Robert Fine, Director of Economic Development

by Robert Fine

With 2012 underway, the speculation continues as to what kind of economic recovery we can expect.  In my last column I cautiously suggested that we will see economic growth similar to what we saw in 2002, considered by many to be a typical economic year before a five-year boom took place in the Okanagan valley.  Between 2005 and 2007, for example, the Central Okanagan economy grew on average of 11 percent per year.  This unsustainable growth created housing shortages and labor market challenges and generated significant levels of income for all levels of government.

Residents of the Okanagan quickly became accustomed to a boom, boom, boom economy which showed no signs of faltering.  But falter it did – the global meltdown precipitated by the collapse of the US housing market and international banks brought a hasty retreat of the prosperity in the fall of 2008.  Unfortunately, many of us became addicted to the growth and that growth became the new normal.  Think of coming off the Connector and hitting the couplet in West Kelowna – you have just dropped from 110 km to 50 km per hour and it feels like you are barely moving.   The economy can feel like it as well.

A look at key economic indicators in 2003 (data from the previous year) and numbers from 2011 (in the Economic Development Commission’s 2012 Economic Profile to be released next month), shows an amazingly similar set of economic conditions, a pattern also evident during the first two years of the past decade.

Population grew at 1.6 percent versus the 3.4 percent estimated in 2011.  The unemployment rate stayed at 9.7 percent compared to 8.1 percent currently.  Labour participation grew from 63 percent to 69 percent, meaning there are more people in the labour force.  When looking at the total number of people employed in 2002 versus 2010 (the last numbers we have), there was an increase of 36 percent while population of the Central Okanagan grew by only 20.2 percent.  In other words, job creation outgrew population by almost two-to-one.

Household income increased by 3.1 percent in 2003 while edging up 2.5 percent in 2010.  Building permits, accounting for inflation, came in at $183 million in the City of Kelowna, reaching $264 million.  On a down side, housing starts tumbled from 987 to 600 last year, while MLS sales about 500 greater than in 2002.

Clearly, there are differences in the economy and it is a case of both good and bad news.  More people are working.  We do not know the wages of the new jobs that have been created and if they are of equal or greater economic value.   What we do know is that residential housing is playing a less significant part in the current economic model.  While population growth has rebounded, excess inventory is impacting the growth in housing.  The housing sector and all those that rely on income from it including suppliers, builders, marketers and realtors are feeling the pinch to some degree.

The return to the boom years of mid-decade is not likely to return in my lifetime.  Globalization has changed the equation.  The 2002 economy may be the 2012 economy.  Not everyone will benefit from our new economy but in real terms, we are doing better than many places.  This is not to suggest that individuals and firms are not struggling. This is not 2007 and we are all readjusting to the “old new reality.”  Firms I have met with in the past year call this the worst market seen in 20 years of being in business.  The manufacturing employee who finds there is no work and no new opportunities is not imagining this scenario.

As a community, we need to continue to be receptive to new business opportunities, be strategic in the approach we take in seeking new investment, and keep our existing businesses strong by listening to their concerns and acting on them.  In the month ahead, the Economic Development Commission will release it 2012 Strategic Plan.  It has been created with the input of hundreds including individual business owners we have met with through our one-on-one site visits, participants in industry sector roundtables, community discussions and significant input from a dedicated voluntary advisory board.  Economic development today is about looking forward and seeing what the next trend is and what role we can play in that trend.  It has become a considerably more challenging task of late, but one that we are in a good position to take advantage of …stay tuned.

The start of a new year always brings hope for prosperity and the desire for a strong economic year. Looking ahead to 2012, what will the year hold?  Starting on a positive note, the Conference Board of Canada predicts strong growth for British Columbia in 2012 – in the area of 2.6 percent. The Canadian Chamber of Commerce sees growth this year at 2.1%.  The Provincial Economic Forecast Council, comprised of some of the most respected independent economic forecasters in Canada, is predicting BC’s GDP will grow 2.2 percent in 2012 and average 2.7 percent from 2013 to 2016.

While BC’s economy is still struggling with the lack of a really strong recovery in the US, the province has seen continued growth in the forestry and manufacturing sectors.  Manufacturing sales in British Columbia moved ahead .1 percent in September, marking the fourth consecutive monthly increase.  British Columbia’s exports are forecast to grow 13 percent in 2012, the highest rate of growth among all provinces according to a Global Export Forecast by Export Development Canada.  Canada Mortgage and Housing sees housing starts growing provincially by 7 percent this year on average.

Other good news comes from the Real Estate Investment Network (REIN), a real estate research, investment and education organization whose members own more than 26,000 properties (valued at over $3.3 billion) across the country.  The REIN identified the best communities to invest in from a real estate perspective based on population growth, employment opportunities and housing sales among other factors. While Surrey led the pack, Kelowna finished in the top 10 at number 7, and the Council’s “open for business mantra” bodes well for getting the word out about opportunities in the Okanagan.

It wouldn’t be a new year without worry and I do have some, most of them at a national or global level.  In late December, the International Monetary Fund warned us that the world economy was at a “very dangerous juncture,” coping with a crisis of confidence due to high unemployment and slowing global growth.  Match this with the United Nations’ move to cut its 2012 world growth forecast to 2.6 percent from 3.6 percent and the year ahead could indeed to be tough.  While British Columbia has done a good job offsetting global sluggishness by increasing exports to growing economies like China and exporting less to the US (forestry exports to the US, for example, have dropped from 70 to 46 percent in the past five years), there are now signs that the world’s largest economy is cooling.  Mounting local government debt and slowdowns in everything from industrial production to the housing market has led many to predict slower economic growth in 2012.

Patrick Chovanec, a professor at Tsinghua University’s School of Economics and Management in Beijing, China has expressed concerns over China’s economic engine.  “For years analysts have warned of a looming real estate bubble in China but the predicted downturn, the bursting of that bubble, never occurred — that is, until now,” Chovanec says.”  He tells of scenes in Shanghai last year where property developers started slashing prices on luxury condos by up to 30 percent.  Crowds of owners who had recently bought apartments at full price converged on sales offices throughout the city demanding refunds. (Sounds like Vancouver’s Olympic Village development).  A decline in Chinese housing would have impact on suppliers worldwide, many benefitting from China’s construction boom from iron-ore miners in Australia and Brazil, copper miners in Chile and lumber mills in British Columbia and Russia.  This would potentially damage investment and consumer confidence while retarding the rising tide of Chinese demand that has driven global growth.

My second major worry is the debt burden of Canadian households.  2011 was the first year in history where household debt in Canada surpassed levels of both the United States and the United Kingdom.  As a Christmas warning to consumers, Statscan released its December findings showing that the ratio of debt to personal disposable income hit a high of 152.98 percent in the third quarter, rising from 150.57 percent in the prior three months.  Any sudden negative economic event such as interest rates hikes, climbing unemployment or falling house prices could put Canadian consumers under significant stress.  Add in a clear signal that consumer spending will remain extremely sluggish for the next few years, and as Mark Carney, Governor of the Bank of Canada, states, “Our greatest domestic risk relates to household finances with roughly one in 10 Canadians in a vulnerable financial position.”

So what will 2012 bring?  Only living it will tell. I’m proud of our Okanagan entrepreneurs and see a positive year ahead – not 2007 positive, but more like 2002 positive.  More on this next time.

By Robert Fine, Director of Economic Development

With less than two weeks left to the Christmas shopping season, I’m amazed at the number of ongoing analysis and reports of how well the season is going and the range of data that is available that relates to the retail economy.  I understand the importance of Christmas to retailers, but are we not taking some of the joy out of the season by broadcasting hourly how good or bad a season it’s going to be from a financial perspective?  At the risk of adding to the question, I have summarized some of the key economic factors behind Christmas.

And here are a few quick numbers first.  The Retail Council of Canada is predicting an increase in sales this Christmas of 3%.  Over 26 million North American’s will shop on Christmas eve day, retail sales increased between November and December by 5.5% with an estimated $600 billion being spent by North American consumers.  With that out of the way, there is a lot of data to be gathered as to why he season is so importnat to retialers, and I don’t mean obvious.  For a number of  years Statistics Canada has looked at the behavior behind Christmas shopping and the impact on our economy.  As Statscan sees it, there is little wonder that Christmas can be a make-or-break time of year for jewellery stores and other larger merchandisers such as toy, hobby and game stores.  Typically these retailers triple their average monthly sales, and sales in December alone accounted for more than 20% of their annual revenue.   And don’t forget the large volume of appliances, electronics, cosmetics and perfumes (17% of December retail sales.)  Overall, Canada is expected to spend $58 billion in retail stores this holiday season.

The importance of the economic impact of Christmas was reinforced in the 1930s by U.S. President Franklin D. Roosevelt.  He proposed moving the U.S. Thanksgiving holiday date to extend the Christmas shopping season as a way of boosting the economy during the Great Depression.  Roosevelt’s idea worked – a recent study undertaken at the University of Missouri found that increasing the number of shopping days increases spending in November while leaving December sales unaffected.  This leads one to believe that lack of time limits retail spending, but when it comes to electronics and clothing, sales actually increase in December when there are more shopping days in November.  Another reason for the early start is the information gained from customer focus groups conducted by some of the larger retailers throughout the year which show people want a longer Christmas shopping season.  Even though many stores have responded to this customer demand, last Christmas Eve in the United Kingdom, shoppers were spending at a rate of $3 million Canadian per minute.

Back in Canada, Statscan data shows that in consumers start buying big-ticket items such as furniture, electronic equipment and appliances, in November but wait until December to buy less expensive gifts.  With the growth in gift cards, it should come as no surprise that January is busier than it used to be; consumer spending in retail stores has eased off in November and December, and gained ground in January.

And what about on-line sales?  The retail monitor from sugested that 90% of  shoppers planned to do at least some of their shopping on-line this year because buying on-line reduces much of the stress associated with Christmas shopping.  Specifically, on-line shopping provides a welcome respite from crowds (82%), parking problems (60%), and even Christmas music (28%)!  A further 70% said price was their main reason for shopping on-line.  There are some warning signs for e-retaliers, however:  challenges regarding delivery times and sites loading too slowly and being difficult to navigate were reported by over half of the respondents.  Over a third of retailers admit to having their own concerns about the overall reliability of their e-commerce sites.

Despite the flow of economic reporting about the importance of Christmas (that ironically, I have just added to), I hope we can all take time this season to be thankful for family, friends and the food and shelter we enjoy and not get caught up in a shopping frenzy.  One is reminded of Stan Freberg, former advertising man and radio comedian who, in 1958 recorded a parody song called “Green Christmas.”  The song called into question the tactics being used by the advertising world to sell products (i.e. Santa with cigarettes hanging out of his toy bag).  A listen to the song today, some 53 years later is a good reminder of what the season is all about.  Happy Holidays everyone!

I know what you‘re saying (after “get a life”) – why is this so interesting?

The answer lies in trying to identify and track trends in foreign direct investment that allow the Okanagan to see how well defined our targets are and, hopefully, to become more effective at attracting investment.

IBM sat down with more than 1,500 CEOs from around the world to talk about expectations for running their companies. The data collected in 2010, showed for the first time in three years, that foreign direct investment was beginning to recover. Total projects grew by over 10 per cent and job creation increased by one-quarter.  Asia overtook North America as the second largest source region for foreign investment after Europe, with Japanese, Chinese and Indian companies engaging actively in global investment.

Much focus has been placed on the amount of investment the emerging nations of Asia have made in European and North American markets, but Asian investment is now staying within the continent.  In 2009, the U.S. was the primary source of investment for China. Flip ahead one year, and Bangladesh and India topped the list. Japanese investment is now headed to Thailand, China and India, with the Philippines the No. 1 location for investment from India.

This is all a result of companies in Asia seeing significant growth opportunities and, in many cases, large talent pools of labour and affordable operating conditions. In terms of job creation, China is now the top destination country with major investments in electronics, transport equipment and chemical sectors. A 70 per cent increase was exhibited in 2010.

By contrast, African nations saw a 35 per cent drop in job creation related to foreign investment, (the exception being South Africa) and both Mexico and Canada saw declines.

Canada‘s totals moved down the results chart from 15th to 20th, a decline by five positions in overall job creation from foreign investment. The U.K., Germany and France had significant foreign investment gains, being prime locations to serve Western Europe and having niche areas of specialization that appeal to multinational firms.

From a city perspective, only one Canadian city made the list, that being Toronto, in 16th place. Of the top 25 cities, seven are from Asia, 12 from Europe and two from the U.S.  London is once again the leading destination, with New York at No. 10.

When looking at it from an Okanagan perspective, it demonstrates the global nature of investment and challenges in luring foreign direct investment into Canada, let alone B.C. As the report concludes, “locations that manage to create attractive and competitive business environments for key sectors and business activities stand to gain tremendously from increased economic growth.”

On the other hand, “the price to pay for failing to address competitive weaknesses has also increased, with companies being more discerning about the global operational footprint.”

With this in mind, the Central Okanagan Economic Development Commission will present its 2012 strategic plan early in the New Year, focusing on building and working with existing companies while seeking targeted investment.  As many an analysis has demonstrated, 80 per cent of economic growth will come from within, that is from existing businesses and aiding in their abilities to sustain and expand.

The business climate described by IBM, speaks specifically what we need to continue to do to make it easier for businesses to thrive, providing pertinent resources and inputs, and letting business do what they do best.

Robert Fine is executive director of the Central Okanagan Economic Development Commission.

Robert Fine, Director of Economic Development

Back during the last Kelowna election for the seat of Brian Given, who lost his heroic battle with cancer in November of 2009, I voted and afterwards attended a cocktail party with about 10 couples. Thinking there would be interest in the election and seeking input from folks, once we found the results, I was completey dismayed to learn that only five people had actually bothered to vote.

Fast forward to 2011 and, after a long four weeks, the municipal election campaign finally culminates with election day tomorrow. With approximately 225 candidates for councillors, regional district directors, mayors and school trustees, it will no doubt be an interesting evening regardless of where you live in the Central Okanagan.

But interesting doesn‘t always translate into voter engagement and voter turnout.

The Kelowna CMA (census metropolitan area) has traditionally had the lowest level of voter participation in municipal elections. In 2008, the last year of full elections, only 19 per cent of Kelowna and Lake Country residents voted – Peachland was the exception with almost half the eligible population voting in 2008).

The last two municipal elections to replace individual candidates dragged to historic lows with only 11 per cent voting in Kelowna, and 14 per cent voting in Peachland. From a provincial perspective, average municipal turnout in 2008 dipped to 31 per cent, a drop of about 12 per cent in real terms from 2005.

What is so confounding is that we continue to vote in greater numbers for our provincial and federal representatives, but on a day-to-day basis, the most relevant and interactive part of our lives involves decisions made and services provided at the local level.

Turnout for the last federal election hovered around 61 per cent, while provincially, about half of the eligible electorate cast a ballot.

So what is it about municipal elections that create a complete sense of apathy with citizens?

Many voters feel they distrust politicians at any level, don‘t follow the local political system and believe their vote makes no difference at all.  Generating interest in local affairs, when bombarded by provincial, national and global media, can be challenging. Elections are rarely fought over life-changing issues for most people and, as a result, many choose not to vote.

Many feel there are just too many candidates and it is far too difficult to get to know them all. And, of course, the highly popular, I don‘t have time. (Moves to create online voting in this municipal election were rejected by the province, with a promise to look into implementing an online system in 2014).

In part, I blame globalization for some of the decline. In a frantic multimedia universe where information is so prevalent, there is the risk of people becoming “over-informed and under-engaged.” The solution to this dilemma comes in better communicating what municipalities are responsible for. Participatory democracy must become a way of life and voting must be seen as part of that lifestyle. Let‘s hope that voters match that interest by taking the time to participate tomorrow.

Robert Fine is the executive director of the Central Okanagan Economic Development Commission.

Robert Fine, Director of Economic Development

In tough economic times, consumers tend to focus more energy and effort on saving money.  A simple Google search for best coupon sites yields close to 58 million results.  Travel sites expound the benefits of last minute deals for air tickets, hotels and restaurants.  But sometimes deals are not as good as they seem.

Cheapseats.com has just completed its 2011 list of the most affordable cross border airports to fly from in North America and the results might surprise you.  Using the 20 most searched border airports through the month of August of this year, Cheapseats scoured its website to find the most popular domestic and international destinations.  The top destinations include Montreal, Miami, Las Vegas and London – not a total surprise considering recent concerns about Canada’s inability to compete with US airports (in spite of the introduction of a new passenger tax of $5.50 by the Americans).  Kelowna, however, has fared well.

Earlier this year, the Association of Canadian Travel Agencies (ACTA) urged Ottawa to take the brakes off Canada’s aviation system and allow the country’s travel and tourism industry to grow and create jobs.  Unlike Kelowna International Airport (YLW) – the largest municipally-owned airport in Canada – most airports in Canada are charged rent by the Federal Government.  Canada is the only country in the world that charges Crown rents to airports.  For the last year that numbers were available, that equates to over $250 million a year received from the airports, which make up for this rent by charging higher passenger taxes and landing fees, resulting in higher ticket prices.

There is a significant philosophical approach which, like many subjects, differentiates the US from Canada.  In the US, most airports are owned by local or state governments and receive no federal subsidies except for small airports under separate criteria.  Major airports do receive huge amounts of funding in other ways that are guaranteed by Washington, however. In Canada, the Federal Government looks at airports as a source of tax and rental revenue rather than an economic engine.  Americans view their airports in a completely different light.

A study by the International Centre for Air Transportation at MIT highlights the importance of this economic relationship.  “Air transportation provides employment in the aviation sector, and creates wider socioeconomic benefits through its potential to enable certain types of activities in the local economy…the availability of air transportation services effectively increases the scope and cycle time of economic activity.  This feedback relationship results in a general correlation between the amount of air traffic and Gross Domestic Product.” A million passengers equates to an increase in GDP of one percent.

David McCaig, President and COO of ACTA, maintains that, “Ottawa has to provide the kinds of progressive programs we see in the US or travelers will increasingly turn away from Canada.”

Giovanni Bisignani, Director General and CEO of the International Air Transport Association (IATA) agrees that the Canadian government should be challenged.  He said Canada has fallen from eighth to 15th place among the most visited countries between 2002 and 2010, and is 106th in cost competitiveness behind Japan, the UAE, India, China and the US.  A visit to Canada is $160 more expensive than a visit to the United States.

The effects of this include a staggering number of Canadians making one way trips that depart from or arrive in the US.  In the past year, almost two million Canadians flew from Buffalo, 700,000 from Seattle and over 325,000 from Bellingham. With significant price savings and lower passenger fees and taxes, Canadian airports will continue to struggle to compete.

The Cheapseats study goes a step further by looking at the average ticket price.  Bellingham is the cheapest location to fly from with an average air fare of $285, followed by Detroit ($380) and Burlington, Vermont ($394).  And here may lay the surprise for many: Kelowna was ranked number four, the most inexpensive transborder airport in Canada, coming in at $415 a ticket. The only US airport more expensive was Buffalo at $476 a ticket.  The most expensive location in Canada – St. Johns, Newfoundland at $593.

YLW is the lifeblood of our region’s economy, generating economic impacts of over $300 million.  Unlike other Canadian airports, we have greater local control over our fees, resulting in Kelowna being a less expensive place to fly from.  Next time you are looking at Bellingham or Seattle as cross border flight locations, check your actual savings and the fuel and time involved – Cheapseats’ results might change your mind.  And be grateful that we use our international airport as an economic tool not a revenue generator.

Robert Fine, Director of Economic Development

by Robert Fine

Kelowna Daily Courier – October 18, 2011

The past month, the challenge of predicting when and how a full economic recovery will occur has been demonstrated around the world.  The Eurozone struggles, rioting in Spain and Greece and the pace at which world events are impacting the global business environment has created a fairly unsure future.  At the same time,  many people feel disenfranchised by their lack of future caused by the current economic climate.  The Occupy Wall Street movement has gained international attention but where the movement is going and whether it will have political impact is still to be seen.

The movement was born out of frustration on a number of fronts.  To begin with, governments around the world spent almost $3 trillion (including $60 billion in Canada) in attempting to jump start the global economy and many people do not see the impacts of that spending.  Unemployment rates have remained at rarefied levels with the developed world seeing double digit rates – Greece (13 percent), Spain (21 percent), the US (9.1 percent) and the UK (8.1 percent) – while the money spent on bailing out banks has created significant profits and little job creation for those institutions.   In England, the number of young people not in education, employment or training (or NEETS as they are known) has risen to just short of the one million mark, a record level.  This is an increase in over 100,000 young people compared to the previous year.  The situation for 19 to 24-year-olds is even worse, with almost 800,000 NEETS or 19.1 percent of the population. According to the Institute for Public Policy Research, this is the biggest annual increase since records began in 2000.

In the United States, foreclosures continue to rise; foreclosure filings totalled 610,337 in the third quarter of 2011.  This was an increase of less than one percent from the previous quarter but was also the first increase in two quarters leading many to question whether a recovery really is on the way.  Low interest rates are not spurring activity as households are not in a position to refinance or borrow at lower rates, and business confidence is so low that even if funds are available, people are not borrowing.  Multinational corporations are sitting on cash – Dell, IBM, Google, Oracle and HP are sitting on over $100 billion, perhaps waiting for better economic conditions before they spend.

At the same time, the divide between corporate fortunes and those of ordinary Americans continues to widen as banks post strong profits and the nation’s largest companies boost executive pay.  Bank profits have soared globally in the first half of the year, and corporate profits likewise swelled last year.  Profits for the third quarter are expected to decline; J P Morgan was the first out of the gate with profit declines of 10 percent in the third quarter, the biggest drop in more than two years.  Europe’s credit crisis and the US debt ceiling debate spoiled optimism for an economic recovery, but put into perspective, they still have profits of almost $4 billion.

The disparity between the have and have- nots continues to widen.  The top one percent of Americans is now taking in nearly a quarter of the nation’s income every year and in terms of wealth versus income, this group controls 40 percent.  In 1986, the corresponding figures were 12 percent and 33 percent.  Those in the top one percent group have seen their incomes rise by 18 percent over the past decade while those in the middle have actually seen their incomes fall.

So what started as a gathering of a couple hundred activists who ventured to the centre of the symbol of the American system – Wall Street – has now grown to protests taking place all over the world, including the Okanagan.  David Graeber, an anthropologist who participated in the first gathering in September, described the original rally:  ”If you look at who showed up, it was mostly young people, most of them were people who went through the educational system, who were deeply in debt, and found it completely impossible to get jobs.  The system has completely failed them… If there’s going to be any kind of society worth living in, we’re going to have to create it ourselves.”

The movement initially described as circus and carnival like, and referred to by Republican Presidential nominees as “un-American” and “mob like” has now become an international phenomenon.  But will it last?  Has this become a national force to bring about real change or simply a passing fancy?  Polling suggests that the group has captured the frustration of Americans.  In a poll conducted earlier this month by Time magazine, 54 percent of respondents rated the Wall Street protests positively, with 25 percent saying they had a “very favourable” opinion of them.

On the surface, Occupy Wall Street (OWS) does not appear to offer any specific changes, claims not to be a political movement and has not laid out a plan to bring about the change.  Much like the American Tea Party movement, it is about the lack of voice given to, and the perceived lack of work being undertaken on its behalf by the political system.  Time will tell where this movement will end up, but I would suggest that the US 2012 elections may be impacted by what started as a circus like movement just over a month ago.  Stay tuned.

Robert Fine, Director of Economic Development

reprinted from Kelowna Daily Courier, October 7, 2011

By Robert Fine

There was a time when the old slogan Fly the Friendly Skies meant something. Fast forward to 2011 and it seems that some airlines have taken a different approach, for various reasons.

The latest airline angst relates to baggage fees. Beginning Tuesday, Air Canada will charge customers to check all bags while flying to the U.S. The fee will start with $25 for the first checked bag. The charge to check a second bag increases to $35 from $3.

If you‘re planning on travelling bag-heavy on international flights, a new $70 charge will be assessed (the good news here is the first checked piece remains free).

Air Canada claims it is simply following the globally accepted practice of recovering fuel costs associated with carrying the added weight. The average U.S. carrier charges $25 for the first checked bag and $35 for the second on flights to Canada.

USA Today recently published its annual survey of fees, so if you are feeling bad about the Air Canada decision, don‘t. The highest fee they found was with American Airlines, which charges $450 for an overweight checked bag weighing 71 to100 pounds on Asian flights.

Continental Airlines charges $400 on overweight bags on international flights. So in theory, to avoid fees, one should bring carry-on luggage instead. But not so fast – Spirit Airlines of Miramar, Fla., charges between $30 and $40 if your bag does not fit under your seat.

Other fees include costs for pre-booking seats; both our major airlines in Canada do this and even charge a booking fee.

Allegiant Airlines, which is popular with Canadians travelling out of Bellingham, Wash., charges an Internet booking fee of $16.99. You can avoid this fee by purchasing your ticket at the airport, but when was the last time you did that?

You would think with all these extra charges, you would feel better treated. Guess again. Here are a few examples of recent issues that can only be described as odd.

Two sisters flying to visit their father who had recently suffered a heart attack were kicked off a Southwest flight after one began to cry and asked when wine would be served. A flight attendant told her she had had enough to drink, even though it was her grief, not the wine altering her behaviour. Southwest apologized, paid for a hotel room and meal for the sisters that night and re-booked them.

Robert Fine, Director of Economic Development

by Robert Fine, Director Economic Development

Over the next month, Premier Christy Clark and the Minister for Jobs Tourism and Innovation will be unveiling a new jobs platform, aimed at kick-starting the economic recovery in British Columbia. One hallowed area, that with the exception of the film industry, the Liberal government has veered away from was subsides and incentives for companies. Creating fairness and a level playing field to all businesses and not subsidizing others has been the direction taken by the Campbell administration.  A majority of US jurisdictions offer them and whether the jobs platform here in BC includes incentives, we will all have to stay tuned to see.

There are many arguments for and against incentives but no better example as to why not can be found in the Greater Kansas City region.  A bit of a unique Region, the Kansas City, Missouri  metropolitan areas becomes part another state – that being Kansas.  As a Royals baseball fan, I remember being confused by this geographic proximity when deciding how to fly to visit my most cherished team.  Instead of baseball, the game being played in Kansas City is the incentive game.

A bidding war has broken out, whereby business are being actively poached with fresh cash from the state of Kansas.  And the opposition mostly loudly being heard now is surprisingly from business leaders.  In a letter penned to the Governors of Missouri and Kansas, some major corporate entities such as Sprint, Nextel, Hallmark and others asked the states to stop the giveaway game and the border war stating the unique bi-state community simply offering incentives to shuffle existing business back and forth across state lines, providing very little benefit and wasting valuable tax dollars.

The Governor of Kansas denies his community is poaching and says he will find new employers wherever he can, even if it’s just across the border in Missouri.

Sly James, (fill in your own comments here!)  The new mayor of Kansas City, Missouri thinks it’s time to shift policy away from his predecessor who opposed tax incentives as a tool to lure businesses.  The new mayor was quoted as saying “The days of sitting back and watching it happen are over. Mutually assured destruction only works if both sides are armed.”

Others feel differently, including the Greater Kansas City Chamber of Commerce who feels a united approach from the Region would make more sense to taxpayers and companies alike.  A Regional approach with a protocol to deal with site selectors and firms is deemed to be a better approach.  One of the benefactors of the Regional disunity has been commercial realtors, busily hunting for short term leases as companies move 20km chasing the latest incentive.

In the state of Illinois, another war has broken out, but not based on incentives but rather business climate. While announcing the creation of  1,200 short-term jobs,  including a $146 million infrastructure project at a Ford plant, another announcement followed with the Modern Forge Cos., which makes truck, RV and aerospace parts, at the same time announced plans to expand in Indiana and possibly leave Illinois altogether.  Potentially hiring 240 people in permanent jobs over the next three years the firm was motivated by the adjacent states lower taxes, workman’s compensation and investment unfriendly policies.

The move fuelled more debate over Illinois’ business climate, and how much it’s recent corporate and personal income tax increases (Illinois raised their tax rate from 4.8% from 4.7%) have damaged its image among business owners. While some Illinois business leaders commented that states in the area should stop bickering and work to develop a regional economy, Indiana’s secretary of commerce said Illinois’ high taxes and battered image make that unlikely.

The Illinois Chamber of Commerce President while not happy with the increase, still sees regional co-operation as the way to go. Instead of trying to chase business from state to state, luring jobs, the states should look at sharing strengths and opportunities.  Many economists agree, seeing the effort to draw firms from one location to another does not create new jobs.

As the Okanagan Valley continues to seek its economic path, there certainly is a level of co-operation among economic development offices, where clients are shared, locations sought and passed on to colleagues and with OVEDS, the Okanagan Valley Economic Development society, partnerships have been formed to look at attracting business immigrants, showcase our opportunities to the world, and in the end serve the client.  Oh, and stay tuned to see what the Province does!

Robert Fine, Director of Economic Development

By Robert Fine

With Labour Day in the past and most of us back from summer vacations, it’s interesting to note that the Okanagan Valley has a reputation of taking more than its share of holidays. The notion of “don’t try to get anything done during July and August” is often heard in business and social settings.  While there has been little analytic work done to prove this to be true, anecdotally, this does seem to be the case.

How does Canada rank when it comes to vacation days compared to other countries?  This question has been answered through a number of recent studies. Canadians work longer and harder than workers in any other country and vacation the least.   North Americans in general work two weeks longer than the work-till-you-drop Japanese, and we work two months longer than the Germans, who sometimes receive up to 15 weeks paid vacation each year, according to the Hay Group, a human resource consulting firm.

A study by Mercer International found that the United States and Canada had the lowest number of paid vacation days.  Using paid time off for those with 10 years tenure, the Mercer study showed the top five countries with the longest vacation time allotted were Finland (44 days), France (40), Israel (40), Morocco (40) and Austria with 40 days. In actual days, Canada actually ranks at the bottom of a 41 country list right behind China.

Most North American employers base vacation time on length of service, while in Europe, vacation time is traditionally mandated by government agencies.  European employees get four weeks of vacation, on average, while it takes the typical American employee 15 years or more to attain the same vacation privileges, according to the Hewitt Group which specializes in global benefit practices.

So why is Canada so low on the scale when compared to European countries?  A key factor is the price of membership within the European Union.  All member countries must provide workers with a minimum of 20 paid vacation days a year plus public holidays.  Mercer suggests that companies in Europe are more likely to encourage workers to take breaks of at least two-weeks at a time because they have witnessed an increasing number of work/stress-related absences; employers are likely concerned about out-of-control litigation and increasing benefit costs as a result of long-term illnesses or disabilities.

So, would more holiday time help Okanagan businesses operate more effectively?  According to a survey by the British recruiting firm, Office Angels, when one employee goes on holidays in an office that is already short-staffed, a big pile of stress is created for the co-workers left minding the store.  Eighty-six percent of the 1,500 office workers questioned said that the gap left by a vacationing office mate created stress for the workers left behind due to the increased workload.  More specifically, this related to vacationers failing to let co-workers know the status of the projects they were working on before they left, and co-workers taking on a vacation mindset the minute they booked their flight.  Management Recruiters International (MRI) claims that over half of the executives they questioned in a recent study were not planning to use their full vacations this year due to increased workloads.

Ultimately, a lack of downtime from work can have an effect on productivity as well as stress-related health issues.  In an Expedia survey, four out of five people polled said they felt better equipped to handle work challenges after they took time off, and 80 per cent said they returned to work with a more positive attitude.

The backdrop for the whole vacation issue comes down to the challenges that time compression has created in the 21^st century.  The typical North American worker puts in more hours than our ancestors did in the 1920s when farming was the number one occupation.  According to Harris Interactive, since 1973 the median number of hours people say they work has risen from 41 a week to 49.  Leisure time meanwhile has dropped from 26 to 19 hours a week over the same period.

When employees do manage to get away, they are increasingly bringing their work with them via cell phones, laptops and Blackberry’s in order to maintain 24/7 connectivity with the office.  With sluggish economic growth, pressure for more vacation time may become highly sought after, but not easily attained.