Smart business Annual Report 2011

SMARTBUSINESS2011-12 ANNUAL REPORT

What is SmartBusiness..................................................................................

Message from the Director.........................................................

SmartBusiness Stats......................................................................

SmartBusiness Referrals................................................................................

Reasons for Referral.......................................................................

Business Climate..............................................................................................

Key Issues..........................................................................................

Halifax Plays to Its Strengths.......................................................

Municipal Services.........................................................................

Services Meet Mixed Results......................................................

Business Composition...................................................................................

Halifax’s Workforce........................................................................

Sales ...................................................................................................

Innovation.......................................................................................

Impediments to Growth...............................................................................

International Commerce..............................................................................

Immigration...................................................................................

Conclusions......................................................................................................

Our Smart Business Team..............................................................................

Our Staff............................................................................................

Table of Contents

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Created in 1996, the Greater Halifax Partnership (the Partnership) acts as a key catalyst for economic growth and confidence in Halifax, the economic hub of Atlantic Canada. A public, private partnership, our mission is to:

• Keepandgrowbusinesses • Attractnewinvestments • Strengthenthecommunity

Quick Fact: The SmartBusiness program was first introduced in 2004.

WHAT IS SMARTBUSINESS?

SmartBusiness is the Partnership’s Business Retention and Expansion (BRE) initiative. It acts as a hub that connects CEOs, owners, and managers to resources in our community and provide a full range of expertise and business solutions. It is designed to assist companies from small start ups looking to make connections and access resources, to large businesses looking to develop a product or service. The Partnership provides what they need to grow business and succeed in Halifax.

SmartBusiness meets face-to-face with employers to hear first-hand about the challenges, needs, and opportunities that impact on competitiveness. The businesses are then referred to members of our Action Team who can provide tailored business solutions for these clients. Our Action Team taps into the acumen and experience of more than 30 senior business and government leaders, valuable information, and programs designed to help your business succeed. SmartBusiness is a central part of the Partnership’s operations and an excellent resource for businesses in Greater Halifax.

SmartBusiness has received two awards: In 2005, it received the Business Retention and Expansion International’s “Best BRE Initiatives” Award, and in 2006 the Royal Bank Award for Best Economic Development Program in Canada presented by the Economic Developers Association of Canada (EDAC). In addition to this recognition, SmartBusiness has been emulated in cities across Canada and has been adopted as a key operating component of every Regional Development Authority in Nova Scotia.

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• 1,969+ jobs created and retained

• 251 business consultations

• 213 retention visits

• 262 referrals generated

• 57% of issues successfully closed

• 29% of issues currently active

• 14% of issues unable to close Since April 1st, 2004:

• 8,436+ jobs created and retained

• 2,682 business consultations

• 2,186 retention visits

• 1,796 referrals generated

• 66% of issues successfully closed

• 4% of issues currently active

• 30% of issues unable to close.

I would like to take this opportunity to thank everyone who took part in

this tremendous effort. The ongoing support of the Action Team, staff, local

business, and the community at large has been integral to our successes.

With your help we have reached out to more than 200 businesses,

resolved deep-seated issues for local entrepreneurs, helped empower the

community, and brought positive change to Greater Halifax. Irving’s $25B

shipbuilding win, Shell’s $1B offshore lease, and other major projects in

the region signal more exciting opportunities for the future. SmartBusiness

is all about responding to businesses with real answers in real-time and

we will continue to serve all the businesses of Halifax - helping them seize

opportunities.

-Robyn Webb Director, SmartBusiness

Message from the Director

SMARTBUSINESS STATS FISCAL YEAR 2011

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Visits spanned across every industry, but we focused on a few key sectors due to their high growth and strategic potential. These sectors include Aerospace & Defence, Digital Industries, Education, Finance & Insurance, Life Sciences, Oceans, and Transportation.

SmartBusiness intelligence has highlighted significant issues throughout the business community, what their key concerns are, and what prevents them from growing. Through our Action Team, we have connected companies to skilled immigrants, to financing opportunities, and to resources in our community to help them succeed. This fiscal year, our team resolved 161 unique business issues and helped create almost 2,000 jobs.

From April 1st, 2011 to March 31st 2012, SmartBusiness consulted with 251 businesses, the majority of which were Small and Medium sized Enterprises (SMEs). This report is a compilation of the 213 retention visits to local businesses and their experiences with the Halifax economy. Retention visits cover a variety of issues ranging from: perceptions of the local business climate, to the company’s local workforce, to sales, even immigration issues.

Of these visits, 53.5% were in Halifax, 15.5% in Dartmouth, 9.5% in Burnside Business Park, 6.5% in Bedford, 2% in Sackville, and 13% throughout other regions of Greater Halifax.

SMARTBUSINESS REFERRALS

5.0%1.9%1.9%3.7%

5.6%

8.1%

8.1%

13.0%

16.8%

36.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Expanding a business

Greater Halifax Partnership

Workforce development

Provincial government

Exporting

Immigration

Financial assistance

Municipal assistance

Recruitment and Retention

Other

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REASONS FOR REFERRAL

The top three consultation referrals in 2011/12 came from business looking to expand their business, leverage Partnership resources/programs, and develop their local workforce.

Some referrals may be similar, but are classified into different needs. The Partnership referred 43+ companies for the Productivity Investment Program (PIP) and these referrals spanned categories from Workforce Development to Expanding a Business.

Expanding a Business: These requests involve Entrepreneurship and Commercialization. They entail creating business plans, relocation assistance, and many tools that our Action Team members provide relating to expanding one’s market presence.

Greater Halifax Partnership: Our organization has a number of in-house resources and programs separate from SmartBusiness. These can include assistance from our research team, the Connector Program, and even our Community Economic Development initiatives.

Workforce Development: These requests involve assistance with Skills and Labour. They can involve training, assistance with investment in human capital, help with specific professional certifications, and working with educators to provide certain skills.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

20112010200920082007

813121721

54

70

524757

31

17

3023

16

86136

Poor

Fair

Good

Excellent

These businesses were also asked about their past experiences and predictions for the future. When comparing their current experiences with 5 years ago, before the recession, 52% claimed that the business climate is better today, while only 23% claimed that it was worse. When looking at future expectations, 75% predicted that climate would be better in 5 years, while only 8% believed the climate would worsen.

The data suggests that Halifax has emerged from the recovery; businesses are confident that the economy will continue to grow and that the worst is behind us. Also, while the current opinions of the business climate are not as rosy as they were last year, future expectations have significantly improved.

The news about Irving Shipbuilding’s win of a $25 billion procurement right has been a major part of comments surrounding business confidence. Many companies have expressed a need to capitalize on the opportunity and to take advantage of this landmark deal.

The overall picture of Halifax is one of stability, rather than outward enthusiasm. There is very little worry about the state of the economy. Businesses see a solid business city with strong fundamentals such as an educated workforce and a highly developed transportation network. Many businesses remain cautiously optimistic as they wait for ongoing developments to unfold.

Moving forward will require leadership and direction, as well as a detailed understanding of individual elements of the business climate. Fortunately, after more than 200 hours of face-to-face time with businesses in Halifax, the SmartBusiness team has collected competitive intelligence on the key factors and important issues in Greater Halifax.

BUSINESS CLIMATE

The consensus among businesses consulted was that Halifax’s current climate is Good and that there was a strong sense of confidence moving forward. 62% of surveyed companies believe that the current business climate is Good or Excellent; although this number is down from previous years.

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KEY ISSUES

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Less Important More Important Critically Important

Surveyed businesses were asked to rate a number of factors as either Poor, Fair, Good, or Excellent and to choose which three factors were most important to their operations. These ratings were used to determine what issues businesses thought were most important, least important, and how well the city performed.

The most important issues were abundantly clear, Workforce Quality (a top-3 issue for 48% of businesses) and Workforce Availability (45%) were mentioned noticeably more than any other part of the business climate. Provincial Regulation (22%) was also mentioned as a significant issue for business’s operations.

HALIFAX PLAYS TO ITS STRENGTHS

Halifax businesses were exceptionally pleased with the performance of two types of factors: those dealing with higher education and those dealing with transportation infrastructure.

Community College (NSCC) was given the highest preference-weighted rating of any business climate factor, with 52% of businesses calling it Excellent, 39% Good, 7% Fair, and only 1% calling it Poor. Post-Secondary Institutions followed closely behind with 46% Excellent, 46% Good, 5% Fair, 3% Poor. This should come as no surprise to those familiar with the city, Halifax is known for its high quality educational facilities and large student/graduate population.

Businesses also expressed high satisfaction with a number of key transportation factors. Shipping/Transportation Services, Port Facilities, and Air Access all rated very positively, with Rail Services being given the lowest rating, between Good and Fair.

Perhaps the most troubling finding, is the negative opinion businesses have of regulatory regimes and taxation, both at the municipal and provincial level. Not only do businesses rate these factors poorly, they also consider them major issues in the businesses climate. This is clearly an area where action and leadership is necessary.

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MUNICIPAL SERVICES

0%

10%

20%

30%

40%

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60%

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100%

312

425

2025

34

68

3439

5945

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59 35

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27

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30302222

96

Poor

Fair

Good

Excellent

Surveyed businesses were asked to rate a series of municipal services as either Poor, Fair, Good, or Excellent. This measurement of opinion shows us how businesses interact with municipal services, where there is room for improvement, and where the city has succeeded. SmartBusiness clients also frequently provide comments which help to guide discussion and deliver input on service delivery.

It is important to note that due to staffing, a large portion of these surveys occurred during February and March, meaning much of the data was collected during the transit strike. There is marked, negative shift in opinions of public transit during this time, which provides a biased picture of transit performance. One should avoid interpreting these opinions as representation of general transit performance.

SERVICES MEET MIXED RESULTS

Halifax businesses noted some successes and some concerns in municipal service delivery. Notably, businesses trumpeted the city’s successes at direct service delivery such as water, sewer, and police protection, while it admonished regulatory and planning services such as bylaw enforcement, zoning, and local road access.

The commentary from the surveyed companies paints a picture of a very capable city, skilled in service quality, that runs into issues with planning and strategic direction. Negative opinions, even in the successful services, all point to capacity issues, a lack of access, legal issues, and planning priorities. Positive opinions, specifically in police protection, point to great use of limited resources, recent improvements in presence, and useful tools available to the public.

A common complaint for bylaw enforcement, zoning, and even permitting, is that the interpretation of the rules tends to be more of a problem that the regulation itself. Many businesses have detailed accounts of difficulties with being given a set of rules to follow, and then later running into issues when the rules are interpreted more strictly, or in a different way. The theme is that businesses would prefer a city that helps them meet regulatory standards, rather than one punishes them for being below grade. Their vision is for a city that coaches them throughout the process, rather than judging them at the end.

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A key finding from SmartBusiness intelligence is that businesses in Halifax tend to have a loyal workforce; most companies experience low-to-no turnover. 70.2% of surveyed businesses reported less than 5% annual turnover, with more than half of those companies reporting no turnover at all. Additionally, only 13.3% of businesses reported over 10% turnover, with 5.1% reporting a very high level turnover rate.

Of those surveyed, 36.6% of businesses noted challenges hiring specific kinds of occupations. Typical reasons involved high cross-industry competition for workers with certain kinds of training, or the lack of a local institution which provided a certain skill set.

Companies were much less worried about retention, 88.8% of companies said they had no issues retaining any of their workers, while 11.2% could list at least one occupation where retention was an issue.

8.4% of companies noted upcoming concerns with retirements in a particular occupation. This is a surprisingly low number given the age demographics in North America.

When asked how employment levels had changed over the past year, 45.2% said they had increased the size of their staff, 48.4% said they had kept levels the same, and 6.4% said they had scaled back their staffing levels.

All of this data points to a Halifax with a stable workforce, and an appetite for new workers. With the lion’s share of companies hiring, very little turnover, and such a low share of companies worried about retirements and retention, it is understandable that so many companies are confident about the city’s future.

SmartBusiness surveyed 213 companies this fiscal year; of which 56.5% were previous clients, and the rest being first time visitations. Of all of these businesses, 90.3% were privately owned, where 9.7% were publicly held. This may not be representative of businesses in Halifax, but a symptom of which types of businesses typically approach the Partnership. Larger, more established businesses tend to be in less need of assistance.

Despite this selection bias, Haligonian businesses tend to be very prepared. Almost three quarters (71.4%) of businesses surveyed had a strategic plan in place at the time of their retention visit. Additionally, 52.3% of businesses either had an industry certification, such as Six-Sigma or ISO 9001, or were in the process of acquiring one.

HALIFAX’S WORKFORCE

BUSINESSES COMPOSITION

0% Turnover40.5%

1-5% Turnover29.7%

6-10% Turnover

16.5%11-25%

Turnover8.2%

>25% Turnover

5.1%

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Businesses had a much better opinion of their own sales, than those of their competitors. When asked about the historical sales trend, both at their own facility and their industry in general, their opinions favoured their local operations:

How have sales changed... ...at this facility? ...within in the industry?

Increasing 56.5% 48.0%

Staying the same 27.6% 33.9%

Declining 15.9% 18.1%

Quick Fact: 63% of businesses in Halifax sell goods or services to government, whether provincial, federal or MASH (Municipal, Academic, Schools and Hospitals).

SALES

A sizeable share of businesses in Halifax deal online. Of the companies surveyed, 30.0% sell products or services through the internet and 13.6% are part of an internet based supply chain or inventory management system. These businesses represent a sizeable faction in the city’s industrial portfolio.

INNOVATION

Local businesses are constantly innovating. In the last three years, 20.8% of surveyed businesses have introduced a new good/service to market, or introduced a significantly improved business process to their operations. In addition to these companies, 19.4% have done both.

Of those companies who innovated, 54.0% sought government funding or tax credits in order to assist their plans. The most commonly cited sources of funding were the Scientific Research & Experimental Development Tax Credit (SR&ED) and the National Research Council’s Industrial Research Assistance Program (IRAP). The share of surveyed businesses who accessed these programs is down from pre-recession levels (60% in 2007-08) but up from recent years (47% in 2009-10). It is unclear whether this is due to a lack of access, or an impediment to invest, but businesses continue to innovate.

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Access to Capital (44.1%): The key impediment to growth appears to be a lack of capital. Businesses are fuelled by investment for their projects and expansions. Without the ability to secure funding, many projects go undeveloped. While this is a constant concern for business, such a large share of mentions suggests that there may be more to this issue than meets the eye.

Improved Workforce Availability/Quality (22.9%): A commonly mentioned impediment was a need for specific skills. Very few had troubles with the number of workers they needed, but often required very particular talents which they could not acquire locally.

Friendlier Local Business Climate (12.7%): Many companies expressed issues with consumers being unwilling to buy local, because international goods were seen as higher quality, sometimes despite the success of the products in the international market. For many companies, this phenomenon is highly frustrating.

Improved Opportunities for Exporting (8.5%): Some of our clients were having difficulties finding international buyers for their products or getting into the export market.

Improved Provincial Regulations (5.1%): A number of clients had problems with provincial regulations, whether it was the consistency of enforcement, the regulation itself, or other concerns.

Lower Taxes (4.2%): Surprisingly, only a small share of businesses considered taxation to be the biggest impediment to growth. This may suggest that although the benefits of taxation are widespread, their effects are only marginal.

Improved Municipal Regulations (2.5%): Similar to provincial regulation, some companies expressed frustration with certain municipal regulations or regulatory agencies.

Every surveyed company is asked about the biggest impediment to their company’s growth. Answers are varied, and many have very specific issues, a road widening, legal amendment for their industry, a new building for their operations, or a specific new hire are some examples; however, there are some themes. Overall, 29.3% listed their responses as ‘Other’, as mentioned above. Those who did not answer ‘Other’ listed the following as the key impediment to growth:

IMPEDIMENTS TO GROWTH

Access to capital44.1%

Workforce availability/

quality22.9%

Friendier climate12.7%

Opportunities for exporting

8.5%

5.1%4.2%2.5%

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Halifax’s economy is primarily driven by local and regional sales. Of the companies surveyed, 42.5% of companies had no sales, whatsoever, outside of the Atlantic Provinces. However, only half of local businesses consider Halifax to be their largest market. Many companies have a larger share of their sales throughout Nova Scotia, and the Atlantic Provinces. This speaks to Halifax as a regional centre, though one that has a lot of opportunities surrounding international exports.

Your largest market... ...in terms of annual sales ...for supplies/raw materials

Greater Halifax 49.6% 54.7%

The rest of Nova Scotia 13.4% 10.7%

Atlantic Provinces 10.2% 4.0%

Other Canada 7.9% 14.6%

International 18.9% 16.0%

Quick Fact: 60% of local businesses are planning to expand to new markets outside Nova Scotia.

INTERNATIONAL COMMERCE

In terms of supplies and raw materials the story is very similar. 34.7% of Haligonian companies do not get any inputs from outside Atlantic Canada and 65.4% of companies use Nova Scotian businesses as their primary suppliers.

It is important to note the large number of companies that expressed an interest or were currently expanding to new markets. This active expansion of businesses may mean changes in the distribution of sales and materials in years to come. It speaks highly of the local economy and the integration of Halifax as a more internationally focused city.

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Immigrants are an excellent source of skilled labour for any company. Many companies hire immigrants when they need specialized skills that they cannot find locally. Despite the common misconception, immigrants tend to be hired for highly technical roles in the workforce. Of our surveyed companies, the most common roles for immigrant workers were in Engineering, Accounting/Finance, and Administration.

There is a large appetite for immigrant labour in Halifax, of the companies who said they do not currently hire immigrants, 66.2% said they were ready to benefit from hiring an immigrant, 7.8% said they were not, and 26.0% did not know.

CONCLUSIONS

Quick Fact: 49% of surveyed local businesses employ immigrants.

IMMIGRATION

The business climate in Halifax is strong and stable. Local businesses had positive things to say about our city and many suggestions and input for further improvement. There are areas of concern that they have raised with the current economy, but they expressed a strong sense that the climate has and will continue to improve.

The Partnership will continue to assist companies and gather intelligence on the business climate. Providing thought leadership and guiding discussion between business and government is an essential step in creating positive change. Providing an accurate picture of the local economy and of business concerns is part of the process, and we invite others to help take part.

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Our Action Team includes specialists from the following organizations:

Quick Fact: The SmartBusiness Action Team consists of three dedicated, full-time staff and over 30 member organizations, each with at least one business specialist.

OUR SMARTBUSINESS TEAM

Aliant Inc.Atlantic Canada Opportunities

Agency (ACOA)Black Business Initiative

Blue Water Business Development Corporation

Business Development Bank of Canada

Canada Business - Nova Scotia

Canadian Youth Business Foundation

Centre for Entrepreneurship Education and Development

Centre for Women in Business at Mount Saint Vincent University

Credit Union AtlanticDalhousie University Career

Services CentreDestination Halifax

Eco-Efficiency Centre, Dalhousie University

Entrepreneur’s Forum Export Development Canada

Foreign Affairs & International Trade Canada

Halifax Chamber of Commerce Halifax Regional Municipality

Immigrant Settlement & Integration Services (ISIS)

Job Search ServicesMount Saint Vincent University -

Career Planning Centre

Nova Scotia Business Inc. (NSBI)Nova Scotia Community College

(NSCC)Nova Scotia Department of

Education

Nova Scotia Economic and Rural Development (NSERDT)

Nova Scotia Economic Development - Procurement

Nova Scotia Office of Immigration

Nova Scotia Power Inc.Saint Mary’s Business Development Centre

SMU Student Employment Centre/Co-Op

TEAM Work Cooperative Ltd.Worker’s Compensation Board of

Nova ScotiaWorld Trade Centre Atlantic

Canada

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• If your organization needs help navigating today’s business challenges, please contact one of our SmartBusiness representatives.

• If you would like more information about the Greater Halifax Partnership, you can check out our website at www.greaterhalifax.com or reach us by phone at (902) 490-6000.

Email: [email protected]

Phone: (902) 490-6115

Email: [email protected]

Phone: (902) 490-6986

Jason Guidry, Account Executive, SmartBusiness

Tammy Milbury, Account Executive, SmartBusiness

(902) 490-6268

[email protected]

Robyn Webb,Director, SmartBusiness

Greater Halifax Partnership