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VW dealers briefed on fix

Volkswagen's plan to fix most of its 2-litre diesel engines that cheat on emissions tests includes a computer software update and a larger catalytic converter to trap harmful nitrogen oxide, according to two dealers who were briefed by executives on the matter.

Limited details of the plan were made public last week at a regional dealer meeting in Newark, New Jersey, by Volkswagen of America Chief Operating Officer Mark McNabb, said the dealers, who asked not to be identified because the plan hasn't been made public.

One dealer said the group was told that early testing of a small sample of repaired cars showed that the fix made "no discernable difference" in the cars' mileage, horsepower or torque. Both dealers said they were told that more testing was needed and that the plans still had to be approved by the U.S. Environmental Protection Agency and the California Air Resources Board.

If the fixes don't hurt performance and mileage, that could be a big boost for Volkswagen, which last month agreed to spend up to $15.3 billion to settle consumer lawsuits and government allegations that its diesels cheated on U.S. emissions tests. The settlement included up to $10 billion that would go to over 475,000 owners of 2-litre VW or Audi diesels, giving them the choice of selling the cars back at the pre-scandal value or getting them fixed. A fix that is satisfactory to owners would entice more of them to go for repairs, saving VW money. The $10 billion figure is the worst-case scenario for the company and includes all owners taking the buybacks. Car owners also would get payments of $5,100 to $10,000.

Volkswagen has acknowledged that the cars were programmed to turn on emissions controls during government lab tests and turn them off while on the road. Investigators determined that the cars emitted more than 40 times the legal limit of nitrogen oxide, which can cause respiratory problems in humans. The company got away with the scheme for seven years until independent researchers reported it to the EPA.

Even with the fixes, the VWs won't fully comply with clean air laws because the cars were built to defeat the tests. The fixes must cut emissions by at least 80 per cent, and VW must pay to mitigate any excess pollution.

At the time the settlement was announced, no fix was available, but the dealers said that VW appeared close to submitting one.

Neither the EPA nor Volkswagen would comment on details repair proposals. "Any remedies that are being discussed still need to be approved," VW spokeswoman Jeannine Ginivan said.

Both dealers said the fix was revealed by McNabb reluctantly under questioning from Northeast region dealers toward the end of a four-hour meeting on July 15. The meeting was held to discuss how VW would implement the buyback and repair plan and included plans to have company representatives handle paperwork.

The news gave hope to the dealers, who have had to make do with a lack of new vehicles and have seen U.S. sales decline since VW admitted cheating on the tests in September of last year. So far this year, VW brand sales are down nearly 15 per cent even though the overall market has grown 1.5 per cent.

One of the dealers said the so-called "Generation 1" diesels — about 325,000 VW Jettas, Golfs, Passats and Beetles from the 2009 to 2014 model years — would get new software and bigger catalytic converters in January or February of next year. About 90,000 "Generation 2" Passats already have sufficient emissions systems and would get only a software update early next year. Another 67,000 "Generation 3" 2015 models would get software in October and would get additional hardware a year later, the dealer said.

Getting the fixes through the EPA and California regulators could still be a problem. The agencies in January rejected a fix for the 2-litre engines, and last week they turned down a plan to fix about 85,000 vehicles with 3-litre diesels that also cheat on emissions tests.

Alan Brown, general manager of a VW dealer in Lewisville, Texas, and chairman of the company's National Dealer Advisory Council, said regional meetings with dealers around the country have caused most to be optimistic that better times are ahead. Details of how the cars would be fixed weren't discussed at the meeting he attended this week, he said. But if they don't affect mileage or performance "We'd celebrate," he said.

Dealers also were told that they'd be reimbursed by VW for sales losses due to the scandal, and that new vehicles are coming. A small SUV built in Tennessee is due early next year, and later in the year VW plans an all-wheel-drive wagon to compete with the hot-selling Subaru Outback.



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Embracing biometrics

In the not-too-distant future, your bank will be able to prevent fraud by learning how you type, your car will unlock when it senses the electrical activity of your heart and the security system at your office will recognize your facial features.

That's according to experts in the field of biometrics, which identifies a person by measuring unique characteristics such as their fingerprints, their retinas or their voice.

But these types of distinctive identification authentication processes offer more than the promise of a higher degree of security than traditional passwords.

Biometrics will also free consumers from the need to memorize a myriad of characters — a convenience that will appeal to anyone who needs to access a secure computer or network regularly.

"People are having to jump through more and more hoops to create a secure authentication," says Karl Martin, the CEO of Nymi, a Toronto-based startup that created a wristband that can identify its wearer based on their electrocardiogram, or the electrical activity of their heart.

"How many times a day do you have to prove who you are, whether it be through a password or a biometric or other means?"

Banks — and the financial services industry, more broadly — have been one of the quickest adopters of biometrics technology, given their strong need for security and identity verification, says Bianca Lopes, director of strategy at BioConnect.

"They're inherently wired and regulated to protect the customer with things like know-your-client and anti-money laundering rules," says Lopes, whose company helps businesses integrate biometrics technologies across various channels.

Royal Bank (TSX:RY) is currently testing out technologies such as iris scanning, face recognition, speech recognition and fingerprint scans — and is expecting to roll out the features to customers in 2017.

Martin says Nymi has completed successful pilot projects alongside RBC and TD Bank (TSX:TD) to test out how its wristband can be used to verify purchases, while MasterCard recently launched a service that allows users to verify their identities with their smartphones by taking a selfie or using a fingerprint scanner.

Notably, it's the popularity of the fingerprint scanner on Apple iPhones that's made consumers more comfortable and familiar with biometrics, says Dennis Gamiello, vice-president of identity solutions at MasterCard.

"Fortunately, Apple and some of the other digital players that have introduced (biometric) capabilities are in some ways helping train the consumers for us."

Biometrics can also identify users based on how they behave — for instance, their typing patterns or the way that they swipe across the screen on a mobile device.

"The way that you actually interact with the phone, the way that you swipe the phone ... it's fairly unique to you," explains Eddy Ortiz, RBC's vice-president of innovation and solution acceleration.

In the future, behavioural biometrics could even be used to detect if a fraudster has somehow gained access to your bank account, Lopes adds.

While identity verification is important, the capabilities of biometrics go beyond that function, notes Martin. The technology can also be used to create personalized environments — by setting the thermostat to your preferred temperature, for example — at your home, the office or a commercial space.

"We're looking at how can identity be used to create completely personalized experiences," says Martin, pointing to cars as an example.

"You may have a shared vehicle but you have preferences in terms of the seat height and position and the steering wheel and entertainment and all of those things."

Experts concede that while biometrics can beef up security, improve convenience and create personalized environments, for some users the technologies may evoke scenes from the popular science fiction film "Minority Report" — a Tom Cruise mystery-thriller, which features a future of nearly boundless technological advancements designed to protect its citizenry.

"There will be consumers who get creeped out," says Krista Jones, head of work and learning at the MaRS Discovery District.

Ultimately, though, the technology gives consumers a greater guarantee that their private information will be kept safe, she adds.

"We have an opportunity to craft this in such a way that the privacy of the consumer is at the heart of this."



Pokemon's first partnership

The Japan launch of "Pokemon Go" on Friday included the game's first partnership with an outside company: fast-food giant McDonald's.

About 400 McDonald's Japan outlets are "gyms," where players can battle on their smartphones. The other 2,500 are "Pokestops," where they can get items to play the game. The hope is, presumably, that they may also buy a Big Mac in the process.

Serkan Toto, a Tokyo-based games industry consultant, explained earlier this week why this partnership between the Pokemon Co., McDonald's Japan and "Pokemon Go"-developer Niantic Inc. could be big for the gaming industry. His comments were edited for space and clarity.

"POKEMON GO" IS ALREADY RAKING IT IN

From the game industry (perspective), the critical point here is that this game is making money from in-app purchases. It's the number one grossing application in every single market where this game has been launched up to this point. That's the amazing, amazing point about this application.

THE MCDONALD'S DEAL

The reason people are talking about this McDonald's deal is it could constitute, and I think it will constitute, a second revenue stream for Niantic that other games cannot possibly have for systemic reasons, if you will. Because of the GPS element, Niantic can do these O2O (online to offline) kind of business deals. They are adding a new way to make money through mobile games, by virtue of the GPS element in the game, and I think this deal is just the first of many to come.

WHAT IS O2O?

There are certain applications — they are not games — that are able to drive traffic to restaurants, or to drive traffic to tourist spots that are not as popular as in Tokyo, for example. The expectation for "Pokemon Go" is that "Pokemon Go" in that sense can become an advertising platform.





The growth of direct sales

About three years ago, Diana Eves signed up to sell loose leaf tea and recruit salespeople for a company called Steeped Tea on her mother's insistence.

The Calgarian says she now rakes in about $1,300 monthly from commission on her sales and those of some of her recruits. Within the next two years, she plans to leave her retail job.

"Being your own boss is a huge benefit," she says, rattling off a list of other advantages of her gig including flexible work hours and the camaraderie among her team.

This business model referred to as multi-level marketing or direct selling is often associated with the heyday of Tupperware parties. It has since ballooned to include folks peddling jewellery, handbags, kitchen gadgets, makeup, leggings and more for companies often touting a profitable side hustle, along with empowerment to mostly female recruits.

In Canada, nearly 800,000 people attempt to make money this way, according to the Direct Sellers Association of Canada. In the U.S., 20.2 million worked as consultants last year, according to the Direct Selling Association, a jump of 11 per cent from the prior year.

But some say consultants don't stand to profit much and the arrangement can create pressure to supplement a loved one's income.

Multi-level marketing structures are prone to operate as illegal pyramid schemes, said William W. Keep, the dean of the College of New Jersey School of Business, who studies these types of business models.

Some of these companies require consultants purchase a minimum amount of products monthly and can't show sufficient public demand for their goods, he said. The U.S. Federal Trade Commission recently ordered one of them, Herbalife, to restructure its American operations, including ensuring that at least 80 per cent of its product sales come from retail customers.

However, many of these companies maintain they are not pyramid schemes. They can operate legally in Canada, according to the Canadian Consumer Handbook, so long as they abide by the Competition Act, which includes not selling onerous amounts of inventory to consultants.

Eves said she doesn't stock up on Steeped Tea goods, and the company is not a pyramid scheme because it promotes a product and gives all recruits the same opportunity to succeed. She stressed she is not a Steeped Tea employee, so her views don't necessarily reflect those of the company.

Steeped Tea did not make anyone available for an interview or answer questions via email prior to publication.

But just because the companies follow the letter of the law doesn't mean making money is easy.

At Scentsy, a fragrance company, consultants fall into nine tiers, according to a company document posted on their website that shows average annual earnings as of December 2014.

Nearly 65 per cent of its consultants — more than 66,000 — sit on the second tier, where the average worker made US$463.34 in a year.

Top-level directors, of which there are fewer than 200, earned an average of US$113,363.98. The highest earner made nearly US$1 million, while its least profitable director took home just more than US$6,000.

Scentsy also did not make anyone available for an interview or answer questions via email.

The probability of success, Keep said, is not encouraging based on the limited earnings information available from multi-level marketing companies.

People looking for "significant financial gain" rather than social benefits shouldn't sign up, said Ela Veresiu, assistant professor of marketing at York University's Schulich School of Business in Toronto.

"For the fun aspect of it, for the free products, to keep busy — sure," said Veresiu.

Eves says the amount of income one can earn boils down to one thing.

"The bottom line is the same: it's your motivation," she said. "If there's six people on your block that sell Steeped Tea, I guess you're just going to have to try a little harder."

But "unintended negative consequences" of this sales model, said Veresiu, include straining social relationships through sales efforts.

U.S. humour writer Rachael Pavlik captured this sentiment in a satirical rant published last November on Scary Mommy, an online parenting publication, about why she's no longer shelling out dollars for products her friends sell.

In an interview, Pavlik said at one point, she would receive a couple of invitations a week to attend sales parties. She bought several things before she stopped going.

"It just feels very phoney to me and it's like I'm just a prospect for you to make more money," she said of recruiting friends to a sales force.

"A good way to lose friends is to push people into something that they don't want to do so that you can make money."

Eves said she avoids that tension by focusing her recruitment efforts on strangers and not targeting individuals in her social media posts about products.

Still, she acknowledges friendships may fall apart if the seller feels judged and the friend feels obligated.

"I think that you've got to watch that on both sides."



Murdoch now acting chief

Roger Ailes is out as chief executive at Fox News Channel, his career at the network he built from scratch and ran with an iron hand for nearly 20 years over with stunning swiftness following allegations that he forced out a former anchor after she spurned his sexual advances.

Network parent 21st Century Fox said Thursday that Rupert Murdoch, the company's executive chairman, would run Fox News and its sister Fox Business Network, which Ailes had also led, until a successor could be found.

Murdoch and 21st Century Fox did not address the widening scandal in the statement on the resignation but lauded Ailes for his contributions. Ailes did not comment in the resignation announcement.

"I am personally committed to ensuring that Fox News remains a distinctive, powerful voice," Murdoch said. "Our nation needs a robust Fox News to resonate from every corner of the country."

Cutting short a vacation, the 85-year-old Murdoch addressed Fox News employees in New York on Thursday. Details were not given on the settlement agreement for a contract that was supposed to run through 2018, but Ailes is expected to get a payment of at least $40 million.

Ailes will have no formal role in the company, but is expected to serve as an informal adviser to Murdoch, said a person familiar with the agreement who spoke on condition of anonymity because it is a personnel matter. The deal is also said to have a standard no-compete clause.

Fox is heading into a general election campaign in its customary spot at the top of the ratings, but without the man who sets its editorial tone every day. The announcement came on the day Donald Trump is to accept the GOP nomination for president, a speech likely to be watched by more people on Fox than any other network.

The blustery, 76-year-old media executive built a network that both transformed the news business and changed the political conversation. Fox News Channel provided a television home to conservatives who had felt left out of the media, and played a part in advancing a rough-and-tumble style of politics that left many concerned that it was impossible to get things done in government.

Ailes' downfall began with the July 6 filing of a lawsuit by Gretchen Carlson, who charged that he sabotaged her career because she refused his suggestions for sex and had complained about a pervasive atmosphere of sexual harassment at Fox. Ailes has denied the charges, but 21st Century Fox hired a law firm to investigate.

In a statement, Carlson's attorneys credited Carlson's "extraordinary courage" with causing "a seismic shift in the media world."

Several Fox employees jumped to Ailes' defence, but notably not Megyn Kelly, one of Fox's top personalities. In rapid succession, it was reported that Kelly was among other women who had told investigators about harassment — again denied by Ailes — and that corporate heads Rupert Murdoch and his sons, James and Lachlan, determined that Ailes had to go. The company has no plans to make results of its investigation public.

Within two weeks of the court filing, Carlson's lawyers also said more than 20 women had contacted the firm with stories of alleged harassment by Ailes either against themselves or someone they knew. Two came forward publicly.

Before the charges, Fox's sheer success had insulated Ailes despite some previous scrapes with the Murdoch sons over who he would report to. Fox News Channel is the parent company's single most important property, said Pivotal Research Group analyst Brian Wieser, with some estimates that it accounted for nearly a quarter of the company's profits.

Ailes was a prominent Republican media consultant who later ran CNBC before Murdoch asked him to create a cable news network to compete with CNN at the same time MSNBC was starting. Ailes' slogans, "fair and balanced" and "we report, you decide," appealed to an audience that believed mainstream outlets didn't live up to those promises.

"He was ahead of his time in recognizing that dividing, not uniting, an audience would be the key to commercial success in the 21st Century cable news business," said Matt Sienkiewicz, communications professor at Boston College. Ailes blew apart the notion that public affairs programming should target a broad audience with civil debates, he said.

Ailes hired a combative broadcast journeyman in Bill O'Reilly and turned him into the star of an opinionated prime-time lineup. He directed news coverage and emphasized issues like the so-called "war on Christmas" or the Benghazi investigation that otherwise got little attention. Republican politicians considered Fox the first stop for reaching their intended audience, and they learned to talk tough. "We're not going to be defensive about anything," Ailes said at the network's launch.

"It is always difficult to create a channel or a publication from the ground up and against seemingly entrenched monopolies," Murdoch said on Thursday. "(Ailes') grasp of policy and his ability to make profoundly important issues accessible to a broader audience stand in stark contrast to the self-serving elitism that characterizes far too much of the media."

He was also a showman. Fox had flashier graphics, brighter colours and a vitality its staid rivals lacked. The daytime show "Outnumbered" is a classic Ailes concept: four women in dresses, their legs prominently displayed, debating issues with a single male panelist.

In 2011, Ailes told The Associated Press that he hired Sarah Palin as an analyst — a decision that later gave him headaches — "because she was hot and got ratings."

Ailes demanded and usually received loyalty from a team that knew there could be hell to pay otherwise. When Paula Zahn left Fox for a job at CNN, Ailes retaliated by saying that a dead raccoon could have done her show and gotten the same ratings.

Critics scoffed at Ailes' promise that he'd lift Fox to first place. By 2002, he did, and Fox hasn't looked back.

Ailes groomed no obvious successors, and has been so identified with the brand that many have a hard time envisioning the network without him. Will his successor lack Ailes' political instincts, or tone down aggressive opinion? That could make Fox more broadly palatable, but also risks alienating the audience that has grown to love Fox and made it such a success.

Murdoch said Fox managers Bill Shine, Jay Wallace and Mark Kranz will assist him in day-to-day management of the network. Long-term, CBS News President David Rhodes is well-regarded and worked at Fox in the past. The Murdoch sons may also seek to make a statement by reaching outside the current Fox News culture.

"Whoever invented the Coca-Cola formula has long since passed this Earth, but the brand keeps selling because people like the taste," said Mark Feldstein, a journalism professor at the University of Maryland. "I think that's how it's going to be with Roger Ailes. He invented this winning formula and all you have to do is not mess with it too much and it will continue to mint money for you."

Documentary filmmaker Robert Greenwald, who made 2004's "Outfoxed: Rupert Murdoch's War on Journalism," said he hopes the younger Murdochs will take this moment to change the network's philosophy.

"I certainly think that some of the hatred and anger and racism and fear that we're seeing in this election has clearly and absolutely been stoked and stroked by Fox News," he said. "Once he's gone, I hope the younger Murdochs will attempt to take an approach in which it does become a news outlet rather than a propaganda outlet."

But Fox would have to tread carefully to not alienate a loyal audience who will be concerned this news could change its favourite outlet.

"We're not going to see any quick changes," said Ken Doctor, a media consultant for Newsonomics and Politico. "That would be foolish from a business point of view."

While ratings are soaring in an election year, a newly aggressive CNN is making inroads among younger viewers that advertisers seek. Fox faces the challenge of trying to inject youth into an audience that is among the oldest in television, and viewership is expected to inevitably fall without the excitement of a campaign.

The network has also been remarkably stable, with personalities bonded from loyalty to Ailes. O'Reilly has recently mused about retirement, and he and Sean Hannity reportedly have contract provisions that would allow them to leave if Ailes does. Kelly's contract ends later this year and it would be a huge blow to the network if she left.

 



Airline offers compensation

Air Transat's president says the carrier will compensate all passengers booked on a flight that was disrupted when two pilots were arrested on suspicion of drunkenness.

"We will be compensating all passengers on this flight pursuant to the applicable European regulations," Jean-Francois Lemay said in a statement Thursday.

European Union rules stipulate a passenger is entitled to 600 euros in the event a flight longer than 3,500 kilometres is cancelled.

The airline confirmed the pilots arrested in Scotland have been suspended at least until the end of an internal investigation.

"The issue of the July 18 arrest of two Air Transat pilots in Glasgow is a complex one, and because the matter is the subject of judicial proceedings in Scotland, the airline will not comment at this point," the statement said.

Jean-Francois Perreault, 39, and Imran Zafar Syed, 37, were detained at Glasgow Airport on Monday shortly before they were to fly an Airbus A310 with about 345 passengers from Glasgow to Toronto.

The two were charged under a section of the United Kingdom's Railway and Transport Safety Act that precludes people from conducting aviation functions "when the proportion of alcohol in (their) breath, blood or urine exceeds the prescribed limit.''

They are also each facing a charge related to threatening or abusive behaviour.

Canadian aviation regulations prohibit any aircraft crew members from working while intoxicated or within eight hours after having an alcoholic drink.

"Canadian and European rules and regulations that we are subject to regarding alcohol consumption are very strict," Lemay said.

"Our own internal rules are even more stringent, and we do not tolerate any failure to comply."

Air Transat is a subsidiary of Transat A.T. Inc. (TSX:TRZ).



Building boom for Fort Mac

Canada Mortgage and Housing Corporation is predicting a house-building boom in wildfire-ravaged Fort McMurray, Alta., later this year and continuing into 2017.

The national agency says if all the homes destroyed by the fire in May were rebuilt in one year, along with the usual number of new homes, it would result in about 2,500 housing starts — greater than the previous record of 2,200 starts in 2007.

However, it stated in a report it's unlikely all the homes can be rebuilt this year because of the extensive cleanup that must take place first.

CMHC said an economic downturn linked to low oil prices had dropped home construction to a near 20-year low before the fire erupted in early May. Only 74 combined single- and multi-family units started construction in 2015, the lowest level since 1997. The pace in 2016 was equally weak at only 13 starts.

Additionally, CMHC noted that only 155 sales of existing homes took place in the first quarter of 2016, continuing a declining trend that began in 2014. The average home price fell to $504,000, compared with an average of about $609,000 two years ago.

In its report, the agency forecasts housing prices will halt their declines but didn't make a price prediction. It said it's unclear how many listed homes for resale will return to the market after repairs are made, noting many listings expired because the owners had been evacuated. Prices will be supported, however, as some displaced residents opt to purchase existing homes, driving up demand.

Rental vacancy rates that hit 29 per cent in October are expected to decline rapidly, helping stabilize rents which had been falling, CMHC said.



Paying for financial advice?

There's a scene in "The Wolf of Wall Street" where the cocaine-fuelled character of Mark Hanna, played by Matthew McConaughey, lays out the No. 1 rule about the stock markets.

Nobody knows where they'll go.

"But you and me, the brokers? We're taking cold hard cash via commission," he tells Leonardo DiCaprio, who stars as stockbroker Jordan Belfort.

The over-the-top exchange illustrates why commission-based financial advisers may not serve one's interests.

The choice between a fee-based adviser or one who gets paid through a commission is an important decision for investors.

Andrey Pavlov, a finance professor at the Beedie School of Business at Simon Fraser University, says he prefers the fee-based system.

"I think it is the right model because then the adviser is clearly working for you and they have your best interests in mind," he said.

"When someone is working based on commission, they can be honest and they can very much care about you, but still they're getting paid based on the mutual funds they sell you and I don't like those incentives."

Fee-based advisers may charge an hourly rate, a flat fee or a percentage of the assets under management, while commissioned-based advisers earn a commission when you buy or sell an investment.

Pavlov says while "99.9 per cent" of advisers will act in your best interest, commissions create a potential conflict of interest.

"With fee-based it is very clear what you're paying and the incentives are aligned," he says.

Pavlov says the fee-based model is going to be more efficient for larger accounts, but he likes it for smaller investments too because he says it aligns the incentives.

"I want to pay for the time and effort that the adviser (puts in) rather than some sort of sales job that I'm not even aware of," he said.

But a fee-based adviser isn't for everyone.

Sybil Verch, national director of wealth management at Raymond James, says the vast majority of her clients are fee-based.

But Verch said a commission-based account may be cheaper for clients who don't trade much and don't need the financial planning services an adviser may offer.

"Then they just pay when they're actually executing on a trade and they don't need any other services," she said. "However, the average client and the majority of Canadians, I think need a little bit more than that."

Fee-based financial advisers aren't without their potential conflicts. For instance, if you receive a windfall inheritance, fee-based advisers who earn a percentage of the assets under management would be paid more if you invested the money with them than if you used it to pay off a mortgage or other debt.

There are also limitations to fee-based accounts. Most firms limit the number of trades one can make in a year and charge more if clients go over that number.

For people who have a fee-based adviser, it is important to ensure they get value for their money, Verch said.

"If you're going to pay a flat fee for services based on the value of your account, the client needs to ask the adviser, 'What exactly can I expect in terms of services?'" she said.

"The client doesn't want to get into a situation where they're now paying a flat fee every year, but there's no activity. There's no trading, there's no financial planning, there's no regular communication."



An elevator crisis?

Every day of the year, Canadians across the country are finding themselves trapped in faulty elevators, while countless more are suffering through inconvenience and isolation because of elevators that are out of service — and the problem is worsening, an investigation by The Canadian Press has found.

Last year, for example, firefighters in Ontario alone responded to 4,461 calls to extricate people from elevators — more than a dozen a day — and double the number from 2001.

"I don't think we're heading toward a crisis, I believe we're already there," said Rob Isabelle, a mechanical engineer and elevator consultant to property managers and owners.

"If we look at the reliability of a large number of pieces of equipment, it's really the worst it's ever been."

Among cities, Toronto led the way last year with about 2,862 elevator-rescue calls to 911, but others also had their share of problems. For example, Montreal firefighters responded to 1,532 such calls, Vancouver responders went to 428 calls, while Ottawa saw 314 in 2014.

Many calls involve rescuing more than one person. Others who find themselves stuck are freed without 911 involvement.

Nancy Lean is distrustful of elevators following a terrifying experience in 2014 as she went up to the second floor of York Regional Police headquarters in Aurora, Ont., where she works.

"It started making a lot of banging noises. Then the lights went out. There was a lot more banging went on, and then it dropped to the basement," said Lean, 46, in a recent interview.

"It jolted me when we came to a stop at the bottom. I didn't know what was happening or when it was going to stop. Everything was black. I kept trying to press buttons to try to make it open the doors but nothing would happen."

Insiders say the steep rise in problems is partly the result of more elevators — Ontario has seen a 10 per cent increase over the past five years. But the real culprits, they say, are aging equipment and structural issues within an industry dominated by four huge multinationals: Otis, Schindler, Kone and ThyssenKrupp.

When it comes to Canada's elevator market, those companies have been in a race to the bottom in their efforts to grab market share, Isabelle said.

Thirty years ago, he said, a technician would typically service about 35 to 45 elevators for about $1,000 per elevator a month. The maintenance contract included everything needed to keep the elevators humming — excluding extraordinary events such as flooding or vandalism.

Nowadays, he said, that same contract might be worth about $600 — with each technician responsible for 100 elevators.

"We're into almost this downward spiral," Isabelle says. "Service technicians are getting loaded up more and more, having less time to do preventive maintenance. The less preventative maintenance you do, the more problems you're going to have."

None of the four companies — whose European operations were fined more than $1 billion in 2007 for collusion — would comment on the crisis. Similarly, the Canadian Elevator Contractors Association, which speaks for smaller elevator companies and suppliers, refused to discuss the situation.

"We are too busy," said Catharine Bothwell, the association's executive director.

The growing phenomenon of faulty elevators is not restricted to big cities or highrise buildings — and it's not just about getting trapped in them.

Janice Abbott, 54, a dietary aide, remembers how the lone elevator at the long-term-care facility in Clarington, Ont., where she works was out for three months in the fall of 2014. About half the 88 residents were essentially stuck on the second floor.

For meals, staff had to push a heavy steam tray from the basement kitchen through service doors, up a ramp, up a hill across the parking lot, and through front doors on the ground floor.

"The worst was carrying the heavy pans of hot food upstairs and hot coffee and tea because of the potential for being burned," Abbott said.

Property owners and managers — particularly those looking after older buildings — are increasingly dealing with an expensive dilemma as parts and technicians familiar with the aging equipment become hard to find or disappear altogether.

Brent Merrill, CEO of Metcap Living, said rental-apartment landlords, faced with a constant cycle of repairs, are being forced into elevator modernization that can cost between $150,000 and $300,000 each — and keep the lift out of service for months. The expense, he said, can only be partly recovered from residential tenants over several years.

Merill blamed industry consolidation for squeezing out smaller players, leaving an "oligarchy" running the show.

"We've got to choose between four or five companies," Merill says. "The (big) elevator companies do not service the elevators as well as a smaller company, or as well as they used to."

About 1,550 of Ontario's 18,000 residential building elevators are more than 50 years old and another 10,000 are between 25 and 50 years old. But even those shiny elevators in new condo buildings are not immune from outages.

"The part needed has been shipped from China and should arrive in Toronto by next week," one harried manager of a new, upscale condo told restless residents at the end of May. "We are hopeful that the work should be completed by mid-June."

Ben McIntyre, business manager for Local 50 of the International Union of Elevator Constructors in Ajax, Ont., said some landlords are simply unable or unwilling to spend the needed money. But the real problem, he said, is that routine maintenance has gone by the wayside as overloaded technicians attend to only the most pressing problems.

McIntyre also complains about the dominance of the few big players in the tight-knit industry.

"They really rule it with a tight fist and it's all about bottom lines more than it is about customer satisfaction or for the riding public," McIntyre said. "If they can cut a corner to make their bottom line look better ... they will. It's only when an accident happens or something happens, then they start pointing fingers."

And accidents do happen.

Last year, for example, an elderly man's legs were severed in an elevator mishap in Ottawa. Lean said she suffered vertical whiplash in her incident.

In all, eight people were permanently injured and another 119 were slightly hurt in Ontario elevators last year — mostly due to what the province's independent safety regulator calls "user behaviour." In addition, such injuries have been rising by six per cent a year for the past eight years.

British Columbia has also had about three elevator fires a year over the past decade — most caused by electrical or mechanical failures — while Ontario sees an average of about five a year, half of which are believed to be the result of a problem with the lift itself.

Elevator injuries, however, remain relatively rare. Putting a price on user inconvenience is harder to quantify.

Esther Goodwin, 96, remembers when the lone elevator at her three-storey assisted-living building in Unionville, Ont., went out of service a couple of years ago.

"It was a very great hassle," Goodwin said. "Some people just didn't leave the floor at all for four months."

Some of the most problematic elevators in the country are found in Toronto's public housing buildings, many of them high-rise.

Lisa Murray, spokeswoman for Toronto Community Housing Corporation, said keeping the 591 elevators in 270 buildings operational — many are more than 50 years old — is a huge challenge.

"We just keep triaging everything," Murray said.

Some well-heeled landlords — particularly in downtown office buildings — have begun paying a premium to ensure their elevators get first-rate service, creating a further strain on limited resources. But they are a tiny minority.

"The status quo does not work," Isabelle said. "Something has to change."

That change, he said, has to start with an end to undercutting by the big companies and higher revenues per device, which in turn should make routine maintenance more viable. He's not optimistic.

In the interim, pressures continue to increase.

Ontario's regulator has mandated the upgrading of single-speed elevators typically found in buildings of three to five storeys. That will increase demand for technicians and equipment, force landlords to dig into their pockets, and could leave more people lugging groceries up the stairs, all but trapped on higher floors, or stuck waiting for rescue.



Economic outlook down

A new Conference Board of Canada report has downgraded its projections for economic growth in 2016 from 1.6 per cent to 1.4 per cent, despite a strong start to the year.

The think tank says Canada's economic growth advanced at a solid annual pace of 2.4 per cent in the first quarter, driven by robust household spending, a surge in exports and a double-digit increase in residential construction.

But that momentum has largely dissipated after gross domestic product contracted in February and March, followed by wildfires in the Fort McMurray, Alta., region in May and June that shut down many oilsands operations.

The board estimates that the temporary shutdowns will have reduced oil production by 57 million barrels this year, costing oil and gas firms $3.5 billion in lost revenues.

Its report says the largest source of weakness in the economy remains the steep deterioration in business investment due to the collapse in energy spending, and there's still no sign of a long-awaited recovery in non-energy investment.

The board says weaker global economic growth prospects — factors that hurt Canada's trade sector — are also dampening the country's outlook.

Its forecast is in line with a report issued earlier this week by the International Monetary Fund, which also cut its prediction for economic growth this year to 1.4 per cent.



220 flights cancelled

Southwest says it has fixed computer problems that caused hundreds of flights to be cancelled, but it is telling passengers to get to the airport early because there could be long lines.

The airline has already cancelled more than 220 flights on Thursday.

Several of the airline's technology systems were affected by an outage that started Wednesday afternoon, causing the cancellation of nearly 700 flights and delays for hundreds more.

Southwest's website crashed, and the airline briefly held up all departing flights on Wednesday.

Southwest says in a statement that most systems are back online.



Fined $130M for fixing price

Japanese auto-parts manufacturer Nishikawa Rubber Co. has agreed to plead guilty and pay a US$130-million fine for its role in an international bid-rigging scheme that affected car sales in Canada and the U.S.

Subject to imposition by the U.S. courts, the resolution is the result of an unprecedented collaboration between Canada's Competition Bureau and the Antitrust Division of the U.S. Department of Justice.

The Bureau said the substantial fine on Nishikawa effectively addresses the adverse effects of its conduct in Canada, as well as in the U.S.

The company admitted that between January 2000 and September 2012 it conspired with other suppliers to fix and rig bids for the sale of automotive body-sealing products.

The BSPs were sold to automakers in the U.S. for cars manufactured there, and cars manufactured in Canada by Toyota and Honda that were then sent to the U.S. for sale.

The Antitrust Division included US$236 million in sales that were made in Canada in its assessment of the proposed fine.



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