and General Motors. While negotiations three years earlier had led to strike action, the 2020 negotiations went well. They led to announcements of investments totaling $4.5 billion in the auto sector. All three companies plan to retool production to produce electric car engines and light-duty vehicles in the Province. The shuttered Oshawa GM plant will see new life as part of this broad-based investment (supported in part by the Federal and Provincial Governments). These investments should ensure an Ontario auto industry into the 2040s.
The Canada-US-Mexico Free Trade Agreement (known as USMCA in the United States and as MUSCA in Mexico) was ratified by all parties early in 2020 and came into effect on July 1. The Agreement is much more of an update to the original NAFTA deal approved in 1993. Agreement changes include the use of the internet in business operations and copyright to the life of the author plus an additional seventy years. Toward the end of 2020, Canada also signed a free trade agreement with Great Britain as part of its plans to leave the European Union (EU). The 2020 agreement is identical to the deal negotiated with the EU in 2017. Both countries agreed to further talks in 2021 to deepen the Agreement.
The Federal Government offered no budget for the 2020-21 fiscal year. In November, it announced an eye-popping projected deficit of $385 billion. Two-thirds of the deficit could be traced to support programs that the government had launched. One-third was linked to smaller revenues, unemployment, and shuttered businesses. The anticipated budget deficit for 2021-22 includes $110 billion in support for a broad-based vaccination program and all business sectors’ recovery.
It was a presidential election year in the United States. President Donald Trump (a Republican) was challenged by former Vice-President Joe Biden (a Democrat). In early November, Joe Biden defeated Donald Trump. The day after he was inaugurated in January 2021, President Biden withdrew all permits to build the Keystone XL pipeline to bring Alberta oil to American markets.
Hertz Rental Cars, Pier 1 retailing, and Le Chateau clothes stores were closed in 2020. Bombardier sold its train division to European competitor Alstom and sold interests in its commercial jets to Airbus. Mountain Equipment Co-op (MEC) agreed to sell its store leases and inventory to Kingswood Capital Management. Five million shares held by customers of MEC were cancelled. Cenovus Energy completed the acquisition of Husky Energy in 2020.
The deaths of Breonna Taylor and George Floyd reinvigorated the Black Lives Matter protest. Even during the May-June pandemic lockdown, many people around the world marched and protested police violence against African-American individuals. Rising social consciousness led to the NFL, Washington Redskins, and the CFL Edmonton Eskimos announcing that they would be changing the teams’ names along with some brand identifiers.