North·In Depth

N.W.T. small businesses wonder if they'll survive 'tough year' ahead caused by COVID-19

There are still only a few confirmed cases of COVID-19 in the Northwest Territories, but the coronavirus is leaving an uncertain future for many, including small businesses.

Businesses, government doing what they can, but economic fallout from COVID-19 will be deeply felt

Business owners across the Northwest Territories are wondering whether they'll be able to keep their businesses as COVID-19 restrictions continue. (Alex Brockman/CBC)

Mike Riling wants to hear the hiss of his welding torch. He wants to see orange flame cut through steel. He wants to feel the satisfaction of a job done right.

Riling wants to be in his shop — Bellar Welding in Inuvik, N.W.T. — but it's closed. He's sent his employees home and is trying to keep himself busy in his backyard as he waits out COVID-19.

He's a working man, unable to work, with thousands of dollars worth of contracts he can't fill. 

"We had tons of work, loads of work that we're supposed to be doing," he said. "But it's all been put on hold. It's going to be a tough year."

There are still only a few confirmed cases of COVID-19 in the Northwest Territories, but the coronavirus has already upended lives. It's creating an uncertain future for an economy dependent on small businesses that aren't built to handle the strain of a pandemic. 

'I'll do whatever I need' 

Kelli Hinchey juggles phone calls between her banker and accountant, crunching numbers to determine how long she can keep making payments on her building — the home of the Yellowknife Racquet Club. 

She shut the gym down March 22, when the first confirmed COVID-19 case in the territory was announced. But still, she has mortgage payments and a heating bill that runs between $6,000 and $8,000 a month. 

"If I don't have a building, I don't have a business," she said. "I have to keep that beast running, whether there are people in there or not." 

Kelli Hinchey owns the Yellowknife Racquet Club. She says heating expenses run between $6,000 and $8,000 per month and they're not stopping. (Jeff Hipfner/Submitted by Yellowknife Racquet Club)
 

Though both the territorial and federal governments have offered emergency loan programs, Hinchey hasn't been able to qualify. Either way, she just took on debt for renovations to the building and isn't in a good position to owe more money. 

"I'll do whatever I need to do for as long as I can do it," she said. "But I have to be mindful of my own personal life and how I'm going to make ends meet." 

She does have a few plans in place, delivering health supplements or renting out equipment, but that's not sustainable. She's unsure how long she can last without more relief — particularly on her heating and utility bills. 

"I'm the sole owner of the club," she said. "This falls squarely on my shoulders."   

Financial hit expected to be worse than 2008 recession  

As of April 2, 56 businesses in the Northwest Territories have submitted 82 applications for either a loan deferral or loan relief from the territory's business development corporation. Eighty-one applications were for a three-month deferral and the other was for relief. 

At the same time, 79 applications came in for $2.6 million in emergency loans from the development corporation. 

Worst-case scenarios suggest more than two million Canadians will lose their jobs during the pandemic and the national GDP would contract by 9.6 per cent, worse than the financial crisis of 2008 and 2009. 

The latest estimates from Statistics Canada put the GDP for the Northwest Territories at $5 billion. If the federal estimates are copied over to the territory, it could mean $500 million wiped away from the GDP. 

"Customer bases are gone, no one's spending money, airlines, retail, auto, you name it," said Michael Miltenberger, who served as finance minister from 2007 to 2015 and now runs a consulting firm in Fort Smith, N.W.T. 

"I lived through 2008 as a finance minister, where the markets crumbled," he said. "It was a major impact, but nothing like this." 

Though small businesses are critical to the N.W.T. economy, its three diamond mines are its engine. Miltenberger estimates they produce at least $1 billion to the territory's GDP each year. Though two, Diavik and Gahcho Kue continue to operate at full capacity, Ekati has been shuttered since March 19.

If the others shut down too, either for health reasons during the pandemic or because of the economic downturn after the fact, the fallout could be catastrophic, Miltenberger said. 

Time for creativity, flexibility 

Katrina Nokleby knows this. She knows business owners can't make their payments and she knows what could happen if the diamond mines close. It's on her to do something about it. 

Six months ago, she was an engineer. Now she's the territory's minister of Industry, Tourism and Investment, responsible for steering the N.W.T. economy through the pandemic. 

N.W.T. Industry, Tourism and Investment Minister Katrina Nokleby announces the first wave of emergency COVID-19 relief at a press conference in Yellowknife. (Alex Brockman/CBC)
 

"This is the largest project I've ever managed," she said. "I'm still in the same role of bringing people together, gathering the information where it needs to be and making strong, science-based, evidence-based decisions." 

Since March, Nokleby has announced two aid packages, representing up to $21.5 million in low-interest loans, deferred payments and waived fees. Now, her focus is shoring up the territory's supply chain, both between the Northwest Territories and southern Canada, and between its regional centres and small communities. 

Short term, she's also looking at mobilizing businesses that can help in the relief efforts: transporting medical supplies, personnel and resupply.

Long term, the government is assessing projects that were already in the works and see if they're safe to go ahead, Nokleby said. 

"We have to think with our heads, remain calm, and put the measures in place where we can be as safe as possible," she said. "I will never sacrifice health and safety for the economy." 

That's a wise statement. But business owners like Riling and Hinchey can only wait so long before they'll have difficult decisions to make about whether they can go back to business when this is all over. 

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