Monday, December 4, 2017

In spite of debt warnings Canadians to increase their holiday spending

The Organisation for Economic Co-operation and Development (OECD warns in a recent report that rising private debt loads in Canada as well as the UK and South Korea pose a risk to further growth. The three lead the world in household debt.
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Consumer debt in Canada
The OECD report notes that higher indebtedness does not mean there are necessarily going to be problems. However, it does increase vulnerability to shocks. If the economy turns down or interest rates are raised substantially consumers might have more difficulty handling their debt load.
In Canada, consumer debt is over 100 percent of GDP higher even than in the UK and South Korea where it is over 80 percent.
On a brighter note, the OECD updated its expectations for economic growth from September predicting that the Canadian economy would grow by 3.2 percent this year the best performance among the G7 countries.
Canadian's debt-to-income ratio had reached a record back in September as discussed in a September Digital Journal article.
Canadian holiday spending still expected to be at record levels
Canadians are likely to spend more in spite of their debt loads, probably because most of them think they know how to manage their debt.
A new Manulife Bank of Canada survey shows that 54 per cent of Canadians think they can manage their debt. 64 percent claim they aim to become debt free. Almost a quarter of consumers were embarrassed to talk of the amount of their debt and another 40 percent did not know where to turn for help.
Less than one third achieved their debt reduction goals in the last year. 53 percent of Canadians believed financial challenges took their toll on mental or emotional health. One third also claimed they had a negative impact on physical health as well.
In spite of the negative associations with increasing debt, Canadians are expectedto spend at record levels this holiday season.
A survey by website RetailMeNot.ca found that Canadians are planning to spend on average $1,400 per person this season. The survey was of 1,500 adults. 43 percent said they tended to overspend.
With respect to gift giving each person committed an average of $653, a full one hundred dollars more than last year. It was also $171 more than the average American.
Black Friday and Cyber Monday
In spite of their intention to spend, only 26 percent said they intended to take advantage of deals on Black Friday and Cyber Monday on November 24 and 27th. This contrasts with Americans 54 percent of whom planned to take advantage of the deals.
However, 60 per cent of those responding thought that excitement about the two deal days was growing in Canada.
Previously published in Digital Journal

Sunday, December 3, 2017

Little progress after fifth round of NAFTA talks end in Mexico City

(November 22)The 5th round of NAFTA talks ended on Tuesday that had started on Friday in Mexico City. Even after three months of talks, the parties remain far apart on major issues.

Lack of progress even on minor sections of NAFTA agreement
The negotiations that started Friday ended with negotiators failing to finalize new agreements on even minor sections of the NAFTA pact.
Robert Lighthizer, U.S. Trade Representative, complained that Canada and Mexico are not seriously negotiating on key areas in NAFTA that need to be overhauled. He said that the U.S. will not accept a deal that does not shift trade flows in favor of the U.S.
Lighthizer said: “While we have made progress on some of our efforts to modernize NAFTA, I remain concerned about the lack of headway.”
The U.S. has advanced proposals that neither Canada nor Mexico are willing to accept.
Phil English, a senior adviser at the law firm of Arent Fox in Washington DC said: “They really need to be much further along than this, and I’m concerned that this negotiation is on the verge of stalling out. I’m very concerned that this growing inertia on the big issues is creating an environment that will lead to bad results.”
The three political leaders from each country leading the talks did not take part in this round of talks. They are not expected to attend smaller sessions held between now and the sixth round that is scheduled for Jan.23-28.
An anonymous U.S. government official said that it was still possible to reach a deal by March. In a joint statement the three countries said: “Chief negotiators reaffirmed their commitment to moving forward in all areas of the negotiations, in order to conclude negotiations as soon as possible."
Unresolved issues
The U.S. wants a full sunset clause that would terminate the pact unless all three countries agree on an extension. A revised U.S. list of objectives speaks only of a periodic review of the pact.
On the important issues of auto content there was no movement. Nor was there a solution to the problem of dairy products with Canada insisting that its supply management system be protected. The U.S. also wants to end dispute resolution panels — while Canada just recently submitted U.S. actions imposing duties on some Canadian softwood lumber to the panel arguing they were unfair and a violation of NAFTA.
U.S. demands are already generating tit-for-tat proposals. The U.S. wants to limit foreign access to U.S. government procurement projects resulting in Mexico making a similar proposal with respect to its own projects.
Mexico is planning to put forth a counter-offer to the U.S. content demands in the auto sector. Mexican Economy Minister Ildefenso Guajardo said that the current U.S. proposal was impractical and inefficient for the industry. He said that Mexico was willing to help the U.S. balance its trade with Mexico but only through expansion of exports not limitation on trade between the two countries.
Guajardo said: "It’s a negotiation with a high degree of complexity, but we’re working through it, and at some point we will find spaces for a landing that serves everyone."
Guajardo noted that there had been progress on issues of digital commerce, food safety and the environment. Much of the technical work was already finished he said and that some of those issues could be concluded even between negotiating rounds.
Mexico and Canada have issues with some U.S. proposals
The Canadian Foreign Minister Chrystia Freeland told reporters that there were significant differences in key areas. She said the U.S. position on the sunset clause and the auto proposal were extreme and could not be accepted. Freeland maintained the sunset clause was redundant since any party can withdraw after six months notice. Canadian officials have even warned that there will be no NAFTA deal if the U.S. doesn’t back down on some issues.
The U.S. is demanding that half of the content of all North American-built autos be produced in the U.S. The broader North American content should be increased from 85 percent from 62.5 percent. There is currently no rule in NAFTAgoverning U.S.-only production. The U.S. also wants all steel to originate in North America.
Asked if Canadians should prepare for life without NAFTA, Freeland said Canada's position is to "hope for the best and prepare for the worst and Canada is prepared for every eventuality."
The talks often pit the U.S. against both Mexico and Canada. Steve Verheul, the lead Canadian negotiator said: “Canada and Mexico are working very closely together. We have a lot of issues in common.”
Trump has repeatedly threatened to scrap the deal if the terms don't suit him.
Talks could extend even into 2019
Brett House, an economist at Scotiabank, said that Trump could give notice of withdrawal and not follow through. He could also try to withdraw and face huge resistance in Congress. House thought that there was only a 20 percent chance that there would be a deal by March but that it was much more likely that they would muddle through for the rest of the year and into 2019.


Previously published in Digital Journa

Thursday, November 30, 2017

Loblaws to close 22 unprofitable stores

Loblaws is planning to close 22 stores which are unprofitable. At the same time it will begin an Internet-based home delivery service which will start in December.
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Loblaws cutting back to save costs and improve profits
The announcement of the closures comes almost a month after the company said it would cut about 500 corporate and store support positions.
The company did not indicate which specific stores would be closed.
Jim Danahy, CEO of CustomerLAB said: "What you've got is a healthy company pruning its garden."
The closures and cuts to staff will result in charges of approximately $135 million with most of the cost expected in the 4th quarter of this year. However, the cutbacks will save Loblaws about $85 million a year. The company expects the closures to be done by the end of the first quarter of next year.
Loblaws owns Zehrs, Provigo, and Fortinos stores. It also has several discount chains including No Frills, Extra Foods, and Real Canadian Superstore. Shoppers Drug Mart is also owned by Loblaws.
Company to begin delivery service in December
The service will start first on December 6th in Toronto with service also slated to begin in Vancouver in January of next year. It is expected to expand to other cities during 2018.
The service will be offered through Instacart, a grocery delivery service, that already operates in 150 markets in the US.
Orders online from Loblaws, Real Canadian Superstore and T & T stores will be shipped to customers' homes in as little as an hour according to the two companies.
In Toronto Instacart will be competing with Grocery Gateway that is already operating in the city.
Jim Danahy said that Loblaws was under competitive pressure to provide the delivery service. Danahy said: "This is totally predictable. It's been a question of how to find the scale and the formula and the technology as they all evolve in what is nothing less than a space race."
Instacart
This will be Instacart's first venture into Canada.
Service in the US is mainly provided through a smartphone app, that works on IOS and Android platforms apart from its website. Customers are able to use Android Pay and Apple Pay.
Customers select groceries through a web application from retailers who have the service and are delivered by a personal shopper.
In March of this year Instacart agreed to pay $4.6 million to settle a class action suit that claimed the company had been misclassifying its shopper employees as independent contractors. Among 18 violations were improper tip pooling plus failure to reimburse its employees for business expenses.

Loblaws faces headwinds and stiff competition next year
Loblaws' CEO Galen Weston said: "Given all the headwinds, we expect 2018 will be a very difficult year." He said potentially the problems were greater than what the company has faced up to now.
The chain is facing stiff competition from Amazon that purchased organics grocer Whole Foods Market. It is expected to expand its online food services. This will put pressure on competitors such as Loblaws to offer comparable services.
Loblaws already offers a "click and collect" service at many stores. Consumers can choose groceries online and then go and pick them up at the store.
The service has been successful and Weston said the company would expand it to reach more than thirty percent of the Canadian population.
Nevertheless, Kaan Yigit of Solutions Research Group claimed that consumers prefer "no fuss" deliveries to the home rather than the click-and-collect model. Yigit said: "I am not sure that you can be a consumer-facing 2017 company and not offer a true mobile contact point and a delivery option, especially in the largest markets'"
Those who want delivery service will pay a premium for the convenience: "The Instacart delivery fees will range from a low of $3.99 (Canadian) depending on the size of the order and deliver time, to as high as $9.99 for one-hour shipments of an order of less than $35. And there will be an added service fee of 7.5 per cent of the value of the order. Home-delivered grocery prices will be higher than Loblaw's regular prices. "
Shoppers will order from local Loblaws, Real Canadian Superstore or T and T locations through the Instacart website or their apps. Instacart will then pick, pack and deliver the orders.
Loblaw has yet to disclose the prices but Weston says that prices could be modified. He says the company has a road map to reach profitability in e-commerce but declined to say how long it would take the company to reach its destination.


Loblaws profitable in third quarter of 2017
The company more than doubled their third quarter profits to $883 million or $2.24 a share from just $419 million or $1.03 a share last year in the same quarter.
Revenue rose to $14.19 billion from $14.14 billion last year.
The company had a one time gain of $432 million from the sale of its gas station business to Brookfield Business Partners.
Loblaws has over 2,000 stores in Canada and has headquarters in Brampton Ontario.


Previously published in Digital Journal


Wednesday, November 29, 2017

Canada setting up 54 EV charging stations in northern Ontario and Manitoba

Canada is teaming up with three different companies to install 34 EV fast-charging stations along the Trans Canada Highway in Manitoba and Ontario in an attempt to encourage more motorists to use EVs on longer trips.

Funding for the program
The $173 million charging network announced earlier this year will allow charging of EV's in about 20 minutes. The different types of charging units are described in this Manitoba Hydro release.
The project is being funded by $8 million of a repayable contribution from Natural Resources Canada as part of the Canadian Energy Innovation Program. There is also private investment from eCamion, a Toronto energy storage system developer, Leclanche an energy storage provider and SGEM a Geneva-based power producer.
Canadian government wants to encourage EV use
In a news release, Jim Carr, the Canadian federal government Minister of Natural Resources said the increased use of EVs would help reduce emissions: “With more electric vehicles becoming available, we want to make them an easy choice for Canadians. The strategic investment brings us closer to having a national coast-to-coast network of electric vehicle charging stations while growing our economy and creating good jobs for Canada’s middle-class.”
Experts agree that developing and installing an adequate infrastructure throughout Canada is crucial in order increase EV sales across Canada.
The nature of the EV charge stations
Every new station will have a storage system that uses large-format lithium-ion batteries. There will be multiple outlets so that several cars will be able to charge at once. Each unit will be able to charge 3 cars at once.
The chargers are level 3 and typically use a 480 volt system. A vehicle can be fully charged in about half an hour. Level two chargers with 240 volt systems take about 8 to 100 hours. Ordinary level one 120 volt chargers take even longer. The different levels are described in this Manitoba Hydro release.
The 34 new stations will have 102 charging units spaced about 100 kilometres apart along 3,000 kilometres of the Trans-Canada Highway. The exact locations are not yet determined.
EV owners must wait a while before starting a trip
The stations are scheduled to be in operation by 2019.
Nevertheless Robert Elms, president of the Manitoba Electric Vehicle Association said: "I think it's terrific."
Elms noted that now the trip from Winnipeg Manitoba along the Trans Canada through northern Ontario is not practical for EV owners. There are at most level 2 chargers that can take up to 10 hours to charge a car. The newer level 3 chargers take only half an hour to an hour at most.
Bryan Urban, executive vice president of Leclanche North America, who is also president of Fast Charage a joint venture between Leclanche and eCamion said: "Vehicles will be able to power up during peak hours using off-peak energy and continue on their journey in a relatively similar amount of time it would take to fuel a fossil-fuel vehicle, grab a snack and visit a bathroom."
A study by Simon Fraser University in 2016 showed that there are only about 125 fully electric cars in Manitoba although there appear to be many hybrids often used by taxi companies. Ontario has more with 7,248 but no doubt most of those are in southern Ontario in larger cities.
The Canadian Automobile Association lists 18 charging stations within the city of Winnipeg. Going east on the Trans-Canada the next charging station is in Kenora a distance of 209 kilometers.
An EV charge station locater in Canada is provided by the CAA. The stations are rated in terms of the level of charge provided. There are nearly 6,000 across the country.


Published previously in Digital Journal

Sunday, November 26, 2017

St. John's salon recycles much of its waste

Urban Salon in St. John's Newfoundland Canada is helping to keep waste out of the local landfill by recycling different wastes it produces including human hair and tinfoil.
Salon produced a full garbage bag plus of waste each day
The salon used to produce more than a full garbage bag of trash daily including tinfoil, human hair and various hair products according to owner Paul Bateman.
Bateman started thinking about how much waste his business was producing and decided to do something about it.
Bateman said: For a small business it just seemed ridiculous, and the garbage bags were always really light because they were just filled with tinfoil and hair. Right now we've cut down on the weekly waste in the salon by about 80 per cent."
Green Circle Salons
To cut down on all his trash Batemen signed Urban Salon up for a program Green Circle Salons whose website can be found here.
Bateman has bins for different materials placed around the salon, including one for hair, another for unused hair dye, one for tinfoil, and another for plastic such as plastic shampoo bottles. A video showing the bins is appended.
Salons that are part of the Green Circle program are throughout Canada and the US. In St. John's alone there are 7 salons he is aware of that are part of the program. The population of the metro area of St. John's is just about 200,000 with the city itself around 110,000.
Bateman charges customers a dollar surcharge for each hour of service to pay for the program. Customers apparently do not complain of the charge.
Waste materials are recycled
The cycling of the plastic and chemicals is conventional.
Green Circle is able to send hair off to be used for such purposes as artificial bedding for animals displaced by the wildfires near Fort MacMurray Alberta, mattresses and even for soaking up oil spills.
When the bins are full the waste is put in bags and sent to Green Circle.
Staff becoming more aware of waste they produce
Bateman claims his staff are now more aware of how much waste they are producing.
Bateman said: "We're keeping 11 pounds of tinfoil out of the landfill just at this salon alone, per week."
Green CIrcle has its own Facebook page.
Green Circle claims that it is helping salons take the lead in reducing their carbon footprint. It claims that their program can divert 70 to 90 percent of waste the salons produce from going to the landfill. Their hope is to make the salons and spas that are part of the program 100 percent sustainable by 2020.

First all weather road completed to Canadian Arctic coast to Tuktoyaktuk

Finally there is an all-weather gravel road from the hamlet or small town of Tuktoyaktuk on the Arctic coast of the Canadian Northwest Territories to the town of Inuvik to the south.

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This is Canada's first permanent highway link to its Arctic coast.
The old ice road is replaced
For many years the Tuktoyaktuk Winter Road, an ice road connected Inuvik with Tuktoyaktuk across the frozen MacKenzie River delta channels, and the frozen Arctic Ocean. The ice road was permanently closed on the 29th of April 2107 to be replaced this year by the new highway.
The new highway includes eight bridges and 359 culverts along its 120 kilometer length.
Tuktoyaktuk

The name in Inuvialuktun the language of the Inuvialiut means "looks like a caribou". The hamlet lies north of the Arctic Circle on the shore of the Arctic Ocean.
It used to be called Port Brabant but was renamed in 1950. It was the first place in northern Canada to revert to its traditional indigenous name. Often it is just referred to as "Tuk" as in the appended video.
The census of 2016 listed the population as 898 but the hamlet's website puts it at over 900.
Inuvik is a town in the Northwest Territories of Canada and is the administrative centre for the Inu...
Inuvik is a town in the Northwest Territories of Canada and is the administrative centre for the Inuvik Region.
© Town of Inuvik
Inuvik
The name means "place of man" in the native language. The town is the administrative center for the Inuvik region.
Inuvik is a larger town than Tuktoyaktuk with a population of 3,243 according to the 2016 census. The population varies from year to year as economic conditions change.
Inuvik has its own website.
Celebration of the highway opening
Darrel Nasogaluak, mayor of Tuk, is traveling down the highway to Inuvik for opening ceremonies to be held there. Later, he will join an official motorcade that will head back up north to Tuk.
There are to be parties celebrating the opening then in Tuk. As well as the mandatory speeches, there will be songs, fireworks and a community feast. Included will be favorite foods including caribou, reindeer, char, whale andmuktuk.
Nasogaluak said: "It's something that's been on the community's want list for 40 years... I've traveled a lot of highways, but the scenery on this one is quite different."
A varying landscape
The road passes through a rolling landscape with tundra, lakes, and many stream crossings. It cost $300 million to build.
Wally Schumann Infrastructure Minister of the Northwest Territories (NWT) said: "When you come out of Inuvik, for about 20 kilometres you don't realize how much you're going uphill. The trees just get smaller and smaller and smaller and all of a sudden you're on the top of a mountain and there's no trees and you can see about 100 kilometres on both sides of the highway. It's an amazing feeling."
The highway was a long time coming
As early as the 1960's people began talking about the project. Surveys were begun way back in 1974.
The NWT government made the first proposal to the federal government in Ottawa in 1998. In 2009 after years of lobbying from the NWT as well as aboriginal and business groups the federal government granted $200 million in funding.
Construction began in earnest only in 2014.
Preparing for change
Nasogaluak says that the slow pace of construction has given the Tuk community plenty of time to prepare for the social and environmental impacts the new road will have on the community.
As shown on the appended video one plan is to paint buildings in the community. 2,000 cans of paint were donated by a southern company.
The local bed and breakfast has added rooms. The hamlet is also developing RV sites with public facilities.
Road should reduce costs
The road is expected to reduce the cost of living in Tuk by about $1.5 million a year by providing a year round reliable route for supplies. The saving is equivalent to about $1500 a year for each man, woman, and child in Tuk.
More roads needed
Schumann claims that the NWT infrastructure deficit is horrendous. The NWT will ask for other new roads that will open the huge territory to tourism and mineral exploration.
Schumann said: "Every dollar invested by the federal government into this type of infrastructure in the territories is not only going to benefit us, it's going to benefit all Canadians."
Previously published in Digital Journal

Friday, November 10, 2017

New US ambassador to Canada believes in "both sides of science" on climate change

Kelly Craft, the new U.S. ambassador to Canada, said that when it comes to climate change she believes in "both sides of the science"

Craft told Rosemary Barton of the CBC that she appreciates all of the scientific evidence on climate change saying to Barton: "I think that both sides have their own results, from their studies, and I appreciate and I respect both sides of the science."
Craft said that although the position of President Trump on climate change is different from that of the Canadian government that the two countries shared the same goal to "better our environment and to maintain the environment."" She also claimed that the U.S. could still fight climate change though it is leaving the Paris climate change accord. Craft said that the US pulling out of the agreement should not impact America's broader relationships with its allies.
Craft's husband, billionaire coal-mining magnate Joe Craft, was critical of former president Obama's climate change policies.
The former Republican fundraiser was sworn in by the Kentucky governor, and her longtime friend, back in August, but she formally assumed her post after she presented her credentials to Governor General Julie Payette at Rideau Hall in Ottawa recently.
Craft is the first woman to be named U.S. ambassador to Canada. In 2007 she was appointed to be U.S. delegate to the UN.
Craft was a delegate to the 2016 Republican National Convention from Kentucky. She is a member of the University of Kentucky's board of directors. She also heads Kelly G. Knight LLC a business advisory firm based in Lexington Kentucky.
Craft and her current husband gave $2 million to the Trump campaign but before that they supported Marco Rubio.
Craft said she was honoured to take on her role as ambassador. She said "Surely there is no better posting than Canada".
Catherine Mckenna, Canada's Environment Minister was quick to react to Craft's remarks about the environment saying: “There’s really only one side to climate change science — that we’re seeing the impact of climate change and that it’s man made." The National Aeronautics and Space Administration (NASA) website claims that 97 percent of scientists say that humans are causing climate change while just 2 percent reject that position.
In November of 2016 researchers at Texas Tech University examined 38 papers that denied human-caused climate change and found that all of them contained flawed methodology.
The researchers said: “A common denominator seems to be missing contextual information or ignoring information that does not fit the conclusions."
The latest assessment report by the UN-backed Intergovernmental Panel on Climate Change claimed: “Human influence on the climate system is clear and growing, with impacts observed across all continents and oceans. Many of the observed changes since the 1950s are unprecedented over decades to millennia.”
According to three separate analyses by NASA, the National Oceanic and Atmospheric Administration and the Japanese Meteorological Agency, this year is on its way to be one of the warmest years on record.


Saturday, October 28, 2017

Canada will be better off if Trump dumps NAFTA

Many commentators appear worried that US President Trump will end up sabotaging any new NAFTA deal by insisting on new provisions that Mexico and Canada cannot accept.
 

An article by Thomas Walkom suggests what Canada can do if Trump kills NAFTA. If U.S. President Donald Trump rejects the North American Free Trade Agreement, there are essentially three things that Canada can do. One reaction would be to try and keep what remains of NAFTA with Mexico and hope that Trump's presidency wont last too long. Negotiations could resume with a new US president more amenable to a free trade deal that all three nations could accept. However, there may be a deep-seated negative attitude towards globalism in the US that could continue even if Trump's presidency ends. A second reaction would be to try to negotiate a bilateral deal with the US. That is not likely to be successful as Trump will insist on terms unacceptable to Canada. If NAFTA is ended then the 1989 US-Canada Free Trade Agreement would automatically come into force. Trump might very well demand it be renegotiated and end up rejecting it as well.
A final reaction would be to accept that the goal of continental economic integration is dead and pursue other economic aims. The US would still be a main trading partner of the US if it rejected NAFTA and as a recent study by the Canadian Centre for Policy Alternatives shows 41 percent of Canadian exports to the US would still face no tariffs without NAFTA. However, this may be because of the 1989 Canada-US Free Trade Agreement. US business reaction might be so negative at this point towards Trump that he might find it difficult to reject it as well as NAFTA.
Walkom suggests that the demise of NAFTA would force Canada to search for other markets for its goods and for other trading partners. This would lessen our dependence on the US which Walkom considers would not be such a terrible fate. While Walkom's view may be correct there are strong reasons why NAFTA should be rejected. Canada is not even attempting to remove some of the key provisions in NAFTA that are very much against the interests of Canadians.
Three provisions were set out in a recent Digital Journal article. In order to protect our crucial water supplies from becoming a commodity the provisions must make it clear that water is not a good, service, or investment. Otherwise Canada would be forced to export bulk water and increase privatization. The US no doubt could see Canadian water as a means of re-hydrating some US states that are very short of water.
Canada also needs to do away with the investor-state settlement provisions (SDS) in Chapter 11 of the treaty. This allows corporations to sue governments if they adopt policies restricting corporate profits. The sections have been used to challenge governments when they pass laws intended to protect people's health or protect the environment but have negative effects on corporate profits.
Finally there is the absolutely unfathomable proportionality clause. There is not a mention of this in Canada's list of priorities. The clause requires that if the government of any member of the agreement cuts energy available for export to another country it must cut the supply to the same extent domestically. Canada gave up its right to give priority to Canadians when it comes to access to scarce energy supplies. An expert on energy notes: ."Proportionality is "unique in all of the world's treaties," writes Richard Heinberg, a noted California energy expert... It's unclear how many other countries the U.S. has tried to impose an energy proportional sharing chapter on, but it is clear none has bitten. Heinberg concludes that "Canada has every reason to repudiate the proportionality clause, and to do so unilaterally and immediately."Mexico is not subject to the proportionality clause. Some of the new demands the US has made that may scuttle the negotiations are mentioned in the appended videos. One demand, the sunset clause seems quite reasonable to me, although both Mexico and Canada as well as many business leaders are strongly against it. The problem is that Trump's ideology of America First places US and not global corporations interest first, as well as attempting to get them to produce in the United States. Global business wants agreements favorable to them to last indefinitely without being subject to the threat of a sunset clause or any nationalist demands akin to those of Trump.

Tuesday, September 26, 2017

Canadian households reach record debt to income level




The ratio of debt to income rose to 167.8 percent from 166.6 in the first quarter, according to Statistics Canada. This means that for every dollar of income, Canadian households had $1.68 of debt. The Bank of Canada increased interest rates both in July and September. The early September hike was from 0.75 percent to 1 percent. Many economists predict more increases in the future. The debt ratio has been high for some time. In the third quarter of 2016 a record was also reached at 166.9 so the present debt level is not a huge increase.
Paul Ferley, assistant chief economist at the Royal Bank of Canada (RBC) said: "Certainly it's confirming that debt levels remain high and (are) creeping up a little bit higher. That's been an ongoing vulnerability for the Canadian economy." Ferley thought that the higher interest rates might dampen consumer demand but he thought that most households would be able to cope. However, Scott Hannah of the Credit Counselling Society warned: "Canadians continue to 'tread water' and are at risk of reaching their tipping point where they can no longer manage their debt payments."
Canadian households borrowed $28.9 billion on a seasonally adjusted basis, up considerably from $25.4 billion in the preceding quarter. Mortgage borrowing actually declined from $19.2 billion to $16.5 billion in the second quarter. Consumer credit and other non-mortgage loans showed a sharp increase to $12.3 billion from just $6.2 billion as Canadians bought more durable goods including autos. The debt service ratio is unchanged at 14.2 percent. The ratio measures debt principal and interest payments as a proportion of income.
A recent survey carried out by the Canadian Payroll Association show that almost half of all Canadian workers are just living from paycheck to paycheck as their spending soars and debts increase. The poll found that 47 percent of those polled said it would be difficult for them to meet their debt obligations if their paycheck was delayed by just a week. 35 percent of respondents felt overwhelmed by debt. The survey was of 4,766 Canadian employees and was taken between June 27 and August 5. 32 percent of those polled said that mortgage payments were most difficult to meet while 23 percent thought credit card debt was the hardest to manage. 32 percent said that high living costs was their main reason for increased spending while another 25 percent cited unexpected expenses. This was an online survey and is not assigned a margin of error since the sample is not random.

Monday, September 11, 2017

Vanocouver tech firms offer benefits to attract tech workers

As Vancouver tries to be a base for new tech start-ups it has found that it needs to offer bonuses of various types to attract workers to the city where living costs are high. While Vancouver has already established itself as the cheapest place among fifty markets in North America to establish a new tech start-up, companies in Vancouver realize that to be successful they must attract top tech talent.

The growth of the tech sector in Vancouver is being helped by the fact that large multinationals such as Amazon and Microsoft have recently opened offices in Vancouver. At the same time, Canadian startups such as Hootsuite have begun to obtain international status. Vancouver's high cost of living and the low value of the Canadian loonie relative to the US dollar are two drawbacks that Vancouver has to counter. However, the situation is even worse in some prime high-tech areas such as Silicon Valley in the United States which is notorious for the high cost of living in the Bay area. An employee in the area notes: “I didn’t become a software engineer to be trying to make ends meet,” said a Twitter employee in his early 40s who earns a base salary of $160,000. It is, he added, a “pretty bad” income for raising a family in the Bay Area." Bill Tam CEO of the BC Tech Association said that the growth of the industry has left companies to fiercely compete to hire workers. The Association issued a report estimating that by 2021 there will be an estimated 35,000 jobs needing to be filled in BC in the tech industry. The competition has led companies to offer enticements such as vacation cash and luxury cars to hire prospective employees. Tam said that demand for workers was by far exceeding supply. Tam said that he has heard of companies offering flexible work hours, unlimited vacation, and even one company that offered a downpayment on a new Tesla car. Tam said: "Tech companies by design are trying to be innovative in all aspects of what they're doing. So the way in which they structure their businesses and the culture they try to adopt is very much consistent with that philosophy."

One company, RingPartner, has cut hours per day worked to just five hours in an attempt to lure employees. The thirty employees of RingPartner report to the office between 10 a.m. and 3 p.m. Monday to Friday. Where they do the rest of their work is up to them. They can spend the afternoon at the beach and log on to their computers in the evening. Many parents appreciate the arrangement as they can spend more time with their family. However, some people prefer the traditional eight-hour day at the office and do exactly that. RingPartner notes that since they introduced their new policies sick days have actually decreased by a significant ten percent. Their revenue and profitability has also increased.

Leslie Collin, director of people and culture at Unbounce said that benefits not only are a recruiting tool but reflect a company's culture. The Vancouver-based company gives each of 190 employees four weeks of paid vacation, plus $1,000 for taking time off. Collin said that the vacation bonus allows workers "to go on a new adventure and support their life goals as well as their career goals." She said that rest helped employees to be able to come up with fresh ideas and more creativity and that this helped the company be successful.

Saturday, September 9, 2017

Study shows that tech students may be going to US rather than staying in Canada

A study by two students at the University of Waterloo shows that in the fast growing tech market many tech graduates are deciding to go to the US rather than stay in Canada.

Atef Chaudary and Joey Loi are graduates of the Systems Design Engineering(SYDE) program at the University of Waterloo in Ontario. The small study of 82 graduating students to which 77 replied showed that many in the program went straight to the US rather than stay in Canada. This appears to show a brain drain from Canada at least in the tech area. However, the two who did the study warned against its being extrapolated. Yet the study does give at least some evidence for a potential brain drain in the restricted area of technology graduates.
The tech area is the fastest growing market in North America and so there is fierce competition for graduates. Each student in the SYDE program had to take six co-ops in which they were required to work for companies to obtain experience. These co-op experiences are what drove many graduates to decide to work in the US. By the end of the term fully 40 percent of the students did co-op work in the US. Students working in the Waterloo area started out at 30 percent but declined ever since. Toronto jobs also fell precipitously from 70 percent to 30 percent. As their skills increased, it would seem that students found better co-op positions outside the country..
The reason for the migration south is that the US jobs pay better among other pluses. In advising Canadian companies how to compete Loi said: “Co-op replicates a realistic job search process. Make the internships in Toronto or other areas more enticing. One of the ways to do so is matching pay. We need it for tuition and also almost as a status symbol.” Average hourly pay for a US co-op job was $49.40 an hour. In contrast, the average pay on co-op jobs in Canada was only $25.40 per hour. Obviously, US pay is much superior. Fully six out of ten students who had a full time job at the time of graduation were working for a company that they had done a co-op with. Many students want to migrate to places such as San Francisco and Seattle where there are large innovative companies such as Tesla, Apple and others who are innovative and are attractive to new grads.
Loi said: “There’s a mentorship aspect. The perception exists that if you go to these bigger companies you’re going to get exposure to better people to network and get more opportunities for you, which is not the same for Canadian companies. If there were more high profile hires in Canada, engineers or others coming from the valley that would an attracting point.”
Obviously, if the Canadian tech companies are going to hire top people from Silicon valley in the US it would need both to up salaries and provide special incentives to lure them away. Neither may be practical. The least Canadian companies could do is to compete on the salary level. No doubt many would prefer to stay in Canada if the salaries came close to matching those provided in the United States. It may be that Canada is able to attract more from overseas as the political situation in the US appears threatening to some tech students from some countries. This may help Canada attract some foreign tech workers and students who would have otherwise gone to the United States.
At a global level, it would appear that China is also on the cutting edge of advancing technology and wants to become a global leader in artificial intelligence development as discussed in a recent Digital Journal article China is offering more to entice top researchers compared to competitors in US or Europe.
Chaudhary also notes that Canadian tech companies are not doing the right things to keep Canadian graduates here particularly on the salary level. Of 50 markets for tech start-ops Vancouver was the cheapest with Toronto and Montreal also faring well as competitors, but unless Canadian technology companies start to to compete with salary levels in the US they will fail to keep and attract the top talent they need.
Heather Galt, of Communitech said that many hope that students will study abroad and then return to start companies or contribute to developments in Canada: “I encourage my students to go and have that opportunity for international experience. It benefits the individual and Canada.I actually believe that going and having those expat opportunities is a fantastic part of how we as a country will build opportunities internally within our own country. The Canadians that I talk to in the Valley and Seattle, they have an incredible sense of pride. They miss home and love Canada. We need to encourage our companies, our schools and our students to share stories with one another to get excited. It shouldn’t be out of a sense of duty—in my mind it should be that you really believe and really want to be a part of what’s coming.” The small study is not in any way a definitive study showing that there is a brain drain. Indeed there are studies that show the opposite which is not surprising given the political uncertainty in the US at present. However, the study does show the need for Canadian tech companies to offer salaries that are competitive to those in the US. The Canadian government and investors have been promoting tech industry in Canada as discussed in a recent Digital Journal article. This investment will be in vain if top tech talent in the country decides to move south.


R

Friday, August 11, 2017

Vancouver a great city to set up a tech company

A report by Commercial Real Estate Research(CBRE) found that of 50 US and Canadian markets, Vancouver was the cheapest city to start up a new tech company.

CBRE has a full time staff of about 30 researchers spread across Canada. A typical tech company setting up in Vancouver would cost about $24 million a year US to cover both employee salaries and rent in Vancouver. In contrast the same company in the San Francisco Bay area, the most expensive area, would cost $67 million more than twice as much.
CBRE, Research Director, Colin Yasukochi said that the lower start up costs in Vancouver are due in part to the lower-priced Canadian dollar, but also more favourable immigration policies, and lower rental rates than many major US tech centers play a significant role. Yasukochi said: "I think there's a better supply demand balance in Canada with regard to the account workforce and the demand for it."
The average salary of a tech worker in Vancouver is $79,402 a year which is $34,000 to $44,000 less than they would receive for similar work in Seattle or San Francisco. However, some BC tech firms are aiming to lure workers to the province due to fears among workers in some foreign countries that Trump will impose strict visa restrictions on them. Allison Rutherford, Executive Director of HR Tech Group, that conducts a yearly salary survey of the BC tech industry said: "Yes our salaries are lower, so that's attracting big anchor companies to come here, because A we've got quality talent, and B, it's a reasonable place to set up shop."
However, Nils Anderson, a game designer in Vancouver said the lower Canadian wages might attract companies but they also drove senior workers to US sites where the pay was better creating a brain drain. Anderson said: "It's how markets work. The market pays what the market pays, and if nobody else in town is going to increase the wages ... then that's the offer you get here. As soon as you want to start a family here in Vancouver, it's like okay, can you do that on $30,000 to $40,000 a year less. When the cost of living here is basically the same as San Francisco, that's not really an option." Anderson also pointed out that Vancouver had not yet attracted big anchor tech companies such as Microsoft, or Ubisoft. He said if they set up shop in Vancouver wages would improve.
However, both Yasukochi and Rutherford said they expect the low wages in Vancouver not to last and that as Vancouver's tech sector grew, salaries would also. Yasukochi said: "I believe that as more and more companies discover the high quality of tech talent in Vancouver, then the relative value of the wages will start to go up."
The US is moving to tighten policies for H1-B visas for skilled foreign workers. However, Canada is waiting for a new streamlined process for worker permits to come into effect. As a result some BC tech companies are taking advantage of the fear created by US policies to recruit workers to come to the province. Igor Fatelski, CEO of Mobify a tech company producing apps for retailers says: "This uncertainty is really dialing down enthusiasm, especially for travel to the U.S. for long-term career moves. We're seeing that change slowly happen. We're seeing more and more interest from around the world from potential employees that want to work in Canada because they're not certain what's going to happen in the U.S." US President Donald Trump has recently announced that his government plans to suspend expedited applications for the H1-B visas. Fatelski said that more interest was being shown in coming to BC. Fatelski himself is an immigrant from Russia coming when he was 15. He now employs more than 100 people and will need more.
Navdeep Bains, Canada's Minister of Innovation said the government would act quickly to fast track work permits in order to attract highly skilled workers from other countries."We're taking the processing time, which takes months, and reducing it to two weeks for immigration processing for individuals [who] need to come here to help companies grow and scale up. So this is a big deal. It's a game changer." The change is to come through the Global Talent Stream a new program.

Canadian company Bombardier considering options for its train business

The Quebec-based Canadian company Bombardier says that it is considering `multiple options` for its train business as the unit continues to provide strong profits and sales, enabling the company to break even in its latest quarterly results.

Overall, the Montreal-based company that makes mainly planes and trains used up $570 million US in the quarter that ended June 30. While the company lost $296 million or 13 cents per share this was an improvement over the same period last year when they lost $24 million or 24 cents a share. However, revenue fell 5 percent to $4.09 billion. However if special charges such as employee severance, and also benefits from a tax adjustment are considered, analysts had expected the company to post a one cent loss per share. Instead the company broke even.
Investors were actually buoyed by the results with shares up 5.4 percent on Friday AM to $2.54. This is a rise of 63 percent from its low of $1.56 last September. Alain Bellemare the CEO said of the train business:“We have multiple options that we are pursuing. We will do what is right to keep on growing the great franchise.” Bellemare is two years into a five-year turnaround plan that has seen many critics of government support and increases in executive pay as show on the appended video. Bellemare became CEO in a shakeup in 2015.
Bombardier is in the final stages of combining rail operations with Germany`s Siemens. Bellemare refused to talk of future partners or time-lines. The pension fund manager Caisse de depot et placement du Quebec owns 30 percent of the firm and the Quebec government has a 49.5 percent share in the C Series airliner program. The US Boeing Corp. wants the US government to subject the C Series planes to hefty tariffs. No doubt Trump will favor such a move.
Bombardier used to be a key Canadian defence contractor but as part of its restructuring it sold off its military-related work. As part of its restructuring program Bombardier announced in October of 2016 ``.. that, by the end of 2018, they will slash up to 7,500 jobs or more than 10 percent of 70,900 employees from 2015. About a half of job cuts will be done in railway technology unit.`` However, executives have seen their pay rates soar: "Bombardier's senior executives saw their compensation rise by nearly 50 per cent last year at a time when it laid off thousands of workers, ... Total compensation for the Montreal-based company's top five executives and board chairman Pierre Beaudoin was US$32.6 million in 2016, up from US$21.9 million the year before, according to a proxy circular ahead of its May 11 annual meeting." Top executives in power when disaster struck the company are financially rewarded while workers are laid off. The government approves the executive moves by providing more support for the company.

Saturday, July 1, 2017

Two Canadian airports ban ads from Quebec company Flight Claim

The Quebec Company Flight Claim, based in Montreal, in April signed a contract for $73,000 that would allow them to run ads on baggage screens at Montreal's Pierre Elliot Trudeau airport.

The campaign started just last week and lasted only four days before it was abruptly stopped. The promotional ad claimed that passengers could receive up to $1,800 in compensation and to contact the company if they wanted help to fight their case. The ads can be seen here.
The general manager of Flight Claim, Jacob Charbonneau said: "We're just there to protect and help the rights of the passengers, so we feel it's kind of sad that we're not able to publicize in a free market" The company will take on passengers' claims in return for 25 percent of the compensation received. Charbonneau claimed that many passengers are unaware of their rights for delays, cancellations, and overbooked flights. The company website is here.
An email sent to Flight Claim by the airport's advertising agency said the ad was pulled after pressure from airlines. Stephanie Lepage, spokesperson the the airport said that the email was incorrect that the airlines had not requested the ad be removed. She said that the airport made the decision on its own in order not to create trouble for the airlines. She said: "Passengers, but also airlines, are our customers. We did not want to have a conflict between airlines and passengers." But obviously the decision favors the airlines not the passengers. While Flight Claim is out to make a profit it also would be informing passengers of their rights and helping them be enforced. Lepage said that the airport made a mistake in publishing the ads in the first place. Surely, that is because the airlines were complaining to the airport management just as the email to Flight Claim had said. The airport was obviously quite happy before the ads made it clear to passengers that they had certain rights against the airlines. The airport is trying to protect the airlines and not promote the rights of passengers.
Toronto's Pearson Airport is also refusing to display the ads. Charbonneau met in person with the Greater Toronto Airports Authority(GTAA) last week to argue for his case. The GTAA claimed the ads would confuse passengers about their rights because the federal government is in the process of creating new compensation guidelines and an upcoming passenger bill of rights. Spokesperson for the GTAA, Natalie Moncur said to CBC: "Before enabling businesses to profit by advertising to travelers, the GTAA has a responsibility to ensure that there is clarity for its passengers about what these new rules mean." This all sounds sensible until one finds out that the new rules won't come into force until some time in 2018. The whole argument is just a red herring meant to avoid talking about what is probably the reall reason for rejecting the ads, actual or potential opposition from the airlines.
Charbonneau argued that it was not fair to passengers passing through the GTAA property not to know their rights to compensation and it was a disservice to customers not to inform them of these rights. Charbonneau says he will be writing to both Transport Minister Marc Garneau and the Canadian Transportation Agency to lobby for the right to run his ads in both airports.
Flight Claim was founded in July of last year. They had begun the bid to put ads in Toronto on March 23rd when Charbonneau approached Astral Media the manager of ad space at Pearson. Charbonneau was asked for details about his business and whether or not they planned to sue airlines. Charbonneau said it was possible because they were in the business of defending passenger rights. Shortly after that, Flight Claim was denied its bid to advertise. As mentioned earlier, Charbonneau's meeting with the GTAA did not change the situation. Perhaps there is one bright note in all of this for Flight Claim. They have received a lot of free advertising by being turned down.