The 45th Quarterly C-Suite Survey...ROB1000-listed companies between November 16th & December 8th, 2016. This quarter’ssurvey asked the C-Suite about the US Presidential Election

The 45th Quarterly C-Suite Survey

December 19, 2016

Sponsored by:

Published and broadcast by:

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Introduction

Methodology: telephone interviews with 155 C-level executives fromROB1000-listed companies between November 16th & December 8th,2016.

This quarter’s survey asked the C-Suite about the US PresidentialElection and its potential impacts on:

Trade agreements and the economy Canadian businesses The Government of Canada’s relations with the White House

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Key Findings

The C-Suite strongly believes the Trump Administration will be a boon for:

The US economy The North American energy sector, including pipeline approval & Canadian crude oil prices Equity markets: i.e. the Dow Jones Industrial and TSX composite averages

Half (52%) expect their businesses to benefit from the transition to a TrumpAdministration. A much smaller number have adjusted business plans to take advantageof or respond to the change in US Administrations (13%).

While the C-Suite feels mostly positive about the outlook for the US, their businessesand certain sectors, most expect the broader Canadian economy will suffer.

Whereas more now expect the US economy to grow (and grow strongly) in 2017 there is noimprovement in the outlook for the Canada this quarter compared to last.

The impact on trade is the top-of-mind concern Canadian businesses have about Trump. Most believe Trump will make good on his threats to renegotiate or withdraw from NAFTA and that

his Administration will make other moves that would hamper global trade. Half believe a Trump Administration will negatively impact the Canadian economy and most expect

Canadian businesses will be less competitive in two years time. Most doubt the current Canadian government will enjoy good relations with the President-elect;

relations that will be important, they say, given the need to advocate for access to markets. There is a division of opinion as to whether Canadian governments should suspend the introduction

of carbon pricing policies. Just over half believe the change in US Administrations meansgovernments here should delay carbon pricing – 44% disagreed with this.

Detailed findings follow.

4444

The Upside ofA Trump Administration

The C-Suite is decisively of the view that the election of Donald Trump will be positive for the US economy.

Most now that the political environment for business in the US will be positive. In September, less than half agreed with this and many were unsure.

The C-Suite expects the Dow-Jones to increase in 2017, as well as the TSX (albeit to a lesser extent).

The proportion that expects the US economy to grow strongly is up significantly - 15 points.

5555

Trump A Boon For US Economy

83 3 14 1

0 20 40 60 80 100

Total

Positive No difference Negative DK

Do you think the transition to a Republican Trump Administration will have a positive or negative impact on the US economy over the next two years?

6666

Most Say The Political Environment for Business in US Will Be Better

65

38

22

24

12

24

1

14

0 20 40 60 80 100

Q4 2016

Q3 2016

Better About the same Worse DK

Generally speaking, do you think the political environment for business in the United States will be better, worse, or about the same over the next 5 years than it has been

over the last 5 years?

7777

Expectations For Dec. 2017:Dow Jones Industrial and TSX Up

10

5

59

54

17

25

13

15

0 50 100

The Dow Jones Industrialaverage

The average of the TSXcomposite index

Significantly higher Somewhat higher About the same as now

Somewhat lower Significantly lower DK

How do you expect (read item) to be doing by the end of 2017? Is it in your view likely to be significantly higher, somewhat higher, about the same, somewhat lower, or

significantly lower than now?

8888

The Upside ofA Trump Administration

The overall economic outlook for the US is significantly more positive this quarter compared to last.

That said it is a minority that expects strong economic growth in the US 2017. Most expect moderate growth for the US next year.

Despite this improved outlook, one of the most interesting findings of this survey is a sombre opinion about the long-term prospects for the US.

Most disagree that its best days are ahead, a reflection possibly of both socio-political issues as well as economic.

They are somewhat more likely to agree Canada’s best days are ahead.

9999

US Economic Outlook

24

9

70

77

6

13

0 50 100

Q4 2016

Q3 2016

Strong growth Moderate growth Moderate decline

Strong decline DK/NR

What are your expectations for the U.S. economy over the next 12 months?

10101010

Canada’s Best Days Are Ahead

14

15

55

37

25

34

5

10

2

3

0 50 100

Canada's best days are ahead

The best days of the United Statesare ahead

Strongly agree Somewhat agree Somewhat disagree

Strongly disagree Don't know

I'm going to read some statements people might make about issues affecting Canada and the US and I'd like to know if you strongly agree, somewhat agree, somewhat

disagree or strongly disagree with each.

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The Upside -Energy Markets

Executives expect a Trump Administration to positively impact energy markets.

Despite his protectionist talk, most think Trump will even be good for Canada's energy markets.

The vast majority expects his Administration will approve Keystone XL within 2 years.

It is perhaps not surprising therefore that Western Canadian executives are more bullish about what Trump will mean for the North American economy.

Most expect Canadian crude to fetch higher prices in a year’s time, including the vast majority in the oil & gas sector who agree with this.

There is no consensus around whether Canada’s dollar will slide further or stay close to its current value.

12121212

Energy Sector to Benefit From Trump Administration

41

21

47

48

5

23

3

7

6

1

0 50 100

Donald Trump's Administration islikely to approve the keystone XL

pipeline by the end of 2018

Donald Trump's Administration islikely to be supportive of developing

Canada's oil and gas resources





13131313

Potential Positive Impacts of Trump

34

22

11

6

5

3

2

5

0 20 40

Increased support for energy sector(pipelines, commodity prices)

Increased Can-US trade

No changes to NAFTA

Renegotiating NAFTA/trade agreements

Weakened dollar would help Cdn exports

Renewed interest in Cdn manufacturing

Resolving softwood lumber

None

What would be a positive impact or outcome for Canada’s economy following the transition to a Republican Administration led by Donald Trump? (Open ended - %

selecting each)

14141414

Expectations For Dec. 2017: Crude Oil $ Up, CAD$ Down

5

1

55

23

35

34

3

37

2

5

0 50 100

The price of Canadian crudeoil

The value of the Canadiandollar

Significantly higher Somewhat higher About the same as now

Somewhat lower Significantly lower DK

What do you expect _______ will be by the end of 2017? Do you expect it will be significantly higher, somewhat higher, about the same as now, somewhat lower, or

significantly lower than now?

15151515

C-Suite Companies

Roughly half (52%) expect a Republican Trump Administration will bepositive for their businesses.

This is especially pronounced among resources executives, although even some inmanufacturing feel positively. Most expect oil & gas to do well with a TrumpAdministration, and almost as many said the same for the automotive sector.

Only 13% said their companies are currently changing or intending to changebusiness plans to take advantage of the new political environment. Thisincludes several who are considering shifting focus to or activity at their USoperations.

Executives are also feeling better overall about their businesses this quarter aswell as last: their outlook improved somewhat over 2016, especially in theresources sector.

16161616

Positive Impacts of Trump Administration

52

62

31

48

33

66

32

18

56

33

53

17

14

17

12

19

11

14

3

3

2

4

3

0 20 40 60 80 100

Total

West

Ontario

Manufacturing

Services

Resources


Do you think the transition to a Republican Trump Administration will have a positive or negative impact on your business over the next two years?

17171717

Political Environment Expected to Improve for Oil & Gas and Automotive Sectors

86

62

10

26

5

10 1

0 20 40 60 80 100

Oil and Gas

Automotive

Better About the same Worse DK

Do you think the political environment for ______ sector in the United States will be better, worse, or about the same over the next 5 years than it has been over the last 5

years?

18181818

Co. Response to US Election: Few Plan on Investment in US

30

15

15

10

10

0 10 20 30 40

Increase business & investmentin the US

Preparing for growth (deployingcapital, making production

investments)

Nothing yet, still planning

Focus efforts on US miningprojects

Planning for all potentialchanges to carbon emissions

standards

Is your business considering or doing anything differently in response to the result of the US election? / What is your business considering or doing differently in response

to the result in the US election? [n=20]

Yes, 13No, 87

32

28

27

19

21

57

61

58

58

58

9

10

13

20

19

1

1

1

1

1

1

2

1

0 20 40 60 80 100

Q4 2016

Q3 2016

Q2 2016

Q1 2016

Q4 2015

Strong Growth Moderate growth Moderate decline

Strong decline Don't Know

19191919

Dec. 2016 Outlook for Business

What are your expectations for your company over the next 12 months, strong growth, moderate growth, moderate decline, strong decline?

32

14

33

35

57

71

60

52

9

14

7

9

1

3

1

1

0 50 100

Total

Manufacturing

Services

Resources

Strong Growth Moderate growth Moderate decline

Strong decline Don't Know

20202020

Outlook for Business

What are your expectations for your company over the next 12 months, strong growth, moderate growth, moderate decline, strong decline?

21212121

The Downside Risk

Executives are fairly sanguine about the world.

Whether it is Europe’s banks, income inequality, the real estate market or the state of oil & gas, fewer than one in five describes themselves as very worried.

The only outlier is the impact of politics on trade: almost 30% are very worried about this issue and almost none are unconcerned.

Few believe Donald Trump was bluffing about renegotiating or even backing out of NAFTA.

Most expect his Administration to take trade measures aimed at China.

Most believe his Administration could bring about a slow-down in global trade.

Most also agreed that the new Administration’s policy on immigration could harm the US economy in the long-run.

22222222

Global Trade a Top Concern

26

15

22

18

16

14

58

61

46

46

46

44

13

19

21

26

25

28

3

5

10

9

12

12

1

1

2

0 50 100

The implications of politics ontrade and trade agreements

The performance of Canada'seconomy

Canada's oil and gas industry

Income inequality in NorthAmerica

The stability of Europe's bankingsystem

Canada's real estate market

Very worried Somewhat worried Not very worried

Not at all worried DK

Now I'd like to ask how worried you are about various economic and business issues. Would you say you are very worried, somewhat worried, not very worried or not at all

worried about ...?

23232323

Most Say Renegotiating NAFTA and Tariffs on China Likely

41

38

10

6

46

45

45

21

11

14

37

41

1

2

6

33

1

1

1

0 50 100

Attempt to renegotiateNAFTA

Increase tariffs on Chinesegoods

Increase tariffs onCanadian goods

Make no changes to NAFTA

Very likely Somewhat likely Not very likely

Not at all likely DK

In his campaign, Donald Trump voiced strong criticism of NAFTA and trade with China. Would you say it’s very likely, somewhat likely, not very likely, or not at all

likely that President Trump’s Administration will…

24242424

Trump Admin. Expected to Hurt Competitiveness, Trade & Relations

21

14

39

45

27

32

11

8

2

2

0 50 100

Donald Trump's immigration policieswould make the US economy less

competitive in the long term

Donald Trump's Administration willlikely lead to a decline in global trade

levels





25252525

The Downside Risk

The impact on trade is the top-of-mind concern the C-Suite has about the impact a Trump Administration could have on Canada’s economy.

A smaller proportion said their top concern was the possibility of strained Canada-US relations or the risk of Canadian companies becoming uncompetitive if the Administration reduces US regulations and taxes.

To be sure, most in the C-Suite believe Canadian businesses will be less competitive compared to US competitors in a few years' time.

Most doubt there will be new tariffs on Canada, but many think it’s quite possible – 43% saying this.

Indeed, many (50%) believe the Trump Administration will be have a negative impact on Canada’s economy, and most expect a negative impact on Canada-US trade, in spite of optimism about energy markets.

Whereas executives are increasingly bullish about the US economy and equity markets in particular, outlook for the Canadian economy is unchanged this quarter and only modestly positive.

26262626

Potential Negative Impact of Trump

25

19

18

7

6

5

4

3

3

2

2

0 10 20 30 40

Renegotiating or ending NAFTA

Increased protectionism concerning trade

Reductions to market access

Rising tariff costs

Less tax/reg'n making US co's more comp've

Potential for delcining political relations

Negative impact of lumber industry

Negative impact on energy sector

Negative impact on interest rates

Canadian currency devaluation

Increased immigration and security concerns

What would be a negative outcome for Canada’s economy following the transition to a Republican Trump Administration? (Open Ended - % Saying Each)

27272727

Canadian Businesses Expected to Become Less Competitive

1

1

32

21

44

3

4

3

52

60

47

10

14

5

2

0 20 40 60 80 100

Total

West

Ontario

Much more competitive Somewhat more

No change Somewhat less

Much less competitive Don't know

The cost competitiveness of Canadian businesses is determined by many factors. Generally speaking, do you think that two years from now Canadian companies will

be more competitive or less competitive than their US competitors?

28282828

Outlook ForCanada’s Economy

2

1

70

64

26

34

1

1

1

1

0 50 100

Q4 2016

Q3 2016

Strong growth Moderate growth Moderate decline

Strong decline DK/NR

What are your expectations for the Canadian economy over the next 12 months?

29292929

Negative Impact of A Trump Administration

43

39

24

22

23

8

10

10

34

50

65

68

1

2

1

Canada-US security

The Canadian Economy

Trade between Canada andthe US

Canada-US relations


Do you think the transition to a Republican Trump Administration will have a positive or negative impact on _______ over the next two years?

30303030

Canada-US Relations

Few expect Prime Minister Trudeau and the President-elect to enjoy good relations.

Most expect Canada-US relations to deteriorate.

Less than a third expect Trump & Trudeau to enjoy good relations – most doubt they will.

Nearly half of the C-Suite (48%) agreed a Trump Administration will be worse for Canada’s interests than the Obama Administration was.

This is especially worrisome for the C-Suite in so far as the clear hope is Canada’s government should be pressing for continued market access.

31313131

Canada-US Relations

14

6

37

25

34

45

14

23

2

2

0 50 100

A Republican administration led byDonald Trump will be better for Canada's

economy than the Administration ofPresident Obama

PM Trudeau & President Trump are likelyto enjoy good relations





32323232

Preserving Free Trade Should Be Government of Canada’s Priority

64

18

15

14

8

4

3

3

3

3

3

10

0 10 20 30 40 50 60 70

Preserving free trade, tariff levels & market access

Security

Energy and pipelines

NAFTA

Environmental standards

Softwood lumber agreement

Defence and Counter-terrorist

International affairs

Immigration

Canadian financial regulatons

Harmonization of regulations

Other

Different White House Administrations have collaborated on various important issues with Canadian governments over the years. What issues should the CANADIAN

government be prioritizing in its relations with the new Trump Republican Administration over the next two years?

33333333

Carbon Pricing

Despite concern about Canadian competitiveness, the C-Suite is divided onwhether or not Canada should suspend carbon pricing policy.

Fifty-two percent agreed the election of a Republican Administration andCongress means Canadian governments should suspend the introduction ofnational carbon pricing.

While 44% disagreed, strong agreement that Canada should step back fromplanned carbon pricing is notably higher than strong disagreement. Thestrongest opinion comes from the oil & gas and resources sectors.

34343434

Suspend Carbon Pricing

28

35

20

24

14

39

43

24

27

22

29

19

26

36

32

27

34

33

40

26

14

12

9

19

14

21

5

4

4

1

5

6

4

4

0 50 100

Total

West

Ontario

Manufacturing

Services

Resources (incl. Oil & Gas)

Oil & Gas

Strongly agree Somewhat agree Somewhat disagreeStrongly disagree Don't know

I'm going to read some statements people might make about issues affecting Canada and the US and I'd like to know if you strongly agree, somewhat agree, somewhat disagree or strongly disagree

with each.The election of a Republican Administration and Congress means Canadian

governments should suspend their plans to introduce national carbon pricing

Documents

The 45th Quarterly C-Suite Survey...ROB1000-listed companies between November 16th & December 8th, 2016. This quarter’ssurvey asked the C-Suite about the US Presidential Election