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A government-mandated forced shutdown of non-essential business midnight Tuesday is slamming corporations in Quebec and Ontario and leading to more factory closings and job losses.

The pain is more acute in Quebec, where economists at National Bank of Canada estimate an extra 10 per cent of the economy is stopped compared with Ontario. Business groups in Quebec are multiplying calls for governments to offer direct subsidies to companies so they can maintain employment.

“This could be the biggest battle of our lives” as Quebeckers, Premier François Legault said Wednesday in Quebec City.

France’s Airbus SE joined TC Transcontinental, Bombardier Inc. and many other major manufacturers in suspending some operations Tuesday night after the governments of Quebec and Ontario ordered non-essential businesses to close for at least two weeks in an attempt to counter the COVID-19 pandemic. Some major employers will be allowed to continue a portion of their more sensitive or critical activities, such as supplying military equipment.

The moves add to a rapid increase in unemployment in Canada as companies such as Leon’s Furniture Ltd. and Groupe Dynamite begin laying off workers in the face of a massive virus-related revenue crunch. Almost one million Canadians have applied for Employment Insurance in the past week alone.

Airbus, which makes the A220 commercial airliner at a plant in Mirabel, Que., sent roughly half of its 2,800 workers home and plans to pay them until April 13 under a deal struck with the machinists’ union. The company will continue certain work on-site, including aircraft maintenance, receiving materials and support to an Airbus plant in Mobile, Ala., spokesperson Annabelle Duchesne said.

Transcontinental said it will continue packaging work, which supports the food industry and represents half its revenue. But the company has laid off 1,600 people temporarily in its printing unit.

“Businesses in Montreal and in all regions of Quebec are being hit hard by the restrictions in place. Almost all small and medium-sized businesses are in a critical situation and if nothing is done, they’ll have no choice but to lay off their staff in massive numbers,” leaders of the Chamber of Commerce of Metropolitan Montreal and the Fédération des chambres de commerce du Québec said in a joint statement Wednesday. “Companies of all sizes will need to make decisions with far-reaching consequences within extremely short timeframes.”

The business groups renewed calls for governments to offer direct subsidies to companies in order to maintain worker salaries instead of shifting responsibility to workers going through the more delay-prone employment insurance system. France, Britain, Denmark and the Netherlands have all implemented variations of such corporate subsidies.

There are also worries that shutdown orders in Quebec, which are harsher than those in many other jurisdictions, will hurt the province disproportionately.

“What’s difficult for us is that other jurisdictions have more relaxed government orders affecting our sector so that penalizes us,” Suzanne Benoît, chief executive of aerospace industry group Aéro Montréal, told Montreal’s La Presse newspaper, noting Ontario, Ohio and Michigan are all largely open for aerospace activity. “Competition is competition. The danger is that if companies relocate now, in the longer term we lose production.”

About half of the economy of Ontario and Quebec is shut down, said Sébastien Lavoie, chief economist at Laurentian Bank. He said Monday’s announcement by the two provinces will translate into a double-digit decline in real gross domestic product for March and a deeper one in April.

Restarting operations in the second or third quarter could be difficult if companies themselves or their work forces change fundamentally during a shutdown, Mr. Lavoie said. “Opening the lights [may] not be as easy as turning them off.”

Balance sheets of most major engineering and construction firms in Canada are robust, and the first half of this year “will be taken as a write-off,” National Bank Financial analyst Maxim Sytchev said in a note. “This is a very painful but ultimately a transient situation and attacking the virus spread aggressively is the right medium to long-term decision.”

Mr. Sytchev expects that so-called force majeure clauses in construction contracts will be activated and companies will not be held accountable when project delivery times slip because of the fight against COVID-19. However, companies will see significant declines in revenue and earnings as their operations hit pause, he said.

To take one example, Montreal-based SNC-Lavalin Group Inc. would see a roughly 8-per-cent decline in second-quarter revenue and a 35-per-cent decline in EBITDA (earnings before interest, tax, depreciation and amortization) from a one-month construction shutdown, the analyst said. Mississauga-based Bird Construction would see a 30-per-cent decline in revenue and a nearly 85-per-cent EBITDA decline for the same period, he estimates.

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