MONTREAL — The head of Canada’s largest manufacturer of tissue products says he’s concerned about the industry’s supply of paper towel ahead of a potential second wave of COVID-19.
Kruger Products CEO Dino Bianco says demand for paper towel has soared as people stay at home and clean more frequently.
He says the industry is “very tight” on paper towel inventory across North America, despite efforts to build up supply.
Bianco says Kruger, which makes SpongeTowels paper towels, is pushing to open its new plant in Sherbrooke, Que., to add more capacity in Canada.
Although slated to open in February 2021, he said the company is trying to get the factory up and running faster. Some machines started over the summer, while more are set to come online in October.
Bianco said the plant will increase the company’s paper towel and toilet paper manufacturing capacity by 20 per cent.
Meanwhile, he says the company is also seeing a shortage of the recycled fibres used in about 25 per cent of its tissue products.
Bianco says Kruger recycles white paper used in offices, but that the market has dried up because people aren’t in offices printing.
This report by The Canadian Press was first published Sept. 21, 2020.
7 business owners share lessons they've learned through success and hardship during the pandemic – CBC.ca
A few weeks ago, Erin Moraghan and her staff celebrated the five year anniversary of her fitness studio. This week, the studio permanently closed its doors.
Like so many small businesses across the country, the fitness operation was no longer financially viable because of the pandemic.
A few hours before leading the final class at the Revkor studio in Cambridge, Ont., Moraghan was trying to be positive about the experience.
“There will be a lot of tears, there were some good tears this morning. It’s tough, but to be honest, we also really recognize that we’re in a very real global situation,” she said.
Moraghan has several pieces of advice for other entrepreneurs, including how important self-care can be.
“It’s been a lonely journey for a lot of business owners,” she said.
It’s just one helpful suggestion among many lessons a group of small business owners shared from their successes and struggles this year.
‘Trusting the numbers’
Moraghan’s fitness studio struggled because the number of participants was heavily restricted. Instead of 60 or 70 people for a class, there was a limit of just 12.
The small capacity was partially Moraghan’s decision because she wanted to go above and beyond the provincial government’s restrictions to ensure customers would be comfortable.
“We really wanted our studio to always feel like a safe haven for people,” she said.
WATCH | The challenge of reopening:
While the process of closing down the operation has been difficult, she credits having a business coach for preparing her for the tough decisions she had to make.
Her other recommendation, especially for people in the service industry, is to be practical and honest about the financial situation.
“We really can’t serve our communities if we are deeply compromised, personally, and so trusting the numbers, sometimes it’s very tough to face those realities.”
‘Call me cautious’
Kaevon Khoozani was at the Winnipeg airport in early March about to board a plane for a fitness trade show in Ohio when the event was cancelled.
His aspirations of growing his business in the United States seemed to be getting derailed.
Khoozani designs fitness equipment targeted toward people interested in powerlifting and CrossFit workouts. Calgary-based Bells of Steel opened 10 years ago and has seven employees in Canada and the States.
In March, sales began to pickup, but there was a big decision to make. Khoozani and his partner didn’t know whether to stock up on inventory or not. He found it difficult to understand if the pandemic would create an immense amount of interest in home-based fitness equipment or whether demand would fall because so many people would be negatively impacted financially due to lockdown measures.
“We could have jumped the gun a little faster. Call me cautious,” he said. “We waited a few months to see where things were at and because of that we lost out to some competitors.”
Fortunately, they had more inventory than normal to begin the year because of their growth plans in the U.S.
Overall, sales are three times as high this year as they were last year, but growth could have been significantly higher if they had acted sooner to put in orders with their suppliers.
Still, Khoozani said the company was able to grow its market share in the States.
On one day in particular, he said sales were $600,000.
He’s now contemplating expanding to Europe.
WATCH | Whether to coast or be aggressive:
‘A sudden shift’
When the Alberta government introduced lockdown measures in March, Kyle Hansen was able to keep his business open, but he expected sales to drop.
He cut back on staffing at his Benjamin Moore paint store in Calgary and decided to take the weekend off.
About 20 min into opening on the Saturday morning, he got a call from an employee who said, “I need you to get to the store right now.”
“It was a pretty big shift, a sudden shift that we weren’t expecting, and we were very fortunate to have it.”
With most people stuck at home, a variety of home improvement businesses saw a boost in demand.
Hansen had planned to start an online store next year, but worked long hours in the spring to get it up and running. A day after it launched, the online sales began.
Overall, paint sales are up about 40 per cent compared with last year.
While Hansen considers himself a planner, he credits the quick decision making as a lesson he learned.
Meanwhile, while sales were strong, the store was understaffed at times with three full-time employees. That, too, was a learning experience, Hansen said, as some staff members became burned out.
WATCH | It’s tough to plan when you don’t know what’s coming:
‘There are no customers’
At Chiles Sandblasting and Painting in Red Deer, the shop can be busy one week and then absolutely dead the next week.
Owner Brian Chiles describes his business as an autobody shop for heavy duty and oilfield equipment. With a severe downturn in the oilpatch, sales at his business are down between 25 and 75 per cent, depending on the month.
The lesson he has learned is how important it is build up some savings and not carry around debt.
“I’ve been around a little bit. It would be very difficult for a new company to start up right now, so I am thankful for the financial situation we’re in.”
Still, there are challenges ahead. Not only are sales down, but even if the business closed, he can only reduce his expenses so much. Chiles owns his building, which costs money to operate. It’s an asset he can’t sell or rent because, he said, three-quarters of the buildings in his industrial park are already sitting empty because of business closures.
He’s unsure if his shop will experience the same fate.
“The problem happens to be there are no customers.”
‘I went with my gut’
After her Vancouver-area fitness studio was forced to close in March, PJ Wren decided over the next month to leave the brick-and-mortar gym in the past and pivot to an online business, Fitness with PJ.
“What I learned the most was how to make some tough decisions with very limited amount of information, as well as the fear of the unknown. So I went with my gut,” she said.
The world of online fitness coaches and programs is saturated, so Wren decided to focus on women over the age of 40. There was a learning curve, especially with understanding so many new online platforms where she can offer her services.
So far, the new venture is a success. Her revenue is similar to when she operated her fitness gym, but her expenses are lower. Instead of a staff of 12, with her online business she has three.
The 50-year-old said she’s less stressed and has more free time.
‘When they call, you answer your phone’
For Vittorio Oliverio, the big lesson of 2020 is communication.
As the pandemic arrived in the spring, uncertainty swept across the country. For many people, it was centred around their jobs, their bills, and how they were going to make ends meet.
At his mortgage business, Oliverio admittedly had just as many questions as clients, but he purposely tried to reach out to as many people as he could to share what information he had.
In hindsight, he said that gave him an edge over his competition as he gained a level of respect as a business that was actively seeking to help and get answers for people.
“Everyone was struggling with what to do,” he said.
“Instead of hiding, we decided to go on the forefront and provide help and advice on how to handle their financial situation,” said Oliverio, who runs Centum Professional Mortgage Group in Lethbridge, Alta.
Over the summer, the phones kept ringing at the office as people wanted more information about mortgage payment deferral programs and other issues.
“It was surprising to me that banks make all these announcements without any indication to the client how to contact them,” he said.
The company ended up gaining a significant number of new clients, he said, and sales of mortgages are up 30 per cent compared with last year.
“It’s been phenomenal, business-wise,” said Oliverio. “A lot of times, people just want to know that when they call, you answer your phone.”
‘Once everything is normal …’
Of all the times to start a business, this year was not the best.
That’s the reality for Mohammad Anis, who began a new venture in the automotive sector.
After more than a few decades in the industry, he started his own business in Toronto to help local companies expand internationally and, conversely, work with foreign firms about how to grow into the Canadian market.
Since COVID-19 arrived around the time his business began, he hasn’t moved past the starting line.
His lesson? No matter the business idea, there can be impacts outside of your control, like a pandemic.
“Once everything is normal, then definitely it will be easier to convince people and convince the industries to look at this [venture],” he said.
It’s a setback, but he’s not giving up. He’s keeping costs low with hopes the business can pick up next year.
Share your experience by sending us an e-mail.
Canadian Investors: 2 TSX Stocks for Peace of Mind in Volatile Times – The Motley Fool Canada
There weren’t many places to hide on Wednesday, as the TSX Index shed nearly 3% of its value, while the tech-heavy NASDAQ 100 tanked nearly 4%. The market-wide sea of red had many worried in what shaped up to be an “everything sell-off” that spared few. With the markets nearing correction territory once again, Canadian investors may wish to put some cash on some battered plays that are better poised to hold their own if the bear were to re-emerge from his cave before the holidays.
Nutrien: A lone green arrow on a big red day
Now, I’ve been a raging bull on shares of the fertilizer kingpin for quite some time now — not just because the long-term prospects for agricultural commodity producers are bright, given the secular tailwind in an ageing global population, but because Nutrien stock had been so beaten up such that its correlation to the broader markets is likely to be near zero, if not negative.
“Nutrien was in a world of pain well before the coronavirus crash hit.” I said in a prior piece where I referred to Nutrien as a dividend darling that was to be bought whether a market crash happens or not. “With a robust retail segment and operational advantages (in potash production in particular) that Nutrien holds over its peers in the space, the company is a ‘moatier’ stock that most folks would give it credit for.”
With shares of NTR trading at one times book value, the stock looks so undervalued that I suspect we’ll see more days where the stock holds its own when the rest of the market crumbles like a paper bag.
Hydro One: Low in beta and high in defence
Shares of the wide-moat municipal utility Hydro One (TSX:H) fell 0.8% on Wednesday. But it easily could have been in the green given the stock’s ridiculously low 0.21 beta. Ryan Vanzo, my colleague here at the Motley Fool, recently referred to Hydro One as one of the safest stocks on the TSX. I think he’s right on the money.
“The company primarily delivers electricity to customers in Ontario, where its transmission lines cover 98% of the province. Even during a recession, electricity demand doesn’t recede that much. And with regulators guaranteeing a level of profits, often years in advance, Hydro One has extreme visibility into future cash flows.” wrote Vanzo.
With a virtual monopoly that’s defending its cash flows, Hydro One is one of the few bond proxies that makes for a decent hiding place for investors worried that things could go south in a hurry. The company may not have the best growth profile in the world, but it certainly has one of the most well-covered 3.5%-yielding dividends out there. With shares trading at 1.7 times book value, you’re getting a lot of bang for your buck with H stock versus the likes of those ridiculously unrewarding fixed-income assets.
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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Nutrien Ltd.
Bank of Canada Signals Low Rates Until 2023, Unveils Changes to QE Program – Mortgage Rates & Mortgage Broker News in Canada – Canadian Mortgage Trends
Mortgage shoppers take note: Cheap money is here to stay, at least for the next two years, the Bank of Canada reaffirmed during its interest rate decision on Wednesday.
The BoC had previously provided guidance that rates would remain at their effective lower bound—currently 0.25%—“until 2 percent inflation target is sustainably achieved,” but went a step further this time by providing a specific year.
“The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed…In our current projection, this does not happen until into 2023,” the Bank’s statement read.
As part of the announcement, the BoC decided to leave its current policy rate at 0.25%, where it’s been since March.
Long Recovery Ahead
While the Bank left its policy rate untouched, it did announce changes to its Quantitative Easing program, whereby the BoC has been purchasing bonds to maintain market liquidity, which has helped keep mortgage rates low.
That bond-buying will be reduced to $4 billion per week from the current $5 billion, and purchases will increasingly shift to longer-term bonds.
“Our main message today is that it will take quite some time for the economy to fully recover from the Covid-19 pandemic,” BoC Governor Tiff Macklem said during a press conference that followed the rate announcement. “The Bank of Canada will keep providing monetary stimulus to support the economy through the recovery.”
And that recovery is facing fresh headwinds as a result of a second wave of the pandemic, which is intensifying by the week.
Despite a stronger-than-expected rebound in unemployment and GDP over the summer, the Bank said “growth is expected to slow markedly.” Looking ahead to 2021 and 2022, the Bank expects the economy to grow by 4% on average each year.
“After a tumultuous spell for all forecasters, the Bank’s view on the economy has largely moved into line with consensus,” BMO Economics Chief Economist Douglas Porter wrote in a research note. “And the main message there is that growth will be put on hold in Q4 by the second wave, but it won’t go into reverse, and should resume in 2021.”
What Does this Mean for Mortgage Rates?
The Bank’s announcement affects both fixed and variable rates. Fixed rates are expected to remain low, and likely fall further, due to the Bank’s renewed commitment to purchasing longer-term bonds, which will help keep rates low for the ever popular 5-year fixed term.
And the Bank’s guidance on maintaining its overnight rate at 0.25% until at least 2023 bodes well for existing variable-rate holders, to the extent they can rest assured their rates won’t rise.
But the Bank’s continued reluctance to entertain negative rates also means that new floating-rate mortgage holders aren’t likely to see their rates fall any further. (Although, an additional rate cut can’t be completely ruled out. Overnight Index Swaps markets are still pricing in a 15% chance of a 25-bps cut in the next 12 months.)
In this environment, many borrowers are gravitating towards fixed rates.
A recent BMO survey found that 57% of first-time buyers said they’ll choose a fixed rate when they’re ready to secure their mortgage. Another 30% who were undecided said COVID has made them more likely to choose a fixed rate.
“The best nationally available 5-year fixed and variable rates are currently just 5 bps apart. Insured 5-year fixed rates are below variable rates,” wrote RateSpy founder Rob McLister. “Most consider a 5 bps rate premium peanuts for peace of mind, as they should…Even if the BoC dropped rates 25 bps, the cost of being wrong by choosing a 5-year fixed is modest ($245 of extra interest per year per $100,000 of mortgage).”
And while the Bank said rate hikes are off the table until at least 2023, some economists believe they’ll remain where they are for longer than that.
“We see this as a reasonable timeline but wouldn’t be surprised if the overnight rate remained at 0.25% into 2024 as well,” economists at National Bank of Canada wrote. “As always, the progression of the pandemic will be in the driver’s seat here and ultimately dictate the health of the economy, and thus, monetary policy.”
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