Regina Executive Leadership OutlookFebruary 2016

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Table Of ContentsIntroduction ...............................................................................................................................................................3

Interviews ...............................................................................................................................................................3

Overview Infrastructure & the Regina Advantage ..............................................................................................4

Survey Methodology ..............................................................................................................................................4

Executive Confidence Index ..................................................................................................................................5

Economic Outlook ..................................................................................................................................................5

Current Events: Infrastructure Investment .............................................................................................................8

Policy Related: Quality of Life ..............................................................................................................................12

Comments of Interest from the Interviews ...........................................................................................................14

Conclusion ..............................................................................................................................................................15

3IntroductIonPraxis Consulting (Praxis), in partnership with Economic Development Regina (EDR) began a quarterly publication in September of 2015 entitled, Regina Executive Leadership Outlook (RELO) that captures the thought leadership of Reginas senior business leaders on key issues facing the Regina region. The publication is a way for EDR to explore the thought leadership of Reginas business leaders on key issues facing the region, and to illustrate and advance the Regina Advantage.

Each quarter, Praxis and EDR choose specific topics as the focus of the publication that aligns with certain categories in the general areas of:

1. Current events

2. Policy

3. Business

4. Executive Confidence Index (Economic Outlook)

Using the chosen topics, a survey questionnaire and an interview questionnaire is developed and distributed to approximately 75 senior business leaders in the Regina region.

In addition to the survey, Praxis and EDR request in-person interviews with 10 to 12 Regina-based executives. The interviews are a way to gather in-depth feedback on the topics chosen, which provides supplemental information and thought leadership on the topics of focus. Interviewee data remains confidential unless otherwise agreed upon by the interviewee for media use.

InterviewsThis quarters interviews focused on The Impact of Infrastructure Investment and Quality of Life Investment on the Regina Advantage.

The interview data is intended to supplement the survey, providing in-depth context for survey results. Twelve executives were invited for the second editions interview process and nine were able to participate. The following individuals were the nine interviewees that participated in the second editions interviews:

1. Mark Allan: Evraz Place

2. Mo Bundon: Harvard Developments

3. Jason Carlston: Dundee Developments

4. Wayne Clifton: Clifton Associates

5. Jennifer Evancio: Best Cooking Pulses

6. Greg Fieger: Conroy Ross

7. Ruth Smillie: Globe Theatre

8. Stephanie Yang: Brandt

9. Brad Zakreski: Storm Applied Technologies

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Overview Infrastructure & the Regina Advantage The Second Edition of RELO illustrates the impact of infrastructure on the Regina Advantage, and further explores the effects of an economy in transition from boom times to stable times.

This quarter, the Executive Confidence Index is 2.08, down by 15 points from the previous quarter results, when it registered 2.23. While a decrease, this still points to a stable and growing economy. Regina executives rate their economic prospects in the next year higher than they rate their economic growth in the last year. Over 88% of executives expect their investments to increase or stay the same, nearly 90% expect their employment levels to increase or stay the same, and over 80% expect their sales to increase or remain the same. Notwithstanding the recognition that the economy faces challenges, executives are investing in their business and communities.

In RELOs September publication, executives highlighted the Regina Advantage of economic diversification, and identified the need for further investment in skills training, diversification strategies and infrastructure investment. Given the priority of infrastructure, the second edition of RELO explored infrastructures role on the Regina Advantage, and in particular, quality of life, economic prosperity, and investment attraction.

Executives indicated that current levels of infrastructure spending is inadequate to ensure continued economic growth, but that the recently announced Federal Government infrastructure spending plans is likely to have a significant impact on the regional economy. Over 60% of executives felt that in an economic slowdown stimulus spending on infrastructure is a preferred approached over ensuring a balanced budget.

Executives recognized the Regina Advantage in terms of our quality of life and emphasized that increased investments in infrastructure will both bolster the regions quality of life and enhance the investment climate for the city. Executives prioritized infrastructure investments into roads and education.

Recent public investments into the International Trade Center at Evraz Place, and the Regina Bypass were acknowledged as being essential to the regions ability to maintain a growing and diversified economy.

The Second Edition of RELO highlights an economy in transition, and illustrates the essential role of infrastructure to the Regina Advantage. Quality of life infrastructure is viewed as both enhancing the regions cultural and social vibrancy and its investment climate. Business leaders acknowledged the slowing economy, but remain optimistic within their own enterprises.

Survey MethodologyThis document reports the frequency of responses to queries in a survey conducted by Praxis Consulting in January 2016. It includes demographic cross-tabulations that tested significant at the 95% confidence level.

Fieldwork for this project included 56 surveys completed by Regina-based business owners and senior executives in Regina. Survey responses were received via an online survey, delivered to each participant by email. Responses were collected January 11 22, 2016.

A total of 77 survey invitations were sent; the response rate is 73%. Margins of error cannot be applied to this type of non-probability sample.

5Executive Confidence IndexThe Executive Confidence Index is a single statistic calculated to gauge leadership confidence in future economic prospects. It is an average taken from questions asking executives to look ahead 12 months. A value of 1 indicates an expected decrease. A value of 2 indicates an expectation of the status quo, while a value of 3 indicates an expected increase.

Executive Confidence Index in this survey is 2.08, down by 0.15 points from the previous quarters 2.23 score. On a scale from 1 to 3, this number indicates overall optimism from executives in Regina for the economic prospects of their business in the next 12 months. The difference is driven by executives opinions of the economy in Regina.

The same executives rate current conditions, compared to 12 months ago, at 1.87, under the neutral midpoint and down .10 points from the previous quarter. These numbers indicate that Regina executives rate their economic prospects in the next year higher than they rate their economic growth in the last year.

Economic OutlookOur executive respondents are slightly more pessimistic about the current state of the Regina economy than they were the previous quarter. However, a close examination of their go-forward expectations and intentions still shows optimism about future prospects and a willingness to invest in their business.

Asked to look forward, 66.7% of these leaders say they expect the economy to remain the same or improve over the next year. Over 90% expect to retain the same number or a greater number of employees during that time. Confidence remains high that their businesses will continue to be profitable, with 76.4% forecasting that profitability will remain the same or improve during that time period.

Survey Question: Think about Reginas economy today as compared to one year ago. All things considered, would you say the economy today is worse than a year ago, about the same as a year ago, or better than a year ago?

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Survey Question: Thinking about the next year, how do you expect Reginas economy will perform? Do you think it will perform worse than today, perform about the same as today, or perform better than today?

Looking back over the last 12 months:

79.6% say Reginas regional economy is now worse, up significantly from the 55.4% who said the same in September.

16.7% say the economy is now about the same and 3.7% say it is better

40.0% say their business fixed investments have increased

40.0% say their fixed investments have stayed the same

20.0% say their fixed investments have decreased

43.1% say their business profitability has decreased over the last 12 months

29.4% say profitability remained the same

27.5% say profitability has increased.

Looking ahead at the next 12 months:

57.4% expect Reginas regional economy to perform at about the same level over the next 12 months.

33.3% expect Reginas economy will perform worse.

9.3% expect it will perform better (This represents a significant change from the previous quarter, when 20.7% expected Reginas economy to perform better.)

7The majority of interviewees expect their business fixed investments will remain the same over the next 12 months:

45.1% expect the same

33.3% expect investments to increase

21.6% expect investments to decrease

Looking ahead at expected results:

59.6% say the number of employees in their business will remain the same over the next year.

30.8% expects that their employee base will increase

39.6% expect sales revenue to increase in the next 12 months

41.5% expect sales to remain the same

18.9% expect sales revenue to decrease

43.1% expects their business profitability to remain the same over the next year

33.3% expect their profitability to increase

23.5% expect a profit decrease.

8Current Events: Infrastructure InvestmentOur executive respondents generally believe infrastructure spending will have a positive impact on the Regina region. Over 57% feel that spending will have a high or very high impact.

Survey Question: On a 1 to 5 scale, please indicate the degree of impact you think this infrastructure spending will have on the economic growth of the Regina region? On the scale, 1 means Very Low Impact and 5 means Very High Impact.

Executives generally believe infrastructure spending will have an impact on the Regina region. Asked to rank the impact on a one to five scale, responses resulted in a mean score of 3.57, indicating high impact.

57.2% indicate spending will have a high or very high impact

10.7% indicate a low or very low impact

32.1% respond neutrally

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9Survey Question: Where do you think this infrastructure spending is best spent? Please use a 1 to 5 scale, where 1 means it is Very Unimportant to spend in this area, and 5 means it is Very Important to spend.

Roadways lead the way in terms of where infrastructure dollars should be spent. The mean score on a scale of 5:

roadways 4.04

education 3.76

healthcare 3.43

major public facilities 3.24

affordable housing 3.23

parks and leisure facilities 3.18

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Survey Question: Think of major infrastructure investments within the Regina region, such as the Regina Bypass project. Please rate the level of impact investments such as this have on each of the areas below. Using the same scale, 1 means Very Low Impact and 5 means Very High Impact.

Impact of major infrastructure investments within the Regina region is felt at roughly equal levels across four listed areas.

1. The overall quality of life is rated to receive the highest impact 3.69

2. Economic prosperity 3.66

3. Investment attraction climate 3.60

4. Business climate 3.60

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Survey Question: Of the following two statements about our provincial economy, please indicate which is closest to your view.

Stimulus spending is the preferred approach:

60.4% believe stimulus spending is the preferred approach in an economic slowdown.

The remaining 39.6% prefer a balanced budget.

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Policy Related: Quality of LifeInfrastructure spending aimed at quality of life will have strong impact, but less so in other areas. A mean response of 4.26 indicates executives believe infrastructure spending directed to improving quality of life will have a high impact in that area.

Survey Question: Now think of infrastructure that is directed primarily at improving quality of life in Regina and region. This includes spending in areas such as parks, recreation facilities, trails, cultural centres and sporting venues. Please rate the level of impact investments such as this has on each of the areas below. Using the same scale, 1 means Very Low Impact and 5 means Very High Impact.

Economic prosperity of the region

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Business climate of the region

Investment attraction climate of the region

Quality of life is an important Regina Advantage. When asked about the biggest advantages to living, working and playing in the Regina region, common themes among responses include:

Quality of life,

Big city services without a big city feel.

Strong sense of social cohesion in this community.

Stable employment.

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Comments of Interest from the InterviewsInfrastructure Investment

Any infrastructure has an immediate impact. Long term impact is based on what new business it can bring to the province.

Transportation infrastructure is key to being competitive for these [surrounding] communities.

[Regina] is experiencing now the impact of under investing.

It is the recreation facilities, trails, culture, cool neighbourhoods that will make us competitive.

[The long term effect of infrastructure investment is that it] continues to build Regina as a vibrant economic hub.

Right now there is a lot of uncertainty economically and investment in infrastructure is showing that we are keeping our economy going.

[We should be] Building what we think the City will become versus what it is right now

Quality of Life

We seem very complacent in Regina. We dont think big. We have an Itll do mentality

Municipal government should be a key advocate for [quality of life investment] but it isnt just solely their responsibility.

You have to look after your home base first. Have a plan in place that satisfies your basic infrastructure, but after that you have to have an equal plan that says if you dont have something to attract people using culture, sport, arts youre never going to have the population or get people here to leverage the infrastructure that youre building.

(Regarding the International Trade Centre) I think there is something to be said about the fact that if you have something exciting on the Tourism side, it develops a sense of pride for people to be able to show off and invite others to keep coming back to this City.

As were building our road, sewer, sidewalks, etc. we should be putting the same kind of effort into culture and what the community really needs.

Much of the quality of life component relates to energizing the population. Doesnt necessarily relate as much to facilities. But once the basic facilities and meeting places are there then the next move is to energize the population to use them.

There is an energy you dont develop a city from a flat piece of prairie without having pride and energy and initiatives.

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conclusIonThis edition of the Regina Executive Leadership Outlook finds that more leaders are now saying that the business environment is currently worse than it was a year ago. However, business leaders in Regina remain positive about business prospects in the next twelve months, with a significant majority saying that they expect their business to be the same or better during that time period.

The 3 point Executive Confidence Index in this survey is 2.08, down by 0.15 points from the previous quarter results, when it registered 2.23. On a scale from 1 to 3, this number indicates overall optimism from executives in Regina for the economic prospects of their business in the next 12 months. The difference is driven by executives opinions of the economy in Regina.

In general, participants in the outlook are supportive of infrastructure spending as a useful measure to stimulate the economy. Executives generally believe infrastructure spending will have an impact on the Regina region. Asked to rank the impact on a one to five scale, responses resulted in a mean score of 3.57, indicating high impact.

57.2% indicate spending will have a high or very high impact

10.7% indicate a low or very low impact

32.1% respond neutrally

The second edition of RELO highlights an economy in transition, and illustrates the essential role of infrastructure to the Regina Advantage. Quality of life infrastructure is viewed as both enhancing the regions cultural and social vibrancy and also investment climate. Business leaders recognize the slowing economy, but remain optimistic within their own enterprises.

The Regina Advantage is one of economic diversity, proximity to strategic resources, and an exceptional quality of life. The regions economic, cultural and social assets will only be fully realized with increased infrastructure invests. Regina region executives emphasized the need to increase infrastructure investment in order to advance the Regina Advantage.

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About EDREconomic Development Regina Inc. (EDR) is the economic development agency for the City of Regina and region. EDR provides leadership to the community to support industry growth and diversification through retention and expansion of existing business and encouraging investment, development of industry and tourism with focus on the key-growth sectors of the economy in the Region. In collaboration with key stakeholders, we work to identify, develop and promote opportunities that advance economic prosperity for those who live, work, learn, visit and invest in the Regina region and ensure the Regina region offers a vibrant and diversified economy for investors, is a positive destination experience for visitors and offers a high quality of life for residents.

David Froh, VP Sector Development E:dfroh@economicdevelopmentregina.com P:306-789-5099 ext 230

About PraxisPraxis consulting is Saskatchewans largest locally-based management consulting firm. Praxis works collaboratively with clients in the facilitation of growth and excellence, leveraging an unmatched wealth of experience across multiple sectors. Praxis strives to:

Inform clients with market research and economic impact studies, providing relevant insights into various sectors and communities.

Strategize, developing custom solutions tailored to clients most unique and complex needs.

Execute strategic plans, portfolios and projects by facilitating internal project management, change management and communication capacity.

Val Sluth, Managing Principal E: info@praxis-research-strategy.ca P: 306-545-3755

IntroductionInterviewsOverview Infrastructure & the Regina Advantage Survey MethodologyExecutive Confidence IndexEconomic OutlookCurrent Events: Infrastructure InvestmentPolicy Related: Quality of LifeComments of Interest from the Interviews

Conclusion