REOPENING CANADA: Border closure may forever alter the way we travel, do business

Friday, June 26, 2020

The Windsor Star/Dave Battagello

Reopening Canada is a series of stories on the post-pandemic economic recovery, here and nationwide:

The border cities of Windsor and Detroit have long promoted themselves as the “two-nation destination” to both tourists and corporate investors.

But that link was severed indefinitely with the shutdown of the Canada-U.S. border in mid-March in a bid to control the ongoing spread of COVID-19.

So the way some business is done will have to be partly reimagined.

Only essential personnel — such as health-care workers employed in Michigan hospitals or truckers hauling freight related to $700 billion in annual trade between the two nations — have continued to cross the border such as at the Ambassador Bridge and Detroit-Windsor Tunnel.

It’s the same story being played out in border cities across Ontario, including Sarnia, Fort Erie and Niagara Falls, which each have felt a major economic impact and life-altering change due to the border closure.

“Without question, the border is an important gateway for entering Windsor-Essex, Ontario and the country,” said Gordon Orr, CEO of the Windsor region’s tourism bureau.

“Being a border community allows you to enjoy an economic advantage. Not having Americans coming over has been a blow to not only Windsor, but several communities.”

Locally, 33 per cent of business at Caesars Windsor comes from U.S. customers, while the region’s thriving wineries get 20 per cent of customers from across the border, he said.

So what does the future hold once the Canada-U.S. border fully reopens? How long might it take for some semblance of normal to return?

Even after border crossings are open to everyone, Orr wonders if people are even going to want to travel.

“What this may do going forward is kill spontaneous travel,” he said. “Are people going to rush over to come to the casino, have dinner (at restaurants) or make a day trip to a winery? That will be the challenge.

“The longer the border remains closed, what the tourism landscape ends up looking like is difficult to know. If you have a second wave of COVID, that will also factor in. There will have to be a comfort level for the consumer before there is a compelling reason to cross the border.”

So there will be more focus for a time on domestic travel and staycations.

It’s not just border cities suffering economic losses with the border closure, said Rocco Rossi, CEO of the Ontario Chamber of Commerce.

He cited millions of tourism dollars lost with hotels, restaurants, resorts, campgrounds and retailers being financially crushed with multiple festival and summer event cancellations, such as the Stratford Festival and the Agawa Train Ride.

Ontario’s airports are also suffering as border closures lead to “huge volumes of traffic dwindling to a tenth of what they were before the crisis,” Rossi said.

Then there are big economic losses for manufacturers and industries because of the closed border, he said.

“We want the border open as soon as possible, but also as safely as possible,” Rossi said. “Until there is a vaccine, there is no zero risk with COVID, so how do we bring the risk down as low as possible so spikes don’t threaten our health-care system and collapse it?”

He believes whenever the border fully reopens each business sector or industry will develop its own set of rules to “be safe.”

“It will not be simple, as much as frustrating,” Rossi said. “The government has to go slow with this and get it right — as damaging as this has been to our economy.”

Each business that relies on goods moving across the border will see changes in their supply chains, Rossi said.

“Our nation depends on (binational) trading more than the U.S., so we want to maintain that free trade system,” he said. “But in critical areas, companies will either stockpile more or look to be able to produce the same goods locally.”

He noted during the crisis how several manufacturers in Ontario reacted quickly early in the pandemic to produce an array of ventilators and PPE that included face masks, sanitizers and gowns, so as to no longer rely on international supplies.

“There are companies that have arisen (because of the pandemic) that are now part of the supply chain,” Rossi said.

He anticipates new long-term corporate partnerships and alliances will be formed for both safety and economic reasons that will change global trade volumes.

This will be part of a larger trend that we will have to watch closely,” Rossi said. “The more people who say ‘I can make that myself,’ the fewer things you will need to exchange or buy from someone else.

“There will be a rethinking of global trade and alliances as companies ensure they have trusted trading partners they can count on.”

Stephen Mckenzie, CEO of the Windsor-Essex Economic Development Corp., described financial impacts of the border closure as “severe” for countless business sectors locally and across Ontario.

Truck traffic carrying trade on the Ambassador Bridge has essentially been cut in half during the pandemic, although it has started to increase since automakers and their suppliers have come back to life in recent weeks, he said.

The longer the border remains closed to certain people, the more likely companies will get their products elsewhere without “being at the mercy of border agents,” MacKenzie said.

“That’s a big risk,” he said regarding potential loss of regional investment in the months and years ahead. “What we will need is consistency of the (border) rules.”

But Mackenzie anticipates most industries will eventually return to economic levels prior to the pandemic.

“For some industries recovery is already under way,” he said. “Some will be impacted more than others, but we certainly will still be marketing our (Windsor-Detroit) region as binational. We haven’t changed any of our priorities or strategies, but what we will be seeing is companies changing tactics.

“We are going to be in a much more virtual world. Companies have already pivoted where their people will travel less and use technology more.”