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Regina Executive Leadership Outlook Quarterly Report March 2018
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
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Executive Summary
Economic Outlook 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.
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.
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
Additional Topic: Economic Priorities Summary
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.
Forty-three percent (43.2%) of respondents believe that the economy will perform better in the next 12 months.
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Economic OutlookThe Executive Confidence
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.
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.
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.
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.
3.0
2.5
2.0
1.5
1.02016 Q1 2016 Q2 2016 Q3 2017 Q12016 Q4 2017 Q2 2017 Q3 2017 Q4 2018 Q1
2.232.08 2.11
2.23 2.21
2.55
2.36
2.60
2.30
2.31
Confidence Index
Index Average
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The Executive Confidence Index is 2.60, the highest to-date over the two years.
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Current Conditions
A calculation similar to the Executive Confidence Index reports executives’ perception of today’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.
3.0
2.5
2.0
1.5
1.0 2016 Q1 2016 Q2 2016 Q3 2017 Q12016 Q4 2017 Q2 2017 Q3 2017 Q4 2018 Q1
2.23
1.98
2.08
1.87
2.11
1.85
2.23
2.01
2.21
1.91
2.55
2.14
2.36
2.05
2.60
2.24
2.31
1.88
Confidence Index
Current Conditions
Economic Outlook Highlights
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.
A large majority (91.6%) of respondents expect their total fixed investments to remain the same or increase over the next twelve months.
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.
Forty-seven percent (47.2%) of respondents report an increase in revenue compared to 12 months ago, 19.4% report decreased revenue.
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.
6www.economicdevelopmentregina.com
Tables 1 – 4 compare responses from the previous quarter (Q4 2017) to the current quarter (Q1 2018).
100
80
60
40
20
0
100
80
60
40
20
0
100
80
60
40
20
0
100
80
60
40
20
0
In the next 12 months, will your firm’s total FIXED INVESTMENTS…
In the next 12 months, will the number of people your firm EMPLOYS…
In the next 12 months, will your firm’s PROFITABILITY…
In the next 12 months, will your firm’s sales REVENUE…
Increase
Stay the Same
Decrease
47.2%60.5%
44.7%54.3%
58.3%72.2%
58.3% 61.1%
33.3%
25.0%
38.9% 33.3%
8.3%
2.8% 5.6%
2.8%
33.3%
29.0%
39.5%31.4%
19.4%10.5%
15.8% 14.3%
2017 Q4 2017 Q4
2017 Q4 2017 Q4
2018 Q1 2018 Q1
2018 Q1 2018 Q1
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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.
Additional Topic: Economic PrioritiesThis edition of RELO asked GRA executive leadership to share their thoughts on economic priorities.
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.
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.
Support the development and success of entrepreneurs and business owners through specific policy initiatives
Diversify the economy by seeking out new or underdeveloped sectors for development
Attract investment and businesses to the province using business friendly policy designed for large institutional investors
Specifically target a few supply chains for growth rather than taking a broad growth approach
Build a pool of trained labour to meet the demands of the labour market
PRIORITY AREAAVERAGE RANK
PERCENT OF RESPONDENT #1 RANKS
1.89
3.19
3.27
3.27
3.38
54.1%
13.5%
18.9%
10.8%
2.7%
INTERVIEW QUESTION:
For your top priority, describe what actions you believe should be taken by the new leader.
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.
KEY THEMES:
Supporting Entrepreneurs
˙ Make 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 a dynamic cannabis industry
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Target Specific Supply Chains
˙ Identify supply chains in which Saskatchewan could effectively participate and assist local business participation
˙ Target valued-add opportunities / sectors
˙ Identify the largest purchases by the Crowns and other government departments and engage in a specific Saskatchewan Supplier Development Program
Investment Attraction
˙ Provide competitive corporate tax rates
˙ Demonstrate stability for investors
˙ Enhance value-add initiatives in the agriculture sector
INTERVIEW QUESTION:
Are there any other priorities not mentioned in this ranking question that you would like to mention?
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.
KEY THEMES:
˙ Strategically invest in infrastructure
˙ Show leadership in the cannabis industry
˙ Be 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
INTERVIEW QUESTION:
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?
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.
Support the development and success of entrepreneurs and business owners through specific policy initiatives
Diversify the economy by seeking out new or underdeveloped sectors for development
Attract investment and businesses to the province using business friendly policy designed for large institutional investors
Specifically target a few supply chains for growth rather than taking a broad growth approach
Build a pool of trained labour to meet the demands of the labour market
Other
Unsure
PRIORITY AREA PERCENT OF RESPONSE
43.2%
8.1%
21.6%
8.1%
10.8%
5.4%
2.7%
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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.
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Support the development and success of entrepreneurs and business owners through specific policy initiatives
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
Specifically target a few supply chains for growth rather than taking a broad growth approach
Diversify the economy by seeking out new or underdeveloped sectors for development
Other
Unsure
54.1%43.2%
18.9%
2.7%
21.6%
10.8%
10.8%
13.5%
8.1%
8.1%
5.4%
2.7%
0% 30%10% 40%20% 50% 60%
INTERVIEW QUESTION:
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).
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.
Support the development of entrepreneurs
Agri-value Sector
Agriculture Sector
Information Technology Sector
Oil and Gas Sector
Manufacturing Sector
Professional Services Sector
Mining Sector
Metal Fabrication Sector
Tourism Sector
Other
19% 14% 14%
16% 19%5%
5% 3%
5% 5%3%
14% 5%3%
16% 38% 3%
11% 16%3%
5% 5% 3%
3%
5%3%
19% 14% 27%
30%10%0% 40%20% 50% 60%
38%
Rank 1
Rank 2
Rank 3
Immediate Top Priority
Future Top Priority
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INTERVIEW QUESTION:
What specific tools, policies or interventions do you believe could expedite economic growth within the GRA?
GRA respondents believe there are multiple policy, program changes, or government interventions that could aid economic growth in the GRA.
MAIN THEMES ARE:
˙ Reduce government involvement in business to expedite business processes;
˙ Financial incentives, including changes to the tax environment; and,
˙ Labour market development.
KEY THEMES:
Reduce Government Involvement
˙ Government should be a ‘champion for growth’
˙ Better communicate policy so that businesses can take advantage of what currently exists
˙ Connect business leaders with policy decision makers to allow discussion about real issues
˙ Reduce the amount of bureaucracy when dealing with city hall
˙ Speed up processes to meet business timelines and expectations
Labour Development
˙ Access to trained, qualified talent pool
˙ Increase graduation rates and overall funding for First Nations students at all levels
˙ Continued investment in upskilling our Saskatchewan workforce
˙ Incentives to bring new graduates here and help them stay (bursaries, tax credits)
˙ Connecting educational institutions to business.
Support entrepreneurship
˙ Loans program for entrepreneurs
˙ Small business incentives
˙ Mentorship programs and making people available to assist businesses with start-up
Enhance Cross-Sector Communication and Collaboration
˙ Open communication between businesses of all sectors in order to find means to collaborate and plan
˙ Encourage locals businesses to use local suppliers
˙ Explore ‘clustering’ sectors through zoning to enhance collaboration
Other
˙ Focus on the downtown and cultural core, following the ‘Design Regina’ OCP
˙ Eliminating the divide between First Nation & Metis citizens and broader provincial society/economy
˙ Engage with business leaders to identify best growth opportunities
˙ Tax credit for employing local talent in targeted sectors (i.e., IT)
˙ Adopt policies that encourage development, such as recent modifications to development fees for industrial land
˙ Incentives for research and development
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INTERVIEW QUESTION:
What single policy, program change, or government intervention would assist your organization and/or sector to capitalize on growth opportunities?
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:
˙ Supporting local businesses through various policies and programs including encouraging local procurement and reducing the cost of doing business in the GRA; and,
˙ Incentives to support business development and sustainability, mainly changes to taxation.
KEY THEMES:
Incentives
˙ Provide direct cash incentives for new plant, equipment, and job creation
˙ Support for product research and development
˙ Incentives 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 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
Procurement
˙ 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
Positive Investment and Development Environment
˙ Regulatory relief for entrepreneurship investing
˙ Easier access & support for capital investments and development
Greater Regina Area Promotion
˙ “Shout from the rooftops that Saskatchewan / Regina is THE place to be.”
˙ Boast about the great businesses that operate here
Infrastructure Investment
˙ Rejuvenate infrastructure
˙ Invest in GRA transportation infrastructure (Uber, public transportation, direct flights, etc.)
GRA respondents believe there are multiple policy, program changes, or government interventions that could aid economic growth in the GRA.
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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.
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.
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.
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
5%0% 25%15% 35%10% 30%20% 40%
10.8%
18.9%
24.3%
8.1%
37.8%
INTERVIEW QUESTION:
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.
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. 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.
5%0% 25%15% 35%10% 30%20% 40%
10.8%
24.3%
24.3%
8.1%
5.4%
27.0%
Strongly agree
Agree
Neutral
Disagree
Strongly disagree
Unsure
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Conclusion
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.
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.
The GRA will continue to grow and provide avenues for future business leaders and investments to find success within Regina.
14www.economicdevelopmentregina.com
About the Report
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
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.
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.
Survey
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.
About EDREconomic Development Regina Inc. (EDR) is the economic development agency for the Greater Regina Area. 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.
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.
David Froh, Vice President E: [email protected] P: 306-789-5099 ext 230
About Praxis Praxis Consulting is Saskatchewan’s largest locally-based management consulting firm.
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:
˙ Research: Information gathering and data analytics.
˙ Strategy: Thought-leadership, rigorous planning, and pragmatic strategies.
˙ Results: Cascading strategy and culture within the organization.
Val Sluth, Managing Principal E: [email protected] P: 306-545-3755
