|
By Bruce Constantineau
Vancouver Sun
Saturday, September 09, 2006
The immediate economic impact of the Sept. 11 terrorist attacks was swift and devastating.
Adrian Mastracci, investment counsel at Vancouver’s
‘fee-only’ KCM Wealth Management, says, “Diversification is your best medicine.”
Financial markets tanked, national economies suffered, and nearly any business related to tourism -- airlines, hotels, attractions and restaurants -- endured almost unthinkable losses as nervous travellers opted to cancel long trips and stay home.
Five years later, financial markets have never been stronger, Canada's economy is on a roll, and a wounded tourism industry has recovered to the point where annual revenues are about to surpass pre-9/11 levels.
No company wants to say it "benefitted" from the horrific events of Sept. 11, but no one denies the attacks created a more security-conscious world. And many security companies have flourished in the past five years.
Allan Bentley, senior vice-president of Montreal-based Garda World Security Corp., sees nothing but growth in the future demand for professional security services.
"We just don't see a decrease in the demand for our services in a post-9/11 era -- a world that is increasingly more dangerous to live in," he said in an interview. "The arrests [of alleged terrorists] around Toronto several months ago show that we have active terrorist cells in Canada, wanting to do us harm."
Garda, which employs about 20,000 people in North America, the U.K. and Iraq, has grown quickly in a short time, mostly through internal growth and 11 acquisitions in the past three years. Company earnings grew by 81 per cent in fiscal 2006 to $13.4 million, and annual revenues are forecast to more than double in fiscal 2007 to $600 million.
Garda provides security screening services at 28 Canadian airports, including 18 in B.C., and offers property and personal protection services throughout the world. Protecting buildings and assets like Alberta oilsands facilities remains a big chunk of the company's business, and it also provides personal protection for politicians, business executives and celebrities.
"We provide serious executive protection, not just bodyguarding," Bentley said. "We're more likely to use men and women in suits who use their brains more than their brawn, as opposed to a knuckle-dragger in a tight T-shirt."
He said Garda employs more than 200 security personnel in Iraq, for both personal and asset protection.
Jack Gin, president of Burnaby-based video surveillance camera manufacturer Extreme CCTV Inc., said 9/11 kickstarted his company's sales throughout North America.
"We were already growing our business in Europe, especially in the U.K., where they have had terrorist bombings for a long, long time," he said in an interview. "Nine-eleven made Americans aware that they were also vulnerable and needed to upgrade their security systems as soon as possible around critical locations."
At the time of the terrorist attacks five years ago, about 100 Extreme CCTV cameras had just been installed at the World Trade Center, and another 100 were in a nearby storage facility, to be installed at a later date. The company got those cameras back, and granted a full refund.
Extreme CCTV makes cameras that work with infrared illuminators, allowing for effective video surveillance in complete darkness. After the World Trade Center attack, Gin said his company got a lot of orders for camera systems for government installations at critical infrastructure sites throughout the U.S. -- including far-reaching locations like Hawaii and Guam.
The company's video surveillance systems are currently being used by the Royal Navy, the U.S. Navy, the U.S. Air Force special operations branch, and the U.S. Department of Homeland Security. One of its U.K. subsidiary companies -- Forward Vision -- produced cameras that caught the images of some of the London subway bombers last year.
Gin said Extreme CCTV produces about 70,000 camera systems a year now, more than double the production levels of 2001.
"Now we deal with top systems contractors like Lockheed Martin and Northrop Grumman, names we would not have been connected with before the increased demand for security following 9/11," he said.
Gin said company surveillance systems are currently in use at several overseas military bases.
"I can't talk too much about it, but we know our equipment is being used in both Iraq and Afghanistan," he said.
Kelowna-based Pacific Safety Products -- which makes body armour and chemical warfare clothing for soldiers and police officers -- expects its revenues will nearly double this year to more than $32 million, and has forecast a pre-tax profit of more than $1 million, compared with a $2.5-million loss last year.
The company has two factories in Canada and recently opened a third in Tennessee to vie for U.S. government contracts.
Pacific Safety Products recently estimated that a new "ballistic blanket product" could add $3 million to $5 million to annual revenues within the next year. The product is designed to provide additional protection for military vehicles that are vulnerable to roadside bombings.
Burnaby-based Response Biomedical Corp., which has sold anthrax-testing equipment to hazardous materials teams throughout North America, posted $1.64 million in biodefence sales last year, and while sales have fallen off this year, company president Bill Radvak said a recent certification of the equipment by a U.S.-based testing agency should boost future sales.
"After the anthrax scare following 9/11, it was clear that this sector of the market had a tremendous lack of technology to combat it, because historically, it wasn't of great importance or urgency," he said. "That created an opportunity for us."
Radvak said the anthrax-related events following 9/11 have become a distant memory for some people, so funding for anthrax testing has declined and been diverted to other areas. But the current "lag period" won't last, he said, especially if another event happens to reignite bioterrorism fears.
Phillips Hager & North Investment Management Ltd. chief economist Patricia Croft said 9/11 hit financial markets hard, but didn't create a permanent shift in people's investment patterns.
"We haven't seen people completely avoid equity markets and go to cash because of the attacks," she said. "Markets have basically doubled since bottoming out in 2002, and I think the recent rise in gold has more to do with fears about the U.S. dollar than anything about terrorism."
Croft feels terrorism has become a fact of life for capital markets.
"I don't think we've become immune, but it's interesting that as time goes on, markets seem to react less and less to various terrorist events that happen around the world," she said. "Look at the London subway bombings last year, or the thwarted airline attacks this summer. The markets reacted, but it was fairly short-lived and not sustained in any regard."
Odlum Brown Ltd. vice-president Murray Leith said 9/11 built a premium into oil prices, which has had a positive impact on a lot of energy companies.
"Oil prices no longer follow the old system of inventory models or spare-capacity models," he said. "They're sort of out there on their own."
Leith said the value of the U.S. dollar has been pulled down by massive U.S. budget deficits that have occurred partly due to funding the global war on terror, a factor that has contributed to the underperformance of some U.S. stocks.
Vancouver financial advisor Adrian Mastracci of KCM Wealth Management said another 9/11-type disaster will hit financial markets some day.
"I don't know what it's going to be, but expect something catastrophic," he said. "That's just the way it is, and no amount of planning will save your bacon unless you have a well-adjusted mix of assets. Diversification is your best medicine."
Tourism BC president Rod Harris said the province's tourism industry should pass the $10-billion mark in revenues for the first time ever this year, which shows the industry has recovered significantly from the major hit it took five years ago.
But international visitation to B.C. has declined this year -- especially from the vital U.S. market -- and Harris feels that's largely due to 9/11-related factors like heightened border security, confusion around border access, and a lingering stay-in-the-U.S. mentality among many American travellers.
"Nine-eleven continues to have an effect on the psyche of travellers, and it's compounded every time we have another terrorist incident," Harris said. "I honestly believe it's a fact of life that is going to be with us for years and years and years. The key for us is to put out more carefully targeted messages that have particular appeal to our perspective visitors."
Tourism Vancouver president Rick Antonson said safety and security have become hugely important factors in attracting tourists to the city since 9/11. There is almost no such thing as "carefree" travellers anymore.
"Vancouver has long had a reputation as a safe destination, but we are seeing that erode with the increase of aggressive panhandling and petty crimes against tourists," he said. "In a world where people want safety and comfort, Vancouver can't afford to lose its reputation as a safe place to visit."
Calgary-based airline industry analyst Rick Erickson said the terrorist attacks devastated annual passenger volumes at first, but air travel in the country essentially rebounded within three years.
"The Canadian industry had its best year ever in 1999, and we're actually past 1999 levels now," he said. "The global numbers are also getting back to 1999 levels, although the U.S. market has been slower to rebound."
Erickson said that with Air Canada going through a successful restructuring and WestJet continuing to post strong financial results, the country currently has two healthy national domestic carriers that have benefitted from a strong Canadian economy.
He said Canadian air travellers are resilient and a "fairly hardy lot" as air travel remains a necessity for a large portion of the population.
"People like to take three or four small vacations a year, and we have winter in this country," Erickson said. "If you intend to catch any sunshine or whatever else motivates you to travel, chances are that aviation has to play a role."
Absolute Spa Group president Wendy Lisogar-Cocchia, who opened three spas at Vancouver International Airport just months before the terrorist attacks, said she was frantic at first that her $1-million-plus investment would be wiped out by a decline in air travel. But those fears were unfounded, and she now operates four spas and a hair salon at the airport.
"As it turned out, we did very well in spite of 9/11," she said. "A lot of people are stressed out when they fly, so they like to use us to de-stress. And the new security measures means the waiting times at airports are a lot longer now, so people have more time to use a service like ours."
bconstantineau@png.canwest.com
9/11 Five Years Later
|
