FEBRUARY 1997Edition
GROWTH
Dun & Bradstreet surveyed 1,200 Canadian business
owners and executives in December and found them upbeat about prospects for the
first quarter of 1997. For the first time since 1991, sales expectations rose,
partly because Christmas sales were better than most retailers expected.
Expectations were also up for profits and inventories. Curiously, employment
requirements remained the same. Businesses in Ontario led the country in
optimism about sales, profits and inventories. Canada's most populous province
tends to be the first to experience boom and bust cycles.
BILLS
Businesses are paying their bills faster. Companies took
an average of 51.06 days to pay their bills in the fourth quarter of 1996, more
than a full day faster than in the first quarter of 1993. Companies in Western
Canada paid their short-term obligations the fastest taking an average of 49.45
days while the Atlantic provinces were the slowest, at 52.58 days. By industry,
the agricultural sector was the quickest at 47.46 days, while manufacturers
were slowest at 52.57 days.
COMMUNICATIONS
Canada has proposed changes to its telecommunications
policy that would open the market in global market satellites to increased
foreign ownership, if an international telecom agreement is reached in Geneva.
In addition, Canada has also proposed easing restrictions on companies wanting
the right to land underseas cables for carrying long-distance traffic in
Canada. Both concessions, offered during World Trade Organization negotiations,
would come in return for other countries lowering their trade barriers to
telecommunications companies.
JOBS
U.S. employment held steady near a seven-year low at 5.3
per cent in December as the economy produced 262,000 new jobs, about 70,000
more than expected. A jump in service sector employment was the biggest since
last spring with 112,000 jobs added. Some experts had predicted that the
50-cent increase in the minimum wage last October would depress the hiring of
low-wage workers in service industries.
BRITISH COLUMBIA
While B.C. is far less dependant on U.S. trade than other
provinces, the Americans are still B.C's biggest export customer by far.
Figures for the first 10 months of 1996 show the U.S. had 55.1 per cent of
B.C.'s total export value, up from 49.2 per cent for the first 10 months of
1995. B.C. appears headed for the highest level ever of exports to the U.S.,
probably near $14 billion for 1996, as against $10.1 billion in 1993. The U.S.
is followed in importance by Japan at 23.4 per cent. Canada and the U.S are
doing more than $1 billion in trade each day, with less than one per cent
subject to trade action such as lumber tariffs or Pacific salmon. Canadian
exports in merchandise trade alone to the U.S. grew about eight per cent in
1996.
TASTE
The lowly squid, once tossed overboard for bait, has
suddenly become the prize of the California coastline. Coveted by new markets
in China and by yuppies at home, squid have shot past salmon to become the
state's leading seafood catch by volume and value.
FURNITURE
This industry suffered in the early days of the
Canada-U.S. free-trade agreement losing half of its manufacturing capacity.
Those that are left are relying on revamped designs, smart marketing and an
explosion in exports to remain competitive. The Canadian furniture industry saw
revenues grow 7 per cent in 1996 to $1.9 billion and exports grow 17 per cent
to $800 million. Furniture makers were exporting 39.8 per cent of their
production in 1995 compared to only 6.2 per cent in 1982 and exports have
climbed 234 per cent since 1991.
GROWTH
By the end of the century, the Toronto area population
will be near five million according to Statistics Canada. The biggest rate of
growth will come in the Vancouver metropolitan area where the population will
jump by 13 per cent to 2.1 million. Montreal, the second-largest city in Canada
will reach 3.4 million. The population of St. John's is expected to drop by 4
per cent, as will that of Newfoundland as a whole.
NEW CARS
Consumers spent an average of $22,300 (before taxes) on
passenger cars in October, up 7.0% from October 1995. Average spending on cars
reflects consumers' choices of model and options, industry changes to features
that are standard on a vehicle, and changes in vehicle prices. In October 1991,
consumers spent an average of $16,700 per car; this represents a 33.7% increase
over five years. Nine out of 10 cars sold in October were built in North
America and fetched an average price of $21,300, up 5.7% from October 1995. The
average price of cars built overseas jumped 22.2% to $29,400 with the average
price of Japanese cars rising 20.3% to $25,600.
BRIBES
A Thai cabinet minister is urging bureaucrats to take
bribes because bribery is part of the Thai culture. However, the minister set
two conditions: Do not demand the bribe up front and do not set any price
lists.
WATER
A Vancouver company has signed an agreement with a small
Alaskan city to harvest glacial water and ship it in bulk to China where a
half-litre bottle will sell for just under a dollar. Global Water Corp. will
ship up to 18 billion litres of water a year from Sitka, a city of 8,900
residents, to the Chinese port city of Tianjin. The company intends to build a
bottling plant within the next year in Tianjin, a city of more than nine
million people about 100 kilometres from Beijing. It will then ship bottles to
cities in China, South Korea, Taiwan and Japan. Global went to Alaska after the
B.C. government banned the export of bulk water last year saying the province's
water must be preserved for diminishing salmon stocks and an expanding human
population. The Chinese government will get 25 per cent of Global's profits.
JUNK MAIL
As of the start of the year, the government has forced
Canada Post to stop delivering so-called junk mail, a multimillion dollar
annual business which has cost around 10,000 mostly part-time jobs. But private
distributers, including newspapers, say they will create at least that many
jobs. The Canadian Daily Newspaper Association claims dailies lost $80 million
in revenues since 1988 when Canada Post expanded aggressively into delivery of
printed advertising. Private distributors long claimed that Canada Post was
using revenue from first-class mail to subsidize advertising mail.
SKILLS
The spread of computers in the Canadian workplace is
wiping out jobs for unskilled workers. According to a study by Canadian Policy
Research Networks, computers have created more jobs than they have destroyed
but employers have used computer-based technology (CBT) to eliminate unskilled
jobs and not given unskilled workers the training they need to move up into the
new high-skill jobs. Instead, the unskilled are being pushed into other
industry sectors that continue to employ large percentages of low-skill and
often low-wage workers. Those sectors, like the retail trade and food services,
are moving in the direction of using more computers leaving the unskilled with
even fewer options.
RETAIL TRENDS
According to the Retail Merchants' Association of B.C., while
a lot of attention has been focused on the entry of so-called
"Big-box" stores such as Wal-Mart and Home Depot in the market, their
impact has not been as great as anticipated. Recent financial data indicates
that their earnings and growth rates have not been as high in the past year
suggesting that high-volume retailers may have reached maximum efficiency in
the market. This presents opportunities for smaller retailers
which have continued to
shave margins and will now have to look for ways of putting more emphasis on
selection and customer service. A national survey in December by Deloitte &
Touche asking consumers about their shopping habits showed 72.9 per cent using
traditional departments stores, 71.9 shopping at specialty stores in malls, 59.7
went to discount stores and 27.5 per cent used big-box outlets.
PRIVATIZATION
Despite a bad year for grain and a lengthy strike at
General Motors, Canadian National Railways is slowly turning around, shedding
fat and making money. In 1996, the company had an operating profit of $610
million and a final profit of $142 million on revenues of $4.16 billion. This
compares with a loss of $1.08 billion in 1995. The company managed growth in
container traffic, one of its key goals, and in traditional staples like coal,
sulphur and lumber. There were only 21,600 employees at the end of 1996
compared to 36,000 in 1992 but the remaining workers are 14 per cent more
productive. Labour costs were reduced by $95 million while total costs fell by
$109 million to $3.5 billion.
MEXICO
After collapsing in 1995, Mexico's economy has recovered
faster than many expected, enabling it to repay its emergency loans from the
U.S. three years early. In its latest report on the country, the OECD estimates
that GDP grew by four per cent last year after shrinking by 6.2 per cent in
1995 and will grow by five per cent in 1997. Initially, the recovery was led by
exports but in 1996 private investment began to pick up again.
INTERNET
A survey of 750
firms with Web sites by Tikkanen-Bradley Consulting in Toronto indicates that
more than a third of Canadian companies are unhappy with the reaction to their
World Wide Web sites but concludes many companies do not grasp the fundamentals
of life on the Internet. More than 41 per cent don't know how many visitors
their sites get in a month, and don't seem to care with 35 per cent saying they
do not track usage and only 6.2 per cent using a registration form or user
survey. More than 10 per cent said they spend no time maintaining their sites,
and 55 per cent said they spend 10 hours or fewer a month. The investment firm
of Volpe Welty & Co. predicts that $500 billion in transactions will take
place on-line by the year 2000 and if this does occur, Canadians may be left
wondering where their share is.
U.S. EXPORTERS
A recent study by the Institute for International
Economics suggests more small and medium-size business owners in the U.S. are
understanding the importance of foreign markets. U.S. exports totalled $452
billion in 1995 with the 50 largest exporters accounting for 30 per cent of the
country's merchandise exports. In the past two years, the percentage of small
and medium-size exporters that receive 10 per cent or more of their revenue
from exports nearly doubled to 51 per cent. This year, 8,000 companies are
expected to expand their exports with help from the U.S. Commerce Department,
more than twice the number from three years ago.
PATENTS
Last year IBM, for the fourth year running, received more
American patents than any other company, the highest number ever.
SERVICE
New Zealand Post has just celebrated a second year of
record profits by delivering all hand-addressed mail free for a day.
SAFETY
Camels which carry tourists for sunset rides along Cable
Beach Road in Broom, Australia, are posing an unacceptable hazard to traffic
and are having battery-operated tail lights fitted to their rear ends.
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