THE FINAL CHAPTER
Despite government’s reassuring tone, many businesses may face bankruptcy
The Olivieri bistro/ bookstore on Côte-des-neiges Rd. is closing after 35 years. “These have been dreadful weeks,” Premier François Legault said of the pandemic. “Financially, it’s been hell.” Frédéric Tomesco has more about Quebec’s plan to ease restrictions.
Quebec business groups expressed relief over the economy’s imminent reopening — though they warned new health-related costs and a slump in demand may exact a punishing toll on entrepreneurs.
Premier François Legault teamed up with economy minister Pierre Fitzgibbon Tuesday to unveil the government’s startup plan. Construction, manufacturing and retail will be the first sectors to power up, with Montreal retailers resuming operations May 11 — one week later than those of every other region.
“Finally, some light at the end of the tunnel,” Gopinath Jeyabalaratnam, economic and governmental affairs adviser at the Canadian Federation of Independent Business in Montreal, said in a telephone interview. “Businesses can start recalling their employees and contacting their suppliers.”
Quebec’s plan “makes it possible to envisage an orderly restart of economic activity,” Michel Leblanc, head of the Chamber of Commerce of Metropolitan Montreal, said in a statement. A May 11 resumption “gives businesses in the targeted sectors enough time to review their practices according to health requirements, ensure an adequate supply and plan work schedules. This approach reduces the risk of a false start.”
The Conseil du patronat du Québec, the province’s largest business lobby group, also praised the stepby-step approach.
“They are acting prudently, and that’s a good thing,” Yves-thomas Dorval, head of the CPQ, said in a telephone interview. “The worst possible outcome would be a second wave of infections. Companies don’t want a stop-and-go scenario, which would be extremely costly.”
To minimize contamination risks, Quebec manufacturers will initially be limited to 50 workers, plus half of their remaining employees, per shift at any time on one site. So for example, a factory that employs 500 could operate with no more than 275 workers.
Those restrictions will be lifted as of May 25, though all health and social distancing rules will remain in force.
Quebec worked with 15 industry associations to craft the manufacturing plan, Fitzgibbon said.
Bombardier Inc., one of the province’s largest manufacturers, said Tuesday it has started recalling most of its 11,000 Canadian aviation and transportation employees that were furloughed because of the pandemic.
Production and service activities will gradually resume as of May 11, Montreal-based Bombardier said. All recalled employees whose physical presence is not required “will be asked to work from home until further notice,” the company said.
In all, about 500,000 people — or almost half of the 1.2 million Quebecers currently laid off — could resume work when the economy reopens, Fitzgibbon said.
Legault acknowledged the cost of the shutdown for entrepreneurs, saying: “I know these have been dreadful weeks. Financially, it’s been hell.”
Still, the premier stressed, the government must do all it can to keep the virus in check. “That’s why we’re opening only certain companies and we are doing it gradually during the month of May.”
Despite the government’s reassuring tone, many businesses may face bankruptcy sooner rather than later.
With borders no closer to reopening and air transport decimated, groups such as the Chamber of Commerce are urging Quebec to free up additional sums for tourism-driven industries such as hotels and event organizers.
Others, such as CFIB, are pushing for a $5,000-a-month hardship grant to help small businesses cover the additional costs tied to COVID -19.
“The thing that’s missing is how businesses are going to pay for these measures,” CFIB’S Jeyabalaratnam said. “These businesses that have very low profit margins, that are already in debt because they had to pay rent with no income, are going to need help to survive this crisis. It’s simple math. If you are not profitable, you are not going to be open for a long time.”
Although Ottawa gave companies a break last month by letting them defer tax payments until September, “those bills are eventually going to come due,” said Dorval at the CPQ. “The problem is that many companies are unlikely to make a profit for a long time.”
Gearing up for COVID -19 won’t come cheap. When factoring in expenses such as new Plexiglas barriers and the hiring of one or more security guards, shop owners could easily incur “several thousand dollars” in extra costs, Emile Roux, head of the Destination Centre-ville merchants’ association, said in an interview.
His group represents about 4,700 shops, retailers and service businesses in downtown Montreal.
Even as they reopen, those downtown merchants probably will face much weaker demand — with universities closed, entire sections of the economy still idled, and many employers forcing their staff to work from home.
About 400,000 to 500,000 people normally work in downtown Montreal, while about 100,000 students live in the area, Destination Centre-ville estimates.
“The big concern for us is that many of our customers won’t be there when the economy reopens,” Roux said. “If that happens, it won’t be long before profitability becomes an issue.”