JUNE 1995 Edition
TECHNOLOGY
Last year, Canadian businesses poured more money into
their information technology budgets than the year before, the first increase
since 1991. Companies increased their spending by 7 per cent in 1994, compared
with an 11 per cent cut in 1993 according to a survey of chief information
officers. Organizations spent on average $16.3 million in Canada. Most of the
money went into networks of computers known as client-server technology. Others
spent money on machines in the quest for the paperless office: The most
promising technologies are imaging devices that let workers scan documents into
computers.
CARS
April was the fourth consecutive month of disappointing
vehicle sales in the U.S. After the last recession, the industry expected sales
of cars and light trucks to be 5.5 million for several years to come. Research
shows that these sales may not materialize for the following reasons. People
want new kitchens rather than new cars. Among the big-ticket items on
consumer's wish lists, cars have fallen to No 11 from No 3 in 1984. Remodelling
the kitchen, saving to start a business, a home computer, a movie theatre all
rate higher than new cars. Other reasons include: there are more and better
used cars around now; cars last longer; prices are too high; cars are not the
status symbol they once were and women are making more car-buying decisions and
their choices differ from men.
TELEPHONES
China will see a boom in the telecommunications industry this
year, reflected in a rapid increase in the number of users of pagers and
telephones. Industry sales will rise by 39 per cent from the 1994 level of
$13.5 billion (US). This year, China will have 4.5 million more pager users for
a total of 12 million. By the end of the year, about 4.2 per cent of the
population will possess telephones. China will have one million long distance
telephone lines, 300,000 more than in 1994 and 14 million more switchboards for
a total of 62.8 million and a digital data network will link 500 economically
advanced cities and counties.
BOEING
In order to remain competitive, Boeing must lower the
cost of producing airplanes and shorten the time it takes to build and deliver
an airplane and suppliers need to bear this in mind. Although the number of
suppliers continue to decline, there are still opportunities for companies
which can offer innovative processes and design, higher quality and lower
costs. Much of Boeing's supplier reduction can be attributed to work which has
been shifted to the MOP group. Suppliers seeking additional business are encouraged
to contact all of Boeing's MOP (Major Outside Production) participants
directly, including: Menasco, Northrop-Grumman, Rohr, Heath, Vought-Rockwell,
CASA, Bombardier, Shorts and Canadair. Canadian companies seeking advice as to
which MOP they should be contacting should call Ron Merrick, Boeing Liaison
Officer at the Canadian Consulate-General in Seattle at 206-443-1777, Fax;
206-443-9735.
BANKS
Doing business with a human in one Chicago bank will soon
cost $3 (US) a time. The bank plans to impose the charge hoping it will
encourage customers to use less costly automatic teller machines. Consumer
groups have criticized the move saying it will hit teen-age, elderly and
disabled customers the hardest. Customers can avoid the teller fee by keeping a
monthly balance in their accounts which varies depending on the type of
account. In Canada, a major bank opted for the "carrot" rather than a
"stick" approach when it started paying customers for making deposits
using automatic tellers.
SINGLES
The top 10 foreign destinations for U.S. singles
according to the Single Traveller newsletter are: 1) Ireland; 2)
England-Wales-Scotland; 3) British Columbia; 4) Costa Rica; 5) Australia; 6)
New Zealand; 7) Switzerland; 8) Israel, 9) Alberta; 10) Austria.
FARMING
Though the second largest country in the world, only 7
per cent of Canada's land mass is used for farming. In 1941, 27 per cent of all
Canadians lived on farms. In 1991, despite a doubling of the population, the
figure fell to 3 per cent and the number of farms declined from 733,000 to
280,000 but the size of the average farm has grown from 237 acres to 598 acres.
Productivity has increased dramatically; a farmer now feeds 32 other Canadians,
up from 3 in 1941. Computers have become an important piece of farm equipment:
In 1991, 11 per cent of farmers used computers, up from 3 per cent in 1986. (a
third of mushroom farmers use computers making them the most computer-literate
of all, while maple syrup producers use them the least). 62 per cent of farmers
count entirely on their farms for income, while 38 per cent have another job to
fall back on and a quarter of farmers are women.
PRODUCTIVITY
Last year, Canadians sold almost $180 billion worth of
goods to Americans, up 70 per cent from $106 billion in 1991 and this year the
figure should reach $214 billion. Rapid economic growth in the U.S. is one
obvious reason; demand has been growing so swiftly that U.S. producers can't
meet the needs of U.S. customers, who then turn to imports. The fall of the
Canadian dollar has also had an impact. In 1991, an American needed about 83
U.S. cents to buy a Canadian dollar's worth of goods; last year he paid only 73
cents.
But there is another reason. Canadian companies,
especially manufacturers, have been getting more competitive and more adept at
keeping their costs under control. Their competitors in the U.S. have been
doing the same, but not as well as Canadian companies. Between 1991 and 1994,
Canadian factories raised productivity 10.9 per cent compared with 10.5 in the
U.S. This sounds small but in the 1985-91 period, Canadians eked out a mere 2.5
per cent gain compared with 17 per cent in the U.S. Also, labour costs in
Canada over the last three years have increased by 7.5 per cent (below the
increase in productivity), compared with 10.7 per cent in the U.S.(more than
the productivity growth). Again, that's better than the previous six year
period when Canadian labour costs rose almost 30 per cent (against the 2.5 per
cent productivity gain) and U.S. costs rose less than 28 per cent (against the
17 per cent rise in productivity). But the U.S. economy is now slowing and the
Canadian dollar rising giving Canadians an even greater challenge.
RETAIL
Incredible Universe is a U.S. electronics retailer
launched by the Tandy Corp. whose giant entertainment emporiums dwarf even the
biggest of the so-called big box stores. It is set to become the latest
megastore to invade Canada and is planning to open its futuristic outlets across Canada beginning with two
locations in Toronto. The store prefers to be known as a "show."
Customers are called guests, the employees called cast members and the
merchandise is referred to as props.
Among the 50,000 props in a typical "show" are
315 different types of television, 181 refrigerators, 83 washers and dryers and
thousands of music and video titles. At 17,000 square feet, the outlets are
about 50 per cent bigger than a Home Depot or Price Club warehouse store. The
stores feature such customers perks as a disc jockey, video screens, a stage
where musicians and jugglers perform, a children's play area and fast-food
restaurant.
MEXICAN AUTO INDUSTRY
The NAFTA agreement helped bring massive investment into
Mexico by foreign car makers. The industry became the country's biggest
employer, with 225,000 workers and its second largest exporter after oil.
Domestic vehicle sales were forecast to top last year's figure of over 600,000
up from 420,000 in 1993 and to rise to 1.2 million by the end of the decade.
December's currency collapse has changed these hopes as
demand has plunged. Vehicle sales for the first two months of the year were
down 61.7 per cent compared with a year ago. With a GDP expected to drop 5 per
cent and astronomical interest rates, domestic sales may reach only half last
year's figure. One industry expert predicts that nearly one third of Mexico's
1,100 dealers will go under before the market recovers. Car makers have cut
production and put some workers on short time. One survival strategy has been
to divert production to exports which shot up 31.3 per cent in January and
February, and could reach 800,000 units this year.
WEALTH
Canadians were worth an average of $81,000 last year,
$1,900 more than in 1993. The tangible wealth of the country, everything but
natural resources, totalled $2.7 trillion at the end of 1994. Take away $300
billion to account for the difference between what foreign investors own here
and what foreign assets Canadians hold, and Canada's net worth was $2.4
trillion. The gain in wealth reflected an accumulation of tangible assets like
cars, factories, computers, houses, household appliances, trucks, highways and
developed land. And with virtually zero inflation last year, most of the
increase in wealth was real. However, debts also grew six per cent last year to
$1.7 trillion.
CEREALS
A pair of Democratic congressmen want U.S. breakfast food
makers investigated for possible pricing collusion. Cereal prices have
increased at twice the rate of other foods over the past decade even as
production costs have declined. Four companies, Kellogg Co., General Mills,
Quaker Oats Co., and Post brand maker Philip Morris, control 85 per cent of the market, selling about 200
varieties. Industry groups have claimed the congressmen's information is
flawed.
VANCOUVER AIRPORT
The airport improvement fee--the $5 to $15 levy
passengers must pay before boarding their flights-- raised $37.3 million last
year according to the Vancouver International Airport Authority. VIAA made a
1994 profit of $53.3 million, compared to $36 million in 1993, after paying its
landlord, the federal government, $31.9 million. All the money was used to help
pay down the debt on the $350 million parallel runway and new international
terminal now under construction. Earnings from operations totalled $21.4
million, up 36 per cent from a year ago, and gross revenue increased 10.6 per
cent to $91 million reflecting substantial increases in passenger volumes and
aircraft movements. Last year the airport handled a record 301,000 flights,
182,000 tonnes of cargo and 10.8 million passengers.
TENDERING
Free trade is coming to Canadian municipalities. From
coffee to copiers, new federal guidelines dictate all Canadian municipalities
must tender their need for goods and services nationwide. The move, while
breaking down inter-provincial trade barriers will have cost implications
according to some municipalities. The object of the agreement is to give
Canadian businesses in all parts of Canada increased access to governments
contracts. Accessability will be ensured through use of an electronic tendering
system or publication in one or more pre-determined daily newspapers.
WINDS OF CHANGE
Termite flatulence is now being blamed for as much as
one-fifth of the world's methane, one of the greenhouse gases causing global
warming. There are 3,000 species of termite and they produce about 88 million
tonnes of methane a year. In a related story, the methane gas produced by 72
flatulent pigs on an airliner heading to South Africa forced the flight to turn
back and make an emergency landing after their methane triggered its fire
alarms. Fifteen prize stud pigs being flown out for breeding died of
asphyxiation when halon gas was released into the cargo hold as part of the
plane's fire-extinguishing equipment.
TRIVIA
At any given moment, there are about 800,000 people aloft
in aircraft.
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