NOVEMBER 1994 Edition
ORGANIZATION OF AMERICAN
STATES
In 1990 Canada at last agreed to join the OAS. This
political forum is vital for the long-term future of the Western Hemisphere and
therefore for Canadian long-term interests. Shortly after joining, the OAS lost
no time in presenting its financial assessment to Ottawa--$10 million a year,
or 11 per cent of the total annual budget. Yet Canada still has only one bureaucrat
among the 688 Latin, U.S. and Caribbean staff in the Washington, D.C.
headquarters. Without appropriate representation within the OAS Secretariat,
Canada can neither project its values adequately within the inter-American
system nor link Canadians with OAS activities. Only Belize has fewer
representatives (none). Even such economic powerhouses as Antigua, Saint
Vincent, Dominica and the Grenadines have more. The U.S has 105 positions,
Argentina 53, Chile 39, Brazil 46 and Peru 71. No other nation would tolerate
taxation without staff representation nor the open insult to a senior member
country that this implies.
EXPORT FINANCING
Small companies seeking to expand sales into
international markets now have access to a new source of export financing.
Northstar Trade Finance Inc has begun offering term export financing for
smaller transactions. Owners of the firm include The Bank of Montreal, the B.C.
Trade Development Corporation and the Government of Canada. Its establishment
fills a recognized gap in the financial market for relatively modest export
sales, under $3 million. Companies must meet several criteria including:
exports must be valued from $100,000 to $3 million; the exporter must be
Canadian: the buyer must be in an OECD country other than Canada and the export
must be goods or services. For more information, call Gary Fowlie at B.C.
Trade, 604-844-1915, Lynne Kilpatrick, Bank of Montreal, 416-867-7014 or Rod
Giles, Export Development Corp, 613-598-2904.
HOURS
Factory workers in the U.S. are now working longer hours
than at any time in the past half-century. The U.S. once led the rich world in
cutting the average working week--from 70 hours in 1850 to less than 40 hours
by the 1950s. It seemed natural that as people grew richer they would trade
earnings for more leisure. Since the 1970s, however, the hours of U.S. workers
have risen--to an average of 42 this year in manufacturing. By comparison,
Canadian manufacturing workers spent about 38.5 hours a week at the factory.
Meanwhile, working time in Europe and Japan continues to fall. In Germany, the
working week will be trimmed to 35 hours next year. Most Germans get six weeks
paid annual holiday; even the Japanese get three weeks. Many Americans are
guaranteed just two. Theories about why this is occurring include the fact that
the real earnings for many Americans have been stagnant or falling during the
past two decades and that people work longer just to maintain their living
standards. Also, because of the fall in marginal tax rates since the 1970s, it
is now more profitable to work longer.
CHINA
Foreign investors continued to stampede into China in the
first nine months of the year injecting the equivalent of $22.7 billion (U.S)
into the economy, up 49 per cent over the 1993 period. This is second only to
the $32 billion that flowed into the U.S. The increase was primarily led by
capital- and technology-intensive projects. Hong Kong and Taiwanese investors
who had been investing heavily in real estate development have been switching
this year to manufacturing. Fifty multinational corporations have received
approval to set up holding companies since the 1980s and are seen as a major
source of new investment.
SMALL BUSINESS EXPORTS
According to a House of Commons' industry committee
report, exporting by Canadian small and medium-sized enterprises is
woefully inadequate.
While exports generate more than 25 per cent of Canada's gross domestic
product, small and medium-sized firms account for only 9 per cent of total
exports. Farming, fishing and logging are the only industries where small
companies are big exporters, 38.6 per cent of products are exported. Only 7.7
per cent of small business products are exported. The committee recommends that
Ottawa establish a limited guarantee to encourage banks to finance the working
capital of small exporters.
FITT
FITT is the Forum for International Trade Training--a
group that helps train primarily small and medium-sized businesses to
aggressively move into foreign markets. Established in March 1992 by the
business community, with the support of the federal government, FITT is
mandated to provide a national standard for international trading. For more
information, contact FITT at: Tel: 1-800-561-FITT or Fax: 1-613-230-6808.
ELECTRONIC CHECKOUT
K-mart Corp. has agreed to assign a checkout monitor in
each of its 2,450 U.S stores to prevent the kind of overcharging that occurred
during an investigation by Michigan's Attorney-General. It will also place
warning signs informing customers they can get a refund of the overcharge
amount and an additional payment of $1 to $5 (U.S.).
Investigators making purchases found that computer
scanners read incorrect charges 23 per cent of the time among the 40 stores
investigated and that 86 per cent of the mistakes were in favour of the stores.
It is claimed that the errors were not the result of computer malfunctions.
Most often, overcharges occurred because the store was too slow to reduce the
price codes on packages at the start of a sale or too quick to adjust prices
higher at the end of a sale. The company is donating $70,000 to a consumer
education program in Michigan. In May, K-mart paid $985,000 to settle a pricing
accuracy complaint brought against it by the California Attorney-General's
office over higher scanner prices.
FLORIDA
While the Consulate is primarily interested in the
development of Canadian exports to Florida, it also welcomes enquiries from
Canadian companies seeking business partnerships or opportunities.The Consulate
has created a database of local companies interested in doing business with
Canada. Companies should contact David Ericson, the Commercial Officer, at Tel:
305-579-1600 or Fax: 305-374-6774.
KNOWLEDGE
According to the Canadian Labour Market and Productivity
Centre, half the skills of technical workers become obsolete within three to
seven years of completing a formal education. One year out of college and you
will have lost 9 per cent of what you have learned (if the half-life is seven
years) or 21 per cent if the half-life is three years). In the most rapidly
changing fields, such as biogenetics, most of what you learn will be wrong in
four years.
LICENSING
dISTCovery is a service of Industry Canada
designed to create industry awareness of the worldwide supply of transferrable
technology available through joint ventures or licensing. This service provides
information on more than 30,000 licensing opportunities from over 40 countries
and introduces Canadian companies to contacts from around the world. A Canadian
company can also use dISTCovery to promote its unique product or process
for licensing internationally. More information on this database can be
obtained from the Strategic Information Branch, Industry Canada, Tel:
613-954-4977, Fax: 613-954-2340.
SOUTH AFRICA
This country has a highly developed economy, foreign
competition is strong and South Africans are experienced traders with strong
global links. The Canadian government's Trade Office in Johannesburg is now
fully staffed and at the service of Canadian companies. They are able to assess
local market prospects for Canadian goods and services, identify potential
business partners and provide advice on local business practices. The Trade
Office can be reached at: Canadian High Commission, Trade Office, 10 Arnold
Street, 1st Floor, P.O. Box 1394, Parklands, 2121, Johannesburg, South Africa.
Tel: 27-11-442-3130, fax: 27-11-442-3325.
MARKETING
Facing stiff competition from ware-house style home
improvement chains, Beaver Lumber Co. is largely abandoning the do-it-yourself
market in an attempt to win over professional contractors. In medium-sized
markets, Beaver hopes to boost contractor sales to 80 per cent from the current
50 per cent. In rural markets, where about 60 per cent of sales are with
contractors, Beaver wants to move the figure up to 70 per cent. They expect 20
to 25 existing stores will be relocated to cheaper, industrial land and 25 new
outlets are planned for rural areas in the next five years and an undisclosed
number for medium-sized markets.
Beaver is spending about $60 million on the program to
complete its repositioning in medium-sized cities before U.S. based Home Depot
Inc. or another home improvement warehouse chain arrives. Beaver has already
left the Toronto market and is in the process of pulling out of Vancouver.
Beaver had an operating profit of $20 million on sales of $845 million in 1994
and estimates the do-it-yourself market is worth $3.2 billion annually whereas
its new target market is worth about $6 billion.
RENOVATIONS
Canadian home renovation spending is expected to rise 6.8
per cent this year to almost $20 billion according to Canada Mortgage and
Housing. A survey showed that almost half of Canadian homeowners plan
renovations in the coming year. Spending should be $19.1 billion this year and
$20 billion in 1995. Economic conditions along with changing tastes and aging
housing stocks boost interest in renovation projects. Of indoor renovations, 22
per cent will involve the bathroom, 17 per cent painting and decorating, 16 per
cent kitchen improvement and 15 per cent flooring and carpets. Among outdoor
projects, 19 per cent will involve windows, 15 per cent decks and patios, 13
per cent roof and 12 per cent painting and siding. The strongest markets will
be B.C. Ontario and Quebec.
CONFIDENCE
A survey done in six major cities shows consumers are
optimistic heading into the holiday season which is good news for retailers. 41
per cent said they believe their economic situation will be better in two years
compared with today, while just 23 per cent expect it will be worse. Nearly 90
per cent said they are familiar with Wal-Mart which entered Canada this year.
But Wal-Mart placed eighth in a ranking of non-grocery stores shopped most
frequently, behind top-ranked Canadian Tire, the Bay, Eaton's, Sears, Zellers,
Shoppers Drug Mart and Consumers Distributing. 46 per cent of respondents
thought it was a good time to make major purchases.
Canadian business confidence has also climbed to the
highest level since 1979 on higher economic growth and better corporate
profits. According to the Conference Board, the index of business confidence
jumped 40 per cent from this time last year, (the highest in fifteen years) and
the percentage of firms expecting to reach profitability over the near term
reached an all time high of 69 per cent. In the second quarter, Canada's output
of goods and services rose at an annual rate of 6.4 per cent, giving it the
best performance of the Group of Seven industrialized countries.
RESEARCH &
DEVELOPMENT
The average cost of an R&D scientist or engineer in
Canada is $207,000 annually, This compares to $257,000 in Japan, $337,000 in
Germany and $369,000 in France. In some industries the savings are enormous. It
costs $141,000 in Canada to equip and pay the salary of a scientist doing
chemical research compared to nearly $500,000 in Germany. Assuming our
scientists are as good as any in the world, the world should be beating a path
to our labs, and they are. Since 1985 the amount of foreign-financed research has
increased from $517 million to $1.03 billion, an growth of nearly 65 per cent.
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