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Waterloo Region doing its BEST to fight economic hit from COVID-19

Tony LaMantia, Waterloo EDC's President & CEO, talks BESTWR partnership, government response to COVID-19 and potential economic outcomes in this Q&A.

The spread of COVID-19 is disrupting businesses and communities around the world.

To combat this disruption, leaders from Waterloo Region have joined forces to form the Business and Economic Support Team of Waterloo Region, also known as BESTWR. This team, which includes representatives from local Chambers of Commerce, Communitech, Business Improvement Areas (BIA), Tourism and top officials from municipal government, is focused on helping businesses of all types and sizes address COVID-19-related challenges by using an array of newly designed government support programs.

The group is a point of contact for governments as they make rapid decisions to support the evolving economic and business environment, helping to disseminate information to the business community and is a central point for advocating on behalf of local firms.

To start, the team published an open letter to Prime Minister Justin Trudeau and Ontario Premier Doug Ford, along with an editorial in the Waterloo Region Record, encouraging urgent business-friendly (and community-friendly) actions like wage subsidies, access to zero-interest loans and more.

With a few weeks of perspective to draw upon, we decided to touch base with Tony LaMantia, who chairs the BESTWR team in addition to serving as the President and CEO of Waterloo EDC. LaMantia’s experience across the private and public sectors, including through the last recession in 2008-2009, give him a unique perspective as we look to what’s next.

Q: We wrote about BESTWR when it was first launched but there weren’t a ton of details. Can you tell us a bit more about it? What don’t people know?

LAMANTIA: So that’s no surprise. When we first wrote about it, we were literally boot-strapping it, just getting started. We knew that our civic leadership and partners like Communitech and the two Chambers of Commerce would be involved, but what BESTWR would become wasn’t really set in stone. In fact, it’s evolving in real time.

Right now, we have four working groups and task force sub-committees with representation from across the business ecosystem. It isn’t a handful of people – it’s closer to 100. Our tech sub-committee, for example, has senior leaders from Communitech, Velocity, the Accelerator Centre, the Founders Institute and the cities of Waterloo and Kitchener meeting once per week to address urgent, emerging issues. It’s the same story for manufacturing, agriculture, small business, tourism and arts and culture, not-for-profits and property development. I think the breadth and reach of what we’ve cobbled together would surprise people.

We’ve worked really hard on setting up a “no wrong door” policy, which means that if a business has a problem they can go to any one of the organizations involved, typically an existing contact point, and it will get escalated to the right committee or sub-committee instantly. From there, we can advocate for change, help find resources or whatever else the business might need to survive. This approach means no one misses out on being heard, getting help and we can make sure our actions are as efficient as possible, given these unprecedented circumstances.

Q: Are you hearing from many businesses in your role leading BESTWR? What are the most common challenges or concerns?

LAMANTIA: Yes and every day. Early on, the focus was on advocating for government programming that would provide wage subsidies, low-interest loans and help with rent, among other things. That’s why we wrote to the Prime Minister and Premier in late March. We actually did that before BESTWR was even a thing, and that illustrates the fluid nature of our quick mobilization. Then, the concerns were more often about either gaps in the programs or confusion with program requirements.

As this situation has evolved, these challenges have filtered up to municipal, provincial and federal governments, and they are able to make changes or expand criteria or come up with new support programs, and then we circle back to business to find out whether there are outstanding issues. It’s a continuous feedback loop and we’re learning experientially by doing—very much the Waterloo Region way.

Q: Do you think governments have been responsive?

LAMANTIA: Absolutely. Yes, I do. The feedback loop is working. Is it perfect? No, far from it. For some sectors, COVID-19 has been catastrophic. Even so, when it comes to government partners, we know their hearts are in the right place and they’re trying to be responsible stewards of public money. They need our perspective – feedback directly from businesses – in order to get it right and in such a way that it will stand up to scrutiny. Under the circumstances, they’ve done an admirable job. I know we’d like quicker action on some key gaps, we’d also like more program flexibility and inclusivity and a sense of a support time-frame – what we call “extension” to allow for vital business planning decisions – but that’s also a function of our progress on the public health emergency and status of containment and future re-opening measures. Each level of government is seeing new challenges, considering new charters. It’s at once vital and very complicated.

In the international context, I think our governments have responded very well compared to the United States, United Kingdom and other countries and I think that will give us an advantage coming out of this crisis sooner and stronger.

Q: You’ll hate this question because I know you don’t like to speculate on something so complex, but how do you see this pandemic changing Waterloo Region’s economy?

LAMANTIA: I do (hate this question)! It’s hard to predict all of the ways COVID-19 could change Waterloo Region’s economy.

The clearest change I see on the horizon is a realignment of manufacturing supply chains. Right now, manufacturers rely on global, just-in-time supply chains that thrive on a high degree of certainty. When something like COVID-19 disrupts these supply chains it adds a ton of uncertainty to the equation. Indeed, these supply chains are so integrated – even within North America – that we don’t know when everything will come back online. It isn’t like you can flip a switch.

We’re hearing a lot about reshoring and/or repatriating supply chains. Plan Bs and Plan Cs are rapidly becoming Plan A for manufacturers – is there a local supplier available? If not, could there be? Cost is a big driver right now, but reliability might end up mattering even more. With Waterloo Region’s expertise in high-tech manufacturing – robotics and automation, in particular – we’re in good position to play a central role in reshoring supply chains in North America. This opportunity could define our community in the years to come.

In addition, our financial services companies, post-secondary academic institutions, tech anchors and start-up ecosystem, government services are all being stressed. What we learn from coping with this pandemic – virtualization and future of work and service offerings, productivity gains, etc. – will create opportunities for new investment and new business models. Many companies and institutions (including governments) will decide that the new ways and productivity gains should be adopted permanently. It’s at once a very daunting and disruptive time.

Q: Having lived through a few chats about economics and finance with you in the past, it’s pretty clear you’re a chronologically mature and often well-informed guy. Do you think the current economic disruption differs from the recession in the late-2000s? If so, why? Does that have repercussions for the recovery?

LAMANTIA: Thank you for the kind words (I think?). So, again, predictions are a mugs game at a time like this. First, we’re right in the middle of it (more likely the front-end if you believe there’s no return to “normal” until we have a vaccine, effective treatments or herd immunity). Second, this type of global event hasn’t happened in my lifetime.

This crisis doesn’t share a lot with the financial crisis in 2008. That downturn happened over the course of many months and it represented a direct hit to credit markets and the financial system itself. What we learned was that it was essential we re-capitalize and strengthen the global financial system with strengthened oversight and banking regulation. I was actually part of the oversight committee responsible for the creation of the Global Risk Institute in 2010, including the banks and the Toronto Financial Services Alliance.

While we’re seeing the benefits of that strengthened financial system today, we’re also seeing much of the global economy literally shut down in a matter of weeks. The upside, and I firmly believe this, is that the fundamentals of our economy are sound and whenever we get COVID-19 under control we’re going to see a robust and swift recovery, albeit not at the same dramatic rate and speed of the descent. TD Economics today predicted that our 2020 Q2 GDP would be 40% lower (annualized). That’s, in a word, devastating! TD is also predicting Q3/Q4 will see double digit growth in both GDP and corresponding reduction in unemployment levels.

But, here’s the most important thing, this scenario doesn’t mean much to people who are really suffering right now. That’s why, while I’m optimistic that Waterloo Region will weather this storm well and the global economy will bounce back, we have to squarely focus on the here and now first. Specifically, we need to focus on the public health response and ability of our companies (especially SMBs) to weather the storm.

When we’re fully in the clear, with no fear of a relapse into contagion, then I think it’ll be akin to the Roaring 20s. All of the pent-up frustration due to long periods of social and physical distancing measures, pent-up investment demand and economic activity, will lead to a pendulum swing in the other direction, marking a prolonged period of recovery, prosperity and celebration of human contact.

Q: I know you’re a bit busy these days, so let’s cut this interview off here. Is there anything else you’d like to say?

LAMANTIA: I’d like to applaud our community’s tenacity in adapting and dealing with the fallout from COVID-19. We really sell ourselves as a collaborative community with a “barnraising spirit” and it’s times like these that you see it in action.

More importantly, I’d like to humbly recognize health care professionals, front line workers and all  those involved in making sure critical products, like food and basic necessities, are still available.

They’re my heroes and we need to ensure we’re worthy of their respect. That’s why BESTWR has to live up to its aspirational name. These men and women truly are the best!

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