La Coop fédérée to Close its Hardware and Material Distribution Centre in Trois-Rivières
La Coop fédérée announced last Friday that it will close its hardware and material distribution centre (which operates under the Unimat banner) in Trois-Rivières, however, the agricultural machinery and parts activities will be maintained, as will the Unimat banner. The company estimates that the time required to carry out the complete closing will be by the spring of 2015.
The closing will impact 235 employees starting in the spring of 2014 with office (administration) personnel, followed by warehouse employees in the summer-fall of 2014.
"Our organization will ensure a fair and equitable transition for all our employees as has always been the case. In order to minimize the impact we have also retained the services of the firm Vézina Nadeau Labre, a leader in career transition, which has successfully supported large, known groups and their distribution centres. Their expertise in the face of such a challenge is clear," noted the CEO, Claude Lafleur in a press release.
“The status quo was not a responsible decision. We looked at a lot of scenarios, including specialization, regionalization, and even bringing back certain activities. We also conducted technical analyses that were studied seriously. However, we arrived at the conclusion that we were up against the wall,” added Mr. Lafleur.
“For La Coop fédérée and its 175 retailers, which employ 4,500 people, it is important to remain competitive. The involvement of La Coop fédérée and its network in this sector remains a priority and it intends to remain a full player,” the statement concluded.
Last November, La Coop fédérée announced that it was acquiring a minority interest (20%) in Groupe BMR and it is expected that BMR’s warehouse operations will take over for the Coop DC that is closing.
Source: La Coop fédérée
Target Accelerates Implementation of Chip-Enabled Smart Card Technology
Target Corp, which suffered a massive data breach during the holiday shopping season, is speeding up a $100 million program to implement the use of chip-enabled smart cards to protect against cyber theft, a senior company executive said.
In an opinion piece on Monday in the Hill newspaper on the eve of his much-awaited appearance before the Senate Judiciary Committee, Chief Financial Officer John Mulligan said the retailer's goal was to have the technology in place by early 2015, more than six months ahead of schedule.
The adoption of such chip-enabled cards would be "one step American businesses could now take that would dramatically improve the security of all credit and debit cards," Mulligan wrote.
He said the United States had been slow to develop the technology, which was already in wide use in other parts of the world.
The enhanced smart cards contain tiny microprocessor chips that encrypt personal data shared with sales terminals used by merchants. Stolen smart card numbers would be useless without the chip, Mulligan said.
He noted that Target had been working for years to adopt the technology.
"Since the breach, we are accelerating our own $100 million investment to put chip-enabled technology in place. Our goal: implement this technology in our stores and on our proprietary REDcards by early 2015, more than six months ahead of our previous plan."
Mulligan said requiring the use of four-digit personal identification numbers to complete sales transactions would provide additional safety.
"To be frank, there is no consensus across the business community on the use of PINs in conjunction with chip-enabled cards," Mulligan wrote. "But Target supports the goal and will work toward adoption of the practice in our own stores and more widely."
In the cyber theft that hit Target, some 40 million credit and debit card records were stolen, along with 70 million other records with customer information such as addresses and telephone numbers.
Luxury retailer Neiman Marcus has also disclosed a data breach that compromised data from about 1.1 million cards. Michaels Stores Inc, the biggest U.S. arts and crafts retailer, said it was investigating a possible security breach on its payment card network.
"The data breach that struck our company spotlighted the sophistication of criminal hacker networks operating across the globe," Mulligan wrote. "We know the attack created significant concerns for millions of customers. We will learn from this incident and we will work to make Target, and the wider business community, more secure in the future."
Source: Reuters
Government & Legislative News
Federal Budget Takes Aim at Canada – U.S. Price Gap But Can It Be Successful?
Jim Flaherty is vowing to legislate away the often large gap between retail prices in Canada and the United States, but it is unclear how the government will manage to do it.
“Canadians work hard and should not be gouged with higher prices simply because of where they live,” according to the budget document tabled Tuesday by the finance minister.
Rather then further reducing tariffs, he promised a new law to tackle so-called “country pricing” – the practice of manufacturers charging retailers higher prices in Canada than in the U.S. for identical products. Country-pricing schemes affect the cost of a wide array of consumer goods, from cars to tires to shoes to cookies.
The new “framework” will enable Canada’s competition watchdog to pursue companies that “use their market power to charge higher prices in Canada that are not reflective of legitimate higher costs,” according to the budget. It mentions “corporate agreements” that thwart Canadian retailers from buying directly from U.S. distributors.
Canadian retailers have complained that suppliers often charge them 10 to 50% more as a result of these deals, leaving them unable to sell at lower the prices offered in the U.S.
Citing various independent studies, the budget says Canadians were paying anywhere from 10 to 25% more than Americans for most goods in 2011 – even after adjusting for the exchange rate and higher Canadian sales taxes.
The government brought in limited measures in the 2013 budget when it eliminated tariffs on baby clothing and sports equipment.
This followed the Senate finance committee report in February 2013 that concluded that there is “no single explanation” for the fact that prices can be higher than those in the U.S., even after adjusting for exchange rates.
The report cited factors for the discrepancy including the relatively small size of the Canadian market and customs tariffs levied by the federal government.
Diane Brisebois, president of Retail Council of Canada, said yesterday that the government is sending a clear signal that big disparities in manufacturers’ prices for Canadian and U.S. retailers is unacceptable. She said the budget “goes a long way to trying to address and fix” the problem but “the devil’s in the details,” and few were provided.
One of the biggest price gaps is between what Canadians and Americans pay for car tires. The Tire Dealers Association of Canada has been lobbying tire makers to eliminate Canadian country pricing, and it welcomed Ottawa’s move.
The TDAC says many U.S. tire makers use their supplier contracts to force Canadian retailers to buy tires directly from Canadian affiliates, rather than through U.S. wholesale channels, where prices are cheaper. Because of intense lobbying by the association, “the gap has closed somewhat,” said Bob Bignell, who heads the tire price disparity committee at the TDAC. But having the government take action on the matter will add pressure to close it further.
However, Mr. Bignell questioned how Ottawa’s plans will work in practice – as did many others.
“It’s beyond me how you can legislate this,” said Douglas Porter, chief economist at the Bank of Montreal, who regularly examines the Canada-U.S. price gap. “One can easily imagine firms making tiny differentiation in products sold in Canada to get around aligning prices precisely between countries. The plot thickens!”
“This is going to extend their mandate into a very gray area,” said Avery Shenfeld, Toronto-based chief economist at CIBC World Markets. “Separating what’s justified from unjustified is going to be difficult.”
Bob Kirke, executive director of the Canadian Apparel Federation, which represents the Canadian clothing industry, wondered whether Ottawa could be effective in addressing country pricing by using the Competition Act. “How will this be enforced?” he asked. “Look at the success rate of the Competition Bureau.”
Joy Nott, president of the Canadian Association of Importers and Exporters, also wondered how Ottawa would implement the policy.
“From a consumer’s standpoint I applaud the initiative,” she said. “This does need to be addressed because it is harming Canadian retailers and importers. I just don’t understand how you get there.”
It is hard to see how the Competition Bureau will handle the issue, she said, especially when a product is sold by the same company in the United States and in Canada. “I think it is a noble effort, but I am not clear on how they are going to proceed.”
Indeed, by targeting retail prices, Mr. Flaherty may be going after a problem that is already be fading on its own. The falling Canadian dollar is already discouraging cross-border shopping.
And in some industries, the price gap has begun to diminish sharply. Chris Hall, co-owner of Winnipeg-based McNally Robinson Booksellers, said that after several years of the Canadian dollar at or near par, the prices printed on most books have caught up with the new reality.
In the past there were many complaints about the discrepancy – especially when the dollar was right at par and it was easy to calculate – but the problem has largely disappeared, Mr. Hall said. “We haven’t had a customer mention it for quite some time.”
In recent months, the Bank of Canada has highlighted the role of intense retail competition in keeping prices down. In a speech last week, the bank’s top deputy governor, Tiff Macklem, warned that competition between major retailers will continue to depress retail prices “for some time.” He suggested that Canadians are enjoying the fruits of cut-throat retail competition and improved productivity as Wal-Mart, Target and other U.S. chains expand across the country.
The budget includes other measures to protect consumers, including a cap on the rates that wireless phone providers charge each other when their customers “roam” on external networks and a code of conduct for financial services.
Canada will also give the Canadian Radio-television and Telecommunications Commission and the industry ministry power to fine companies that violate rules such as the government’s wireless code of conduct.
In another budget move, the government pledged to promote credit card “fairness and transparency” and “help lower credit card acceptance costs for retailers” while encouraging those merchants to lower prices.
Ms. Brisebois applauded the government for addressing the problem of the growing number of premium credit card fees that become a cost burden for retailers. “This is a $5 billion-plus issue for Canadian retailers and consumers and one that has been particular debilitating for our independent merchants,” she said.
Other budget highlights:
Based on private sector forecasts, Ottawa expects the Canadian economy to grow 2.3% this year and 2.5% in 2015, slightly lower than the growth rates anticipated last fall.
The government also expects the jobless rate to gradually fall, from 7% currently to an average of 6.8% this year and 6.6% in 2015.
The finance minister said the government would put the country back in the black by 2015-16 – and perhaps as early as this coming fiscal year – after running annual deficits since 2008-09. But with surpluses looming, he insisted the government would not indulge in a spending binge ahead of the anticipated election in the fall of 2015.
After posting a record deficit of $55.6-billion in 2009-10, Ottawa now expects a shortfall of $16.6-billion this year and a $2.9-billion deficit in the coming year, though with a $2.5-billion cushion, the 2014-15 budget could easily end up in the black.
Mr. Flaherty forecast a surplus of $6.4-billion in 2015-16, growing to $10-billion by 2018-19. That assumes, however, that the Conservatives don’t shower voters with tax breaks in the next budget, the last one before an anticipated 2015 election.
Based on current projections, the federal government’s debt burden would shrink from 33% of GDP this year to 27% in 2017-18 – hitting pre-recession levels.
While the budget contained no major new spending or tax cuts, Mr. Flaherty did provide some further selective help for businesses and consumers including:
- Allocating $500-million in loans over two years for an Automotive Innovation Fund, which could be tapped by Chrysler as it looks to re-invest in Windsor plants.
- Over the next decade, $1.5 billion will be set aside for a fund that post-secondary institutions can dip into for research that creates “long-term economic advantages for Canada.”
- Included in the budget is notice that Ottawa is pushing ahead with the Canada Jobs Grant program, regardless of a host of provincial complaints. The program, a centrepiece of last year’s budget, will see roughly $300-million of $500-million in current federal job-training transfers redirected by the time it’s fully implemented. According to the budget, Ottawa will now take on the provincial share of the program and launch it April 1 in provinces where a deal isn’t reached soon. No province has yet signed on.
- The budget includes $11-million over two years in new funding for the Labour Market Opinion process, a document required for the much-maligned Temporary Foreign Worker Program. The new funding comes as employers have complained LMO wait-times have soared.
- Providing up to $100-million a year for interest-free loans for apprentices who train in the trades – part of an effort to address business complaints about a shortage skilled workers.
- Selective infrastructure spending totalling $376-million over two years, including bridges in Montreal and between Detroit and Windsor to enhance the flow of commercial traffic.
- Over five years, $305 million will be spent to extend broadband Internet service in rural and northern areas.
- Although he warned about soaring consumer debt, Mr. Flaherty offered no new measures to combat it. But the Canada Mortgage and Housing Corp. will continue to reduce its insured-mortgage program and, in the budget documents, the government promised “to make further adjustments as necessary.”
Source: The Globe and Mail, The National Post
Economic News
Housing Starts in Canada Slide in January; To Stabilize in 2014 CMHC Says
The pace of housing starts slowed in January compared with December, the Canada Mortgage and Housing Corporation (CMHC) said on Monday.
The agency estimated there were 11,737 actual starts in January and that is extrapolated out to a seasonally adjusted annual rate (SAAR) of 180,248, down 3.7% from 187,144 in December.
TD Bank economist Connor McDonald said the cooling in the number of housing starts supported the bank’s view calling for a soft landing of the Canadian housing market this year and next.
“The decline in starts is an indication of housing supply falling into alignment with demand in most major markets,” McDonald said.
“We’ve yet to see the same trend in Toronto, where new home sales have lagged due to limited supply. However, we expect Toronto to follow suit as homes under construction reach completion and more supply comes online.”
Urban starts decreased by 2.7% in January to 163,158 units on an adjusted annual basis.
Multiple urban starts were down 6.0% to 102,289 units on the same basis, while single-detached urban starts segment increased by 3.4% to 60,869 units on the same seasonally adjusted basis.
Urban starts in January increased in the Prairies and in Ontario and fell in Atlantic Canada, Quebec and British Columbia.
Rural starts were estimated at a seasonally adjusted annual rate of 17,090 units in January, down 12.0% from December.
The month-over-month results came as CMHC also said its six-month moving average of the monthly seasonally adjusted annual rate slipped to 191,456 units in January compared with 194,518 in December.
“The trend in housing starts decreased slightly in January, while the inventory of newly completed and unabsorbed units saw a modest downward trend in the last half of 2013,” said Mathieu Laberge, deputy chief economist at CMHC.
“This is consistent with our expectation that builders will continue to gradually adjust activity in order to manage their levels of inventory.”
Last week, CMHC predicted builders will likely reduce housing starts in 2014 and 2015 as they adjust to rising interest rates and a slowdown in demand from first-time buyers.
“With a relatively high number of units currently under construction, we expect builders will gradually adjust their activity in order to reduce their level of inventory,” said Mr. Laberge. “Housing demand for resale market homes will continue to be sustained despite expected modest and gradual increases in mortgage rates toward the end of the forecast horizon.”
On an annual basis, housing starts are expected to range between 176,600 and 199,800 units in 2014, with a point forecast of 187,300 units, relatively unchanged from 187,923 units in 2013 according to CMHC’s 2014 First Quarter Housing Market Outlook. In 2015, housing starts are expected to range from 163,200 to 206,600 units, with a point forecast of 184,900 units.
Multiple Listing Service (MLS) sales are expected to range between 436,000 and 497,000 units in 2014, with a point forecast of 466,500 units, up from 457,485 in 2013. In 2015, sales are expected to range from 443,400 to 506,000 units, with an increase in the point forecast to 474,700 units.
The average MLS price is forecast to be between $380,100 and $400,700 in 2014 and between $384,300 and $409,900 in 2015. CMHC’s point forecast for the average MLS price calls for a 2.1% gain to $390,400 in 2014 and a further 1.7% gain to $397,100 in 2015.
Source: CMHC, The Canadian Press
Canadian Building Permits Fall Unexpectedly
Statistics Canada reported last week that the total value of building permits issued by Canadian municipalities declined 4.1% to $6.5 billion in December, following a 6.6% decrease in November.
Lower construction intentions for commercial buildings and multi-family dwellings in Ontario and British Columbia were responsible for much of the decrease at the national level in December.
The total value of building permits for 2013 edged down 0.1% from 2012 to $80.8 billion.
December’s drop came as a surprise to industry watchers, as the consensus call had been for a 1.5% rebound following November's slump.
CIBC economist Peter Buchanan suggested the bad weather in large parts of the country in December contributed to the continuing slowdown.
"Construction will continue to drag on growth in 2014, but the broader story is how resilient the Canadian construction and housing sectors have been so far to the correction engineered for them by the government," Bill Adams, senior economist for PNC Financial Services Group, said in a client note.
He was referring to the four rounds of mortgage rule tightening that Finance Minister Jim Flaherty put into place in recent years, in an effort to keep the housing market from overheating.
"While activity in the Canadian real estate sector has slowed, prices have so far held fairly steady in most markets. The true test of the resilience of the Canadian real estate sector will be what happens after interest rates begin to rise, but that is still down the road."
The total value of permits in the residential sector fell for a second consecutive month, down 9.3% to $3.7 billion in December and the lowest level since March 2013. Lower construction intentions were posted in all provinces except Quebec and New Brunswick.
Overall for the year, the total value of residential building permits amounted to $48.3 billion, almost unchanged from the total value reached in 2012.
Construction intentions for multi-family dwellings decreased 21.9% to $1.5 billion in December, following an 8.4% decline in November. Most of the decline occurred in British Columbia, Ontario and Alberta. Despite decreasing in December, these three provinces posted strong gains in the value of multi-family dwelling permits in 2013 compared with the previous year.
Municipalities issued $2.2 billion worth of building permits for single-family dwellings in December, up 1.5% from November and the third increase in four months. Gains in Alberta, Quebec and Ontario more than offset decreases in five provinces, led by British Columbia, Saskatchewan and Nova Scotia.
Municipalities approved the construction of 15,565 new dwellings in December, down 14.2% from November. The decrease in December was largely the result of a 21.3% decline in multi-family dwellings to 9,439 units. The number of single-family dwellings edged down 0.1% to 6,126 units.
In the non-residential sector, the value of building permits rose 3.7% to $2.8 billion in December, following a 4.5% decrease the previous month. Quebec, Alberta and Newfoundland and Labrador were mostly responsible for the growth at the national level, while declines were recorded in the other provinces.
Between January and December 2013, municipalities issued non-residential building permits worth $32.5 billion, relatively unchanged from 2012.
In the institutional component, the value of permits more than doubled to $939 million in December, following a 32.8% decrease in November. This was the highest level since March 2013. Institutional construction intentions were up in five provinces, with the largest increases in construction intentions for medical facilities in Quebec and educational buildings in Alberta.
In the industrial component, the value of permits rose 34.9% to $576 million, the highest level since May 2013. This advance was the result of higher construction intentions for manufacturing plants in Ontario and Quebec. Decreases were posted in five provinces, led by Manitoba.
Following three consecutive monthly advances, Canadian municipalities issued $1.3 billion worth of commercial building permits in December, down 33.5% from November. The decline came mainly from lower construction intentions for office buildings in Ontario and recreational facilities and retail stores in British Columbia. In contrast, Quebec posted the largest gain, as a result of higher construction intentions for office buildings and, to a lesser degree, warehouses.
The value of permits was down in seven provinces in December, with Ontario and British Columbia posting the largest declines.
The declines in Ontario and British Columbia were mostly attributable to commercial buildings and multi-family dwellings. Saskatchewan followed a distant third, as a result of lower construction intentions for commercial and institutional buildings as well as single-family dwellings.
Quebec recorded the largest increase, with institutional building construction intentions accounting for most of the growth. Institutional buildings and single-family dwellings explained the advance in Alberta.
In 2013, the total value of permits was down in six provinces compared with 2012. The largest decreases were in British Columbia, Quebec and Ontario. All three Prairie provinces posted advances, with Alberta registering the largest increase in the total value of permits for 2013. New Brunswick was the lone Atlantic province to post an advance in 2013.
Source: Statistics Canada, The Canadian Press
Canada’s Unemployment Rate Drops to 7% as January Job Gains Beat Expectations
Canada’s employment picture turned positive in January, with 29,400 people finding work, clawing back some of the huge declines during the last month of 2013.
Most of the gains in January — the biggest jump since August — were in the public sector, up by 25,000, and among the ranks of the self-employed, rising by 28,300, Statistics Canada reported last Friday.
Full-time employment increased by 50,500, while the number of part-time workers fell by 21,100.
The unemployment rate declined to 7% from 7.2% the previous month.
The six-month average, which smooths out monthly volatility, shows employment gains of 15,000 per month.
More people exited the labour force last month. The participation rate fell one notch to 66.3%, its lowest level in more than a decade.
Over the past 12 months, employment increased 0.8% or 146,000 and the number of hours worked rose 0.7%.
“While no ball of fire, [Friday’s] solid comeback represents a nice recovery from the ugliness in last month’s Canadian employment report,” said Douglas Porter, chief economist at BMO Capital markets.
”Notably, though, the unemployment rate at 7.0% is precisely unchanged from three months ago and from a year ago. In other words, the underlying trend in job growth is just firm enough to keep up with labour force population growth — no better, no worse,” he said.
“For the Bank of Canada, this type of result leaves them squarely on hold for as far as the eye can see.”
“With the dip in December, employment still doesn’t look to be on a great trend, but the rebound will alleviate concerns that things were getting much worse,” said Avery Shenfeld, chief economist at CIBC World Markets.
Overall jobs gains were greater than the 20,000 economists had forecast, and almost had expected a smaller decrease in the unemployment rate, at 7.1%.
The biggest job gains in January were in the health care and social assistance sector, up 16,900 positions, as well as in transportation and warehousing industry, adding 15,200 jobs. Despite this increase, employment in this industry was similar to what it was in January 2013.
The manufacturing sector lost 6,800 positions in January, with companies continuing to struggle to gain momentum after the economic downturn. Construction, meanwhile, gained 6,700 workers last month.
The number of people working in business, building and other support services fell by 25,000, bringing employment in this industry back to a level similar to that of 12 months earlier.
There were 16,000 fewer employees in public administration in January. Compared with 12 months earlier, employment in public administration was down 58,000 (-5.9%), making it the only industry with an employment decline over the period.
Over the past 12 months, most of the employment gains were recorded in five industries: professional, scientific and technical services; finance, insurance and real estate and leasing; health care and social assistance; utilities; and natural resources.
Employment in Prince Edward Island rose by 1,000 in January, and the unemployment rate was 11.3%. On a year-over-year basis, both the employment level and the unemployment rate were virtually unchanged.
The number of people working in New Brunswick fell by 2,400 in January, leaving employment at about the same level as that of 12 months earlier. The unemployment rate in this province was 9.9% in January, down 1.3 percentage points from January 2013, as fewer people searched for work.
Although employment was little changed in Ontario, the unemployment rate fell 0.4 percentage points to 7.5% as fewer people looked for work. On a year-over-year basis, employment in the province rose by 54,000 or 0.8%, the same growth rate as the national average.
In Alberta, employment was virtually unchanged in January. Compared with 12 months earlier, however, employment was up 70,000 (+3.2%), accounting for nearly half of the national gains of 146,000.
For men aged 25 to 54, employment rose by 24,000 in January, and the unemployment rate declined by 0.3 percentage points to 6.1%. Compared with 12 months earlier, employment for this group was little changed.
For men aged 55 and over, employment increased 18,000 and the unemployment rate fell by 0.4 percentage points to 6.3%. On a year-over-year basis, employment for this group was up 69,000 (+3.8%), mostly as a result of population aging.
Among women aged 25 to 54 and those 55 and over, employment was little changed in January. Compared with January 2013, employment was little changed among women 25 to 54, while it increased by 77,000 or 5.1% for women 55 and over, partly as a result of population aging.
In January, youths aged 15 to 24 saw little change in employment, and their unemployment rate was 13.9%. On a year-over-year basis, youth employment was down 29,000 or 1.2%.
Source: Statistics Canada, Reuters
U.S. Economy Adds Far Fewer Jobs in January than Expected, Unemployment Rate Falls to
5-Year Low
U.S. employers hired far fewer workers than expected in January and job gains for the prior month were barely revised up, suggesting a loss of momentum in the economy, even as the unemployment rate hit a new five-year low of 6.6%.
Nonfarm payrolls rose only 113,000, the Labor Department said last Friday. But with construction recording the largest increase in jobs in a year, cold weather probably was not a major factor in January.
“It is an improvement but a number this soft does feed worries about slowing U.S. growth,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
The second straight month of weak hiring – marked by declines in retail, utilities, government, and education and health employment – could be a problem for the Federal Reserve, which is tapering its monthly bond-purchasing stimulus program.
It was the weakest two months of job growth in three years. December payrolls were raised only 1,000 to 75,000.
But there was a silver lining in the employment report. The jobless rate dropped a tenth of a percentage point to 6.6% last month, the lowest since October 2008.
Economists polled by Reuters had forecast payrolls increasing 185,000 last month and the unemployment rate to hold steady at 6.7%.
The household survey from which the jobless rate is derived found strong gains in employment. In addition, more people came into the labour force, an encouraging sign for the U.S. labour market.
The participation rate, or the proportion of working-age Americans who have a job or are looking for one, increased to 63% from 62.8% in December, when it fell back to the more than 35-year low hit in October.
The U.S. unemployment rate is now flirting with the 6.5% level that Fed officials have said would trigger discussions over when to raise benchmark interest rates from near zero.
But policymakers have made it clear that rates will not rise any time soon even if the unemployment threshold is breached.
The private sector accounted for all the hiring in January. Government payrolls fell 29,000, the largest decline since October 2012.
Manufacturing employment increased 21,000, rising for a sixth month. Retail sector jobs fell 12,900 after strong increases in the prior months, the first decline since March.
Construction payrolls bounced back 48,000 after being depressed by the weather in December. It was the largest increase since December 2012.
Average hourly earnings rose five cents. The length of the workweek was steady at an average of 34.4 hours.
Source: Reuters
