Tuesday, April 01, 1997

APRIL 1997 Economic Digest - Importing and Exporting



APRIL 1997 Edition

ASIAN TRADE
            Canada's share of the Asian import market has dropped by 33 per cent to a 1.6 per cent share during the past decade. The other Group of Seven top industrialized countries (excluding Japan) collectively have dropped only 6 per cent. The decrease is partly because the Asian nations are increasing their trade among themselves. Even though Canada has increased the value of its merchandise and service exports into Asia, (about $28 billion in 1995), $30 billion worth of imports from Asia have swelled the Canadian balance of trade deficit. Even Australia outdid Canada in its trade with Asia with exports of more than $34 billion.

PROFITS
            Larger firms were substantially more profitable than medium and smaller enterprises in 1995, in part because they continued to benefit from Canada's export boom. In 1995, large firms had an average rate of return on assets of 6.0%. That compares to 4.0% for medium‑size firms and 4.2% for smaller firms. Average rates of profitability have generally been on the rise since 1992, with the most substantial increases occurring in 1993 and 1994. Rates of return for large firms peaked at 9.0% in 1988. This compares with the 1995 rate of 6.0%. Taking into account the fact that current rates of inflation are much lower than those in 1988, the rates of return have fully recovered.

FOREIGN CARS
            Since the early 1990s, foreign automakers have built more vehicles in North America, bolstering the total volume of vehicles built in the region. As a result, sales of passenger cars built in Japan plunged 79.8% from 236,700 in 1992 to 47,900 in 1996. Sales of other imported cars declined 30.4% from 57,900 to 40,300 during the same period. For the first time, sales of cars built in other countries out‑numbered sales of cars built in Japan three times last year (January, April and August).

SUBSIDIES
            The World Bank issued a report urging an end to subsidies on fossil fuels, which increase global warming and pollution. Coal, the worst offender, is still heavily used in China, India, the ex‑Soviet Union and Eastern Europe, though Russia and China have made big cuts in subsidies. Oil and gas producers are least keen to make cuts.

JEANS
            Levi Strauss paid $25,000 for a pair of its own jeans, thought to be among the oldest in existence and dating from the late 19th century. They were originally found in an old mine in Colorado before turning up in a vintage‑clothing store in New York.

TELEPHONES
            In the time‑honoured way of trade diplomacy, 69 members of the World Trade Organisation reached a last‑minute deal to open their telecoms markets to competition and foreign investment, and agreed to observe common principles of telecoms regulation. Together, the signatories account for more than 90% of global telecoms revenues of $660 billion. Liberalisation is expected to lead to lower telecoms prices around the world.

MEXICO
            According to the latest issue of U.S. Magazine Entrepreneur International, Mexico is a land of opportunity. The publication lists why entrepreneurs might consider this market of 91.6 million consumers.
*           The government has untangled much of the red tape for setting up a foreign firm. So far, it has privatized 81 per cent of the 1,150 state-owned companies in key sectors, such as petrochemicals, pharmaceuticals, air transport and tourism.
*           Mexico, Latin America's most populous country is youthful--50 per cent of the population is under 20. Its work force makes up 39 per cent of the population, which makes it ideal for manufacturing or other labour-intensive businesses.
*           A U.S. poll found that the average Mexican household spent $30,500 (U.S.) on consumer goods in 1995.

PROTECTION
            Fewer than a quarter of Canadian manufacturers use legal means to protect their innovations according to Statistics Canada. And big companies are more likely than small ones to use protections such as patents, trademarks and formal secrecy agreements. Small firms tend to rely on trade secrets before shifting to patent protection as they grow. Many companies believe they are better protected by getting new products to market quickly or by adopting more complex designs, instead of using patents. Foreign-controlled firms are more likely to use legal protection than their Canadian counterparts,

PALLETS
            Every year, goods arrive in New York on more than six million wooden pallets. A furniture and flooring firm, Big City Forest, reclaims rosewood, cherry, oak, mahogany, maple and other valuable hardwoods from 180,000 pallets, crates and other unwanted packing. The company owner says millions of pallets go to waste each year consuming 1.5 billion board-feet of oak while 500 million board-feet are used annually for flooring. He claims that if one-third of the oak in tossed pallets were reclaimed, not one oak tree would need to be cut for flooring.

EXOTIC FARMING
            Alberta's elk farming industry took to the air recently as 144 bull elk were flown in a chartered 747 jumbo jet to Seoul, South Korea. Worth nearly $1.5 million, the elk are going to a farm where their antlers will be removed each spring for use in health foods and herbal medicines. This is the fifth shipment of Alberta elk in the past six years. Korea is the biggest buyer of velvet. New Zealand, China and Russia are the major suppliers followed by the U.S. and Canada. Elk ranching is worth about $400 million a year to the Alberta economy. A cargo of 180 ostriches will soon be leaving Alberta for Korea.

CHEMICALS
            Canadian chemical companies wishing to discover new markets, recruit new partners, create strategic alliances or discover new products and technologies now have a useful tool at their disposal.The Association for the Development of the Chemical  Industry has developed an Internet site likely to be of value to small- and medium-sized chemical companies. The address is: http://www.adicq.qc.ca

SHOPPING
            According to advice given to the Canadian Federation of Independent Grocers, stores must start displaying meal ingredients in ready-to-cook combinations if they want to stay competitive. Cooks are pressed for time, but willing to pay for convenience, analysts say. Convenient location, parking, reputation and cooking "solutions" all take consumer priority over value and savings. Canadians like to cook more than Americans who have taken to grocery-store sold, ready-to-eat "meal solutions" with more gusto than Canadians. An average Canadian pantry holds 65 different food items compared to 20 in an American pantry. Small grocers are being advised to hire their own home economists or meal-assembly advisors.

LOYALTY
            A new study shows that retail workers are more loyal to their companies than the average Canadian employee. About 40 per cent of retail workers were found to have been with their current employer more than 11 years. This compares with about 30 per cent for the entire workforce. 21 per cent of retail workers stayed with the same company for between 11 and 20 years and 18 per cent stayed for more than 20 years. In comparison, Statscan figures show that 18 per cent of all workers stayed with the same company for between 11 and 20 years and 12 per cent stayed more than 20 years.

HAPPINESS
            An international survey of 7,500 workers in 13 countries found that Canadians are the happiest and most committed to their employers, followed by workers in Finland, Spain and the United States. Employees in Asia, Germany and the United Kingdom rated the lowest. The study did not try to determine why employees are happier in one country than in another but did assess what factors affect employee satisfaction and found wide cultural differences.

ENERGY SAVINGS
            According to Environment Canada, landfills can provide power and in many cases it is untapped. Half a million homes in Canada could be heated from the one million tonnes of methane released from Canadian landfills every year. The gas is being recovered from only 27 sites in the country.

CURIOUS
            It's too late to do anything about it but, the U.S. economy doesn't have enough 25-year-olds. It is suggested that the importance of this not be overlooked by retailers, or anybody concerned with the economy, because 25-year-olds are first-time buyers with avaricious material needs and desires. They are the newly married and they bring brand new demand to the economy as they load up on furniture, and assorted hardware and enter the adult world of family formation, possessions and credit cards. When similar demographic events occurred in the past, an economic downturn occurred.

HAIR
            The American Hair Loss Council reports that 400,000 follicly challenged men in the U.S. purchased wigs and hairpieces last year.---about enough fake hair to carpet the outside of the World Trade Center Towers in New York.

TRAINING
            A Conference Board survey of 200 companies indicates middle managers get lots of training. The study found 70 per cent or more middle managers were receiving training in four broad categories--leadership, information technology, interpersonal and managerial\administrative training. Senior managers get less training and executives receive the least of all, having learned a lot on their way to the top. But executives were highly represented in one type of training: 20 per cent take international management, compared with only 8 per cent of middle managers and supervisors.

TECHNOLOGY
            A computerized cake-decorator has been developed by a Kansas company. The patented photo-to-frosting technology involves a four-colour inkjet printer that is loaded with food colouring; bakers can scan in a piece of artwork and have it rendered into icing in minutes.

MEDICINE
            Increasing numbers of Canadians are seeking the help of alternative medicine but most continue to consult a family physician. Over three million Canadians a year visit non-traditional practitioners and the numbers are growing. Many are looking for help with chronic problems that have not responded to mainstream treatment. Most patients opted for this type of treatment after hearing from family or friends who had been helped.

RAILWAYS
            Most autumns in Britain, falling leaves made railway tracks slippery, wreaking havoc with train schedules. But not last fall, when delays were down 30 per cent from the previous year. The government thinks that it might be because, for the first time since the 1940s, most of the state-run rail system is in private hands. Britain's train system can now make long-term investment without interference from The Treasury. Government subsidies are dropping, service is improving and some fares are falling. The private sector is using high-pressure water jets to clear the leaves and spreads a gritty paste on the tracks for better traction.

TRIVIA
            When hooked up to an electroencephalograph and jiggled, a bowl of lime Jell-O emits the same waves as the human brain.

Saturday, March 01, 1997

MARCH 1997 Economic Digest - Importing and Exporting



MARCH 1997 Edition

JAPAN
            Canada's second‑largest trading partner is offering an increasingly favourable business climate: Japan's yen is still relatively high‑valued, its consumers are becoming increasingly value conscious, it has a large pool of available capital and technologies and, not least, the Japanese business community is keen to develop partnerships with Canadian firms. In 1995, two‑way trade between Canada and Japan surpassed $24 billion, and exports alone increased by 24 per cent to $12 billion. Japan is also Canada's third most important source of foreign direct investment, valued at $12.5 billion in March 1996, and the second‑largest portfolio investor, valued at $43.5 billion in March 1996.

ADVERTISING
            Global spending on advertising rose 7.8 per cent last year to $292 billion. That includes spending on advertisements in newspapers and magazines, on television and radio, and in cinemas. In the U.S., advertising got a boost from the Atlanta Olympics and the presidential election. Many European television channels do not rely on advertising. As a result, TV accounts for only 30 per cent of Europe's advertising spending compared with around 40 per cent for North America and Asia. Latin America devoted the biggest slice of its GDP to advertising, 1.3 per cent which is expected to grow by 13.4 per cent during the next three years.

MARINE SECTOR
            Canada's marine sector is a significant employer. In the first half of 1996, organizations engaged in water transport or incidental service industries, such as marine cargo handlers, shipping agents and marine pilots employed 29,800 people, up 2.1% from 1995. These industries paid almost $650 million in wages and salaries in the first six months of 1996, according to the Survey of Employment, Payroll and Hours. This, however, does not represent the total employment in marine activity, as some firms in industries such as petroleum and forest products transport or handle their own products via marine transport. Vancouver was still Canada's busiest port, handling 35.1 million tonnes of freight, more than three times that handled by the port of Saint John.

AUTO SALES
            Canada's automakers plan to make their dealers' used car operations more consumer friendly to counter a competitive threat from U.S. used-car superstores. Among the strategies under consideration are separate brand names for used-car operations, offering warranties and limited money-back guarantees, and putting sales staff on salary instead of commission. The U.S. superstores feature as many as 1,000 vehicles on huge lots and emphasize haggle-free shopping. None have announced plans to enter Canada yet but industry experts feel it is only a matter of time.

UNITED ARAB EMIRATES
            A Canadian Embassy in Abu Dhabi was established in August 1996. The United Arab Emirates (U.A.E.) represents an import market of $30 billion per year. Canada has less than 1 per cent of this market, and its goal is to increase its exports to the U.A.E. from $200 million to $300 million over the next three years. Opportunities abound in all sectors, especially oil and gas, building materials, construction, agriculture, telecommunications and information technology, defence and transportation. The office may be reached at: Tel: (971) 4‑521717, Fax: (971) 4‑517722.

CELL PHONES
            Drivers whose attention is distracted while talking on a cellular phone have a four times as high a risk of having an accident. A University of Toronto study of crashes by 699 cars equipped with cell phones found the number of accidents that happened during or just after a conversation was more than four times higher than would be expected in normal driving with younger drivers more prone than older ones and the accidents were more likely to happen at high speed. One Quebec insurance company is now adding a surcharge of $60 a year on premiums for cars equipped with cell phones. About seven million cellular calls are made each day in Canada and the average call lasts less than three minutes.

DRUGS
            New drugs and strong domestic sales gave most American drug companies double‑digit profit growth in 1996, galloping past the corporate average. The tighter rein on drug costs that the huge managed‑care companies were expected to bring didn't happen. Drug prices rose 5% last year and sales volume also increased.

CLOSINGS
            The U.S. based K-Mart chain has closed its last store and left Southeast Asia two years after it introduced U.S.-style discount retailing to Singapore.
            After five years in Russia, ice cream maker Ben & Jerry's is pulling out claiming legal, tax and management problems that plague many Western investors.

PANAMA
            The Government of Panama, which assumes overall control of the Panama Canal in 1999, is seeking financial and technical input to update 1993 studies that were conducted to determine what should be done to take newer ships that are too large to cross the existing canal. Canadian companies, particularly those with engineering or technical skills, are being asked if they are interested in participating in these studies and if they would be interested in bidding on eventual tender calls for the upgrade of the canal. The cost of updating the studies is estimated at US$20 million, of which the European Union has agreed to contribute approximately 50 per cent. The hope is that other main canal users, including Canada, will contribute toward these costs. Only firms located in the contributing countries will be eligible for contracts related to the completion of the studies. The 1993 studies, considered two options: a third set of locks or a new (sea level) canal. Information may be obtained by
contacting C. Boies of Foreign Affairs at: e‑mail: celine.boies@extott12.x400.gc.ca

PART-TIME
            Nearly 50 per cent of Canadian companies now employ part-time workers, up from 41 per cent in 1994 and 35 per cent in 1989. Part-timers now make up 29 per cent of the average firm's total workforce, more than triple the 1989 level.

STARS
            Analysts at Velo, a British company, ran checks on 50,000 drivers it has on its books and discovered a relationship between the zodiac and numbers of car crashes and repair bills. Self-controlled Scorpios were found to be the safest drivers. Nervous Virgos are more likely to crash and when they do the results cost a fortune to repair. Clumsy Taureans had the highest frequency of accident claims. Gentle and patient Aquarians have relatively fewer accidents but when they do, it's a big one. Sagittarians are almost as good as Scorpios and Pisceans have the least costly crashes. Britain's best known Virgo driver is Damon Hill, Formula One's world racing driving champion.

UNIONS
            A Wal-Mart store in Windsor, Ontario has made history by becoming the first store in the U.S. retailers history to be unionized. The company has successfully fought off every attempt to unionize since it was founded in 1962. Wal-Mart is the world's largest retailer with roughly 3,000 stores worldwide. The Ontario Labour Relations Board certified a union at the Windsor store even though workers voted 151 to 43 against the union saying that Wal-Mart executives from Wal-Mart Canada subtly threatened workers who supported the drive by United Steelworkers. Workers at Wal-Mart have now signed a petition seeking a new certification vote.

PAPER
            If China ever consumes as much paper per capita as its neighbour, South Korea, another 500 paper mills will have to be built worldwide to meet their needs. There are only 500 paper machines in the entire U.S.

FASHION
            Candy Man is a new line of nail polish aimed at men. The company has seven shades including: Dog (purple), Oedipus (forest green), Testosterone (steel gun), Libido (teal) and Gigolo (black).

TRAINING
            Canadian companies are making training a bigger priority according to the Conference Board of Canada as more businesses realize that the best competitive tactic is to invest in a work force that is highly skilled and competent. Companies in the transportation, communications, public utilities and oil and gas sectors have consistently been the biggest investors in training and development (T&D). But a survey of 200 large Canadian companies shows a big jump in T&D spending in finance, insurance, real estate and service fields.

FORESTRY
            More than 80 of the world's environmental groups lined up beside the U.S. timber industry at the United Nations to oppose a Canadian-led plan for a global treaty to manage the world's forests. Opponents say the proposal is premature and that not enough research has been done. Canada is supported by the European Union, Finland, Malaysia and Indonesia.
            Canada has 10 per cent of the world's forest land covering 1.6 million square miles, or 45 per cent of Canada's total land base. Forest-product exports total $25 billion annually, ($11 billion of which are from B.C.), or around $70 million a day. The forest sector employs 880,000, a full seven percent of Canada's total labour force.

KIDS
            According to B.C. Statistics, kids are working more and studying more than their counterparts 20 years ago. Only nine percent of 15- to 19 year olds in 1995 were neither working nor going to school full-time, compared to 14 per cent in 1976. Among 20- to 24-year olds the trend is the same, falling to 21 per cent of the population in 1995 from 25 per cent in 1976. Data shows that about half of the latter group are "officially unemployed" (not working but looking for work), but no one knows what the other 11 per cent are up to.

2000
            It has been estimated that it will cost US$1.10 per line of computer code to fix the Year 2000 problem, (expected when software programmed with a two-digit numbering system read the date 01/01/00 as January 1, 1900.) It is also calculated that there are 225 billion lines of code to be corrected worldwide at a cost of US$300 billion and that 10 per cent of companies affected will go out of business if they don't fix the problem in time.

TIME
            The Wall Street Journal reports that today's average consumer, more often than not a woman, takes just 21 minutes to do her shopping--from the moment she slams her car door in a supermarket parking lot to the moment she climbs back in with her purchases.
SMUGGLING
            Canadian customs officials seized at least three shipments last year of the controversial growth hormone for cattle that is prohibited in Canada, promoting concern about the drug slipping across the border and into the milk supply. Individuals attempted to bring in 200 to 300 syringes filled with bovine growth hormone which increases milk production. It has been allowed in the U.S. for three years but is still awaiting licensing by Canadian Health and Welfare.

ETHICS
            A psychiatrist in Wisconsin is facing a malpractice suit after he convinced a woman she had 120 personalities and then charged her $300,000 for group therapy.
            A lawyer in Australia charged a woman $26.00 for opening and reading a Christmas card she sent him and a further $26.00 for a "telephone attendance" when he called to thank her for the card.