CANADA ECONOMICS
US TARIFFS ON STEEL AND ALUMINIUM
The Globe and Mail. 3 May 2018. Thousands of steel-sector jobs at risk in South Africa. Trump’s tariffs are a heavy blow for the country, which is already struggling with unemployment, slow growth and poverty
GEOFFREY YORK, JOHANNESBURG
In the mounting trade war between global giants, some of the most severe damage could be suffered by a smaller bystander that has been caught in the crossfire: South Africa.
As many as 7,500 jobs in South Africa are threatened by U.S. President Donald Trump’s announcement of steel and aluminum tariffs, according to South African estimates. And while countries such as Canada have won temporary exemptions from the tariffs, South Africa lost its bid for an exemption this week.
The tariffs are a heavy blow for South Africa, which is already struggling with high unemployment, slow economic growth and widespread poverty.
“South Africa finds itself as collateral damage in the trade war of key global economies,” said Sidwell Medupe, spokesman for the country’s Department of Trade and Industry. “South Africa is concerned by the unfairness of the measures.”
Mr. Trump announced levies of 25 per cent on steel imports and 10 per cent on aluminum in early March. He has granted temporary exemptions to several U.S. allies, including Canada. But when South Africa pleaded for its own exemption, in a series of written submissions and telephone calls to U.S. officials over the past several weeks, its request was denied.
South Africa had offered to limit its U.S. steel and aluminum exports to a fixed quota, based on the amount of its 2017 exports, but the offer was rejected.
South Africa argues that it, too, has been a victim of the glut of cheap global steel that has helped to trigger the trade war. Chinese steel imports have flooded into South Africa in recent years, damaging its steel industry and causing job losses. But the argument failed to sway the U.S. administration.
“Due to these measures, South Africa will be disproportionately affected, both in terms of jobs and productive capacity … in a sector already suffering from global steel over-capacity,” Mr. Medupe said in a statement this week.
The government is also worried about the preferential treatment that other U.S. trading partners have received. This will damage the competitiveness of South African steel and aluminum and “is likely to displace South African products out of the U.S. market in favour of the exempted countries,” Mr. Medupe said.
After announcing the tariffs, the Trump administration gave temporary or indefinite exemptions to a range of countries: not just Canada and Mexico, but also Argentina, Australia, Brazil, South Korea and the European Union. In total, a majority of U.S. imports of steel and aluminum are currently exempted from the tariffs.
South Africa provides a relatively small proportion of U.S. imports, which makes it more puzzling that the United States refused to give it the same exemption that it gave to bigger suppliers.
Only about 1 per cent of U.S. steel imports and 1.6 per cent of U.S. aluminum imports are from South Africa. This, according to Mr. Medupe’s statement, shows that the South African steel and aluminum exports are not a “threat to national security” – the official U.S. reason for the tariffs.
South Africa alleges that the U.S. duties are a violation of World Trade Organization principles. But it hasn’t given up hope on the issue. Its Trade Department is asking South African exporters to talk to their U.S. buyers to consider applying for product exemptions, under a U.S. Commerce Department process.
South Africa and a number of other African countries have received trade preferences from the United States in several industries, especially textiles and apparel, under the African Growth and Opportunity Act, which was approved by the U.S. Congress nearly two decades ago. There have been fears that Mr. Trump will seek to renegotiate the deal.
NAFTA
The Globe and Mail. 3 May 2018. NAFTA ruling could cost Ottawa $500-million. U.S. company wins arbitration case after it was denied permission to build quarry in N.S.
SHAWN McCARTHY, GLOBAL ENERGY REPORTER
This decision, if it stands and we don’t fix NAFTA to protect ourselves, confirms there is no place for the reasonable expectations of Canadians to have their voices heard on the impacts of foreign-owned projects on the environment and communities.
GRETCHEN FITZGERALD, NATIONAL PROGRAM DIRECTOR, SIERRA CLUB OF CANADA
The federal government has lost a challenge to a NAFTA arbitration ruling that could provide an award of up to $500-million to a U.S. company that was denied an environmental approval to build a quarry in Nova Scotia.
In a judgment released Wednesday, Federal Court Justice Anne Mactavish acknowledged that the decision of the NAFTA panel “raises significant policy concerns” and could impair the ability of governments “to regulate environmental matters within their jurisdiction.”
However, she said Ottawa failed to establish that the arbitration under the North American free-trade agreement fell outside the scope of what the trade agreement contemplated in setting up the investor-state settlement process.
The ruling comes as Canada is negotiating a renewed NAFTA deal with the United States and Mexico.
U.S. President Donald Trump is seeking to exempt American governments from the investorstate provision, but Canada and Mexico want to keep it in the agreement, with the addition of language that is meant to protect a country’s right to regulate in the public interest.
The case involves the Delaware company Bilcon, which sought to build a quarry on the Digby Neck, a peninsula in rural Nova Scotia that juts into the Bay of Fundy. After being encouraged by the provincial government, Bilcon was refused an environmental certificate once a review panel declared that the project was not in keeping with community values.
In 2015, an arbitration panel ruled the environmental review had not treated Bilcon with the same level of fairness that would have been accorded to a domestic company and had resorted to a “community values” test that was not part of its mandate.
Bilcon is owned by the Clayton family, which welcomed the ruling. The New Jersey-based company and federal government are currently before another NAFTA panel to determine damages, which could amount to as much as $500-million, according to Amir Attaran, a lawyer for environmental groups that supported the government in its legal challenge.
In a statement, the Clayton family said the Bilcon case represents a “cautionary tale” to investors who expect fair treatment when they seek to invest in NAFTA-partner countries.
“Bilcon, a family-owned company that has been in business for more than 50 years, believes the treatment it received was unbecoming of Canada’s reputation as a reliable jurisdiction in which to do business,” the statement said.
However, environmental groups see the outcome as a cautionary tale of a different kind and urged the Liberal government to take it into account as Ottawa looks to conclude the NAFTA talks.
“This could be a very expensive lesson on what’s wrong with NAFTA when it comes to the environment − we still don’t know how much the tribunal will award Bilcon,” said Gretchen Fitzgerald, national program director for the Sierra Club of Canada, which intervened in the case.
“This decision, if it stands and we don’t fix NAFTA to protect ourselves, confirms there is no place for the reasonable expectations of Canadians to have their voices heard on the impacts of foreign-owned projects on the environment and communities,” she said in an e-mail.
Canada has lost a number of investor-state arbitrations under NAFTA’s Chapter 11, and environmental groups warn that record is creating a “chill” among governments that would turn down environmentally damaging projects owned by foreign investors.
The federal court ruling could give Kinder Morgan Inc. encouragement to launch a NAFTA suit should the British Columbia government succeed in blocking its Trans Mountain pipeline expansion, Ms. Fitzgerald said. She added that TransCanada Corp. launched a NAFTA action against the Obama administration when it turned down Keystone XL in 2015, only to withdraw the action when Mr. Trump approved it.
US - CHINA
REUTERS. MAY 3, 2018. Impact of "Chinese overcapacity" on global trade is exaggerated, study finds
Tom Miles
GENEVA (Reuters) - The concept of global excess capacity, commonly used to support the creation of trade defense against China, is imprecise and unsound as a justification for U.S. protectionism, a study by a Swiss-based trade watchdog said on Thursday.
Global Trade Alert, an initiative coordinated by Simon Evenett, professor of international trade at St Gallen University in Switzerland, sought to quantify excess capacity, especially in steel, and the damage to global trade.
Its report, by Evenett and Johannes Fritz, a research fellow at St Gallen, found that there was no compelling case for governments to get upset about global excess capacity in manufacturing.
“On examination, it turns out that the phrase excess capacity is slippery — rhetorically useful, but hard to pin down, even harder to operationalize, and at the same time woefully misleading.”
The United States, the European Union and Japan have accused China of trading unfairly by subsidizing bloated steel and aluminum sectors and flooding the world with cheap exports.
U.S. President Donald Trump has used China’s mammoth steel and aluminum sectors as justification for imposing tariffs on global supplies, causing an outcry from many countries.
Global Trade Alert has cataloged global trade policies since 2009 to gauge trends in protectionism, following a pledge by the G20 group of countries in November 2008 not to resort to trade protectionism as a response to the financial crisis.
There was no question that the steel sector was plagued by trade distortions, the study said, but G20 governments had grossly under-reported their own use of trade-distorting policies.
“Even before the recent steel tariffs were imposed by the U.S., the cumulative effect of the 144 American actions to limit steel imports still in effect today covered 96.8 percent of U.S. steel imports,” the report said.
Targeting excess steel capacity was “a fool’s errand”, because measuring it was very difficult, and estimates of China’s steel production capacity varied enormously, it said.
Drawing on Chinese and U.S. sources, the study said other sectors thought to have overcapacity included glass, shipbuilding, base metals, paper, chemicals, batteries and footwear.
But for most of those, Chinese overcapacity had little impact on global trade, the study said. China’s exports of those products accounted for only a small proportion of its total exports and less than 2 percent of G20 countries’ manufacturing imports, it found.
Since 2005, no more than 21 percent of world trade was in sectors where China was suspected of having overcapacity, and that number had fallen from 2011 to reach 18 percent in 2016.
Reporting by Tom Miles; Editing by Adrian Croft
REUTERS. MAY 2, 2018. Trump praises China's Xi as U.S. team arrives for trade talks
Michael Martina, Tom Daly
BEIJING (Reuters) - U.S. President Donald Trump praised his relationship with Chinese President Xi Jinping as a U.S. delegation arrived in Beijing on Thursday for talks on tariffs, with state media saying China will stand up to U.S. bullying.
A breakthrough deal to fundamentally change China’s economic policies is viewed as highly unlikely during the two-day visit, though a package of short-term Chinese measures could delay a U.S. decision to impose tariffs on about $50 billion worth of Chinese exports.
The discussions, led by U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, are expected to cover a wide range of U.S. complaints about China’s trade practices, from accusations of forced technology transfers to state subsidies for technology development.
“Thrilled to be here. Thank you,” Mnuchin told Reuters on arriving at his hotel, when asked if he expected progress. He made no other comments.
As Mnuchin arrived, Trump tweeted: “Our great financial team is in China trying to negotiate a level playing field on trade! I look forward to being with President Xi in the not too distant future. We will always have a good (great) relationship!”
It was not clear when Trump and Xi might meet again next, though both will likely attend some of the same multilateral summits this year, including G20 and APEC.
Throughout his 2016 election campaign, Trump routinely threatened to impose a 45 percent across-the-board tariff on Chinese goods as a way to level the playing field for American workers. At the time, he was also accusing China of manipulating its currency to gain an export advantage, a claim that his administration has since dropped.
The U.S. Embassy in Beijing said the delegation planned to meet Chinese officials on both days, in addition to U.S. Ambassador Terry Branstad, before leaving on Friday evening.
The delegation returned to their hotel late on Thursday evening without taking questions from reporters, though one U.S. official simply answered “Well” when asked how the talks were going. It was not clear who the official was.
Chinese foreign ministry spokeswoman Hua Chunying earlier said the talks had begun, but she had no information on them.
She reiterated that China welcomed the talks but that they had to be founded on equality and mutual respect.
“The outcome should be mutually beneficial and win-win,” Hua said, speaking at a regular briefing.
In a commentary widely cited in Chinese media on Thursday, the official Xinhua news agency said if things went poorly and a trade war did break out, China would never yield and would hit back strongly.
“China will inevitably suffer losses, but China has the political advantage of a centralized and unified leadership and support of a massive domestic market,” it said.
The official China Daily said in an editorial China would “stand up to the U.S.’ bullying as necessary”.
“The U.S. wants greater access to China’s market, but it should not use trade actions as a battering ram to force China to open its doors. It is already in the process of opening them wider,” the English-language newspaper said.
In doing so, China expected Washington to reciprocate and open its market to Chinese investment and competition, it said.
‘NEGOTIATIONS ARE BEST’
Widely read Chinese tabloid the Global Times, published by the ruling Communist Party’s People’s Daily, said it hoped the talks were a beginning of a resolution of the dispute.
“Washington and Beijing should be clear: neither side can scare the other down. Negotiations are the best way to resolve the problem.”
The first round of threatened tariffs under the U.S. government’s “Section 301” intellectual property probe focused heavily on technology products benefiting from a “Made in China 2025” program to upgrade China’s domestic manufacturing base with more advanced products.
The U.S. tariffs could go into effect in June following the completion of a 60-day consultation period.
China, which denies it coerces technology transfers, has threatened retaliation in equal measure, including tariffs on U.S. soybeans and aircraft.
U.S.-based trade experts said they expected Beijing to offer Trump’s team a package of policy changes that may include some previously announced moves, such as a phase-out of joint venture requirements for some sectors, autos tariff reductions and increased purchases of U.S. goods.
Trump has demanded a $100 billion annual reduction in the $375 billion U.S. goods trade deficit with China.
But the diverse U.S. trade delegation is likely to have differing views among its members on the merits of such an offer.
The group includes Commerce Secretary Wilbur Ross along with noted China hawks Robert Lighthizer, the U.S. trade representative, and White House trade and manufacturing adviser Peter Navarro.
Reporting by Michael Martina and Tom Daly; Writing and additional reporting by Ben Blanchard; Editing by Lincoln Feast, Nick Macfie and Richard Balmforth
INTERNATIONAL TRADE
StatCan. 2018-05-03. Canadian international merchandise trade, March 2018
- Imports: $51.7 billion, March 2018, 6.0% increase (monthly change)
- Exports: $47.6 billion, March 2018, 3.7% increase (monthly change)
- Trade balance: -$4.1 billion, March 2018
- Source(s): CANSIM table 228-0069: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=2280069&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
Canada's imports rose 6.0% to a record $51.7 billion in March. Exports also increased, up 3.7% to $47.6 billion. As a result, Canada's merchandise trade deficit with the world widened from $2.9 billion in February to a record $4.1 billion in March.
In real (or in volume) terms, imports rose 5.3% and exports were up 3.0%.
Chart 1: Merchandise exports and imports
Imports reach record high
Imports rose 6.0% to a record high $51.7 billion in March, with increases in 9 of 11 sections. Motor vehicles and parts and also consumer goods were largely responsible for the increase. Year over year, imports were up 9.2%.
Imports of motor vehicles and parts rose 8.3% to $10.3 billion, the strongest increase since 2011. Passenger cars and light trucks contributed the most to the March increase, rising 13.0%. Higher than usual import levels for March were observed for light trucks. For the section as a whole, volumes rose 10.0%, while prices fell 1.5%.
Imports of consumer goods also contributed to the overall increase, up 7.7% to a record $11.0 billion. Higher imports of clothing, footwear and accessories (+20.8%) drove the widespread gain in the section, posting an atypical increase in March. Pharmaceutical and medicinal products (+13.2%) also contributed to the increase, mainly on higher imports from the United States and Belgium. For the section as a whole, volumes were up 6.0% and prices rose 1.6%.
Widespread increase in exports
Exports rose 3.7% in March to $47.6 billion. Aircraft and other transportation equipment and parts; farm, fishing and intermediate food products; and energy products contributed the most to the widespread increase. Exports excluding energy products rose 3.6%. Year over year, total exports were up 1.9%.
For a second consecutive month, exports of aircraft and other transportation equipment and parts rose sharply, up 24.3% in March to $2.3 billion. Exports of boats and other personal transportation equipment almost tripled, mainly due to higher exports of other transportation equipment to Saudi Arabia. Aircraft engines and aircraft parts (+15.2%) also contributed to the increase in March, primarily on higher shipments to the United States.
Exports of farm, fishing and intermediate food products also increased, up 14.7% to $2.8 billion. Following a sharp decline in February, which coincided with rail transportation disruptions in Western Canada, wheat exports (+51.9%) rebounded in March.
Increase in trade with countries other than the United States
In March, Canada's total trade with countries other than the United States reached a record $31.2 billion, with imports increasing 11.5% and exports up 11.4%. Imports from China (+26.6%) led the increase, mainly on higher imports of computers and computer peripheral equipment and of communications and audio and video equipment. Other notable increases were in imports from the Netherlands (motor gasoline) and Germany (passenger cars and light trucks).
Higher exports to countries other than the United States were mostly attributable to the United Kingdom (unwrought gold), Saudi Arabia (other transportation equipment), South Korea (aircraft) and Japan (copper and coal).
Consequently, Canada's trade deficit with countries other than the United States widened from $5.2 billion in February to $5.8 billion in March.
After rising 3.8% in February, imports from the United States increased 3.1% in March, mainly due to higher imports of passenger cars and light trucks. Exports to the United States rose 1.2%, led primarily by higher exports of crude oil. Comparing the average exchange rates of March and February, the Canadian dollar lost 2.1 US cents relative to the American dollar.
As a result, Canada's trade surplus with the United States narrowed for the fifth consecutive month, moving from $2.3 billion in February to $1.7 billion in March.
Imports and exports rise in the first quarter
Imports rose 2.1% to $148.3 billion in the first quarter of 2018, mainly on higher imports of motor vehicles and parts. Exports were up 1.0% to $139.2 billion on increased exports of energy products. As a result, Canada's trade deficit widened from $7.4 billion in the fourth quarter of 2017 to $9.1 billion in the first quarter of 2018.
In real (or volume) terms, imports rose 1.5% in the first quarter, while exports edged up 0.3%.
Revisions to February exports and imports
Revisions reflected initial estimates being updated with or replaced by administrative and survey data as they became available, as well as amendments made for late documentation of high-value transactions. Exports in February, originally reported as $45.9 billion in last month's release, were essentially unchanged in the current month's release. February imports, originally reported as $48.6 billion in last month's release, were revised to $48.8 billion.
Chart 2: International merchandise trade balance
Table 228-0069 1, 2, 3, 4
Merchandise imports, exports and trade balance, customs and balance of payments basis for all countries, by seasonal adjustment and principal trading partners
monthly (dollars x 1,000,000)
Data table
The data below is a part of CANSIM table 228-0069. Use the Add/Remove data tab to customize your table.
Selected items [Add/Remove data]
Geography = Canada
Basis = Balance of payments
Seasonal adjustment = Seasonally adjusted
Basis = Balance of payments
Seasonal adjustment = Seasonally adjusted
| Trade | Principal trading partners | 2017 | 2018 | |||
|---|---|---|---|---|---|---|
| November | December | January | February | March | ||
| footnotes | ||||||
| Import | Total of all merchandise | 48,973.1 | 50,095.1 | 47,735.1 | 48,801.5 | 51,723.6 |
| United States | 31,984.9 | 31,662.1 | 31,024.0 | 32,215.9 | 33,227.3 | |
| European Union | 4,711.3 | 5,599.9 | 4,999.0 | 4,769.8 | 5,366.5 | |
| China | 3,872.1 | 3,946.1 | 3,435.1 | 3,413.7 | 4,320.0 | |
| Mexico | 1,725.5 | 1,763.8 | 1,628.8 | 1,781.2 | 1,781.4 | |
| Export | Total of all merchandise | 46,518.0 | 46,635.4 | 45,746.3 | 45,869.1 | 47,584.0 |
| United States | 35,230.9 | 34,746.0 | 33,979.6 | 34,492.6 | 34,907.0 | |
| European Union | 3,461.8 | 3,593.8 | 3,991.9 | 3,577.7 | 4,166.8 | |
| China | 2,097.5 | 2,053.8 | 1,902.5 | 2,002.0 | 2,087.8 | |
| Mexico | 744.8 | 744.0 | 755.9 | 727.4 | 741.1 | |
| Trade Balance | Total of all merchandise | -2,455.1 | -3,459.7 | -1,988.7 | -2,932.3 | -4,139.6 |
| United States | 3,246.0 | 3,084.0 | 2,955.6 | 2,276.8 | 1,679.7 | |
| European Union | -1,249.5 | -2,006.2 | -1,007.1 | -1,192.0 | -1,199.7 | |
| China | -1,774.6 | -1,892.2 | -1,532.7 | -1,411.7 | -2,232.2 | |
| Mexico | -980.8 | -1,019.8 | -872.9 | -1,053.7 | -1,040.3 | |
Footnotes:
This CANSIM table replaces archived CANSIM table 228-0058.
Totals are not equal to the sum of their components.
Countries listed are the top 27 principal trading partners of Canada based on annual 2012 total merchandise trade data.
The concept of Trade Balance exists only on a Balance of Payments seasonally adjusted basis.
Source: Statistics Canada. Table 228-0069 - Merchandise imports, exports and trade balance, customs and balance of payments basis for all countries, by seasonal adjustment and principal trading partners, monthly (dollars), CANSIM (database). (accessed: )
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180503/dq180503a-eng.pdf
THE GLOBE AND MAIL. MAY 3, 2018. Canada’s trade gap swells but import, export growth signals economic momentum
DAVID PARKINSON
Canada’s merchandise trade deficit swelled to a record $4.1-billion in March, as solid exports were outpaced by even stronger growth in imports – evidence of improving economic momentum despite the widening trade gap, economists said.
Statistics Canada reported that imports surged 6 per cent month over month, to a record $51.7-billion, driven by strong gains in autos and consumer goods. That outweighed growth in exports, which rose 3.7 per cent to $47.6-billion, their biggest gain in four months and their second-highest level on record.
On a volume basis, which excludes the impact of price and currency changes, imports rose 5.3 per cent while exports were up 3 per cent.
“The trade deficit deteriorated in dollar value terms, but for solid underlying reasons that reflect strength in the domestic economy alongside external strength,” said Bank of Nova Scotia economist Derek Holt in a research note.
“While the import boom is by itself a headwind to GDP, the associated implications for domestic demand suggest that the economy maintained healthy momentum in March,” said Canadian Imperial Bank of Commerce economist Royce Mendes.
Economists had anticipated a modest decline in the trade deficit from February’s $2.9-billion (revised from an originally reported $2.7-billion), thanks to the easing of severe rail-car shortages that had choked off grain exports earlier in the year. But they hadn’t foreseen the widespread strength in imports. Nine of 11 import sectors posted gains.
Exports also showed broad strength, with nine of 11 sectors rising.
The import side showed encouraging consumer demand, with passenger vehicles and light trucks up 13 per cent month over month, and consumer products up nearly 8 per cent. Economists said the strength reflects Canada’s continued strong labour market, as well as the acceleration in wage growth in recent months.
Meanwhile, gains in imports of computer equipment (up 13 per cent), medium and heavy vehicles (up 9 per cent), and industrial machinery and equipment (up 3 per cent) suggested a solid pick-up in business investment. That’s an area that the Bank of Canada has been watching closely for signs of improvement, as it speaks to the economy’s capacity to grow.
“The underlying details point to solid momentum across investment, materials demand and consumption,” Mr. Holt said.
Exports were lifted by the rebound in the agricultural sector, up nearly 15 per cent, reversing February’s 14-per-cent slump, as the sector bounced back from its temporary transportation problems. Exports of aircraft and other transportation equipment jumped 24 per cent, largely reflecting shipments under Canada’s contract to supply armoured vehicles to Saudi Arabia.
Statscan said that for the first quarter as a whole, import volumes rose 1.5 per cent, while export volumes inched up 0.3 per cent. The difference means that net trade likely subtracted about 1 percentage point from Canada’s annualized rate of gross domestic product growth in the quarter, economists said – the third straight quarter that trade has been a drag on growth. Economists estimate that first-quarter real GDP growth was about in line with the fourth quarter’s relatively tame pace of 1.7 per cent annualized.
Nevertheless, they said the positive implications of the growth in two-way trade suggest better times ahead for trade and the Canadian economy.
“Things were looking very good to end off the first quarter and transition to the second quarter,” Mr. Holt said. He added that the improvements in exports, which have been a sore spot for the Canadian economy since the middle of last year, “suggest that a soft patch across earlier months may be giving way to a better picture.”
One key factor that has been holding back export growth has been the deep uncertainty surrounding the North American free-trade agreement (NAFTA) talks. But even without a NAFTA deal nailed down, Canadian exporters may be starting to make up for lost time amid a healthy and growing U.S. economy, which is by far Canada’s biggest export market.
“Although a NAFTA agreement is looking closer to becoming reality, an agreement in principle is likely still weeks away. Nevertheless, we anticipate that improved momentum, stronger demand from the U.S., and a sub-80-U.S.-cent loonie should encourage a rebound in Canadian exports in the second quarter,” said Fotios Raptis, senior economist at Toronto-Dominion Bank, in a research report.
REUTERS. MAY 3, 2018. Canada racks up record trade deficit, but exports rebound
David Ljunggren
OTTAWA (Reuters) - Canada’s trade deficit in goods jumped to a record high in March on a surge in imports, but analysts took heart in data showing healthy export growth, a sign the economy is performing well.
Statistics Canada said on Thursday that the deficit hit C$4.14 billion ($3.21 billion) in March, much higher than the C$2.24 billion shortfall predicted by analysts in a Reuters poll. The previous record was C$4.13 billion in September 2016.
After two weak months, exports posted a 3.7 percent gain to C$47.58 billion on exports of aircraft and other transportation equipment, in part due to a contract to supply armored vehicles to Saudi Arabia.
“This is a tremendous rebound which us very comforting. We are very happy to see that,” said Peter Hall, chief economist at Export Development Canada.
Wheat shipments jumped by 51.9 percent after a sharp fall in February amid rail transportation disruptions.
Imports grew by 6.0 percent to a record C$51.72 billion on increased shipments of motor vehicles and parts - in particular, passenger cars and light trucks - as well as consumer goods. In volume terms, imports rose 5.3 percent.
The Canadian dollar slipped to C$1.2870 to the U.S. dollar, or 77.70 U.S. cents, from C$1.2840, or 77.88 U.S. cents before the data were released.
Royce Mendes of CIBC Economics said the data though should not be written off as bad news.
“This report actually seems like good news from a GDP perspective given what it implies for domestic demand,” he said in a note to clients.
The Bank of Canada, which has long fretted about the sluggish performance of Canadian exporters, says the sector could be hit by uncertainty over the future of the North American Free Trade Agreement. Canada sent 73.4 percent of all goods exports to the United States in March.
The central bank, which has raised interest rates three times since last July, says it will look closely at domestic data before deciding when to hike again.
“I would say on balance they would see the strength in imports and exports as being more important than the deterioration in trade,” said Doug Porter, chief economist at BMO Capital Markets.
Exports to the United States rose 1.2 percent while imports increased by 3.1 percent. As a result, the trade surplus with the United States shrank to C$1.68 billion from C$2.28 billion in February.
($1=$1.29 Canadian)
Additional reporting by Fergal Smith in Toronto; Editing by Nick Zieminski
TCS. 2018-05-03. Importers bring important benefits to Canada
When we look at who is engaged in international trade, the focus is usually on those who export, however many of the benefits of international trade come through importing.
Imports make available increased varieties of goods and services at lower prices, thus helping Canadian companies to specialize and focus on producing the goods and services they excel at producing. This helps boost productivity and contribute to raising wages and, increased competitiveness.
| All firms | SMEs | |
|---|---|---|
| Importers | 148,866 | 146,860 |
| Exporters | 43,255 | 42,126 |
This concentration is pervasive across sectors, with SMEs accounting for more than 95 percent of all importers in 16 of 20 major industries. The four sectors where SMEs accounted for less than 95 percent of all importers are: finance and insurance (94.5 percent), educational services (84.5 percent), public administration (77.0 percent), and management of companies and enterprises (76.8 percent). However, measured by the dollar value of imports, SMEs account for 46.7 percent of goods imported into Canada in 2016—less than half of the total value.
Three sectors dominate imports in Canada: manufacturing, wholesale trade, and retail trade. These sectors accounted for 53.9 percent of the number of importers and 81.7 percent of the value of imports in 2016. Wholesalers alone accounted for 57.4 percent of the value of SME imports, while manufacturers accounted for another 24.7 percent.
For large firms—that is, those with 500 or more employees&mdash:manufacturers accounted for 15.4 percent of all importing firms and for 50.9 percent of total goods imported. The average large manufacturing firm imported about $432 million worth of goods into Canada&mdash:a figure roughly 178 times greater than the average $2.4 million in imports by SME manufacturing firms.
Submitted by the Office of the Chief Economist
INTERNATIONAL RESERVES
Department of Finance Canada. Ottawa, May 3, 2018. Official International Reserves - All 2018
The Department of Finance Canada announced today that Canada's official international reserves decreased by an amount equivalent to US$1,074 million during April to US$82,221 million.
Details on the level and composition of Canada's reserves as of April 30, 2018, as well as the major factors underlying the change in reserves, are provided below. All figures are in millions of US dollars unless otherwise noted.
Note: Official international reserve figures for March 31, 2018 were revised due to a miscalculation in the valuation of SDR holdings.
NOTES:
- Net change in securities and deposits resulting from foreign currency funding activities of the Government. (Issuance of foreign currency liabilities used to acquire assets increases reserves, while maturities decrease reserves). During April, Canada bills decreased by US$33 million to a level of outstanding bills of US$1,977.8 million. An equivalent of US$650 million in cross-currency swaps was raised while US$804.3 million in cross-currency swaps matured during the month.
- "Return on investments" comprises US$83 million of interest earned on investments and a US$285 million decrease in the market value of securities.
- "Revaluation effects" reflect changes in the market value of reserve assets resulting from movements in exchange rates. In April, the revaluation effect was mainly due to the depreciation of the euro and the pound sterling.
- "Net government operations" are the net purchases of foreign currency for government foreign exchange requirements and for additions to reserves.
- "Foreign currency securities" include maturities of foreign currency debt, cross-currency swap payments and an estimate of interest payments on foreign currency liabilities.
- "Securities lent under repurchase agreements" are included in total reserves. Collateral provided in securities lending transactions is not included in total reserves.
- Cash invested under repurchase agreements is included in total reserves. Collateral provided in securities
| Millions of US dollars | |
|---|---|
| Securities | 68,400 |
| Deposits | 3,685 |
| Total securities and deposits (liquid reserves): | 72,085 |
| Gold | 0 |
| Special drawing rights (SDRs) | 8,090 |
| Reserve position in the IMF | 2,046 |
| Total: | |
| April 30, 2018 | 82,221 |
| March 31, 2018 | 83,295 |
| Net change: | -1,074 |
AVIATION
The Globe and Mail. 3 May 2018. Bombardier wins over key institutional investors. Proxy advisory firms recommend investors support the company’s full slate of directors and policy regarding executive compensation
NICOLAS VAN PRAET, MONTREAL
CLOSE: $3.93, UP 7¢ BOMBARDIER (BBD.B)
This year, there are fewer things that could blow up and become controversial.
MEHRAN EBRAHIMI, PROFESSOR OF MANAGEMENT AT THE UNIVERSITY OF QUEBEC AT MONTREAL
Bombardier Inc. has made enough progress on governance issues and with its turnaround effort over the past year to avoid another clash with institutional shareholders ahead of the company’s annual meeting on Thursday. But some investors say the company still falls short of best practices in key areas.
Proxy advisory companies Glass Lewis and Institutional Shareholder Services are both recommending investors support the company’s full slate of directors as well as its executive-compensation policy. The Canada Pension Plan Investment Board is among those heeding the advice, signalling on its website that it will back all 14 board nominees as well as the company’s pay practices.
Bombardier’s largest outside shareholder, the Caisse de dépôt et placement du Québec, is also voting in favour of the company’s executive-compensation plan and the directors proposed. It says the performance of chief executive Alain Bellemare’s management team getting the company back on track after a brush with bankruptcy justifies their 12per-cent pay hike last year.
“We think you have to recognize the remuneration being received by the management team,” Caisse CEO Michael Sabia told lawmakers in Quebec City on Tuesday afternoon. “Is it perfect? No. Is the company in full evolution on several levels? I think so, yes. And I believe we contributed to a profound reflection by the company’s board and management team last year” on certain issues including pay.
The pension-fund manager owns roughly 30 per cent of Bombardier’s train business, which it bought in late 2015. The unit has seen a significant improvement in performance under Mr. Bellemare, which is lifting the company as a whole, Mr. Sabia said. Asked what he thought about Bombardier ceding majority control of its flagship commercial airline, the C Series, to Airbus SE for no cash compensation, Mr. Sabia said it was “a reasonable transaction” given the competitive challenges the aircraft faced.
Bombardier shares closed up 1.8 per cent to $3.88 in morning trading on Wednesday. They’ve gained 86 per cent over the past year.
The company was in the throes of a public storm one year ago following its decision to boost the 2016 pay of its top executives by nearly 50 per cent after taking more than US$1-billion in taxpayer aid. Quebeckers held street rallies denouncing the plan and lawmakers who’d supported the company expressed their discomfort. After Bombardier corrected course and delayed most of the payments, several of the company’s big investors weighed in and admonished the manufacturer for what they said was a corporate-governance lapse. They said Bombardier’s board had failed to properly appreciate and balance the interests of its stakeholders, including governments and communities.
Several large pension funds, including the Caisse and Ontario Teachers’ Pension Plan, then called for a shakeup of the Bombardier board, saying the company should be chaired by an independent director and withdrawing their support for Pierre Beaudoin as executive chairman. He subsequently relinquished his executive duties but stayed on as chairman, winning re-election to the board with roughly 92-percent support. The company’s revised executive-compensation policy was approved with 93.5per-cent support.
Mr. Beaudoin’s family controls Bombardier through a special class of shares with 10 votes each, giving it about 52-per-cent voting control despite owning less than 20 per cent of the equity. The company doesn’t break out the results of votes by class so it’s difficult to get an accurate picture of how shareholders not affiliated with the family voted.
“This year, there are fewer things that could blow up and become controversial,” said Mehran Ebrahimi, professor of management at the University of Quebec at Montreal. There are issues that are still aggravating for some investors, such as Bombardier’s dual-class share structure, but the company’s improving finances and partnership with Airbus has helped blunt much of the criticism, Dr. Ebrahimi said.
Shareholder-rights group Médac will present four proposals to shareholders at Thursday’s meeting, including one calling on Bombardier’s board of directors to discuss at the meeting the changes it made to the compensation policy over the past year. Most of the proposals will likely be voted down.
Excluding Mr. Beaudoin, remuneration for Bombardier’s five most senior executives rose 12 per cent in aggregate in 2017 versus the year before, to about US$31million. Not counting exchangerate fluctuations, total pay rose 10 per cent. Mr. Bellemare earned US$10.6-million, an increase over the US$9.5-million he earned the year before, making him Quebec’s top-paid CEO last year.
Bombardier spokesman Simon Letendre said the company reviews its approach to executive compensation every year to make sure it is line with peer groups of global companies of comparable size and complexity and seeks advice from advisory firms Mercer and Meridian in this effort. With input from investors, Bombardier has provided more disclosure in the 2018 proxy circular on performance measures and targets, individual achievements and the decision-making process for incentive awards, he said.
The composition of Bombardier’s board is also changing. Mr. Beaudoin’s father, Laurent Beaudoin, who is widely credited for building Bombardier into the manufacturing multinational it is today through shrewd deal-making, will not stand for re-election Thursday. Board members Sheila Fraser and Patrick Pichette are also leaving the company. In all, nine of Bombardier’s 14 directors will be independent if the proposed candidates are elected at the meeting.
That’s still not good enough for British Columbia Investment Management Corp., which manages the nest eggs for B.C.’s publicsector workers. It is voting against all non-independent directors on the ballot except Mr. Bellemare because the board’s independence level does not meet its guideline of two-thirds representation. It is also voting against the company’s executive-compensation approach, saying it does not sufficiently align pay with performance and still lacks disclosure.
Mutual fund company NEI Investments is also among Bombardier shareholders who say more needs to be done to improve governance, even if it acknowledges the manufacturer has made efforts to address investor concerns. One issue it singles out is the large peer group Bombardier uses to set pay for most of its top executives, with many of those peers being larger U.S.-based companies that typically pay management more.
“We find it a little awkward that the company is kind of focused on the U.S. when it comes to the pay, but then when the company has faced problems, it’s very much a Canadian company at that moment,” said Michelle de Cordova, director of corporate engagement and public policy at NEI. “When the company needs [public help, I mean]. We think there’s a little bit of a contradiction there.”
THE GLOBE AND MAIL. MAY 3, 2018. Bombardier sells Downsview assembly site to pension fund in major makeover
NICOLAS VAN PRAET
Bombardier Inc. has struck a deal to sell its Downsview site in Toronto for about US$635-million, further shoring up its cash reserves as it reshapes its business after a brush with bankruptcy three years ago.
The shares rose 1 per cent to $3.97 in early Toronto trading Thursday. Bombardier investors will gather for the company’s annual meeting later in the morning.
The plane-and-train maker said it will sell the sought-after property in Canada’s biggest city to Public Sector Pension Investment Board for net proceeds of US$550-million after costs. Ottawa-based PSP Investments is one of the country’s biggest pensions, investing funds for the Canadian Armed Forces among other public sector workers.
The sale, combined with proceeds of an equity issue in March, buoys Bombardier’s cash by more than US$1-billion and could help the company pay buy back a 30-per-cent stake in its train business or pay down its US$9-billion debt faster than expected. The company amassed the debt to bring its flagship C Series airliner to market and continue development on its Global 7000 business jet, its biggest ever luxury aircraft.
Bombardier had US$4-billion of short-term capital resources available at the end of March. It does not have a major debt repayment to make until 2020.
“Once we get past 2018, we’ll have an opportunity to allocate this capital property with the greatest return,” John Di Bert, Bombardier chief financial officer, told analysts on a conference call Thursday to discuss the company’s first quarter earnings. “And there are many options for us at this point in time.”
Alain Bellemare, who took over as chief executive officer of Bombardier in February 2015, has pulled Bombardier back from the brink of bankruptcy after it nearly toppled that year under the weight of cash-sucking investments in two major aircraft development programs. He has shored up liquidity, cut jobs and struck a partnership with Airbus SE to take control of the C Series, a deal now expected to close before the end of the second quarter.
The CEO plans to rebuild earnings power by boosting revenue to US$20-billion by the end of 2020. Selling more business jets is the key to that sales effort.
First quarter results reported Thursday suggest the company is on track with its plan. Revenue rose 12 per cent to US$4-billion as Bombardier sold more business jets and trains. Earnings before interest and taxes, stripping out special items, was US$201-million, some 16 per cent ahead of analyst forecasts. Net income was 1 cent per share as the company burned through US$721-million of cash in the three month period. Analysts had expected Bombardier to break even on a net profit basis.
″[This is] a constructive start to the year with encouraging signs of pick-up in demand in business aviation,” BMO Capital Markets analyst Fadi Chamoun said in a note.
The company’s commercial aircraft business also delivered a nice surprise Thursday, announcing an order from American Airlines Group for 15 Canadair CRJ900 regional jets and options on another 15 planes. The value of the deal based on published list prices is US$719-million but customers buying multiple aircraft typically win discounts.
Bombardier announced in January that it had started analyzing options for the Downsview site. The company uses only about 10 per cent of the 371-acre property but shoulders the full cost of operating its 7,000-feet runway. The PSP deal gives Bombardier rights to use the property for up to 5 years, the company said.
Bombardier will use that time to figure out next steps for the production of the Q400 turboprops made there, it said. There is no sign the company is pursuing a sale of the business at the moment.
“We are committed to the program,” Mr. Di Bert said.
Bombardier mulled bids from three frontrunners for Downsview, the Globe and Mail reported last month. They included Hong Kong billionaire Li Ka-shing’s CK Asset Holdings Ltd, a joint bid by Toronto developers Great Gulf and Dream Unlimited Corp., and PSP Investments.
Meanwhile, the company said it will shift production of its Global business jets, currently done at Downsview, to Toronto’s Pearson Airport. It said it entered into an agreement with the Greater Toronto Airports Authority for a long-term lease of about 38 acres of property at Pearson, where it plans to open a new final assembly plant for the Global jets. Details on that facility were not provided Thursday.
Allison Lampert, Yashaswini Swamynathan
(Reuters) - Bombardier Inc (BBDb.TO) said on Thursday it will stick by its remaining commercial aerospace program after agreeing to sell its biggest land asset, as the Canadian plane and train maker strives to raise cash to pay down its debt.
Investors reacted positively to the news, pushing up the stock as much as 3 percent to C$4.05 in early trade.
The company, which has a long-term debt of $9.1 billion and considered bankruptcy in 2015, sold its Downsview site in northern Toronto to the Public Sector Pension Investment Board for $635 million. That facility is an assembly site for its Q400 turboprop passenger planes and is one of four final assembly sites it uses.
Thursday’s sale, combined with an equity raise of C$638.4 million ($496.73 million) in March gives the company $1 billion in cash.
“This (the Q400) is a product line we’ll keep pushing,” Chief Executive Alain Bellemare told analysts on a call, allaying concerns about the plane line’s future. The company has up to five years to find a new assembly site for the plane.
He said the deal would allow the company to “monetize an underutilized asset and optimize our business aircraft operations.”
The Q400, with a backlog of 50 planes, has about 25 percent of the global market in small commercial planes, second to European rival ATR, the world’s largest maker of turboprops.
Bombardier also agreed to sell a controlling stake in its flagship CSeries jet to Airbus (AIR.PA) last year for a token C$1 after struggling for years to make the plane line commercially successful.
Jerry Dias, president of the Unifor union which represents workers who assemble the Q400 and Global 7000 plane in Toronto, said on Thursday the deal means Bombardier will keep the two programs in Canada.
“My biggest concern all along has been the Q-400 and the Global program,” he said by phone. “Those two issues have been resolved. We are keeping all of it.”
Bombardier said it would assemble business jets at a leased facility at Toronto’s Pearson Airport, and would continue leasing space at the Toronto site for three years, with options to renew for two more.
BENEFITS
Bombardier’s first quarter results showed revenue increasing in three of Bombardier’s four businesses, led by a 21-percent rise in its rail unit. But the company’s loss-making commercial aircraft segment, which includes the CSeries, reported a 12-percent drop in revenue and Bombardier used $721 million of its available cash in the quarter - more than last year.
Bombardier said it is on track to achieve free cash flow breakeven for the full year.
“I assume they will be utilizing the proceeds (of the sale) to reduce debt at an accelerated timeframe,” William Blair analyst Nicholas Heymann said.
In a staff memo on Wednesday, Bellemare said the company’s commercial aircraft president would stay on to lead its regional aircraft business once the deal with Airbus for the CSeries is completed.
Bombardier Inc
3.92
BBDB.TOTORONTO STOCK EXCHANGE
-0.01(-0.25%)
BBDb.TO
BBDb.TOAIR.PAAAL.O
Bombardier announced 15 new CRJ900 regional jets order worth $719 million from American Airlines Group Inc (AAL.O).
“Cash flow for this quarter wasn’t strong but if we hear that they are on track to break even and next year begin to reduce debt, I think the stock should do well. Clearly people are anxious to know what’s next for Bombardier,” Heymann said.
($1 = 1.2852 Canadian dollars)
Reporting by Yashaswini Swamynathan in Bengaluru and Allison Lampert in Montreal, writing by Nivedita Bhattacharjee; editing by Patrick Graham and Nick Zieminski
BLOOMBERG. 3 May 2018. Business. Bombardier Gains From Toronto Land Boom in $635 Million Deal
By Frederic Tomesco
- Planemaker sells Downsview, will move production to Pearson
- Company’s first-quarter sales, earnings surpass expectations
Bombardier Inc.’s drive to bolster its cash reserves is getting a lift from the booming real-estate market in Canada’s biggest city.
The maker of planes and trains agreed to sell its Downsview factory in Toronto to Canada’s Public Sector Pension Investment Board for about $635 million. The transaction is expected to close in the second quarter, increasing cash by more than $550 million after costs, Bombardier said in a statement Thursday as it reported earnings.
The deal buoys Chief Executive Officer Alain Bellemare’s goal of fortifying Bombardier’s balance sheet, which is saddled with about $9 billion of debt from pricey development programs for the C Series airliner and the Global 7000 business jet. Bombardier raised C$638.4 million ($498 million) in a share offering in March, taking advantage of this year’s biggest stock gain among Canadian industrial companies.
The Downsview sale “further improves Bombardier’s liquidity position,” Kevin Chiang, a CIBC World Markets analyst, said in a note to clients. “We continue to see the company execute against its long-term strategy, further de-risking its operations and balance sheet.”
Pearson Airport
Bombardier will continue to operate from Downsview for as many as three years after the land sale closes, with options for two one-year extensions.
Production will be moved to a 38-acre site at Toronto Pearson International Airport in about three years, Bellemare said on a conference call with analysts. The company plans to open a final assembly plant for its Global business jets at Pearson and hasn’t decided where to build the Q400 turboprop, which is currently made at Downsview.
Bombardier said in January that it had begun reviewing options for Downsview because the company uses only about 10 percent of the 375-acre site and bears the entire cost of operating a 7,000-feet runway. Cowen & Co. analyst Cai von Rumohr said in February that Downsview could fetch as much as $1 billion.
“This bolsters liquidity and allows Bombardier to rationalize production footprint, but the net proceeds look below some estimates,” he said in a note to clients Thursday.
Bellemare is about halfway through a five-year turnaround plan designed to boost profitability and cash flow. The CEO is targeting a debut later this year of the Global 7000 after having shored up liquidity, cut jobs and struck a partnership in which Airbus SE will take control of the C Series. Bombardier said it now expects the venture to close by the end of next month. The companies originally targeted a closing in the second half of the year.
Surprise Profit
Bombardier reported an adjusted profit of 1 cent a share in the first quarter. Analysts had predicted the company would break even, according to the average of estimates compiled by Bloomberg. Sales climbed 12 percent to $4.03 billion, compared with expectations of $3.88 billion.
The results signal “a constructive start to the year,” Fadi Chamoun, an analyst at BMO Capital Markets in Toronto, said in a note to clients. He cited “encouraging signs of pick-up in demand” in business aviation.
Bombardier booked 31 orders for private jets in the quarter, two more than in the same period a year earlier.
The Montreal-based planemaker also said it reached an agreement with American Airlines Group Inc. to sell 15 of its CRJ900 regional jets, an order with a list value of $719 million before customary discounts. American also took an option to buy 15 more.
Break-Even Forecast
Free cash flow usage rose 22 percent in the first quarter to $721 million, while analysts estimated $599 million. Earnings before interest, taxes and special items climbed 16 percent to $201 million. Analysts had predicted $173 million.
For all of 2018, Bombardier continues to expect to break even on a cash flow basis, plus or minus $150 million, according to a slide presentation posted on the company’s website.
Bombardier will burn less cash this quarter than in the first and improve further still in the third quarter, Chief Financial Officer John Di Bert said on the call. Earnings will improve as the company deconsolidates results of the C Series program, which is unprofitable, he said.
Bombardier’s widely traded Class B shares climbed 1 percent to C$3.97 at 10:13 a.m. in Toronto. The stock has surged 30 percent this year through Wednesday, while Canada’s benchmark S&P/TSX Composite Index slumped 3.6 percent.
TRADE PROMOTION
The Globe and Mail. 3 May 2018. Loblaw accelerates e-commerce push in preparation for Amazon’s arrival. Loblaw: Grocer eyes locations for customer order pick-ups
MARINA STRAUSS, RETAILING REPORTER
Loblaw reported improved first-quarter profit while raising its quarterly dividend to 29.5 cents a share from 27 cents a share.
Loblaw Cos. Ltd. is accelerating its grocery e-commerce push, joining other major food retailers in boosting online selling to fight off powerhouse Amazon.com Inc. as rising costs cut into profit margins.
Loblaw, the country’s largest grocer, will “blanket” Canada with grocery cybershopping options by the end of the year, chief executive Galen G. Weston said on Wednesday. Loblaw is rebranding its Click & Collect program to PC Express and expanding it to more than 700 stores by the end of 2018, from about 200 last year. It’s also adding some of its Shoppers Drug Mart stores and GO Transit locations in the Toronto area as grocery pick-up sites.
And Loblaw is expanding its premium home delivery service in partnership with Instacart to 16 markets in Canada by year’s end from 11 today, he said. “We feel very confident in the path we are on,” Mr. Weston said.
Each of the country’s three major grocers are taking ambitious but different steps to pump up their e-commerce, even as they grapple with cost challenges ranging from increased minimum wages to lower generic drug profits and higher transportation expenses.
The rush among grocers to expand their online selling follows Amazon’s US$13.7-billion acquisition of Whole Foods Market last year, signalling the ecommerce titan’s intention to build its food business.
Discount giant Walmart Canada Corp. is also expanding its online grocery service.
Sobeys, the country’s No. 2 grocer, owned by Empire Co. Ltd., is teaming up with British online grocery specialist Ocado Group PLC to build sophisticated central distribution centres with robots for its ecommerce operations, while Metro Inc., the country’s third-largest player, is combining home delivery and store pick-up options as it plans on expanding e-commerce into Ontario from its Quebec base.
Still, grocers are grappling with how to find a profitable cyberselling business model. Michael Medline, CEO of Sobeys, said its first e-commerce fulfilment centre will not be built for another two years or so and will take years to turn a profit. But he said that long term, the robotics system for home deliveries will be the most profitable online grocery solution in Canada. “If you don’t believe in growth or e-commerce, this is not the deal for you.”
At Loblaws, customers tend to spend more in a click-and-collect order than a home delivery purchase, Mr. Weston said. The retailer’s hypothesis is that “you have a customer looking for one-hour convenient delivery because they’re trying to fill in something that’s in their kitchen, whereas the click-and-collect is more of the planned weekly shop. And that’s why we believe there seems to be such compelling room for both.”
Loblaw is looking for any location for highly convenient customer pick-ups, ranging from its own supermarkets to Shoppers stores, GO stations “or perhaps others,” he said.
Almost half of Canadians today have access to Loblaw’s PC Express (click-and-collect) or the retailer’s grocery home delivery and, by year’s end, that will grow to 70 per cent, Mr. Weston said.
Still, grocers are investing in their ecommerce at a time when they are facing rising costs from higher minimum wages in Ontario and Alberta – and possibly other provinces–along with profit challenging generic drug reform sand higher transportation costs.
Loblaw president Sarah Davis outlined a few of the retailer’s cost-cutting initiatives, with the top one being rolling out more self-scan checkouts at Shoppers. It now has them in 260 of its drugstores and will boost that to about 400 by year’s end, she said. Almost 25 per cent of Shoppers’ customers ring in their own purchases with the self scanners at the stores where they are available, higher than the 15 per cent that the company had expected, Ms. Davis said. She did not spell out the labour reductions and cost savings tied to the scanners.
“The benefit is also that it’s actually improving customer satisfaction,” she said. “It really is allowing people with small orders to get in and out of stores more quickly.”
Loblaw has also been cutting costs by lowering its levels of inventory in its distribution centres and stores – by 16 per cent and 19 per cent, respectively – over the past three years, she said.
“With less handling of the inventory, there’s less labour required to handle the inventory,” she said. In some parts of its retail business, Loblaw has reduced the number of times employees “touch” inventory to 21⁄2 times from four times, she said.
As well, Shoppers is centralizing routine prescription orders and refills – having them done at another central location – and freeing up pharmacists’ time to provide flu shots and other services, she said.
The efforts come as Loblaw reported improved first-quarter profit while raising its quarterly dividend to 29.5 cents a share from 27 cents a share.
Loblaw’s profit grew to $377-million, or 98 cents a diluted share, from $232-million, or 58 cents a share, a year earlier. Revenue was $10.37-billion compared with $10.4-billion a year earlier. (Loblaw sold its gas station operations.) Loblaw’s food retail same-store sales – a key retail measure – rose 1.9 per cent while drug retail sales grew 3.7 per cent.
EDC. May 03, 2018. Organic foods: Hot zone in a hot sector?
Peter Hall, Vice-President and Chief Economist
Organic is ‘in’! It seems that everywhere, consumers are clamouring for organic food products. And they are willing to pay a premium for them. Now, this didn’t just happen yesterday; it’s obviously pretty dated news. But maybe what is fresh is the hot annual growth path. Momentum is strong, and trend growth suggests this is going to be a winner for some time to come. Is Canada, as a key global food supplier, in the game?
Food exports in general are a hot topic these days. Canada is a heavy net producer of food, with much of it shipped around the world. In fact, compared with other exports, it is atypically a very globally diversified market; unlike other industries, traditional customers are not nearly as dominant in the food space. And even from today’s high base of export activity, growth prospects – from the near term out to as far as 2050 – are very strong. Why? The sustained surge in emerging market middle- and upper-class populations has created demand for higher-quality foodstuffs that outstrips their countries’ productive, distribution and quality control capacity. Naturally, they are turning to the world’s big net producers for solutions to their long-term problem. Canada is already playing in this space, but the potential for even greater sustained growth is obvious.
Canada’s organic food sector seeing strong growth
Unlike the market for general food and beverage products, organics are seeing strong growth in Canada’s traditional export markets. Health consciousness is encouraging demand growth in organic foods and beverages, as seen by its growth in overall food sector market share. Likewise, sales growth is strong at home for the same reasons. At least one large Canadian grocery chain has remarked that in discount stores in lower-income neighbourhoods, the organics section attracts a higher share of traffic and has better margins than the rest of the store. This has in turn created innovation in organic products like labelling, traceability, and so on.
All of this adds up to more than $5 billion in annual organic sales domestically, with Canada’s organic market representing about 5 per cent of total global demand. Since 2012, the market share of organic food and beverages sold through mainstream retailers in Canada has grown from 1.7 per cent to 2.6 per cent. The sector currently producing almost 3 per cent of all agricultural sales. The Canadian Organic Trade Association (COTA) estimates that we had over five thousand organic operations in 2015. The bulk of these were primary producers, but many are processors, manufacturers and retailers. Even with all this effort, Canadian production isn’t keeping pace with demand; we are actually net importers of organic foods, as domestic sellers seek out needed ingredients and inputs not always available from local suppliers.
That hasn’t stopped the export machine from humming, though. Canada currently trades organic foods with 127 countries, and accounting for over $600 million of export sales. Just 11 per cent of our organic exports go to the US. Other major markets include the European Union and Japan. In all, export sales of organics are outstripping total food exports, a trend we expect to continue.
To facilitate this trade, Canada has negotiated organic equivalency agreements with trading partners who account for 90 per cent of Canadian trade: Bilateral equivalency arrangements with the U.S., E.U. , Switzerland, Costa Rica, and Japan have opened up important export markets for Canadian organic businesses. Agreements with Mexico and South Korea are being negotiated.
Challenges for organic producers
Canada’s organic producers do face challenges, though. The industry feels that gaps in international regulations may constrain Canadian producers from reaching their full potential in key growth markets. Closing this gap will require adoption of new food safety regulations. And as in exports of other food products, successful sales to the broader world will likely depend on how we flog ‘brand Canada’ while up against other strong brands from the leading producers in the rest of the world.
The bottom line?
Health-consciousness is rising globally, creating strong demand for organic food products. It’s no longer just a wealthy-market thing; ever-richer emerging markets are a hotbed of current and future demand. This one has opportunity written all over it.
QUEBEC BUSINESS SUPPORT
Canada Economic Development for Quebec Regions. May 2, 2018. Sotrem, Usinage SM and Deliwok to carry out growth and development projects. Government of Canada supports the development of three Saguenay businesses with nearly $1 million in financial assistance
Saguenay, Quebec – By investing in the production capacity of enterprises, the Government of Canada is standing by its commitment to help businesses expand, innovate and commercialize their products to create good-quality jobs and ensure prosperity for our regional and national economies.
David Lametti, Parliamentary Secretary to the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development and Minister responsible for CED, announced that Sotrem (1993) Inc., Usinage SM (9088-9148 Québec Inc.) [website in French only] and Deliwok (9292-2913 Québec Inc.) [website in French only] have been granted repayable contributions of $583,558, $155,000 and $125,000, respectively, to increase their production capacity and optimize their manufacturing processes.
The funding awarded by the Government of Canada through CED’s Quebec Economic Development Program will help the recipient businesses achieve their growth objectives.
Quotes
“I am very pleased about the financial support from the Government of Canada. It has decided to build on the expansion goals of these Saguenay businesses, which have set themselves apart in a constantly changing market. Their know-how, dynamism and boldness are growth-generating, and I encourage them to continue on the same path.”
- David Lametti, Parliamentary Secretary to the Minister of Innovation, Science and Economic Development and Minister responsible for CED
“As the Minister of Innovation, Science and Economic Development, my goal is to help businesses prosper and innovate so that they can become more competitive and create good-quality jobs and wealth for Canadians. Support for the three Saguenay businesses will definitely help them achieve these objectives and contribute to the region’s economic vitality.”
- The Honourable Navdeep Bains, Minister responsible for CED
Quick facts
- CED is one of the six regional development agencies under the responsibility of the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development.
- For more information on CED’s key directions until 2021, consult Strategic Plan 2021 or visit www.dec-ced.gc.ca.
- Budget 2018 proposes to provide an additional $511 million in funding over five years on a cash basis, starting in 2018–2019, for the regional development agencies to support the Innovation and Skills Plan across all regions of Canada.
- Of the $511 million, $99 million will be allocated to CED, of which $22 million will go toward supporting the new Women Entrepreneurship Strategy.
Backgrounder
Government of Canada supports the development of three Saguenay businesses with nearly $1 million in financial assistance
By investing in the production capacity of enterprises, the Government of Canada is standing by its commitment to help businesses expand, innovate and commercialize their products to create good-quality jobs and ensure prosperity for our regional and national economies.
David Lametti, Parliamentary Secretary to the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development and Minister responsible for CED, announced that Sotrem (1993) Inc., Usinage SM (9088-9148 Québec Inc.) [website in French only] and Deliwok (9292-2913 Québec Inc.) [website in French only] have been granted repayable contributions of $583,558, $155,000 and $125,000, respectively, to increase their production capacity and optimize their manufacturing processes.
The funding has been awarded through CED’s Quebec Economic Development Program.
Sotrem (1993) Inc.
Repayable contribution of $583,558 out of a total investment of $1,290,815
The project consists in improving Sotrem’s performance by increasing its productivity and production capacity. It involves retrofitting the work spaces, making alterations to the existing building and acquiring strategic equipment.
Sotrem has been in operation for 22 years, having started up in the heat treatment of metals, and aluminum recycling and re-smelting, among other things, mostly for aluminum smelters and other businesses in the industry. In 2011, it added the manufacture of deox cones and specialized alloy ingots, and the production of aluminum granules, aluminum alloy sows and other value-added products designed for a targeted industrial clientele for its niche markets.
The project will help create five full-time jobs.
9088-9148 Québec Inc. (Usinage SM)
[website in French only]
Repayable contribution of $155,000 out of a total investment of $310,000
The project consists in improving the company’s productivity by adding higher performance equipment tailored to its needs, including a machining centre.
Usinage SM has been in business since 2000 and specializes in the manufacture and repair of metal parts. It operates mostly in high-precision machining and aluminum wheel repairs for heavy-duty vehicles.
The project is expected to create two jobs.
9292-2913 Québec Inc. (Deliwok)
[website in French only]
Repayable contribution of $125,000 out of a total investment of $250,000
The project consists in improving the performance of Deliwok by increasing its productivity. It involves retrofitting the production and handling areas and acquiring strategic equipment.
Deliwok is well established in the region, having been in business since 1999. It specializes in the manufacture of mostly Asian food products. Its fresh and frozen products are sold under the Deliwok brand and are marketed in Quebec and Canada in supermarkets, grocery stores and big-box stores.
The project will help create three full-time jobs.
Summary
- Number of projects: 3
- Number of jobs created: 10
- CED’s contributions: $863,558
- Total investments generated by these projects: $1,850,815
PM ITINERARY
1) Statement by the Prime Minister on World Press Freedom Day Ottawa, Ontario - May 3, 2018
The Prime Minister, Justin Trudeau, today issued the following statement on World Press Freedom Day:
“Today, on World Press Freedom Day, we celebrate the important work journalists do around the world to promote and protect democracy. We also take a hard look at the current state of press freedom, and remember those who have lost their lives in defence of facts, uncovering truth and shining light on stories that would otherwise not be told.
“This year’s theme ‘Keeping Power in Check: Media, Justice, and the Rule of Law,’ highlights the importance of having an open and transparent environment – safeguarded by an independent judiciary – that protects freedom of the press. It also underlines the role that media play as champions of accountability and the rule of law.
“While in Canada we recognize freedom of the press as a fundamental freedom, many journalists working in other areas around the world face threats and dangers in their mission to inform the public. The arrest of two Reuters journalists, Wa Lone and Kyaw Soe Oo, in Myanmar last December is a vivid reminder of the ongoing need to advocate for a strong and free press as the cornerstone of any healthy democracy.
“Canada will always defend journalistic freedom and stand against any violence, intimidation, censorship, and false arrests used to silence journalists. From international broadcasters that bring the world into our homes, to local newspapers that empower us to shape the communities we live in – we know that a free press helps build stronger and healthier societies.
“On behalf of Canadians, I thank all the journalists in this country and around the world who seek out truth, unravel fact from fiction, bring clarity and fairness to public debate, and encourage us to open ourselves to new perspectives.”
2) Itinerary for Thursday, May 3, 2018 Ottawa, Ontario - May 2, 2018
Itinerary for the Prime Minister, Justin Trudeau, for Thursday, May 3, 2018:
Note: All times local
Ottawa, Ontario
10:05 a.m. The Prime Minister will attend the welcoming ceremony with military honours for the Prime Minister of Portugal, António Costa. A second ceremony will take place in the rotunda.
Centre Block
Parliament Hill
Note for media:
Photo opportunities outside and inside Centre Block
10:25 a.m. The Prime Minister will hold a bilateral meeting with the Prime Minister of Portugal.
Prime Minister’s Office
Centre Block
Parliament Hill
Note for media:
Pooled photo opportunity at the beginning of the meeting
11:40 a.m. The Prime Minister and the Prime Minister of Portugal will participate in a signing ceremony.
Rotunda
Centre Block
Parliament Hill
Note for media:
Photo opportunity of the walk through Hall of Honour to the rotunda
11:50 a.m. The Prime Minister and the Prime Minister of Portugal will hold a joint media availability.
Foyer
House of Commons
Note for media:
Open coverage
2 p.m. The Prime Minister will attend Question Period.
5:30 p.m. The Prime Minister will meet with the Premier of Yukon, Sandy Silver, the Premier of the Northwest Territories, Bob McLeod, and the Premier of Nunavut, Paul Quassa.
Prime Minister’s Office
Centre Block
Parliament Hill
Note for media:
Photo opportunity at the beginning of the meeting
BOOK
The Globe and Mail. 3 May 2018. In Fascism, Albright draws on her own experience with autocrats. Part potted history, part polemic, the former diplomat’s book charts a narrative of despots from Mussolini to Kim
ADRIAN MORROW, WASHINGTON
[Trump] is the most undemocratic president of the modern age, of people I have studied, that I’ve ever seen.
MADELEINE ALBRIGHT
BILL O’LEARY/THE WASHINGTON POST VIA AP
Madeleine Albright says Donald Trump is the “first anti-democratic president in modern U.S. history” and, were he living in a country with weaker checks and balances, “would audition for dictator.”
The charge comes in the former U.S. secretary of state’s new book, Fascism: A Warning. The tome cautions that the President’s dismissal of unflattering media stories as “fake news” and his repeated attempts to denigrate an independent investigation into his campaign’s ties to the Kremlin dovetail with a rising wave of autocracy around the world.
“He is the most undemocratic president of the modern age, of people I have studied, that I’ve ever seen,” Albright says in an interview. “He does not have a respect for democratic institutions.”
Part potted history, part polemic, the book charts the narrative of fascism from Benito Mussolini to Kim Jong-un and raises the alarm about the current crop of authoritarian leaders – from Russia’s Vladimir Putin to Hungary’s Viktor Orban to Turkey’s Recep Tayyip Erdogan – consolidating power.
Fascism is also a lament: Rather than serving as a counterweight to the world’s autocrats, Albright argues, Trump often expresses admiration for them. His bashing of the U.S. media gives dictators cover for their own attacks on media freedom, she writes, while his attempts to dial back the United States’ historic international leadership role offers undemocratic countries such as China more room for influence.
And the President’s musings about firing Robert Mueller, the special counsel investigating whether Mr. Trump’s associates conspired with Russia’s efforts to tip the 2016 election to their candidate, are straight out of an autocrat’s playbook.
“This is exactly … somebody who clearly thinks that he is above the law,” she says. “He’s undermining his own Department of Justice. This is one of the characteristics that I think is very, very dangerous.”
Much of the book draws on Albright’s own experience: Born in Czechoslovakia in 1937, she fled the country twice with her family – first to England after the Nazi takeover in 1938 and then, permanently, to the United States following the rise of a Communist government in 1948. Following a career as a political staffer and academic, Albright served as former president Bill Clinton’s ambassador to the UN before becoming her country’s top diplomat.
Some of Fascism’s strongest sections are the ones drawn from Albright’s first-hand observations of the autocrats she dealt with while in office.
Russia’s Putin struck her as “so cold as to be almost reptilian”; Serbia’s Slobodan Milosevic liked to “act the innocent” in talks with the West, insisting he was merely protecting the rights of Kosovo’s Serb minority when his security forces were actually ethnically cleansing the province’s Albanian majority; Venezuela’s Hugo Chavez was an “ebullient” charmer.
One particularly vivid chapter recounts Albright’s meetings with Kim Jong-il in 2000, when Washington sought to negotiate an end to Pyongyang’s nuclearmissile program. For the pampered, hereditary leader of a brutally repressive hermetic country, Albright found Kim to be wellversed on world affairs, from computers to the environment, frank about his country’s economic failures and easy to talk to.
“He was cordial, in full control of his emotions,” she writes. “Kim listened patiently and didn’t try to lecture me on history the way Milosevic had done … instead he allowed me to have my say, and when I paused out of courtesy, urged me to go on and complete my thoughts, something that almost never happened with my male colleagues back in Washington.”
The deal ultimately unravelled, North Korea built nuclear bombs and Trump is now preparing to meet with the son of the dictator Albright negotiated with nearly two decades ago. While Albright says she is encouraged that the White House wants to kick-start talks, she worries that the President is unprepared and could make concessions to Kim Jong-un without securing verifiable commitments to nuclear disarmament in return.
“I am in favour of using the diplomatic tool, but I’m nervous about who actually is going to be able to have those discussions,” she says. “There are technical issues and there is no evidence that President Trump has been well-versed in them.”
Where the book falters is in its lack of a substantial first-hand account of how and why democratic leaders failed to stop the current rise of authoritarianism. As one of the most powerful members of the West’s ruling class during the decade after the Cold War, Albright is in a prime position to recount the behind-the-scenes decision-making that led to the failures of democracy she describes.
Speaking with The Globe and Mail, she does admit some collective naiveté on the part of democratic leaders who sincerely believed the fall of the Soviet Union marked the end of history. Economic problems in the former Soviet bloc, including the rise of the oligarchs, served to dissipate that initial promise.
“We had been asked to do something that had never been done in history, which is how to devolve the power of your major adversary without a war,” Albright says.
Still, Fascism stands out for both Albright’s close vantage point to many of the leaders she describes and for its deft structure, which rests on highly readable sketches of a dozen despots, interspersed with analysis on the common traits that signal the rise of fascism.
Albright even tries to define the notoriously murky term, setting out three specific criteria: A leader who identifies with a specific ethnic or class group and pits it against others; denigrates democratic institutions such as the courts or the free press and puts themselves above the law; and uses any methods, including military force, to achieve their aims.
And by this definition Trump, for all the harsh criticism he takes from Albright, does not actually count as a fascist in her view.
“While certain elements of the first part are there [with him], certainly the third part isn’t,” she says. “I do not think that he’s a fascist.”
But Albright draws parallels between the forces that brought to power Trump, current autocrats and fascist leaders nearly a century ago. And she argues that the original rise of fascism offers lessons for today on fighting back.
“We can’t normalize what’s going on. … We should not accept leaders that think they are above the law,” she says. “One of my favourite quotes is from Mussolini, who said ‘If you pluck the chicken one feather at a time, then people won’t notice.’ So we have to speak up when the feathers are flying.”
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LGCJ.:
