Hey, how's it going?

by Amy Reiswig, October 2010

Focus takes the economic pulse of our community by talking with people in the bellwether sectors.

Hey, how’s it going? We hear and use this phrase many times a day, usually receiving or providing a polite and perfunctory answer. But the global economic downturn of the past two years makes it a question worth seeking deeper answers to in order to get a read on the health of Victoria’s economy and our community. 

One read on our community is through the daily parade of disturbing headlines: housing sales at a 20-year low; the lowest minimum wage in the country; public anger and fear over the HST and its impact on both industry and inflation; increase in consumer bankruptcies; high profile developments headed into receivership; unsolved issues around mental health, addictions and homelessness; arts groups and other non-profits limping and losing important personnel under provincial funding cuts. But how are the people—beyond the headlines, beyond the expert commentators and statistical reports—doing?

When it comes down to how things feel on the ground, after all, an economy is a network of people—people making money, spending money, saving and investing money, and helping those without money.

Victoria’s economy, like that of any city, stands on about 15 different feet of various sizes and strengths, far too many to be examined in one article. Here we have chosen to side-step some of the most solidly planted of those feet, such as public-sector areas of education, health care and government/public service, to look at some lesser limbs—lesser perhaps in economic impact and employment, but certainly not in terms of community vibrancy or ultimate impact on the economy. In fact, the people interviewed here—from buskers to business owners, gardeners to construction workers—represent bellwethers of the city’s economy because of their greater responsiveness to the prevailing economic winds. 

These private and non-profit sectors can be seen as the canaries in our coal mine, and their singing or slumping give a good indication of where we, as a community, still have work to do. 

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Certainly, one of the legs needed for any community and economy to stand on is housing. According to the Victoria Real Estate Board, housing sales have recently “softened,” with prices dropping slightly but generally stable. Numbers for this August show 425 sales for 4,356 active listings compared to 764 sales for 3,509 active listings in August 2009. While giving buyers more choice, the current ratio of sales to listings is bad for sellers and for Greater Victoria’s approximately 1,200 realtors, since it means more competition for less business. 

So how are local realtors feeling about their business? That partly depends, it seems, on one’s years of industry experience. Inez Loudon, a realtor in Victoria for 20 years, says her first six months of 2010 have already surpassed all of 2009 in terms of volume and income, while younger realtors—without reserves of past clients and referral business—say this year has been tough. For instance, Shamus Baier, working for about two years, says, “July of 2009 was my biggest month last year, but I had no transactions in July 2010.”

“The last two years have been a fight to keep afloat,” Baier says. “Being a real estate agent means that you have to accept that you don’t know when your next paycheque is coming, but you just keep doing your job every day and believe that it will come.”

Another young realtor, with over a decade’s experience in Vancouver and several here in Victoria, and who has asked to remain anonymous, describes an increasingly cautious and adversarial work environment—where realtors must justify commissions, clashing buyer and seller expectations stall negotiations, and ethics get compromised.

 “People come into the business thinking it’s an easy way to make a lot of money, but it doesn’t work that way. As a result, integrity issues go up in tough times,” he says, describing it as a “brutal business.”

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How the housing market is doing is considered to be a major indicator of economic health. One of the four main questions asked by The Conference Board of Canada in developing its Index of Consumer Confidence is whether people think now is a good time to buy a big-ticket item such as a home. Apparently, despite slightly falling prices and historically low interest rates, people still aren’t moving on the market the way they used to, even just last year. 

Housing starts were up dramatically at the beginning of 2010, but builders and developers have hit some serious snags, as the receiverships at Bear Mountain and Cook Street Village’s Essencia Verde attest. Not only does a sliding real estate market speak to a lack of consumer confidence, it also impacts another important sector of Victoria’s labour force: the building and construction trades.

The first part of 2010 saw a bit of a building boomlet: from January to July, Greater Victoria had 1,310 new housing starts, compared with 393 during the same period in 2009. But then 2009 was not a good year for housing construction. The latest Canadian Mortgage and Housing Corporation report notes: “The 1,958 units currently under construction remains well below the elevated levels recorded in 2007 and 2008 when 2,900 to 3,600 homes were being constructed at any given time.” Casey Edge, executive officer with Canadian Home Builders’ Association-Victoria, qualifies the good news so far this year as well, noting, “Much of it was generated by trying to beat the HST on July 1.” He says the rate of new construction is expected to drop off.

“It’s a very mixed-up market right now,” says Ross McLean, chair of the Vancouver Island Construction Association and branch manager for Houle Electric in Victoria. “Competition means people who are not as skilled or not used to doing a certain kind of work are getting into and undercutting the people who usually do that work, because their normal work’s not there.” Additionally, he says “the past economic situation is really catching up with some people now” resulting in some contractors having trouble qualifying for bonding. On top of that, both McLean and Edge worry that the HST will encourage growth of the underground economy, as consumers seek out cash deals. 

However, to McLean’s knowledge, “no good tradesperson has had to leave the industry” because of the downturn in Victoria: “You work hard, you’ll do well.” 

Trusting that belief is Jonathan Bratseth, a 32-year-old carpenter with Città Group. Bratseth says, “I’ve seen people come and go. In ’08 even we shed a few pounds with layoffs. But there’s an ethos in this industry: good, honest, hardworking people will do well.”

That faith is important for feeling secure, especially given what he’s been hearing. “It’s starting to smell like ’08 did around here,” he says. “People are talking the same way. There’s just a general feeling based on how much work people have, the fact that people are only booking a week out when they used to book two months out. The housing market is a good indicator of whether people are feeling brave.” 

So is he, secure in his position with a large development company, feeling brave? “I’m always doing renos around my place. I’m a carpenter! But I’m not tearing my kitchen out. If I had more money or was feeling more confident I’d do more.” Of his family spending in general he says, “We’ve scaled back. Our eyeballs have definitely gotten a bit smaller.”

McLean believes things will return to normal as private spending returns, adding that the recovery and stability of the construction and trades sector depends largely on government committing to infrastructure spending. Overall, McLean says, “it’s not been easy, but it’s been better than for some sectors. I have hope for now, but concern for the future.”

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When people’s eyeballs get smaller, as Bratseth puts it, they spend less, and so consumer spending in the retail sector is also seen as a good indicator of economic health. For instance, the aforementioned Index of Consumer Confidence measures consumers’ optimism on current economic conditions and links that to spending.  According to Statistics Canada, seasonally adjusted retail sales for the first five months of this year in BC were up by 8.6 per cent compared with the same time in 2009—the highest increase of all Canadian provinces. Sounds good, but remember, 2009 was not a good year. So, how are things now out on the sales floor here in the capital region?

Retail employs about 11 per cent of Victoria’s labour force. One of those so employed is Brian Henry, the self-titled Big Kahuna at Ocean River Sports downtown. 

“Spring was down in terms of people through the door from last year,” he says, noting that the economic climate is still tough. “We’re going to have to work twice as hard—I am working twice as hard,” he laughs. Hard work is evident when you look at everything Ocean River does: they sell clothes, equipment, kayaks; run adventures tours, rent kayaks and kayak storage space; coach competitive paddlers, and are trying to increase online sales. “It’s quite a job to keep everything together,” Henry admits. “You have to be innovative, creative and proactive. The key is diversity.” 

Another key to their survival is loyalty—to customers, product lines and staff. Last year, Henry increased staff wages. Wages are a huge expense, “But salespeople are the key to my success, so it would be crazy not to take care of them.” 

“Financially we do ok, but I wouldn’t call it a highly profitable business,” he says. “We do it because of the lifestyle. We’re local and independent. We have less financial power but we’re more flexible.” 

That’s why, even though times are a little tight, “We’re doing more donations than we’ve ever done,” he says. “We don’t have lot of money, but we can facilitate things for people,” like donating kayak rentals to silent auctions or taking kids who have witnessed abuse out on the water for free. Strong community bonds make for good business in any economic climate, explains Henry.

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The notion of a community bond is one that has also been credited for the strength of Victoria’s tech sector. The Victoria Advanced Technology Council’s (VIATeC) executive director Dan Gunn claims that “Because of where we’re located we attract a certain kind of individual,”—individuals who are brilliant, likeable, creative and committed to making a difference. 

And tech is predicted to make a difference. In a recent Ipsos poll on issues facing the province’s economy, BC business leaders predicted the high tech sector—followed by tourism and green energy/clean technology—will be the biggest generator of economic activity and employment. Here in Greater Victoria, the tech sector includes close to 900 companies, employs approximately 13,000—about seven percent of our community—and generates more than $1.95 billion in annual revenues. With an economic impact of about $2.65 billion, VIATeC’s website claims: “That’s bigger than the revenues generated by the entire NHL.”

Delivering products and services in areas including information technology, environmental technology, life sciences/biotech, aerospace, advanced manufacturing, telecom and research labs, Victoria’s tech companies range from small game developers with five employees to major firms employing hundreds. And according to the NDP-sponsored discussion paper Looking Forward: the BC Economy at a Crossroads, the high-wage, high value-added tech sector jobs “can help offset the erosion of high-value jobs in forestry and manufacturing.” 

However, Gunn says the mood is still cautious in Victoria’s tech sector. For instance, regardless of how well Victoria is doing, many local tech companies are involved in exports and therefore affected by waves rocking the global economy.

“Take components,” Gunn explains. “If you don’t have a reliable supply chain, you can’t promote and sell your product. That and quality control are real issues,” he says, in terms of dealing with overseas suppliers reeling from the global recession. “It involves a lot of risk-taking and investment, and that has our companies concerned.”

But it’s not just companies that export their services. One well-established local company lost close to 50 percent of its business virtually overnight when the provincial government cancelled contracts in a belt-tightening move of its own. Since then, staff reductions and a sale of the building it owned have ensued, though the owner feels things have now stabilized, albeit at lower revenues.

As Gunn sums up about the tech sector, “The waters are choppier and there are a lot more rocks out there right now.”  

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So are those doing physical work around the neighbourhood also having to negotiate choppy waters?

 Workers in small service-based businesses, often self-employed, experience the economy from a more self-reliant position than other sectors, according to Heather Smith of garden maintenance company Hedges and Edges. 

“Five years ago, I quit my job to become a peasant,” Smith laughs. Formerly a service writer for General Motors, Smith has chosen a less corporate lifestyle and sees individual economic security as rooted precisely in this kind of flexibility. 

A scan of the service directory in the newspaper’s classified section shows Victoria’s healthy crop of small service-based businesses, from garbage haulers and window-washers to house cleaners, lawn mowers, landscapers, movers and more.

“I can always do something,” says Smith. “Diversity is the key.” For instance, on top of her gardening, Smith is going to England in October to learn how to hang wallpaper and already has the promise of work with a local décor company. Working for both individual and corporate clients, she says she’s keenly aware of the contrast between her way of life and that of people tied to more material ideas of security and prosperity.

“People’s lives are artificially inflated. All you have to do is look around.” Living in Sooke and driving past new developments in particular makes her feel that “It’s a big balloon with all this stuff balanced on top of it and it’s going to burst.” In the future, she says, “I can see ghost towns everywhere. I drive through and just shake my head. You just get that feeling.”

While she may fear for society at large, she is feeling well-placed to stay stable. “I have no problem going up to someone and asking to do a job I’ve never done before. People today need to lower their expectations, increase their initiative. Schools aren’t teaching kids to be creative, they’re teaching them to get specialized training for specific jobs,” and when times get tough and the job market is limited, that kind of specialization doesn’t stand anyone in good stead, she says. 

Smith’s advice for weathering uncertain economic times and for creating a more stable community for the future: “Don’t forget about everyday things. Don’t try to get rich quick. Don’t miss an opportunity.”

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One sector of Victoria’s economy in which people are definitely not trying to get rich quick is arts and culture. Accounting for between three and five per cent of Victoria’s labour force (depending on which statistics you read), the arts and culture sector may not be one of the city’s major employers, but it is certainly one of the most visible and valuable beyond the bottom line.

The BC Arts Council’s Strategic Plan for 2009-2013 acknowledges that arts and culture “contribute to higher than average economic growth, tourism and job creation” and that “a thriving arts and cultural sector in a community is essential to attracting and retaining the highly trained creative workforce needed to compete in the 21st Century global economy.” 

Yet, as we’ve being hearing, devastating cuts to gaming and direct access grants caused by the BC government’s belt-tightening—and  the resulting competition for funds available from other sources—have left Victoria’s arts community reeling. 

In distress are organizations both large and small. Paul Destrooper, artistic director of Ballet Victoria, says they just lost $40,000 from the BC Arts Council. “It’s not just a reduction, it’s a 100 per cent cut,” he says. Lina de Guevara, director of Puente Theatre Society, hasn’t suffered from such drastic funding cuts, but still struggles under the current economic climate: “Our funding only covers two part-time positions for administration and the creation of productions. We do pay all our performers but have to get funding for each project.” 

The continual hunt and peck for funding finds artists fatigued and, despite grand words in service plans, feeling disrespected. “I’ve lost track of how many grants I write each year,” de Guevara tells me. “It’s exhausting and time consuming. We have to justify our existence over and over. People are in a combative mood. It’s very difficult to understand how they don’t see the value of the arts for communication, for healing, for building community.” 

As a result, she says, there is a pervasive pessimism in Victoria’s arts and culture industry. Paul Scrivener of the Community Arts Council of Greater Victoria (CAC)—which also recently lost a huge grant—says, “I don’t see any light at the end of the tunnel.” Cuts have meant the CAC has had to cut some of their programming, salaries and staff. “The arts will survive,” he says, “but they shouldn’t just survive: they should flourish. It shames us.” 

Destrooper agrees. “I sound bitter, and I am,” he says. “We’re working so hard to produce something great here in Victoria,” noting that he’s dedicated to raising local talent, engaging in community outreach, and contributing to what he calls an arts ecology in the city by bringing business to local designers, photographers, musicians, etc. 

“Victoria is blessed with an enormous amount of talent,” de Guevara exults. “But if we don’t take care of them, they will go. That’s really dangerous for a city like Victoria, a capital city. We need to have something to offer other than going to shopping malls.”

The arts, de Guevara says, “are important the way education is important. It should not be that young people think the only things to do are watch TV or go see bad American movies. If young people see that a career in the arts is accessible and possible here in Victoria, they will stay and work here rather than go to Vancouver or Toronto.” Case in point: when I emailed the Professional Arts Alliance of Greater Victoria for their views, an automated email responder informed me that “Scott Walker has resigned as Coordinator to accept a job in Toronto. A search is underway for his replacement.” I wish them luck.

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There’s a lot of overlap between the arts and culture and tourism sectors in terms of Victoria’s economy; in fact cultural tourism is a fast-growing area of the tourism industry. However, unlike the arts, which fight to prove their financial worth, tourism has long been seen as one of Victoria’s great economic pillars and revenue pullers. A recent poll showed that, after tech, tourism was voted most likely to generate economic activity and jobs in BC in the future. As has been widely reported in the media, though, Victoria’s tourism industry has also suffered during the economic downturn, from drops in hotel room occupancy rates to restaurants feeling the fallout of the HST. 

With so many agencies pledged to promote tourism in this city, it’s hard to know what numbers to trust. For instance, the Harbour Authority touts a record-breaking 228 cruise ship visits, but several people I spoke with said those passengers simply aren’t spending much money in town because they’ve already spent it on the cruise tickets. Many, apparently, don’t even get off the boats. The cruise ship industry has changed and now Victoria is feeling the impact.

Backing away from potential promotional spin, therefore, and looking for a very literal “man on the street” view of Victoria’s tourism industry, I sought out the man in black, Darth Fiddler.

Predictably installed on his usual corner across from the Tourism Victoria visitor centre, the actually very gentle Randy McKenna considers himself a tourist attraction, a kind of Disneyland character, and has been busking in Victoria for the last six years. As a result, he has a good read on what’s happening in the Inner Harbour. “This place is a Mecca for tourists,” he says, but right now people are “incredibly cautious.” 

He lays blame on the American dollar, the unpredictable summer weather, the few aggressive panhandlers, late cruise ship docking times and people being “blown out” from Olympic spending. “The Olympics were amazing” for him, he says, but it’s been really slow since then and “much harder to get tourists to part with their money.” He pauses and notes that his opinions are based on his conversations with people and “by how traffic feels.”  

“I fear for the future,” McKenna says. “I think it’s going to get rougher and rougher for Victoria.” Whether it’s enticing visitors to return or creating viable tourism job opportunities for local workers, McKenna concludes, in a phrase never to be heard from the real Vader, “In order for a flower to grow in the garden, you need to have a garden to grow it in.”

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Nurturing and helping things grow in a garden is a good metaphor for a sector that rarely makes it into discussions about Victoria’s economic drivers: non-profit. Non-profit organizations (NPOs) are generally not big employers and are, by design, not making profit. However, their contribution to Victoria’s economy should not be overlooked or underestimated. The extremely diverse NPOs in Victoria provide support, skills and training to help people in distress get back on their feet and participating in the community—and therefore the economy—as workers, consumers or just healthy citizens. But are these organizations, which help our community’s most vulnerable, themselves vulnerable in today’s economic climate?

An NPO’s stability depends largely on its funding structure. For example, the Victoria Women In Need Community Cooperative (WIN) is entirely self-funded, generating revenue through its resale shops in order to run programs for women in crisis and in transition to independent living. 

“We have a huge reliance on the community for donations, and the economy can have a big impact on that,” says Clare Yazganoglu, executive director of WIN. While donations decreased in 2008, in the last six to eight months donations have almost returned to what they were before the downturn. “It really speaks to the community. We have a pretty amazing community in Victoria,” she says. 

Unlike WIN, however, many of Victoria’ non-profits rely heavily on government and private-sector funding, and drastic cuts to gaming grants have left many without stable funding sources. 

The executive director of one Victoria NPO—someone who has worked in the non-profit sector in Victoria for over 20 years—says “non-profits across BC are under attack” by the current provincial government. “We have proven that we are good for the community, but still our funding is cut.”

“Their advice is to diversify our funding—go to the private sector, go to foundations. We’ve been doing that, but we are not the only ones.” He said the idea of having to compete with other non-profits, all trying to do good for the same community, is abhorrent. “We feel like we are in the hands of the Devil. We are so vulnerable.” 

Non-profits are under a cloud of fear, he says, including a fear of speaking out, which is why he insisted on anonymity for this interview. NPO executives and workers feel that regulations can change or funding be taken away at any time. “I’m scared I could lose everything,” he says. “It’s like living with the sword of Damocles over your head. Yet we are responsible for employees, responsible to our clients.” 

According to him, not only do non-profit sector workers suffer from stress, disillusionment and fear of job loss, the people they aim to help also suffer due to cuts and/or reductions in programs and services. Instead of working from the ground up to build a healthy community during the downturn, he notes, it seems Victoria’s social support network is being dismantled from the top down, specifically by the provincial government’s funding cuts. 

Victoria Mayor Dean Fortin seems to recognize that a healthy non-profit sector is crucial to Victoria’s well-being, telling me that “The creation of, and continued advocacy to protect, a strong social safety net is for these very situations”—i.e. during an economic downturn. But when the organizations that help the vulnerable are themselves vulnerable, one wonders where it’s going to lead. Seems like the City of Gardens has more tilling left to do for its flowers to really grow.

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So that’s how it’s going. Neither anticipating a return to boom years nor despairing of further collapse, across the private and non-profit sectors people are focusing on the practicalities of adjusting their behaviour, both in their professional and personal worlds. They repeatedly emphasize their coping strategies: working harder, innovation, creativity, flexibility and community responsibility. These lean times may make us stronger, more entrepreneurial, or perhaps just more realistic.

 Which would likely suit Ken Stratford, CEO at Business Victoria, just fine. He sees Victoria as largely a reactive rather than proactive community. “We’re a quite conservative community, really,” he says, noting that for years we put very little energy into issues like homelessness and poverty, and now look at things. Yet, he adds, we do have the capacity to galvanize when called upon—he cites the Blue Bridge and the HST petitions—but it’s not the norm or instinct of the community.

Certainly the Victorians I talked with are not simply floating along here in the land of the lotus eaters. At least in the private and non-profit sectors, a shift in attitude could well take root out of necessity. Perhaps enough individual reaction to the economy’s slackening will also spur deeply-needed proactive solutions at both grassroots and government levels.

Everything is connected, after all. Mayor Fortin hints at the social and economic interconnectedness recognized by many of the people I spoke with, in saying, “We need a healthy and sustainable economy if we are going to meet all the social challenges we are committed to solving, like homelessness.” Yet we also need to address social challenges in order to create a strong community that can then sustain a strong economy. 

All those muscles many Victorians have been exercising to get them through some rather tough times over the past couple of years may be just what we need to do the heavy lifting  of community-building.

Writer and editor Amy Reiswig’s awareness of Victoria’s diversity—jobs, people, opinions, hopes and heartaches—grew three sizes during the writing of this article.