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Canadian executive haven’t been this optimistic about their business prospects since 2006. The latest C-Suite Survey shows the resource sector is the most bullish, with executives feeling more positive about capital spending and hiring. Catch the full C-Suite Survey at 8:30 p.m. ET, 5:30 p.m. PT.
Business see brighter days ahead
By Richard Blackwell, The Globe and Mail
As they approach year-end, Canadian executives are increasingly optimistic about the economy and they are willing to put their money where their mouth is, by boosting capital spending, hiring more staff, and making acquisitions.
According to the latest C-Suite survey of top corporate executives, many have also stopped whining about the high Canadian dollar and are instead using it to their advantage by importing new equipment or buying foreign assets. That could, in the long run, help boost Canada's abysmal productivity numbers, which have been low for several years.
The survey shows that 92 percent of executives think the Canadian economy will grow in the next year, although the vast majority feel the expansion will be moderate rather than strong.
They are even more optimistic about their own companies' prospects, almost unanimously predicting growth, and almost half predicting strong growth. While executives are usually more optimistic about their own firms than they are about the economy over all, this is the highest level recorded by the C-Suite survey in more than four years.
The optimism ranges across all sectors, although the resource sector has the sunniest outlook.
"We're going to be expanding and hiring more people," said Elson McDougald, chief executive officer of CanElson Drilling Inc., a Calgary-based company that makes and operates drilling rigs. High oil prices have lit a fire under the demand for rigs, he said, and the outlook is "very positive unless the whole world changes ... we've got 100 percent of our fleet working, right now. Every rig is working ."
That optimism extends to the other side of the country, where Colin MacDonald, chairman of Halifax-based Clearwater Seafoods, is also upbeat, although a little more muted. "At the end of the day you have to be optimistic that the economy will correct itself," he said.
Like many firms, Clearwater is grappling with the high Canadian dollar, which hurts the company when it sells its fish products around the world. More and more, however, the solution to that dilemma is to boost productivity and beat out the competition. At Clearwater, MacDonald said, that means upgrading the fishing fleet and buying state-of-the-art freezing equipment to ensure its products are of the highest possible quality when they reach their markets.
"We're certainly looking at capital spending because we have to drive productivity, since the Canadian dollar is so damn strong out on the world markets where we do our business," he said. "Would I prefer a weaker Canadian dollar? Damn right. It would make life a lot easier. But it's a reality and you deal with it."
Indeed the survey, which was conducted for Report on Business and Business News Network by Toronto research firm Gandalf Group, shows more than 80 percent of executives are making their plans for the year ahead based on a Canadian dollar between 95 cents US and $1. While many would prefer a lower level, almost a third say the dollar's current value has had a positive impact on their company's bottom line.
Forty percent of those surveyed say they, like Clearwater, will use the high dollar as impetus to invest in new equipment and technology.
In addition, 47 percent say they will consider buying foreign companies or assets, because the high dollar gives them more clout.
This marks a "mindset shift" for many Canadian companies that have been loathe to make moves overseas, but it makes perfect sense in the current environment, said Philip Deck, executive chairman of Waterloo, Ont.-based software firm MKS Inc. "If your Canadian-denominated assets have now been revalued relative to the rest of the world, now is not a bad time to make acquisitions."
Increasingly, he said, the successful Canadian companies will be the ones that are active in a number of global markets. At the moment, the U.S. economy is in the doldrums, but "Asia is growing like a weed and that makes up for it" if a company is sufficiently diversified internationally.
Deck said he is "extremely optimistic" about his business prospects at the moment, and his expectation is that the economic recovery will continue, perhaps with some bumps along the way.
The C-Suite survey also asked executives about their views on Ottawa's decision to block the takeover of Potash Corp. of Saskatchewan Inc. by Australian firm BHP Billiton Ltd. About 60 percent supported the decision while 35 percent opposed it, with western-based companies showing the strongest support for Ottawa's stance. Almost 80 percent of executives said major purchases of Canadian firms by foreign companies should be subject to some kind of "net public benefit" test.
The problem is defining that test, said David Yager, CEO of HSE Integrated Ltd., a Calgary company that sells health and safety services.
In the current circumstances, the rules "are always going to be interpreted by politicians," he said. "It is impossible to depoliticize [the process]."