Corpcentre's Blog

August 6, 2009

The Pick of Professionals

Filed under: canada economy,canadian business,hiring executives,recession — corpcentre @ 3:05 pm

While some companies coast-to-coast have been downsizing as a reaction to the slump in the national, and ultimately global, economy, others have found that this is the ideal time to recruit professionals at senior and executive levels. In essence, some companies have realized that this is the time to turn the economic downturn to their advantage.

A large number of highly qualified people are ready and able to work. Through no fault of their own, they have been laid off, as companies have had to make extremely hard decisions in order to maintain a balanced budget in challenging financial times. The result is a deficit in cash but a surplus in talent. Thus, CEO’s with a sharp eye are using this opportunity to shop for top talent that can ultimately add to their corporate team.

Not only are recently dismissed professionals available to work. Companies are unabashedly recruiting top talent from the active workforce, seizing the opportunity to woo top-tier professionals to their management teams. In this new era where job security is rapidly becoming near extinct, top executives are open to offers.

As Canada is rapidly emerging from the recession, companies with an eye to the future are adding talent to their teams in order to strengthen their corporate positions. An impressive list of available talent is ready and able. Similarly, not only has active recruiting become the order of the day. Whereas companies had difficulty soliciting top level resumes as little as two years ago, today those same companies are able to take their pick of qualified applicants. Similarly, the wide variety of available talent has afforded companies the opportunity to add new skills to their management teams.

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August 2, 2009

When Will the Economy Be Stable Again?

Filed under: Bank of Canada,canada economy,canadian business,entrepreneurs — corpcentre @ 7:42 pm

This is the question on the lips of many economists and regular citizens alike. According to the Bank of Canada, the economy is in an upswing. However, complete recovery, or a return to economic levels prior to the recession, should not be expected until mid-2011.

Although economic indicators are showing upward trends, restructuring in major industries such as auto and forestry – to name but two of many – will take some time, thus slowing economic activity. Another key factor is the increasing strength of the Canadian dollar. The return of a strong dollar – currently trading at nearly 91 cents U.S. – will hold back exports. Mark Carney, governor of the Bank of Canada, has warned that the dollar’s raid rise may “fully offset positive factors” in the economy. However, economists seem certain that Mr. Carney is unlikely to intervene with the dollar’s growth, thus maintaining the policy of the Bank of Canada for nearly a decade.

A strong Canadian dollar is not all bad, though, for the economy. While it increases the price of Canadian exports, conversely it decreases the price of imports. As the demand for imports is quite high, the strength of the Canadian dollar is beneficial to consumers.

Another indicator of recovery on the horizon is the decision by the Bank of Canada to reduce the amount of cash that it was injecting into the banking system. This measure was adopted when credit markets seized up in the final quarter of 2008. The banks have reduced their dependence on this cash influx, thus generating the central bank’s decision. However, the Bank of Canada will maintain its commitment to provide liquidity as necessary to support the stability of the nation’s financial system.

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July 27, 2009

Bank of Canada: Hiring and Sales to Go Up Within a Year

Filed under: Bank of Canada,canada economy,canadian business,recession — corpcentre @ 3:30 pm

Businesses in Canada say things are looking up after a difficult year, as per a new Bank of Canada survey. One hundred companies were polled in May and June.

Sales are expected to increase in the next year according to 61% of senior managers polled in the quarterly business survey. This is the first positive forecast for sales from a majority of execs surveyed since the 3rd quarter of 2008. In the past year, sales went down according to 69% of respondents, which was a record amount for this poll.

In addition, more companies plan to do more hiring in the next 12 months (39%) than those who plan to lay off employees (17%).

The Bank of Canada comments that in general their results show that businesses expect the economy to improve, but slowly, still conservative about investing.

This is an extremely positive outlook for Canada and as well for the US. But the companies surveyed still don’t see US demand increasing in a big way next year. So they estimate that they will spend less on investing in the upcoming year. The results in this area have been negative for the past 2 years as well.

And despite some claiming to have reduced their production capabilities already at this point; the bank says very few businesses report that they would have a hard time meeting unforeseen swells in demand. A greater number of businesses also believe their product prices will be lower next year.

Senior loan officers, polled separately, reported that in the second quarter of 2009 the conditions for lending continued to contract. However, this time the bank explained that the tighter lending was industry-specific than in previous surveys and found more in such areas as the auto sector, forestry products and transportation.

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Economic Growth is on the Horizon

Filed under: Bank of Canada,canada economy,canadian business,Economic forecast — corpcentre @ 2:48 pm

While it is not predicting the end of the economic recession – the worst since the Second World War, the Canadian government is presenting a bright outlook for the immediate future. The government now thinks that the current year’s downturn will be less severe than earlier predictions and growth for 2010 will be stronger. As expected, the Bank of Canada is keeping its key policy rate at 0.25-per-cent – an historic low and has pledged to keep that rate until the spring of 2010.

In a move that has surprised some economists, the central bank has reduced the amount of money available to chartered banks in order to support borrowing and lending. Bank Governor Mark Carney has noted that some banks were not drawing down as much money as the Bank of Canada was making available, Mr. Carney cautiously sees this trend as a strong indicator of improving financial markets.

“Stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in business and consumer confidence are spurring domestic demand,” according to a recent statement released by the central bank.

Mr. Carney has improved his financial forecast for the Canadian economy. An earlier April forecast of three percent annual contraction has been reduced to 2.3 percent. Similarly, he has increased his 2010 growth projection by half-a-point to 3.5 percent.

While agreeing that the future is looking brighter, leading analysts at several of the nation’s leading banks view Mr. Carney’s outlook as overly optimistic. Most forecasts in the private sector are limiting growth in 2010 to 2.0 percent.

In any event, Mr. Carney has not changed his opinion that complete economic recovery will not be realized before mid-2011.

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July 19, 2009

Green Light for Organics Part III

The Price and Profit Factors: Status Matters

Even with a lack of real evidence of its superiority, people do pay more for organic produce, mainly because they believe it to be healthier as well as tastier than its counterpart. Depending on various factors, the prices can be on par with conventional produce and go up to 30% higher.

Because of the regulation/certification, lower production volumes and the fact that fewer organic products are mass produced, the price of organic can be higher. But the increase in demand recently for these products has caused greater production, thus driving down the price. Retailer Shaskin says that organic strawberries, for example go for almost the same price as the conventional ones, and that even though some organics will stay higher, many types of organic products will go down in price in the future.

Ontario-based organic wine producer Martin Malivoire believes the prices will even out and conventional food producers will find their market to be less profitable as the costs for pesticides and other conventional growth methods go up. “It will become a healthier world out of necessity because we won’t be able to expend the energy and organic foods will actually be the cheaper choice,” he said.

Malivoire’s critically acclaimed wines are seeing an increase in sales in Ontario so his company is expanding production as well as distribution to Quebec and Alberta, among other new markets. He feels that the labeling claims no small part in his success. Though his grapes were always organic, he got the official accreditation in 2004 as he saw it made a difference to his consumers. And now he sees that his products are believed to be of higher quality for that reason.

Though he has been advised to raise prices due to his organic status he chooses not to at this point. “I think the impact is those that are not organic are going to have to reduce their prices in order to compete with us,” Malivoire says.

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July 17, 2009

Green Light for Organics Part II

Questionable Standards Until Now for Canada

Despite that proper accreditation for organic products has existed in Europe and the U.S. for several years; until recently Canadian organic products could receive such a title even based on the manufacturer using organic hand soap. There has only been voluntary certification here until June 30 of this year; when the labeling standards for Canadian organic products became enforceable by law.

According to Michael Saumur of the Canada Organic Office at the Canadian Food Inspection Agency, those companies claiming to be organic on their labels that don’t act on a warning to comply with the laws are subject to their products being removed from stores or face prosecution. These laws include a requirement for a product to contain at least 70% organic ingredients to be called “organic”. There will also be a specific logo for products that are over 95% organic. Those products that are between 70% and 95% organic can state their percentage on the packaging.

Though the laws may be inconvenient to implement at first, Denise Shaskin of Planet Organic Market believes they will ultimately benefit the organic industry. Now the competition in the industry can be more fair too, and the new certification is recognized by the U.S., eliminating the need for separate certification in order to export goods. According to a study in the Canada Gazette, the new certification standards could have a net benefit of $752 million for the economy.

In Shaskin’s experience, people’s main reason to shop for organic goods is due to an illness in their family. So since they often scrutinize the contents of a product for health concerns, she believes the certification standards will boost many consumers’ confidence in the contents of the packages they buy.

Shaskin, recognizing the increasing demand for organic products in the marketplace, entered this market in 1993 and started the Planet Organic chain in 2001. She claims that annual sales jumped to $113 million last year from only $2 million for her retail chain that operates throughout Canada now and intends to expand further into Ontario and Alberta.

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July 16, 2009

Canada More Confident About Hiring as Ontario Catches Up

According to the Bank of Canada’s Business Outlook report, Ontario businesses are not as optimistic regarding hiring as companies in other Canadian provinces.

The Bank of Canada released this and another report on July 13 2009. Both are bullish about the Canadian economy yet bearish on Ontario’s payroll statistics. The central bank said “On balance, firms expect to increase the level of employment over the next 12 months… Hiring intentions have improved in all sectors but continue to be relatively weak in some regions, notably, in Ontario.”

Out of 100 companies interviewed between May and June of 2009, only 39% expected to increase payrolls during the next year and 17% expected declines. The last report in April said that 25% were optimistic and 26% were expecting payroll cuts.

The central bank did not explain why Ontario was not as confident regarding hiring. Michael Gregory of BMO Capital Markets, a private-sector economist, pointed to the manufacturing sector saying that the survey was conducted during the shutdown of Chrysler LLC‘s business operations and prior to the emergence of the new General Motors Company.

Meanwhile, the Conference Board of Canada issued its own report forecasting moderate growth for the Canadian economy which would cause the GDP to diminish by 1.9% in 2009 yet is expected to bounce back in 2010 by 2.7%.

Despite these hiring trends, 61% of Canadian businesses are more positive about future sales despite the credit crisis. Only 33% of respondents suggested that credit conditions have tightened within the last few months.

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July 15, 2009

Canadian economy not to be outdone – Part II

At the G8 summit, both the U.S. President and British Prime Minister, among others called for additional economic stimuli on a global scale, despite the US$2 trillion already expended as they feel it has yet to push demand high enough. On the contrary, Canadian PM Stephen Harper urged other leaders to focus on ensuring proper delivery of those stimuli already promised. “That’s been our focus in Canada and I would encourage the same priority elsewhere,” he told the press.

Canada’s stimulus package consists of $46 billion over 2 years, poised for creating more jobs and igniting consumer demand. The amount is expected to increase to almost $80 billion once the provincial and territorial aspects kick in. PM Harper claims 80% of the planned federal funds have already been committed. In addition, Bank of Canada cut its key lending rate from 4.5% in December 2007 to its present level of .25%

Analysts see the present Canadian stimulus package taking effect in the next few months and see no need for any new stimulus monies. There is always a lag from the announcement of the stimulus package until effects are seen from it, must like that of lowering interest rates, according to Craig Wright, chief economist at Royal Bank of Canada. “Staying the course is probably the prudent path right now,” he says.

Stefane Marion, chief economist at National Bank Financial, agrees that we must wait for the money to start working in the economy. Canada’s financial system in general is in better shape than those of most other G8 countries and did not have the same real estate collapse that they did. He also sees production rising this year as indicated by purchasing managers and other key factors.
Furthermore, the IMF advises countries to continue to support their economies in some way until the recovery takes hold (predicted next year); while they should also plan to reduce deficits in their budgets caused by spending to combat the recession.
Canada, along with the IMF in general also agreed to make emergency capital available for borrowing, for countries that may need it soon.

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July 14, 2009

Canadian economy not to be outdone – Part I

The International Monetary Fund, which released a report at the same time as the G8 summit convened, believes Canada is capable of the most improvement in her economy for 2009 and 2010 compared to almost all industrialized nations. Though some leaders at last week’s G8 summit are pushing for more stimulus money, other economic experts don’t think they will be necessary in Canada.

Despite expectations of a slight shrinking for the world’s economy this year (1.4%), IMF has a positive outlook for the end of the recession in 2010, calling for 2.5% global economic growth next year, up more than .5% from their predictions last April.

Other industrialized countries’ economies are expected to decrease by 3.8% this year, in comparison to Canada, only expected to drop by 2.3%. Only .8% growth is predicted for the US for 2010, half that of Canada’s forecasted gain of 1.6%, which is only second in line to Japan’s 1.7%. India and China, top consumers of Canadian raw materials are seen as leading in growth for 2010, set to increase by 6.5% and 8.5%.

Even though they feel that emergence from the recession will be on the slow side, “Financial conditions have improved more than expected, owing mainly to public intervention, and recent data suggest that the rate of decline in economic activity is moderating,” the IMF commented.

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July 13, 2009

Small Business Outlook- The Worst Is Behind US

Filed under: canada economy,canadian business,economic recovery,recession — corpcentre @ 2:48 pm

There was a time when small and medium sized enterprises (SMEs) had a problem with staffing, today it is with customers. Where are the customers? With sales down, SMEs are coming up with creative ways to draw in customers from bundling items for specials of the day, to discounting individual items. Even with the creativity, SMEs are hoping to make a profit.

The state of the economy has SMEs concerned about the year ahead. Consumer spending has weakened. A recent article in the Canadian Business magazine sites a recent poll on the SMEs business outlook for the near future. The poll conducted by the Canadian Federation of Independent Business (CFIB) listed the Business Barometer index for Alberta as 53.2 for May, meaning SMEs in Alberta were slightly more optimistic than pessimistic about the near future. The outlook for the future varied in other provinces with Newfoundland and Labrador having one of the highest Business Barometers at 64.4, Quebec (52.2), and Ontario at 59.9.

The SMEs in Quebec and Ontario are highly dependent upon manufacturing and US trade. British Columbia has been affected by the housing market in the US and the lumber sectors. Optimism amongst SMEs is well below the historical average, however Ted Mallet, the CFIB’s chief economist believes the worst times could be behind business owners, but there is uncertainty when the recovery will begin and how long it will take.

The recovery should likely start in 2012, if not earlier, for Newfoundland and Labrador with the announcement from the government that the Hebron offshore oil project is moving forth. Although operation will be several years down the road (2016- 2018) this announcement has provided a glimmer of hope for SMEs. The project is estimated to create 3500 jobs and to generate approximately$20 billion in royalties over 20 – 25 years. This is obviously good news for businesses in Newfoundland and Labrador, hopefully there will be a similar turn for the rest of the country.

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