Bombardier Inc. says 11,000 furloughed employees will return to work across Canada over the next few weeks, primarily in Quebec where some 450,000 residents are expected to go back on the job as the province prepares to restart its economy.
The plane-and-train maker said Tuesday it will resume production in Quebec as of May 11, the day set by the provincial government for factories to unlock their doors.
The economic restart will come as welcome news to a company grappling with share-price lows, credit downgrades and a US$9.3-billion debt.
Bombardier shuttered operations and sent 12,400 employees on unpaid leave on March 24 as non-essential work ground to a halt across the country.
By the end of May, it expects 9,000 in Quebec and 2,000 in Ontario to be back on the assembly line, a spokesman said Tuesday. Return dates for the remaining 1,400 workers “will be communicated at a later moment, when we have greater visibility on COVID impact.”
Employees whose physical presence is not required at plants or service sites will continue to work from home, the company said.
All 12,400 — 70 per cent of Bombardier’s Canadian workforce of 17,600 — will benefit from the Canada Emergency Wage Subsidy, which funds 75 per cent of an employee’s pay up to a maximum of $847.
Earlier Tuesday, Premier François Legault said stores with their own entrances will be allowed to open on May 4 outside of the Montreal area and May 11 in the Montreal region, with factories and construction sites across the province allowed to open May 11.
Legault said the province will keep close tabs on the number of COVID-19 cases and the ability of hospitals to respond.
On Monday, he announced elementary schools and daycares across Quebec will reopen by May 19.
Ontario, on the other hand, has given no dates or schedule for lifting COVID restrictions, other than that schools will stay closed until at least the end of May. Premier Doug Ford has been adamant that reopening depends on getting the virus under firm control.
Roughly 3,000 employees work at Bombardier’s private jet assembly plant in Toronto while others work at its railway operations in Thunder Bay and Kingston, Ont.
“Gradual return-to-work schedules will vary per site,” spokesman Olivier Marcil said in an email, stressing that Quebec operations will start to ramp up in less than two weeks. “Recalls have already started for some sites or for essential activities.”
In Thunder Bay, the payroll dropped to about 420 workers from 1,100 last summer after major contracts — for Toronto Transit Commission streetcars and Metrolinx GO Transit rail cars — wound down. The plant turned the lights back on this week to help produce 18,000 ventilators for the Ontario government.
The machinists’ union representing Bombardier said visits to a pair of facilities in the Montreal area last week “revealed a clear improvement in the application of physical distancing measures required by Quebec.”
The affected factories in the Montreal area sit in Mirabel, Saint-Laurent, Dorval and Pointe-Claire, and east of Quebec City in La Pocatière.
Eric Martel, who took over as CEO from Alain Bellemare earlier this month, continues to confront sobering questions about the future of a debt-laden Quebec institution that has become a penny stock with junk-status credit ratings as it slims down to a single revenue stream _ private planes _ just as the economy plunges into a downturn.
National Bank analyst Cameron Doerksen pointed to weakening demand for business jets, further trimming his Bombardier forecast to 123 deliveries from 145 this year and to 108 deliveries from 120 in 2021.
“Cash remains tight,” he said in a research note last week. When the crisis kicked off, Bombardier had about US$3.1 billion in cash on hand, including roughly US$500 million from the sale of its remaining stake in the A220 commercial jetliner program — formerly known as the C Series — and on top of US$1.3 billion in available credit.
As of last week, Bombardier’s aerostructures plant in Belfast, Northern Ireland, was slated to reopen on May 4, a spokeswoman said. Its factory in Cespin, France, that specializes in rolling stock remains shuttered indefinitely.
© 2020 The Canadian Press
Swiss Economy Slumps the Most in Decades – Yahoo Canada Finance
(Bloomberg) — Switzerland’s economy slumped the most in at least four decades as a result of the coronavirus pandemic, with private consumption and investment plummeting.
First-quarter gross domestic product plunged 2.6%, data from the State Secretariat for Economic Affairs showed. That’s worse than the 2.1% hit forecast by economists in a Bloomberg survey and the biggest three-month contraction since the start of the time series in 1980.
Like neighboring France, Italy and Germany, Switzerland responded to the pandemic by winding down much of public life. The hotel and restaurant sector experienced a 23.4% drop in output, according to the data on Wednesday.
Although the Swiss economy fared slightly worse than Germany’s in the first quarter, the contractions in France and Italy were far more severe.
Swiss government subsidies have kept a lid on unemployment and helped companies avoid a cash crunch, but the SECO still expects the economy to shrink 6.7% this year before staging a slow recovery in 2021.
Machine industry group Swissmem said that 80% of its member companies were forced to apply for short-time work, and that the full impact of the pandemic wouldn’t be felt by the sector until the second or third quarter of this year.
To prevent the rallying haven franc from hurting the economy still further, the Swiss National Bank has stepped up the pace of its currency interventions. Its deposit rate is already at a record low of -0.75%.
(Updates detail on hospitality sector in 3rd paragraph)
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Australia Economy Contracts as End to Recession-Free Run Looms – BNNBloomberg.ca
(Bloomberg) — Australia’s economy contracted in the first three months of the year, setting up an end to the nearly 29-year run without a recession as an even deeper slowdown looms for the current quarter.
Gross domestic product fell 0.3% from the final three months of 2019, the first quarterly drop since 2011, compared with a forecast 0.4% decline, statistics bureau data showed in Sydney Wednesday. From a year earlier, it expanded 1.4%, matching estimate
The result sets up an end to Australia’s record run of avoiding two consecutive quarters of negative GDP, having dodged recessions during the 1997 Asian Financial Crisis, the Dot Com Bubble and the 2008 global financial crisis. The current quarter will see a deep contraction, with almost 600,000 jobs lost in April alone and much of the economy in lockdown to contain the coronavirus.
Fiscal and monetary policy are working in tandem to rebuild the economy. The Reserve Bank of Australia has taken the cash rate near zero and lowering the cost of borrowing with its 0.25% bond yield target. The government has injected tens of billions of dollars into the economy to help tide businesses and households through the lockdown.
With the containment of the health crisis allowing activity to resume, how quickly businesses can get back on their feet, workers regain employment and households resume spending is the critical question.
“The rate of new infections has declined significantly and some restrictions have been eased earlier than was previously thought likely,” RBA Governor Philip Lowe said Tuesday after keeping borrowing costs unchanged.
“However, the outlook, including the nature and speed of the expected recovery, remains highly uncertain and the pandemic is likely to have long-lasting effects on the economy,” he said. “In the period immediately ahead, much will depend on the confidence that people and businesses have about the health situation and their own finances.”
©2020 Bloomberg L.P.
Australia’s Economy Contracts, Ending Three-Decade Expansion – Yahoo Canada Finance
(Bloomberg) — Australia’s economy contracted in the first three months of the year, setting up an end to a nearly 29-year run without a recession as an even deeper slowdown looms for the current quarter.
Gross domestic product fell 0.3% from the final three months of 2019, the first quarterly drop since 2011, brought down by a collapse in household spending, statistics bureau data showed in Sydney Wednesday. Economists had forecast a 0.4% drop. From a year earlier, the economy expanded 1.4%, matching estimates.
The Australian dollar edged a little lower after the release, and traded at 69.32 U.S. cents at 1:06 p.m. in Sydney.
The result sets up an end to Australia’s record run of avoiding two consecutive quarters of shrinking GDP, having dodged recessions during the 1997 Asian Financial Crisis, the Dot Com Bubble and the 2008 global financial crisis. The current quarter will see a deep contraction, with almost 600,000 jobs lost in April alone and much of the economy in lockdown to contain the coronavirus.
Treasurer Josh Frydenberg, speaking after the release, accepted this fate when asked directly whether the economy is now in recession.
“The answer to that is yes,” he told reporters. “That is on the basis of the advice that I have from the Treasury Department about where the June quarter is expected to be.”
Fiscal and monetary policy are working in tandem to rebuild the economy. The Reserve Bank of Australia has taken the cash rate near zero and lowered the cost of borrowing with its 0.25% bond yield target. The government has injected tens of billions of dollars into the economy to help tide businesses and households through the lockdown.
With the containment of the health crisis allowing activity to resume, the critical question is how quickly businesses can get back on their feet, workers regain employment and households resume spending.
“Growth should resume in the September quarter, but the impact of COVID-19 will surely cast a long and lingering shadow over the global economy and Australia’s recovery,” said Callam Pickering, an economist at global jobs website Indeed Inc. who previously worked at the central bank. “Continued support from fiscal and monetary policy will be necessary throughout 2020 and beyond.”
Today’s report showed:
Household spending tumbled 1.1%, shaving 0.6 percentage point off GDP, driven by a 2.4% drop in services expenditure. Restrictions particularity impacted spending on travel, hotels, cafes and restaurantsGovernment spending jumped 1.8%, adding 0.3 percentage point. Payments to provide support during the pandemic are expected to rise in the current quarterThe savings ratio advanced to 5.5% from a downwardly revised 3.5% in the fourth quarterDwelling construction fell 1.7%, reflecting continued weakness in approvalsNon-mining business investment fell 1.7%, while mining investment rose 3.6% as miners invest in new technologies and automation
Rising commodity prices are boosting miners’ profitability, with the terms of trade 2.9% higher in the first three months of 2020, pushing the current account surplus to a record A$8.4 billion ($5.8 billion). Yet, miners will be keeping a watchful eye on the nation’s currency, which has surged almost 20% in the past two-and-a-half months.
What Bloomberg’s Economists Say
“Typically backward looking national accounts releases contain an array of hidden trends that are often overlooked. Mining investment has climbed to a 7-year high, Australia’s terms of trade have risen and exploration intentions are elevated. This bodes well for the recovery.”
James McIntyre, economist
The economic outlook is improving as the restrictions are lifted, but will continue to be constrained by closed borders that are hitting tourism and education exports. The government is discussing a fresh round of fiscal stimulus to try to put residential construction back on its feet.
(Updates with Treasurer and economist comments)
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