OCTOBER 1992 Edition
NAFTA
President Bush has now formally notified Congress of
NAFTA, before the legal drafting was completed. The ratification process in
Congress will start on December 17. It now appears that Prime Minister Mulroney
will shortly meet his U.S. and Mexican counterparts in San Antonio, Texas, to
initial the deal. It is suggested that the ceremony has been designed to give a
sagging campaign a boost in an area where Bush must gain strong support among
Hispanic voters.
Bill Clinton is now fence-sitting on NAFTA lest out-right
support costs him votes in the industrial north-east of the U.S. However,
Richard Gephardt, leader of the Democratic majority in the House of
Representatives has called upon the Bush administration to cease further
efforts to win congressional approval of NAFTA and to re-negotiate it or leave
it for the next administration to be written right. This is an interesting
contrast to the Canadian political process which requires that the party line
be followed. Meanwhile, Mexico's foreign minister says that his country won't
renegotiate the free trade agreement.
U.S. Trade Representative Carla Hills told A & A
Customs Brokers at a recent meeting in Bellingham, "international trade
agreements are above the political process."
THE ECONOMY
A number of Canadian industries have sloughed off the
recession and embarked on a round of solid growth that sets them apart from
their more sluggish counterparts. Economists at Burns Fry Ltd have singled out
10 industries--together accounting for more than 14 per cent of Canadian
output-- that have expanded by an average of 28 per cent since 1987 and six per
cent in the past year alone. Each has consistently outperformed the economy in
the decade since the previous recession.
Among them: Telecommunications (almost three per cent of
output), up four per cent in the past year and 54 per cent in the past five.
Office machinery, which has doubled its output in the past five years and
Gold-mining production which has risen by almost two-thirds in the past five
years.
At the same time, the economists isolated another group
of industries--more numerous--but accounting for less than seven per cent of
output--that they describe as collapsing. Included are: Major appliances (down
55 per cent in the last five years), Footwear (off 37 per cent), Batteries
(down 35 per cent) and Printing and Publishing which accounts for about two per
cent of total output and is the biggest shrinking industry. It has contracted
by 17 per cent in the past five years.
TOURISM
Eaton's has a yen for Japanese shoppers. The downtown
department store in Victoria says its decision to do business in Japanese
currency is already a clear winner. Eaton's said more yen has been collected
than U.S. bucks since starting the practice in August. Several smaller
tourist-oriented shops have followed or will follow Eaton's lead to accept yen.
Meanwhile, it is reported that German tourists are
starting to drop Banff from their Canadian itineraries as they feel it is
becoming too large and sophisticated.
The accommodation and food industry in B.C. has seen a
growth of 40% in employment between 1981 and 1991 with 32,300 new jobs created.
It was recently announced that Canada presently has a
$8.5-billion tourism deficit which is expected to climb to over $9-billion by
1994. During discussions at the Open Skies negotiations where the government is
trying to "protect" Vancouver, Montreal and Toronto from transborder
competitiveness with temporary safeguards, industry experts said that lost
economic opportunities that would be generated by open skies are costing
B.C.--and mostly Vancouver-- over $40-million a year.
LABOUR LAW
Ontario's proposed labour law reform has generated a lot
of controversy and the suggestion that it could make the province an uncertain
place for the Big Three auto makers to do business, costing jobs and industrial
investment, according to the car makers. The government is proposing to ban the
use of replacement workers during strikes and lockouts which could disrupt its
parts delivery system. The ban on replacement workers could also cause auto
parts makers to sign collective agreements that drive up the cost of doing
business because a strike would shut them down completely. The changes could
cause suppliers to quietly leave, with the resulting loss of jobs. Other changes proposed would
transfer workers' union rights from one employer to another when businesses are
sold.
The government is also preparing legislation that could
unionize farm workers for the first time which has terrified many farmers who
say they will be forced out of business by regulations that were developed for
urban factories but cannot be applied to farms. The Ontario Federation of
Farmers is not philosophically opposed to collective bargaining but say
"there is nothing good in this legislation for farmers."
CLOTHING
The consumer is benefiting from the competitiveness in
the Canadian clothing trade. Murray Goldman of Vancouver says his prices have
dropped ten per cent in the last year and the Fairweather chain say their
prices are now twenty per cent below last year. Clothiers attribute the drop in
prices to better deals from manufacturers, better fabrics, rock-bottom wool
prices, cheaper production costs and few increasing costs. No one admits the
prices were too high in the first place but it would seem that this area has
benefitted from the competition of cross-border shopping.
There are even success stories in this ravaged area of
the economy. Danier Leather, with its glamorous full page newspaper ads,
appears to be one. Profitable and debt-free, Danier is a privately held company whose sales have tripled in the
last five years to about $55-million, and it now has 33 outlets in seven
provinces. At its June year end, sales were up 11%, while women's fashion sales
as a whole were down almost 2%.
Meanwhile, giant clothing company Dylex Ltd which operates
1300 stores in Canada and the U.S., is negotiating to buy a stake in U.S.-based
Pacific Linen Inc. which operates 45 stores, most of them south of the border,
that sell large volumes of everything from cut-rate sheets and bath towels to
tablecloths and duvet covers. Because "category killers" buy in bulk
and enjoy greater clout with suppliers, they are able to undercut traditional
suppliers. Pacific Linen opened three stores in Vancouver and a fourth in
Edmonton and it recently acquired Folkstone Fine Linen which owns three stores
in Calgary. Additional stores will quickly follow as the company takes aim at a
market that Dylex says is poorly served by the competition.
FARMING
Farmers in B.C.'s Lower Mainland are growing lush fields
of cash---by moving indoors. The region's 80-odd hothouse vegetable growers
have escaped recession by selling fresh vegetables to, of all places,
California, where discerning consumers are willing to pay big premiums for
near-perfect produce.
Because of new technology, vegetables are not only
unblemished but they grow like weeds. Tomato plants 30 feet tall are not
uncommon; English cucumbers grow 14 inches in 10 days. Harvesting is year
round, with enough artificial light and cheap natural gas it's always summer
under the glass. B.C. and Alberta are the largest markets but last year one
B.C. Co-op flew five million pounds of tomatoes, peppers, cucumbers and
lettuce--almost one quarter of its total production-- to California.
Annual sales for these farmers jumped from $14.7-million
seven years ago to more than $35-million last year, all from just 168 acres of
glass. The boom is due to Dutch farmers, experts in the field, who have been
moving to the Fraser Valley bringing new hydroponic technology with them.
SUNDAY SHOPPING
Since Ontario and New Brunswick joined Vermont and New
York in opening for Sunday shopping, a powerful coalition of Quebec retailers
has warned that $2-billion in sales and thousands of jobs are at risk if the
provincial government does not immediately allow wide-open Sunday shopping. A
group representing retailers such as Price Club, Sears Canada Ltd, The Bay,
Wise Stores and Dylex plus major shopping centre owners released a survey
showing that nearly 70 per cent of Quebecers favour Sunday shopping. The large
stores are less worried about cross-border shopping than they are about laws
which allow small shops, with fewer than five employees, to open on Sunday and
the creation of 26 exempt tourist zones, where factory outlets do a booming
Sunday business. Large retailers want to see the law applied fairly and to let
them compete on an equal footing.
TRANSPORTATION
Taking advantage of falling beer barriers between
provinces, CN Rail has begun pulling containers of beer around the country.
Since the historic beer walls came down, business has been so brisk that CN has
announced an investment of more than $9-million for new cars to carry beer.
The investment is for 200 domestic containers, steel
boxes the same length as a long truck trailer. The containers are insulated and
heated so they can continue to carry the beer during the winter months. CN says
it's a natural fit for railroads because what they do best is long haul, high
density service.
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