DECEMBER 1994 Economic Digest - Importing and Exporting

DECEMBER 1994 Edition

FREE TRADE

            The U.S. Commerce Secretary has again stated that the NAFTA is proving to be an economic boon and a creator of jobs. Figures for the first nine months of the pact show that exports to Canada and Mexico account for almost half of U.S. export growth. While total U.S. exports were up seven per cent, exports to Canada and Mexico were up 14 per cent. U.S. exports to Mexico are at record levels and rose 22 per cent for the nine month period. Imports were up 23 per cent. Trade with Canada, the largest trading partner with the United States, also grew with exports to Canada up 11 per cent and imports from Canada up 13 per cent.

WORLD TOURISM

            According to the Asia Pacific Foundation, Asians will account for 70 per cent of global travel by the year 2010. Two decades ago, Asians accounted for only 10 per cent of global travel. Competition is fierce within the region and around the world and Canada will have to fight to retain its share. Australia is implementing an aggressive $60 million marketing program and has set annual targets of 11 per cent growth until the turn of the century. Canada has already lost market share to Australia, and Japan has now become Australia's chief source of arrivals. Experts say that in order to attract a larger share of the Asia Pacific market, Canada must be aware of the changes taking place within this market and adapt our products and services to meet the tastes and interest of Asian clients. By the turn of the century, only one in five travellers will be on business.

GINSENG

            Starting almost from scratch nearly twelve years ago, British Columbia, with its large Asian population and close ties with the Pacific Rim, started farming ginseng and now produces about $30 million worth of the root a year. It is expected that the harvest will quadruple by 2000. Altogether, around a sixth of the world's $954 million worth of ginseng is produced in North America. The crop earns farmers up to $165,000 an acre, far more than the familiar crops. China alone uses roughly 3 million pound of North American ginseng, about 60 per cent of the total crop. Two companies, both based in Vancouver, are dominating the industry.    

HOW TO FAIL AT EXPORTING

            According to Ottawa's trade people, these are the ten commonest mistakes make by new exporters:

* Failure to obtain export counselling and develop a master international marketing plan.

* Not enough commitment by top management to overcome initial difficulties.

* Not enough care given to selecting overseas agents or distributors,

* Chasing orders from around the world instead of establishing a profitable base.

* Neglecting the overseas market when the domestic market booms.

* Failure to treat international distributors on an equal basis with domestic ones.

* Unwillingness to modify products to meet regulations of other countries.

* Failure to print services, sales and warranty messages in locally understood languages.

* Failure to consider use of an export management company, or other intermediary.

* Failure to consider licensing or joint venture agreements.

MEGA-STORES

            Eagle Hardware of Tukwila, Washington, entered Canada a year ago selling in Alberta and B.C. Now, it is selling its properties for book value, plus tax losses, to rival Revelstoke Home Centres and retreating back to the States. The two Edmonton stores are closing at a cost of 300 full- and part-time jobs. Inventory and fixtures will probably be transferred to new Eagle stores in the U.S. where the company's 17 outlets compete primarily against Home Depot Inc. It is claimed that Eagle could not compete against the likes of Home Depot and that Revelstoke gained an advantage by wrapping itself in the Canadian flag and appealing to Albertans' patriotism. Experts have claimed for some time that Vancouver cannot support all the current and promised home-improvement stores.

VACATIONS

            According to the Conference Board, the weak dollar will keep many more Canadians at home this winter. This is based on a random survey of 1500 Canadians in September. Less than one-third of Canadians are planning a vacation trip this winter, down from 44 per cent last year and 54 per cent in 1992. Florida will be the hardest hit but planned visits are down for all destinations. But almost one-third of those who will travel outside Canada expect to spend more money on their vacations this winter than last, almost double the proportion  who felt that way a year ago and the highest proportion in four years. Meanwhile, the 68 per cent of Canadians who are staying home expect to take short trips.

TRUCKING

            As with the related industries of rail and air cargo, the Canadian trucking industry is booming again and is faced with a problem it has not had since the mid-1980s, a shortage of labour and equipment. There is a one-year waiting period for trailers and 18 months for highway tractors. Ontario needs at least 1,500 truck drivers now, and even more through 1995. In the first quarter of 1994, the big trucking companies returned to profitability on revenues of $828.5 million and $888.2 million in the second compared to $777 million in the same period in 1993, the best in five years.

            Starting in 1988, the industry suffered tough times due to deregulation, the introduction of the FTA and a rising Canadian dollar. The slump was made worse by the invasion of U.S. truckers who were able to undercut Canadian truckers in the domestic market because of lower fuel costs, taxes and wages. Now, with the lower Canadian dollar, the industry is making heavy inroads into the U.S. market. Canadian truckers now carry 80 per cent of Ontario-U.S. trade, a far cry from the late 1980s when U.S. truckers carried most of the goods that crossed the border.

JOBS

            A survey of 1,500 Canadian employers shows that 16 per cent intend to hire workers between January and March, while 15 per cent say staff numbers will decline. A year ago, 9 per cent were hiring and 22 per cent were cutting. Hiring is expected in mining, durable and non-durable goods manufacturing, transportation and public utilities, finance, insurance and real estate, business and health services, and public administration. Reductions are planned in the construction, wholesale and retail trades and education sectors.

            In the U.S., employers plan to add to their work forces in the first quarter at the fastest rate in five years, with prospects strongest in the southern and midwestern states. In a survey of more than 15,000 businesses in nine industries, 22 per cent of companies said they plan to increase hiring while 12 per cent said they expect a decrease.

Among manufacturers of durable goods such as appliances and automobiles, 32 per cent indicated they expected to add staff.

TELEPHONES

            With dual-career and single family households on the rise the trend is towards more home shopping--$8.4 billion of it in 1992. Now, New Brunswick Telephone and Northern Telecom have sunk $40 million into a joint venture company called CallMall which has introduced an interactive telephone system in Moncton. It gives consumers access to banking, shopping and communications services over a display-screen telephone. Consumers will also be able to view text advertisements on the small screen and, if interested in an ad, read more information and hear an audio clip. In 1990, Bell Canada spent tens of millions on a similar service before pulling the plug in 1991 because of lack of interest.

TECHNOLOGY

            A "personal navigation system" for the blind is now in the experimental stage. The 12 kilogram device interprets signals from a military network of global positioning satellites and feeds them into a computerized map. In turn, headphones connected to the map "read out" the location of objects. An electronic compass on the person's head tells the computer the exact position of the individual's ears, so that it can then send messages sounding as though they were coming from an object. When used in conjunction with a cane or guide dog, the device can steer people through totally unfamiliar terrain. From satellites it knows a person's position on Earth to an accuracy of one metre.

U.S. EXPORTERS

            Mid-sized companies are looking abroad for opportunities and, spurred by the NAFTA, they are looking to Canada and Mexico first. Both are tied at 33 per cent as the first foreign markets that American firms want to enter. Western Europe is third at 31 per cent with Asian countries at 27 per cent. This Ernst & Young survey contacted CEO's of 384 companies with combined sales of $35 billion and 400,000 American employees.

            Nearly half of the companies listed either direct exporting or establishing alliances with foreign distributors as first choices for foreign business and 27 per cent want to set up an overseas sales office and 24 per cent want to establish either a joint venture or a licensing program. In terms of major barriers to foreign trade, poor understanding of foreign markets ranked as the biggest problem. Other points in the study include: 71 per cent of companies believe profits will increase in the next twelve months; 44 per cent of firms are increasing capital spending and 62 per cent intend to expand their work force. 

WATER

            The price of water in most countries has more to do with politics than with the economic cost of providing it, often almost impossible to calculate. This is because by far the biggest cost is the massive bill for the infrastructure that delivers the water; yet in many countries this was paid off years ago. Of the 14 countries surveyed by National Utilities Services, to July 1994, Germany had by far the highest water charges at $1.69 (U.S.) per cubic metre. Canada has the cheapest water at $0.35 per cubic metre. (Costs in the U.S. were about $0.55 a cubic metre). Prices rose fastest last year in South Africa, by 11 per cent, to help pay for better water supplies to poorer areas. They fell by 14 per cent in Australia due to changes in regulations.

CATTLE

            The worldwide number of cattle rose slightly this year according to estimates by the U.S. Department of Agriculture and is expected to reach 1.04 billion early next year. In Canada, cattle are expected to number 12.5 million head in January--beef exports to the U.S. could rise by 10 per cent in 1995 as packers continue their aggressive marketing of delicious, low-fat Canadian beef.

CARTOGRAPHY!

* The Ontario government recently unveiled a new film to a Toronto business audience on the opening of the province's new investment promotion office. The map of the province, shown repeatedly in the production, showed large parts of the province as being in the United States. The film is to be changed. 

* There is a map in the Stanford University's business school entitled "The Two Americas." Many would expect this map to depict the familiar theme that America is divided between rich and poor. In fact it is divided into patterns for purchasing mayonnaise. In the North and West consumers buy Miracle Whip, while the South and East go with Hellmann's.

* In the briefing book prepared for journalists, officials, provincial premiers and business executives prior to Prime Minister Chretien's recent Asia tour, Hong Kong, (one of the most important stops), was left off the map. Even worse, Taiwan was shown as a separate country, a major insult to China.

TRIVIA

* According to the Forbes 400, Bill Gates of Microsoft is worth $9.35 billion. Chile has a national budget of $7.1 billion.

* Concern that racing pigeons are taking performance-enhancing steroids has led the Dutch Carrier Pigeon Organization to require droppings from the first 10 finishers for testing.

NOVEMBER 1994 Economic Digest - Importing and Exporting

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.

OCTOBER 1994 Economic Digest - Importing and Exporting

OCTOBER 1994 Edition

BRITAIN

            For years the British Disease was synonymous with labour unrest and low productivity. This is no longer the case. Britons are the hardest workers in Europe. The average Greek takes three hours for lunch and Italian civil servants have just six hour days. Even Germans manage an hour and a half meal break. But market analysts report that Britons work long days with short lunches. They also lag behind in annual holidays with an average of 20 days compared to 30 in Germany and 25 to 30 in France. Britain also has the least public holidays a year--eight. Germany and Spain have the most with 14. Observers say Japanese businessmen continue to hold British workers in high regard, a contributory reason for the high Japanese investments in Britain over the past few years.

SMALL BUSINESS

            The Canadian Imperial Bank of Commerce is giving away do-it-yourself workbooks that small business owners can use to develop business and financial plans. The CIBC also sees its Guide to Business Planning as an aid in obtaining financing. It's available free from any CIBC commercial banking centre or by phoning 1-800-465-2422.

NEBS

            The New Exporters to Border States (NEBS) program is now 10 years old and has contributed to the training of over 8,000 Canadian exporters, mostly small and medium-sized enterprises. NEBS is a one-to-two-day crash course in export marketing. Participation fees are low and the excellent programs are put together by various Canadian border posts across the United States. It is estimated that 50 per cent of NEBS companies engage in exports after their participation in the program. Participants learn all the basics of exporting, including transportation  matters, customs brokers, export insurance, distribution networks, and much more. Canadian Consulates in the U.S. running NEBS missions are Boston, Buffalo, Detroit, Minneapolis and Seattle. Interested companies can contact the nearest International Trade Centre, co-located in Industry Canada offices to register for a NEBS mission.

SATISFACTION

            The chairman of the American Research Group has advised Canadian retailers to advertise that their products come with a satisfaction guarantee in their fight to keep customers during the superstore onslaught from the south. He also said that salespeople should learn to understand the needs of customers and even send out hand written thank-you notes to build loyalty. He claimed that about 40 per cent of Canadian stores will disappear unless they learn how to do battle with the U.S. retail giants. A recent study indicates more than 70 per cent of Canadians questioned said they would buy at a new competitively priced store--whether shoes or mattresses--rather than stick with their current store. Stores that do survive will do so mainly by boosting customer loyalty--not necessarily by lowering prices. A survey of 500 Canadians and 800 Americans indicated Canadians are generally more loyal to the stores where they shop than are Americans.

OUTSOURCING

            Outsourcing by big companies means big opportunities for nimble entrepreneurial firms. Coopers & Lybrand, which has surveyed companies in the U.S., reports that the most popular areas for outsourcing over the past year were payroll, 68 per cent; tax compliance,  48 per cent; employee benefits and claims administration, 46 per cent; maintenance and equipment, 35 per cent; manufacturing, processing and assembly, 33 per cent; sales representatives or brokers, 27 per cent; internal auditing, 21 per cent; and accounting services, 19 per cent.

RAILWAYS

            Trains are arriving all over Europe. Germany, Spain and Italy all have versions of the high-speed French TGVs. Soon it will take only three hours from London to Paris, without airport hassles or traffic jams. In the U.S. Amtrak is pondering which sort of high-speed train will be chosen to run in the lucrative Boston, New York, Washington corridor. And Texas is trying to raise funds for a high-speed triangle linking Houston, Dallas and Austin. All over East Asia huge investment is pouring into railways. By 2000, China alone will be spending almost $50 billion (US) on railways.

            Trains have many natural advantages over other forms of transport. They consume less energy than cars and trucks, cause less pollution and take up less space than roads. Above all, in crowded industrialized regions such as Western Europe, they are fast. In Europe, airlines are in poor shape to reply. This year, they will lose about $3.5 billion despite a rising market. Where fast trains and airlines have competed head to head, as they have for 10 years between Paris and Lyon, the trains have won taking in that case, 90 per cent of passengers.

CULTURE?

            One of the most controversial aspects of the final days of the GATT Uruguay Round was the issue of the US television programming industry. The US exports around $2.5 billion dollar's worth of TV programming. And that does not include theatrical showing of movies, home videos, and the booming business of international satellite networks aimed at other countries' cable, microwave and home satellite receivers. All told, US exports of movies and TV programming amounted to at least $5 billion in 1993. The reverse trade--US purchases of foreign shows, TV networks, and movies--totalled less than $300 million last year. 

SAVINGS

            The way Canadians are saving their money is undergoing change. In the 1960s, houses, land, cars, furniture and appliances constituted about 44 per cent of individual Canadians' assets. About 49 per cent of their assets took the form of cash, stocks, bonds, life insurance and pensions. In the 1970s when the first wave of baby boomers reached their mid-twenties, their investment in housing--coupled with the rising costs of these houses--shuffled a bigger share of Canadians' personal wealth into living space and the things that fill it. By mid-decade half of the average Canadians' assets was tied up in housing and only about 45 per cent was tucked into financial investments. This trend reversed in the 1980s and 90s as more and more boomers began  shifting their savings into paper wealth, the kind of investment they hope will generate a healthy retirement income. In 1993, 52 per cent of Canadians' assets took the form of cash and other financial instruments. Homes, land and durables fell to a 46 per cent share. This latest shift has taken place during a period when the personal wealth of Canadians more than doubled to $2.2 trillion (from $850 billion in 1980). This represents almost $77,000 for each Canadian, up from $34,700 in 1980.   

ABSENTEEISM

            When 860 Canadian companies, with between 100 and 500 employees, were surveyed about absenteeism levels, 39 per cent were unable to answer the questions. The others said that staff members were off work an average of 5.5 days a year, costing companies 2.3 per cent of payroll. That figure does not include the cost of lost productivity or hiring temporary replacements. Nor does it include longer absences covered by formal short-term or long-term disability programs for which premiums cost an equivalent of 1.85 and 0.99 per cent of payroll respectively.   

THE FUTURE

            The Business Council on National Issues has unveiled a 10-point "growth and employment strategy for Canada" which calls for no new taxes and a zero federal deficit before the next economic downturn. The plan also calls for local government to deliver more services and duplication between levels of government to be eliminated---without opening up the constitution. Other recommendations include: Canada should draft a "coherent 21st century vision," such as aiming to be the top economic performer in the G7 by the year 2000; Revamp social programs to make them cheaper while targeting only those in need; "Non-inflationary growth" should be a central tenet of economic policy; The federal government must honour its pledge to cut the deficit to 3 per cent of GDP by 1996\97; Harmonize provincial taxes in a new Value Added Tax only if it means no new taxes and, improve education and training, including a longer school year.

INFORMATION TECHNOLOGY

            Canadian trade posts in the U.S. produce a newsletter on the IT industry (including telecommunications), providing Canadian exporters with relevant and timely market information and intelligence in this field. Articles cover companies, events, decisions, and technology that may have an impact on the market for Canadian IT products and services. Contributors also deal with joint ventures, strategic partnerships and investment relations. Currently, the newsletter is mailed out in hardcopy every other month to almost 1,500 Canadian companies at $2.35 a copy. The Canadian Consulate General Trade Office in San Jose, California distributes the newsletter which is now available by E-mail on Internet. Just send an E-mail message to the San Jose office (canadian@shell.portal.com) to give them your Internet address.  

BUSINESS INVESTMENT

            Massive investment by Canadian companies in everything from fax machines to computer-aided machine tools has radically altered the profile of business investment over the past decade. The total value of all fixed assets--everything from telephones to office buildings--is expected to reach $1.6 trillion this year, up 38 per cent from 1984, and the technology side is taking over from bricks and mortar. During the decade, the value of assets tied up in machinery and equipment grew at more than twice the rate of buildings and engineering assets--5.3 per cent compared with 2.2 a year.

            Soft assets like computers, telephones and plant equipment now account for 33 per cent of all fixed assets, up from 27 per cent in 1984. Increasingly, companies are choosing to invest in machines instead of people because that is where they perceive they get more value. Companies can deduct from their taxes the money they spend on machinery and equipment while payroll taxes and lower productivity act as a disincentive to hiring new workers. The trend has been most evident in the service industries like retailing, finance, insurance and hotels.

TECHNOLOGY

            Twenty years ago, the Calgary Stockyards sold hundreds of thousands of cattle a year through live auctions in a complex of corrals, loading pens and barns along the railroad tracks. Those days are over. Today, its nerve centre is a plain room in an office building where a computer is connected by phone lines and modems to buyers and sellers in ranches and offices. Now, the stockyards conducts most of its business in cyberspace.

USER DOESN'T PAY!

            A local government in Britain has suspended a program which sent young delinquents on vacations as a "character building" exercise after one young offender was arrested for drunk-driving shortly after returning from an 80-day African safari with his social worker at a cost of more than $10,000 to the taxpayer. Other young convicts have been sent skiing.

TRIVIA

* In 1989, according to the Worldwatch Institute, the world marine fish catch sold for $70 billion (US), however, catching these fish cost $124 billion.

* One-third of the Canadian population is involved in the educational system, either as students, teachers or administrators.

* Around the world, golfers spend almost $6.5 billion a year on equipment, as much as the GNP of Latvia.

* Burglars have broken into a British prison and escaped with a safe containing about $1,500. Inmates of the prison, which houses low-risk offenders, are complaining about lax security.