Economy

Frank Stronach: Competition is key to any economy – National Post

Published

2 years ago

May 24, 2022

Harry Miller

Competition is the best tool for ensuring that customers get a better-quality product or service at a better price

Publishing date:

May 24, 2022 • 11 hours ago • 3 minute read • 39 Comments

Competition is one of the most important aspects of a properly functioning market economy. Without competition, you will have stagnation, deteriorating quality and a lack of innovation, progress and growth.

Back in the late 1980s, when Mikhail Gorbachev was introducing a number of wide-ranging economic reforms in the Soviet Union, my company became the first manufacturer in North America to open a facility behind the Iron Curtain. On one of my visits there, a senior Communist party official invited me to tour some Soviet automotive factories and assembly plants.

After seeing the various factories, filled with antiquated equipment and assembly lines that looked like they hadn’t changed since the days of Henry Ford, the minister asked me what I thought. I told him that I didn’t think they could make quality cars at the right price, and they couldn’t make enough of them to satisfy the needs of their people. And then I said: “You know why your country always does so well at the Olympics? It’s because you’ve got competition. If there was only one runner in a race, time wouldn’t mean anything. Even a slow guy could win.”

Competition was a deeply held principle at Magna International, the auto parts I company I founded. One of the hallmarks of how we operated as a company was that every factory was an independent business unit. Our manufacturing divisions were so decentralized and independent, they even competed against each other.

For example, back in the early ’90s, we had one division that made running boards for trucks. Traditionally, this was a metal-stamped component. But one of our plastics divisions began experimenting in its R&D unit and came up with a lighter-weight plastic running board that was stronger and cheaper. It ended up capturing the business from the other Magna division.

I always encouraged our people to be at the forefront of change, rather than being forced to play catch-up with the rest of the industry. Some people thought it was crazy that we’d allow our own factories to compete against each other. But when push came to shove, I would sooner lose business to one of our own product groups than to an outside competitor. That’s one of the main reasons why we became known as one of the most innovative companies in the automotive industry.

Evolution and change are inevitable and relentless: just as the small, stainless steel trim pieces we made in Magna’s early years gave way to aluminum trim and then to plastic, technological innovations and new competitors force companies to continually change. But this would never happen without competition — it’s the force that drives individuals and organizations and countries to be better, to go faster, farther and higher.

I learned that powerful lesson on a business trip to Japan back in the late ’70s, when companies such as Honda and Toyota were quickly but quietly emerging as serious competitors to the Big Three carmakers in Detroit, which had grown fat and inefficient.

During my travels throughout the country, I had an opportunity to visit a traditional Japanese silk farm. I was amazed to see the silkworms feeding on mulberry bushes and spinning the spectacular strands of silk used to make fine clothing and other materials.

My guide explained that the operation was going to shut down because it could no longer compete against the synthetic silk producers that were grabbing a larger and larger share of the market. Human ingenuity being what it is, someone had figured out a way to make a product as good or better than nature, at a much lower cost.

It was a vivid example of how entire industries can be wiped out overnight by technological advances or sudden changes in the economic landscape — changes that only happen when there is free and unfettered competition.

That’s the reason why monopolies, whether they are government-run or privately operated, are always bad for society. I believe one way to constrain the inevitable drift toward market concentration is to enact a law that no company can have more than 30 per cent market share in any industry and that there must be a minimum of four competitors operating in each industry — everything from packaged goods and phones, to internet search engines and automobiles.

Wherever they exist, monopolies lead to poor service, lower quality and higher prices. At the end of the day, competition is the best tool for ensuring that customers get a better-quality product or service at a better price.

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Economy

Tentative deal reached in Metro Vancouver grain strike, federal minister says

Published

2 hours ago

September 28, 2024

Anne Joseph

VANCOUVER – Canada’s labour minister says striking grain terminal workers in Metro Vancouver and their employers have reached a tentative labour deal.

Steven MacKinnon announced the agreement between Grain Workers Union Local 333 and the Vancouver Terminal Elevators’ Association in a post on social media platform X, but provided no other details.

The union confirmed the tentative deal in a statement on Facebook, saying its members will conduct the ratification vote by Oct. 4.

The notification from the union also says picket lines were to be removed Saturday and members will return to work pending ratification, ending the strike that had paralyzed grain shipments from Metro Vancouver’s port.

The dispute had previously led to picket lines going up at six Metro Vancouver grain terminals on Tuesday as about 600 workers went on strike.

Canadian grain producers had urged a resolution in the dispute, noting about 52 per cent of the country’s grains moved through Metro Vancouver terminals last year en route to being exported.

Farmers say the strike, happening during crop harvesting, would result in as much as $35 million per day in lost exports.

The Western Grain Elevator Association said on Friday that talks had stalled after two days of negotiations this week, with the employer saying it had increased its offers to settle “outstanding issues.”

The employers group had said they’ve reached the end of their “financial ability to conclude an agreement that industry can absorb” with the last offer, and it was up to the federally appointed mediator to report the results to MacKinnon for the next steps.

MacKinnon says in his tweet that both parties put in “the work necessary to get a deal done.”

This report by The Canadian Press was first published Sept. 28, 2024.

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Economy

S&P/TSX composite down Friday, U.S. markets mixed as Dow notches another high

Published

1 day ago

September 27, 2024

Anne Joseph

TORONTO – Canada’s main stock index dipped lower Friday despite strength in energy stocks, while U.S. markets were mixed as the Dow eked out another record but tech stocks dragged.

The mood Friday was mixed after a strong week for equities in both Canada and the U.S., said Andrew Buntain, vice-president and portfolio manager at Fiduciary Trust Canada.

The S&P/TSX composite index closed down 77.01 points at 23,956.82, one day after it . It closed over 24,000 for the first time on Thursday.

The strength this past week wasn’t just in North American markets, noted Buntain, as Chinese stocks enjoyed a rally after the country’s central banks announced a suite of measures intended to boost the economy.

Meanwhile, an undercurrent of broadening strength continued this week as investors spread out their interest beyond a narrow set of tech giants, said Buntain.

“Some of the sectors that have been ignored for several years have been some of the better performers this year,” he said.

“We’re very encouraged by that.”

In New York on Friday, the Dow Jones industrial average was up 137.89 points at 42,313. The S&P 500 index was down 7.20 points at 5,738.17 after setting an all-time high on Thursday, while the Nasdaq composite was down 70.70 points at 18,119.59.

A report Friday on one of the U.S. central bank’s preferred measures of inflation — the personal consumption expenditures price index — showed continued cooling.

The Federal Reserve started lowering its key interest rate last week, and is expected to keep going this fall and into 2025.

However, the Fed’s next interest rate decision isn’t until November, noted Buntain, so there’s plenty of data for the central bank to take in yet — including next week’s labour report.

The job market has been an increasingly key focus for the central bank after recent reports showed cooling in that area of the economy. Friday’s report also showed consumer spending in August didn’t meet economists’ expectations.

In Canada, where the Bank of Canada is set for its next rate decision later in October, Friday brought a GDP report that was a little stronger than expected, said Buntain.

“The Bank of Canada has already delivered three cuts and signalled maybe some further reductions,” he said.

If inflation continues to move lower, Buntain added, the Bank of Canada could even announce an outsized half-percentage-point cut, echoing the Fed’s move last week.

The Canadian dollar traded for 74.08 cents US compared with 74.22 cents US on Thursday.

The November crude oil contract was up 51 cents at US$68.18 per barrel and the November natural gas contract was up 15 cents at US$2.90 per mmBTU.

The December gold contract was down US$26.80 at US$2,668.10 an ounce and the December copper contract was down four cents at US$4.60 a pound.

— With files from The Associated Press

This report by The Canadian Press was first published Sept. 27, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Statistics Canada reports real GDP grew 0.2% in July

Published

2 days ago

September 27, 2024

Anne Joseph

OTTAWA – Statistics Canada says real gross domestic product grew 0.2 per cent in July, following essentially no change in June, helped by strength in the retail trade sector.

The agency says the growth came as services-producing industries grew 0.2 per cent for the month.

The retail trade sector was the largest contributor to overall growth in July as it gained one per cent, helped by the motor vehicles and parts dealers subsector which gained 2.8 per cent.

The public sector aggregate, which includes the educational services, health care and social assistance, and public administration sectors, gained 0.3 per cent, while the finance and insurance sector rose 0.5 per cent.

Meanwhile, goods-producing industries gained 0.1 per cent in July as the utilities sector rose 1.3 per cent and the manufacturing sector grew 0.3 per cent.

Statistics Canada’s early estimate for August suggests real GDP for the month was essentially unchanged, as increases in oil and gas extraction and the public sector were offset by decreases in manufacturing and transportation and warehousing.

This report by The Canadian Press was first published Sept. 27, 2024.

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