Importers Delight: Manufacturers Decline
Having been a manufacturer for approximately 25 years and the son of a manufacturer, I feel somewhat qualified in commenting upon the state of my manufacturing sector and its relationship with the Retail Sector.
A long time ago a manufacturer could request money up front to help finance the large projects that they were involved in, and most large retailers would comply. There was a certain honored respect between each sector of the economy. This all changed once the large retail sector became attached to cheap-priced products made offshore. Whether in China, India, Mexico, or many other national economies our retailers hitched their wagons to the foreign manufacturer’s wagon train. Can’t blame them at first. Foreign manufacturers pay their employees approximately 1/10 to 1/3 what Canadian, American, and European Manufacturers have to pay, often with no medical benefits offered. Our Unions wage a quiet war against this situation since a laborer is a laborer no matter where they may be located. Manufacturing learned how to carry out business within this foreign threat everywhere.
Retailers made off like bandits, importing a woman’s blouse landed for $1.98 and retailed it for $55-85.00
I make store fixtures, retail furniture, and Salon and Spa Equipment. The only way I can make some money is if I specialize and approach high-end retailers who demand custom-made fixtures in small quantities. The Importers among us have developed foreign manufacturing to art, helping offshore manufacturers to improve their product quality while maintaining their far less costly pricing levels. Such firms employ millions of citizens in warehouses across North America and Europe, warehousing, but not making the products. Since the Pandemic has “ended,” these firms and their retail customers have moved back to importing products and fixtures from offshore. Prices have increased a bit but they still remain far more competitive than our pricing. Retailers discovered the power of online markets, and the import power of the Amazons of the world brought profitability to many retailers also.
Manufacturers have responded to this love affair between our governments who allow it, importers who import the products, and foreign manufacturers worldwide. A global village we are told. We prefer to think of it as a group of capitalists that have no loyalty to their community, neighborhood, or nation. Such people have affected the lives of millions who have lost their jobs to workers in other lands. Retailers have responded through charitable works, promoting their corporate vision within the communities they are located in. Regional economic droughts have ravaged North America’s Small Town and created many societal problems that we deal with daily.
How do Retailers make a profit?
1. Find sources of the products they wish to sell, preferably cheap in price but high in quality. Add profit.
2. Limit the number of employees that should be servicing customers to a bare minimum. Low labor costs.
3. Have products made at an extreme price point, no matter how, where, or if safely made. Add profit.
4. Own every aspect of the transportation, source(supplier), and retail environment. Add profit to each.
5. During the pandemic create artificial shortages so prices can be justifiably increased.
6. Create monopolies and in the case of communication technology oligopolies that control the marketplace.
7. Befriend- partner with all levels of government. Keep your friends close, and your questioning enemies closer.
What have I seen Retailers do to manufacturers? A client of mine was contracted to provide 2-3 stores for Hudson Bay Retail. No money was provided at the beginning, once the stores were completed the manufacturer waited for 4-5 months to receive payment. Once they asked for payment, a thick book arrived with multiple complaints and a demand for a 20% discount on their invoices. The stores were operating for months, and the complaints were mostly scuffs on a cash counter or a store fixture. Only after we threatened to go into the stores to retrieve our products did they begin paying. Another time a retailer received @half a million dollars worth of store fixtures, and after receiving them closed shop and therefore would not pay for these items. Some forms of these incidents have happened multiple of times. Retailers have huge costs, and they will often take it out on their suppliers. A manufacturer of religious plaques from Stayner, Ontario received multiple orders from Canada’s largest retailer. Sales of the product were low, and the supplier received no payment for their product. The retailer then told them their product would stay in-store and they’d be paid as it sold. Not what was agreed upon.
Manufacturers try to charge as much as they can, knowing that a retailer or go-between can go out of business at any time. Restaurants have been the most difficult to work with, and the hardest to receive payment from. So we go to larger corporations, and yet they too manipulate and push manufacturers around. Domestic mass manufacturing will eventually become a thing of the past. Only specialized firms that find a specific niche will survive and prosper in North America and Europe.
Manufacturers in North America and Europe are required to accept and work within the local-regional regulatory and legal framework, while our foreign competition does not. While Canadian manufacturing is required to live up to the Federal Green Initiative, Chinese, Indian, Asian, African and Caribbean-Latin American Manufacturers do not, unless their homeland requires them to do so. Labor-Environmental Laws are very demanding, but we live in communities that need to be safe, and environmentally clean for generations to come so we accept them. Not so in many other foreign environments. I have always worked toward a future that has clean air-water-land masses. The pollution we dislike, but why are 1st World Manufacturers forced to bear all the costs to clean and maintain our land mass while our so-called developing nation competitors say they are, but do not invest as we do?
It is not happenstance that cheap import products are made and provided in nations that are not free or at peace with themselves. their people or other nations. China, India, and Mexico are fine examples of nations where humanity is often not respected, and where labor is used and abused. I am sounding like a complainer, am I not? I guess I am complaining. Hopefully, you are listening and thinking about some of what you have read.
Henry Ford once said, “Quality means doing it right with no one looking”. Domestic manufacturers make superior quality yet most of our neighbors do not recognize this reality. Is our manufacturing sector working in a broken system? A bad system will break a good person every time. Sometimes we feel broken, lost in a system that shows us the carrot, only to give it to others almost every time. Small and medium manufacturers are often artisans finding themselves fighting monsters of mass production. Are we manufacturers evolving into the new Luddites or an endangered species?
Downtown decay: Greater investment needed to reverse decline
In Part 3 of its Downtown Decay series, CTV News Toronto examines the path forward for the city’s slumping core—and what can be done to reverse the troubling trend.
It is lunch hour in Toronto’s core, and the Front Street patio tables are set. It’s midweek, it’s May, and the skies are clear—but the office crowd is scarce, and the chairs sit empty.
It’s a tell-tale sign that fewer people are downtown these days, with plenty of reasons to avoid the area.
“Transportation has been a hot mess,” said Jay Daye, who lives downtown. “It has been a struggle to get around.”
“I have never seen this much construction at a single time,” said Akash Thomas, who moved here from India three years ago.
Improving the commute into the core, and the ease with which people can move around within it, is key to revitalizing a slumping city centre, said Matti Siemiatycki, director of the Infrastructure Institute at the University of Toronto’s School of Cities.
A ‘for sale’ sign in the window of a commercial building in downtown Toronto. (CTV News Toronto)
“It’s just like a litany of transportation challenges in that area, to the point where politicians are in some cases saying ‘Don’t come into downtown,’ which is the opposite of what we need right now,” he said.
“We’re talking about a downtown core that is struggling, and needs huge numbers of people to come in and out, and be able to do that easily.”
With activity levels at just 47 per cent of what they were in the core pre-pandemic, the data suggests a downtown decline spurred by a lockdown-led drop in the nine-to-five office crowd. But with hybrid and remote work here to stay in at least some capacity, some experts suggest reorganizing the role of Toronto’s core in the city’s economy.
“If you’re not able to attract people to work, attract people for amenities,” said William Strange, who teaches urban economics at the University of Toronto. “The stronger are the amenities, the happier people are going to be to go into their office anyway.”
“What I see is a huge opportunity for downtown Toronto to remake itself,” Karen Chapple, director of the University of Toronto’s School of Cities, told CTV News Toronto.
The key, she said, would be to reinvent the area as a mixed-use community, a model other urban centres have demonstrated to be successful.
“What I just hope, though, as we’re attracting sectors back, is that they are not nine-to-five sectors, because that’s what killed some of these downtowns.”
People passing by an empty patio on a sunny day in downtown Toronto. (CTV News Toronto)
The revitalization of the core will be a critical challenge for the city’s next mayor, Siemiatycki said, who warned service cuts could worsen an already-spiralling problem.
But investment won’t be possible without a rethink of the city’s fiscal framework, according to Matt Elliott, publisher of City Hall Watcher.
“If you look at the city’s budget hole and you say, ‘We’re just going to keep doing what we’re doing,’ and you’re not going to have a real plan to fill that budget hole, that gets into some really dicey territory,” Elliott said. “Because that’s when you start looking at really deep cuts.”
It’s not ideology, he said—it’s math.
“I don’t think we’ve realized that we’ve fallen down this ladder in terms of our prosperity,” Giles Gherson, incoming Toronto Region Board of Trade president, told CTV News Toronto.
Gherson warned that without a new financial deal for the city, which heavily supports services that should be the responsibility of Ottawa and the province, Toronto’s downtown would fall further behind.
“We’re poor,” he said. “We’re a poorer place than we used to be.”
The core, he argued, is in need of a correction, if the city is to salvage its productivity, maintain job growth, and remain competitive globally.
“We haven’t been paying attention,” he said. “We’ve been sleeping, and it’s falling off. So that’s what we need to fix—and that’s a big deal.”
FTX: Singapore state fund Temasek cuts pay after failed investment – BBC
Singapore state-owned investment fund Temasek Holdings says it has cut the pay of staff responsible for its investment in cryptocurrency exchange FTX, which collapsed last year.
In November, the fund wrote off all of the $275m (£222.8m) it invested in FTX.
Mr Bankman-Fried has pleaded not guilty to the charges.
“The investment team and senior management, who are ultimately responsible for the investment decisions made, took collective accountability and had their compensation reduced,” Temasek said in a statement on Monday.
The sovereign wealth fund also said it was “disappointed with the outcome of our investment, and the negative impact on our reputation.”
Temasek did not indicate how much salaries were reduced by.
It had invested $210m and then another $65m in FTX in two funding rounds between October 2021 and January 2022.
Last year, the state-owned fund said that before making those investments it had spent eight months evaluating the cryptocurrency exchange. This included the review of an audited financial statement “which showed it to be profitable.”
As of March 2022, Temasek was worth more than S$403bn ($298.1bn; £241.3bn), so the money it had put into the cryptocurrency platform accounted for a small percentage of its investments.
However, Singapore’s deputy prime minister Lawrence Wong said in December that Temasek’s losses in FTX had caused damage to the fund’s reputation.
“The fact that other leading global institutional investors like BlackRock and Sequoia Capital also invested in FTX does not mitigate this,” added Mr Wong, who is also the country’s finance minister.
Sovereign wealth funds are like a savings account for a country, and they typically invest in shares, currencies, property or other assets.
FTX, which a year ago was valued at $32bn, filed for bankruptcy protection in November. It has been estimated that $8bn of customer’s funds was missing.
Mr Bankman-Fried, who co-founded FTX in 2019, was one of the most high-profile figures in the cryptocurrency industry, known for his political ties, celebrity endorsements and bailouts of other struggling firms.
US federal prosecutors have accused Mr Bankman-Fried of stealing billions of dollars from FTX users to pay debts at his other firm, Alameda Research, and to make other investments.
In December, prosecutors announced eight criminal charges against Mr Bankman-Fried, including wire fraud, money laundering and campaign finance violations. Another five charges were levied against him in March. Financial regulators have also brought claims against Mr Bankman-Fried.
FTX co-founder Gary Wang and Caroline Ellison, the former head of Alameda, have also been charged over their alleged roles in the company’s collapse.
Mr Bankman-Fried was arrested in December in the Bahamas, where he lived and FTX was based.
In an interview with BBC News just days before his arrest, he said: “I didn’t knowingly commit fraud. I don’t think I committed fraud. I didn’t want any of this to happen. I was certainly not nearly as competent as I thought I was.”
Singapore’s Temasek cuts compensation for staff responsible for FTX investment
May 29 (Reuters) – Singapore state investor Temasek Holdings (TEM.UL) said on Monday it had cut compensation for the team that recommended its investment in the now-bankrupt FTX cryptocurrency exchange, as well as for its senior management team.
The move comes around six months after Temasek initiated an internal review of its investment in FTX, which resulted in a writedown of $275 million.
“Although there was no misconduct by the investment team in reaching their investment recommendation, the investment team and senior management, who are ultimately responsible for investment decisions made, took collective accountability and had their compensation reduced,” Temasek Chairman Lim Boon Heng said in a statement posted on Temasek’s website on Monday.
Temasek did not detail the amount of compensation cut.
Temasek had said its cost of investment in FTX was 0.09% of its net portfolio value of S$403 billion ($304 billion) as of March 31, 2022, and that it currently had no direct exposure in cryptocurrencies.
Temasek also said last year it had conducted “extensive due diligence” on FTX, with its audited financial statement then “showed it to be profitable”.
FTX’s other backers such as SoftBank Group Corp’s (9984.T) Vision Fund and Sequoia Capital had also marked down their investment to zero after FTX, founded by Sam Bankman Fried, filed for bankruptcy protection in the U.S. last year.
“With FTX, as alleged by prosecutors and as admitted by key executives at FTX and its affiliates, there was fraudulent conduct intentionally hidden from investors, including Temasek,” Lim said in the statement on Monday. “Nevertheless, we are disappointed with the outcome of our investment, and the negative impact on our reputation.”
Temasek seeks to deliver sustainable returns over the long term by investing into early-stage companies, Lim said.
“While there are inherent risks whenever we invest, we believe that we have to invest in new sectors and emerging technologies to understand how these areas may impact the business and financial models of our existing portfolio, and whether they would be drivers of future value in an ever changing world,” Lim added.
($1 = 1.3245 Singapore dollars)
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