Many of Canada’s small and medium-sized businesses (SMBs) are expected to ride the wave of the country’s major projects boom, provided they can overcome some key challenges.
The news: A new report from the Business Development Bank of Canada (BDC) and the Transition Accelerator found that Canada’s big infrastructure push could attract more than $670 billion CAD in additional investment and boost the country’s gross domestic product by 4.1 percent over the next four years.
The study, released on Tuesday, surveyed 750 companies that are already supporting such initiatives and 250 other interested firms. It estimates that successfully delivering these large Canadian AI, energy, defence, housing, mining, and gas projects could require the participation of 280,000 Canadian SMBs. This group stands to benefit from as much as $443 billion in economic activity tied to these initiatives. While many such firms are eager to take part, they still face key barriers to reaping the full benefits.
From the source: “This is going to be a major shift for the Canadian economy,” BDC chief economist Pierre Cléroux told BetaKit in an interview. “Many [mid-sized] businesses are ready to be a part of this investment.” But if Canada hopes to fully deliver these projects, it must bring more smaller SMBs along for the ride. “They are also very interested, but it’s more complicated,” he said.
The context: Cléroux was surprised to learn that so many mid-sized businesses—namely, firms with 100 employees or more that already derive 50 percent of their revenue from large projects—were already prepared and positioned to take advantage of this boom. However, he was not taken aback by the survey’s finding that their smaller counterparts, which face greater difficulty building capacity, securing financing, and navigating procurement processes, were not. The solution, BDC argued, is to provide those smaller businesses with better information about upcoming opportunities, smaller contract lots, reduced financial or bonding requirements, more predictable payment terms, and clearer procurement pathways.
Final thought: While construction, mining, and manufacturing SMBs likely stand to benefit most from this push, defence and AI data centres account for approximately $220 billion and $11.2 billion of this major projects pipeline, and Cléroux noted that nearly every initiative will require some degree of technology.
Feature image courtesy Mark Carney via LinkedIn.