Businesses are warning of looming layoffs, lost revenue and a hit to Canada’s reputation, as rail disruptions drag on in the country.
A coalition of 39 industry associations wrote a letter to Prime Minister Justin Trudeau on Tuesday, calling on him to “work urgently” with First Nations and police to bring the blockade to a peaceful end.
“The damage inflicted on the Canadian economy and on the welfare of all our citizens mounts with each hour that these illegal disruptions are allowed to continue,” the coalition said, which represents automotives, mining and numerous other industries.
While the members said they share the government’s commitment to reconciliation with Indigenous groups, the blockades “inflict serious damage on the economy, leaving countless middle-class jobs at risk, many of them in industries that must get their goods, parts, and ingredients to and from market by rail.”
“In addition to disrupting domestic and global supply chains, the blockades undermine Canada’s reputation as a dependable partner in international trade,” they said in the letter.
The rail blockades sprung up on Feb. 6 as Indigenous groups and activists across the country protested in solidarity with the hereditary Wet’suwet’en chiefs that are opposed the Coastal GasLink project in British Columbia. The hereditary chiefs oppose the pipeline through their traditional territory, though it’s received approval from elected band councils.
Meanwhile, the national chief of the Assembly of First Nations called for calm and constructive dialogue to ease tensions. National Chief Perry Bellegarde said governments and industry need to give the time and space to work with the Wet’suwet’en.
The blockades undermine Canada’s reputation as a dependable partner in international trade
industry letter to Prime Minister Justin Trudeau
“We say we want to de-escalate and we want dialogue,” he said. “And I say our people are taking action because they want to see action — and when they see positive action by the key players, when they see a commitment to real dialogue to address this difficult situation, people will respond in a positive way.”
The rail stoppages has forced Via Rail and Canadian National to halt its operations for more than a week, bringing a key artery of Canadian transportation infrastructure to a halt. On Tuesday, Via Rail said it’s preparing to resume part of its passenger rail service.
Many businesses executives are already counting the cost of the rail paralysis.
Dennis Darby, CEO of Canadian Manufacturers and Exporters, estimates around $425 million of manufactured goods is sitting idle as shipments are stalled, based on Statistics Canada numbers and rail usage estimates from Canadian National Railway Co. and Canadian Pacific Railway Co.
“We’ve talked to a number of members here in Ontario and many of them said if (the blockades) extend into that two-week range, most companies will have to start temporary layoffs and cutting shifts, because we just don’t have the inventory,” Darby said during a press conference in Toronto on Tuesday.
Mississauga, Ont.-based Maple Leaf Foods Inc. is also facing escalating costs as it tries to get its perishable products shipped out in time, according to its president Curtis Frank.
Maple Leaf Foods is trying to get its perishable products shipped out in time.
Peter J. Thompson/National Post files
“While it is true that we have already begun to move loads by truck wherever we can, the fact of the matter is that road transportation is becoming harder and harder to secure every day,” he said at the press conference.
Just under a third of Maple Leaf’s revenue is dependent on the movement of perishable products through the rail network in some way, Frank said.
Other industry executives underscored the need to get infrastructure projects built in the country.
“It hurts, because it suggests you can’t get anything done in Canada,” Steve Laut, executive vice-chairman of Canadian Natural Resources Ltd., told the National Post in an interview Tuesday. “And it’s hurting investment across the board.”
“It’s about the pipelines, but it’s also not about the pipelines — it’s about a number of other issues that Canadians have not addressed for a long time.”
Agriculture industry groups have also warned that recent blockades would deepen the financial pain felt by farmers after a dismal harvesting season.
It hurts, because it suggests you can’t get anything done in Canada
Steve Laut
“These new blockades are once again hampering the ability for farmers to get their products to port, especially those in Western Canada,” the Canadian Federation of Agriculture said in a written statement Tuesday.
The protests could put additional pressure on the Canadian economy at a time when the Canadian economy remains vulnerable after narrowly avoiding a contraction in the fourth quarter of 2019.
Finance Minister Bill Morneau, who is preparing to release the federal budget in coming weeks, has already warned that the spread of the coronavirus could weaken economic output. Slumping Canadian manufacturing sales in December could add to those woes, while blockades threaten to further depress business investment.
“We see that the blockade does have real economic impacts,” Morneau told reporters on Tuesday.
Nathan Janzen, senior economist at RBC Economics, said that the blockades may result in a two or three tenths of a per cent drop in the first quarter GDP, with an expected reversal in the second quarter.
Supporters of the Wet’suwet’en Nation take a break during occupation of railway tracks, as part of a protest against British Columbia’s Coastal GasLink pipeline, in Toronto, on Feb. 15.
Chris Helgren/Reuters
However, with large disruptions such as strikes, the manufacturing industry usually experiences a “significant” bounce back. “You’re delaying activity but not losing it altogether in a lot of cases,” he said.
“You build up inventory for a while and eventually a lot of that production is going to be backloaded. You lose production in the near term but maybe then you add shifts temporarily to make up for lost production when you regain transportation capacity.”
CME’s Darby hopes that the government can reverse the declines in Canada’s industrial economy. “I hope very strongly that the government will be able to come up with a long-term solution. It’s not about necessarily just solving this issue today about this particular blockade. It’s about how to give manufacturers, or any industry, predictability.”
The right to protest is “part of the Canadian history,” but the government must step in because the protests are “hurting our economy,” he said.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
