Canada’s economy in for a ‘turbulent’ year, associate finance minister says | Canada News Media
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Canada’s economy in for a ‘turbulent’ year, associate finance minister says

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Canada’s economy is facing a “turbulent” year, but the federal government still has some spending room for big priorities including a new health-care deal with the provinces, Associate Finance Minister Randy Boissonnault said Tuesday.

Boissonnault’s remarks came as the federal Liberal cabinet was meeting on the second day of a three-day retreat in Hamilton, Ont., where the economy and the next federal budget were high on the agenda.

Finance Minister Chrystia Freeland delivered an economic update to the cabinet Tuesday, and economists and Canada’s chief statistician also briefed the ministers on the situation facing Canada and the world.

That came the day after a joint report from the Business Council of Canada and Bennett Jones warned that the fiscal forecast laid out in the last federal budget and the fall economic statement was likely too rosy.

The report, written by former Bank of Canada governor David Dodge and former Liberal finance policy adviser Robert Asselin, said the government’s forecast was based on a “plausible but optimistic” set of economic and interest-rate assumptions that are unlikely to come true.

They warn that there is a “high likelihood of a more severe recession” this year, and that the Liberal promises on everything from health-care funding and enhanced national defence spending to infrastructure improvements and climate change are going to cost a lot more than was projected.

Boissonnault said the report is one of many the government will look to as it makes its economic forecast ahead of the next budget. He said he thinks the fiscal reality will fall somewhere between the best- and worst-case scenarios laid out in the fall economic statement.

“There’s lots of uncertainty,” Boissonnault said. “So we’re going to be watching this every step of the way as we get ready for budget (2023). We still have fiscal room to be able to do the things we need to do, but the fiscal room has tightened.”

Freeland said it’s not clear yet how the COVID-19 recession will “finally play out,” and the reopening of China following years of pandemic closures is also a bit of an unknown.

“That means we do need to continue to take a fiscally prudent approach,” she said.

At the same time, Freeland said health care and the green economic transition are “real fiscal pressures” that the government has to address.

She said Canadians are looking to governments to solve health-care woes, and the green transition is something Canada can’t push off, because if it doesn’t move now, it will miss the chance.

Ongoing talks with the provinces for a new health funding deal have made some progress in recent days, though a conclusion to those talks does not appear imminent.

The provinces have asked for billions over the next decade to bring their health systems back from the brink of collapse. Ottawa is insisting on accountability for any new health funding, and Trudeau has not publicly committed to meet the premiers’ demands.

Kevin Milligan, a University of British Columbia economist who was among those asked to brief the cabinet Tuesday, said it is unlikely that any new health deal would include a lot of up-front funding, so it is unlikely to put pressure on the government’s spending immediately.

Both he and Carolyn Wilkins, a former deputy governor at the Bank of Canada and now an economics research scholar at Princeton University, said the government needs to be careful that whatever it does on the fiscal side doesn’t nudge the Bank of Canada to push interest rates up even further.

Canadians are so heavily in debt that every interest rate hike now has a bigger impact on the economy and on individuals than it would have in the past.

“And so it may seem difficult now to go through this period of slower growth (during which) we’re expecting to see higher unemployment,” Wilkins said. “But at the same time, on the other side, we’ll then be in much better shape than if we’re impatient.”

Trudeau started his day Tuesday meeting with Hamilton Mayor Andrea Horwath, the former leader of the Ontario NDP. The two tackled another spending pressure and big concern for Canadians: housing.

Horwath thanked Trudeau for bringing the cabinet meeting to her city, but not everyone in Hamilton was as warmly welcoming.

“Freedom Convoy” demonstrators have made their presence known in small numbers over the first two days. On Monday evening, about three dozen people waved flags, yelled and set off fireworks — including some they appeared to aim at the building where cabinet ministers were meeting.

Most of them disbanded by 11 p.m., but at least one protester spent most of the night honking a vehicle’s horn off and on. It was reminiscent of the noise caused by protesters’ big rig truck horns as demonstrators blocked much of downtown Ottawa almost a year ago.

This coming weekend will mark the one-year anniversary of the convoy’s arrival in the capital. The weeks-long demonstration and accompanying blockades at several border crossings prompted Trudeau to invoke the Emergencies Act for the first time since it replaced the War Measures Act in 1988.

The final report from the public inquiry into that decision is due in February.

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Rogers Communications reports $526M third-quarter profit, up from loss a year ago

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TORONTO – Rogers Communications Inc. reported a third-quarter profit of $526 million compared with a loss a year ago.

The company says the profit amounted to 98 cents per diluted share for the quarter ended Sept. 30.

The result compared with a loss of $99 million or 20 cents per diluted share in the same quarter last year.

Revenue for the quarter totalled $5.13 billion, up from $5.09 billion a year earlier.

On an adjusted basis, Rogers says it earned $1.42 per diluted share in its latest quarter, up from an adjusted profit of $1.27 per diluted share a year ago.

Analysts on average had expected a profit of $1.36 per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Oct. 24, 2024.

Companies in this story: (TSX:RCI.B)

The Canadian Press. All rights reserved.



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‘Roller-coaster’: The ups and downs of becoming a franchisee

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MONTREAL – Before she owned one, Sarah Evans had no experience in hair-removal clinics — other than the personal kind.

She began searching for a new spot for treatments after moving to Toronto from the U.K. in 2013 and found a suitable service.

“It wasn’t terrible, but there were some things where it was a little bit dodgy and suspect,” said Evans, whose professional background lies in optometry and journalism. “They were using soft wax, which isn’t the most comfortable experience.”

Then she spotted Waxon, a hair removal service just starting to franchise.

“It looks very clean, it looks very inviting … so the next time I needed a wax, I went in. And that was kind of the beginning of the story.”

Fast-forward a decade, and Evans runs three Waxon locations in the Greater Toronto Area, part of a franchised brand with 18 locations and eight more slated to open before 2026.

“It’s like being on a roller-coaster … the wheels just started turning,” Evans said. “I always had this bug in me to own my own business.”

Many Canadians feel likewise. More than 40,000 franchisees run operations that employ two million people across 600-plus brands in sectors ranging from painting to event planning, home health care, construction and — of course — food retail, according to the Canadian Franchise Association.

Compared with launching a new enterprise, opening a franchise typically comes with head office support, brand recognition and lower financial risk, as well as a connection with the local community and colleagues. But it can also mean tight corporate restrictions, heavy workloads and a big up-front investment — among other challenges of small business ownership, from rising costs to rude customers.

Head office assistance — from site renovation to software, signage equipment and furniture — is among the selling points for those considering a move into the world of franchising.

“It’s turnkey. They provide you with a fully operational bakery that’s open and running,” said Tait Mitchell, who launched a Cobs Bread bakery in Barrie, Ont., with his wife Lisa in 2021.

Franchisees receive 16 weeks of training — much of it spent baking at another location — as well as recipes and menus. All food items are ordered through Cobs distributors.

In the case of College Pro window cleaners, franchisees often draw on an existing client list that they then build out, relying on corporate staff to handle payroll and taxes.

Ambrose Obe trained part-time for two months before jumping into the business he took over in Winnipeg after coming to Canada from Nigeria last year to study management.

“This was going to be an opportunity for me to learn how businesses work here in Canada and to get some business experience,” said Obe, who ran a trucking outfit in his home country.

A closer bond with the surrounding community can also be a surprising bonus for some new franchisees.

“We have people that come in once, twice, sometimes three times a week … they know my front staff, and my front staff knows their order as soon as they walk in the door,” said Lisa Mitchell of Cobs. “That means a lot.”

Though familiarity with spreadsheets and balance sheets is a plus, franchising is open to people from all walks of life, said Waxon founder Lexi Miles Corrin.

“We have widows, we have women who are just coming out of mat leave, corporate jobs, lawyers … they really wanted to do their own thing and be their own boss but were maybe too scared to make the leap alone,” she said, adding that some franchises can feel like a “boys’ club.”

Even with that hand-holding — or because of it — the financial side of franchising can be tough to swallow.

Opening a location often costs hundreds of thousands of dollars, on top of royalties that typically hover between five and 10 per cent of sales as well as fees for marketing and advertising.

At Waxon, the investment is between $500,000 and $600,000, with $150,000 in liquid capital up front, Miles Corrin said. There’s also a one-time $50,000 “franchise fee,” plus a six per cent royalty on sales and 1.5 per cent for marketing.

Tim Hortons, which has about 3,500 restaurants across the country, requires at least $100,000 in cash up front and minimum net worth of $500,000 — the investment may be up to four times that amount, however. Operators must also kick between 4.5 to six per cent of sales upstairs and another four per cent for advertising and marketing.

Franchises are not insulated from the hurdles that confront many small businesses these days, from employee retention to inflation to abrasive clientele.

“One of the greatest challenges is finding good workers,” said Tait of Cobs.

Costs for some items have also soared.

“Cocoa went up by about 75 per cent,” he said. “The war in Ukraine caused canola and oil issues.”

Many owners may also learn the hard way that not all Canadians live up to the nation’s reputation for niceness.

“Sometimes somebody will not even listen to you at the door, just tell you, ‘Go away.’ I was like, wow, so rude,” said Obe, recalling his porch pitches.

Meanwhile, the corporate structure and guidance that some see as a life-jacket will be felt by others as a straitjacket.

“Our franchisees can’t go out and design their own wonderful glitter ad and take our brand mark and make it pink,” said David Druker, CEO of the UPS Store Canada and past chairman of the Canadian Franchise Association board of directors.

“If you’re a lone wolf personality, if you don’t like taking advice from others, if you don’t like the concept of team, then chances are franchising is not for you.”

While small franchises can offer more leeway and closer relationships with executives, larger companies tend to have stricter rules and impersonal ties to head office.

Either way, hard work is part of the package, along with ground-floor involvement in the business.

“Food service is Monday to Sunday, every day of the week, early morning to late nights, weekend nights when your family’s celebrating and you can’t because somebody called in sick,” said Domenic Primucci, president of Pizza Nova.

Franchisors and franchisees alike recommend speaking with others in the business and thinking it through before jumping in.

“Be truly prepared for the amount of effort that you have to invest in it,” said Lisa Mitchell.

“It’s a marathon.”

This report by The Canadian Press was first published Oct. 24, 2024.



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Teck Resources takes impairment charge at Trail operations, reports Q3 loss

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VANCOUVER – Teck Resources Ltd. reported a $748-million loss from continuing operations attributable to shareholders in its latest quarter as it took a one-time asset impairment charge related to its Trail operations.

The Vancouver-based mining company says its loss amounted to $1.45 per diluted share for its third quarter compared with a loss of $48 million or nine cents per share a year earlier.

Revenue for the quarter totalled $2.86 billion, up from $1.99 billion in the same quarter last year.

In its outlook, Teck says it now expects its 2024 copper production to amount to 420,000 to 455,000 tonnes, down from earlier guidance for 435,000 to 500,000 tonnes. The company also lowered its 2024 guidance for molybdenum and refined zinc production and reduced its expectations for zinc net cash unit costs.

On an adjusted basis, Teck says it earned 60 cents per diluted share for its latest quarter, up from an adjusted profit of 16 cents per diluted share a year earlier.

The average analyst estimate had been for a profit of 37 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Oct. 24, 2024.

Companies in this story: (TSX:TECK.B)

The Canadian Press. All rights reserved.



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