Grammarly sets foot in Van

American tech firm Grammarly Inc. is looking to put its prints on downtown Vancouver.

The company announced Sept. 12  the city would be home to its fourth global office.

Grammarly has secured a 3,000 square-foot site on Water Street in Gastown and is currently in the midst of hiring a dozen new workers to fill jobs in frontend and backend engineering, as well as customer service and social media.

“The location is not a coincidence. It is part of our effort to become part of the tech community,” says co-founder Max Lytvyn.

Lytvyn, who lives in Vancouver, says he has witnessed the number of technology leaders and experienced engineers steadily increasing in the city over the years.

He said Grammarly's main consideration when choosing their next base was access to talent. 

“Many of my friends who are Canadians who are from Vancouver or around the area moved to other places… like Seattle, Bay Area or even Toronto, looking for more interesting companies to work for. I hope that Grammarly can be one of these companies that turns this trend around and brings people back to Vancouver.”

GM staff to strike: UAW

The United Auto Workers union announced that its roughly 49,000 members at General Motors plants in the U.S. will go on strike Sunday night because contract negotiations with the automaker had broken down.

The decision came after about 200 plant-level union leaders voted unanimously in favour of a walkout during a meeting Sunday morning in Detroit.

"We stood up for General Motors when they needed us most. Now we are standing together in unity and solidarity for our members," union Vice-President Terry Dittes said in a statement.

It's still possible that bargainers could return to the table and hammer out an agreement, but union spokesman Brian Rothenberg said at a news conference that it would be unlikely. He said it would be hard to believe that the bargainers could resolve so many issues before 11:59 p.m.

The announcement came hours after the union let its contract with GM expire Saturday night.

On Saturday, UAW Vice-President Terry Dittes said in a letter to GM members that after months of bargaining, both the union and GM were far apart on issues such as wages, health care, temporary employees, job security and profit-sharing. The letter to members and another one to GM were aimed at turning up the pressure on GM negotiators.

"While we are fighting for better wages, affordable quality health care, and job security, GM refuses to put hard working Americans ahead of their record profits," Dittes, the union's chief bargainer with GM, said in a statement Saturday night.

A strike by 49,200 union workers would bring to a halt GM's U.S. production, and would likely stop the company from making vehicles in Canada and Mexico as well. That would mean fewer vehicles for consumers to choose from on dealer lots, and it would make it impossible to build specially ordered cars and trucks.

The strike would be the union's first since a two-day work stoppage at GM in 2007.

On Friday, union leaders extended contracts with Ford and Fiat Chrysler indefinitely, but the pact with General Motors was still set to expire Saturday night.

The union picked GM, which is more profitable than Ford and Fiat Chrysler, as the target company, meaning it's the focus of bargaining and would be the first company to face a walkout. Picket line schedules already have been posted near the entrance to one local UAW office in Detroit.

Talks between the union and GM were tense from the start, largely because GM plans to close four U.S. factories. The union has promised to fight the closures.

Here are the main areas of disagreement:

— GM is making big money, $8 billion last year alone, and workers want a bigger slice. The union wants annual pay raises to guard against an economic downturn, but the company wants to pay lump sums tied to earnings. Automakers don't want higher fixed costs.

— The union also wants new products for the four factories GM wants to close. The factory plans have irked some workers, although most of those who were laid off will get jobs at other GM factories. GM currently has too much U.S. factory capacity.

— The companies want to close the labour cost gap with workers at plants run by foreign automakers. GM's gap is the largest at $13 per hour, followed by Ford at $11 and Fiat Chrysler at $5, according to figures from the Center for Automotive Research. GM pays $63 per hour in wages and benefits compared with $50 at the foreign-owned factories.

— Union members have great health insurance plans but workers pay about 4% of the cost. Employees of large firms nationwide pay about 34%, according to the Kaiser Family Foundation. The companies would like to cut costs.

Enbridge seeks new pipeline

Enbridge has started the regulatory process for a new natural gas liquids extraction plant and associated pipeline in Northeast B.C. with a projected capital cost of $2.5 billion.

The company filed an application for the Frontier Project with the B.C. Environmental Assessment Office in August.

It would be B.C.’s second straddle plant; whereas there are eight in Alberta, noted GMP FirstEnergy analyst Ian Gillies.

The plant will be located near Chetwynd and is expected to have an initial capacity of 1.0-1.5 bcf/d, he wrote in a research note.

The related 100,000-bbl/d NGL pipeline will begin at the Chetwynd plant and will stretch 130-170 km to Taylor, where the liquids would then go to third party fractionation and rail loading facilities for further processing and transportation to market.

“This is another example of infrastructure companies trying to provide solutions for natural gas liquids in the WCSB and improve takeaway capacity for dry gas,” Gillies said. “We expect the fractionation facility will be owned by a third party. Mosaic theory would suggest that Pembina Pipeline will be the provider as they have discussed building a fractionation facility in this region."

Project design is currently in the conceptual stage, with FEED work expected to begin the third quarter, for an expected in-service date of winter 2024, Gillies said.

The project is not yet secured, and Enbridge has not yet discussed it with the analyst community, he added. 


Crown corporation loses big

Ontario Cannabis Retail Corp. lost $42 million in the latest fiscal year, according to newly released public documents.

The provincial Crown corporation tasked with online sales and wholesale distribution of recreational pot reported revenues of $64 million for the year ended March 31, 2019.

However, Ontario's consolidated financial statements show the OCRC, which operates as the Ontario Cannabis Store, racked up expenses totalling $106 million during the period.

Canada legalized cannabis for adult use on Oct. 17 last year, and the rollout was mired by supply chain issues and product shortages, which largely have been resolved in recent months.

The supply shortages prompted the Ontario government to cap the initial number of retail licences at 25, but the province is in the process of increasing the number of legal pot outlets to 75 by October.

The OCS announced last week that chief executive Patrick Ford would be retiring. Cal Bricker, senior vice-president of horse racing at Ontario Lottery and Gaming Corp., was named interim chief executive while a search for a replacement is conducted.

Household debt dips slightly

Household income grew slightly faster than debt in the second quarter as the amount Canadians owe relative to their income edged down for the third quarter in a row.

Statistics Canada said Friday that credit market debt as a proportion of household disposable income edged down to 177.1 per cent on a seasonally adjusted basis, compared with about 177.5 per cent in the first quarter.

In other words, Canadians owed roughly $1.77 in credit market debt, which includes consumer credit, mortgages and non-mortgage loans, for every dollar of household disposable income.

The Bank of Canada has repeatedly pointed to household debt as a key area of concern for the Canadian economy.

"Policy-makers no doubt will find something to like in these numbers. Yet we're still a long distance from writing off household debt from the list of top vulnerabilities for Canada's economy," said Robert Hogue, a senior economist at Royal Bank.

On a seasonally adjusted basis, total credit market borrowing increased to $23.5 billion including $14.8 billion in mortgage borrowing in the quarter. That compared with a total of $18.9 billion in the first three months of the year when mortgage borrowing accounted for $13.1 billion.

The household debt service ratio, measured as total obligated payments of principal and interest on credit market debt as a proportion of household disposable income, edged up to a record 14.93 per cent of household disposable income in the second quarter compared with 14.87 per cent in the first quarter.

TD Bank senior economist Brian DePratto said the recent strength in the real estate market was reflected in the data, noting the growth in mortgage debt.

"While falling borrowing costs likely helped demand for housing, they haven't translated fully into servicing costs, which rose just a bit higher in the second quarter to break through the record last set in late-2007," DePratto said.

"However, this uptrend is unlikely to persist much longer given five year bond yields and mortgage rates that are back at or below five-year-ago levels."

Total credit market debt amounted to $2.25 trillion in the second quarter including nearly $1.47 trillion in mortgage debt and $782.9 billion in consumer credit and non-mortgage loans.

Push for easy mortgage rules

Real estate associations representing nearly three-quarters of the realtors in Canada have called for federal parties to commit to ease mortgage rules as the election campaign gets underway.

Organizations representing realtors and brokers in Toronto, Vancouver, Calgary, Edmonton, Quebec and Nova Scotia say too much regulation makes ownership unaffordable.

With the federal election set for Oct. 21, the boards and associations have urged federal political parties to commit to revise the mortgage stress test and adapt it to regional differences and changing economic trends.

The stress test, made more stringent in 2018 to cool an overheated housing market, requires would-be borrowers to show they could still make payments if faced with higher interest rates or less income.

The associations also want the $750 First-Time Home Buyers Tax Credit replaced with a $2,500 non-refundable tax credit for first-time buyers and are seeking reintroduction of 30-year mortgage amortizations.

Industry groups have been calling for eased rules around home buying for some time, while the CEO of the Canada Mortgage and Housing Corp. has urged the federal government to keep the rules in place to protect the economy from tragic consequences as debt levels soar.

CMHC head Evan Siddall urged in a letter to a federal committee in May that it look beyond the "plain self-interest" of groups advocating for eased rules and see the lowering of home prices as helpful for the long-term health of the economy.

Ashley Smith, president of the Real Estate Board of Greater Vancouver, said in Thursday's release that her association believes in responsible lending and regulation, but also wants to see a balance.

"The stress test is causing more harm to hopeful home buyers than it needs to. It's hurting affordability and stifling people's ability to meet their housing needs."

John DiMichele, CEO of the Toronto board, also called for more measures to increase supply, including relaxed rules on mid-density buildings, less red tape, and help on transit-oriented development.

"We need concrete results in the Greater Toronto Area to address the lack of supply."

Matt Honsberger, president of the Nova Scotia Association of Realtors says no two real estate markets are the same and the inflexible stress test as well as other housing policies "are simply not solutions that will work across our diverse country."

Whistleblowers stay secret

The Supreme Court of Canada will not hear an appeal of a lower court decision that kept the identities of a pair of key witnesses in the Competition Bureau's bread price-fixing investigation confidential.

Grocery retailers Sobeys Inc. and Metro Inc. had sought the disclosure of the identities of witnesses, however the Ontario Superior Court ruled the witnesses were protected by confidential informer status.

As is usual, the Supreme Court gave no detailed reasons for its decision.

The top court's decision comes as the federal competition watchdog continues to investigate bread price-fixing, where the country's largest bakery wholesalers and grocers allegedly conspired to artificially bake at least $1.50 into the food staple's price tag.

The price-fixing allegedly took place from 2001 up until as far as November 2017, according to an affidavit filed in late 2017 but unsealed in early 2018.

The pattern of price fixing became known as the 7/10 convention, with an average seven cents price increase at wholesale and 10 cents price bump for the consumer in stores, resulting in an average margin increase of three cents per loaf for retailers, the documents showed.

Prices were fixed on a variety of baked goods, including bread, buns, bagels, naan, English muffins and tortillas.

The scandal came to light after grocery giant Loblaw Companies Ltd. and its parent company George Weston Ltd. came forward and admitted to participating the price-fixing arrangement, and implicated its competitors Walmart, Sobeys, Metro and Giant Tiger. Loblaw and George Weston received immunity in exchange for their co-operation.

The watchdog said in the court documents that it was approached by informants from Loblaw in 2015.

The Competition Bureau executed search warrants at the offices of a number of grocers in 2017 as part of its probe.

Canada's Competition Act prohibits agreements between two or more persons to prevent or lessen competition, and agreements between competitors to fix prices are considered to be "hard-core" cartel activities.

Penalties for price-fixing include fines up to $25 million, imprisonment to a maximum term of fourteen years, or both.

TSX hits record high

Canada's main stock index hit a record high Thursday thanks to broad-based gains including the heavyweight financial sector.

The S&P/TSX composite index was up 64.23 points at 16,675.37 in early afternoon trading on the Toronto Stock Exchange. The index hit an intraday mark of 16,676.37 that beat the all-time high set in April.

In New York, the Dow Jones industrial average was up 125.60 points at 27,262.64. The S&P 500 index was up 15.37 points at 3,016.30, while the Nasdaq composite was up 46.93 points at 8,216.61.

Stock markets rose after the United States delayed increasing tariffs on US$250 billion worth of Chinese imports by two weeks as "a gesture of good will."

In Beijing, China's Commerce Ministry said Thursday that Chinese importers are asking U.S. suppliers for prices of soybeans, pork and other farm goods. It's a sign they might step up purchases of American agricultural products, a possible goodwill gesture ahead of talks next month aimed at ending the tariff war.

The European Central Bank also launched a stimulus drive to help the euro zone economy ahead of the U.S. Federal Reserve's meeting next week when it is expected to lower interest rates.

In a wide-ranging package of measures that will ensure outgoing president Mario Draghi leaves his mark on ECB policies long after he departs next month, the bank cut one key interest rate further below zero. It trimmed the rate on deposits it takes from banks to minus 0.5 per cent from minus 0.4 per cent, a penalty that pushes banks to lend their excess cash.

The ECB, which sets policy for the 19 countries that use the shared euro currency, also said it would restart its bond-buying stimulus program, which pumps newly created money into the financial system to lower borrowing costs and help the economy. It will buy 20 billion euros (C$29.2 billion) a month in government and corporate bonds for as long as needed.

The Canadian dollar traded for 75.79 cents US compared with an average of 75.87 cents US on Wednesday.

The October crude contract was down 62 cents at US$55.13 per barrel and the October natural gas contract was up 1.1 cent at US$2.56 per mmBTU.

The December gold contract was up US$4.80 at US$1,508.00 an ounce and the December copper contract was up 3.25 cents at US$2.65 a pound.

Royal charity clothes line

Meghan, the Duchess of Sussex, has launched a clothing line for a British charity that helps unemployed women find work.

The wife of Prince Harry attended a reception at a John Lewis department store to showcase a collection of workwear and accessories she created with designer and friend Misha Nonoo.

The line includes professional attire such as a blazer, tote bag and trousers. The launch came the day before London Fashion Week starts.

The Smart Set collection supports Smart Works. Meghan is royal patron of the charity that provides women with training and interview clothes.

Meghan said: "As women, it is 100% our responsibility, I think, to support and uplift each other."

The reception was one of her first royal engagements since the birth of her and Harry's son Archie in May.

Dollarama sales up

Dollarama Inc. reported a profit of $143.2 million in its latest quarter as its sales grew 9.0 per cent compared with a year ago.

The discount retailer says its profit amounted to 45 cents per diluted share for the quarter ended Aug. 4 compared with a profit of $140.4 million or 42 cents per diluted share a year ago.

Sales totalled $946.4 million, up from $868.5 million, while comparable store sales grew 4.7 per cent.

Analysts, on average, had expected a profit of 46 cents per share and revenue of $939.2 million, according to financial markets data firm Refinitiv.

In its outlook, Dollarama raised its guidance for comparable store sales growth to a range of 3.5 to 4.5 per cent compared with earlier expectations for between 3.0 and 4.0 per cent.

However, the retailer said its gross margins are expected to come in at the low end of its earlier guidance at 43.25 to 43.75 per cent, compared with earlier expectations for between 43.25 and 44.25 per cent.

Bay reports $984M loss

Hudson's Bay Co. reported a loss of $984 million in its latest quarter compared with a loss of $280 million in the same quarter last year.

The retailer says the loss amounted to $5.35 per share for the quarter ended Aug. 3 compared with a loss of $1.45 per share a year ago.

Excluding one-time items, HBC says its normalized net loss for the quarter was $171 million compared with a normalized net loss of $85 million in the same quarter last year.

Revenue totalled $1.9 billion, roughly the same as a year ago, while overall comparable sales fell 0.4 per cent.

Saks Fifth Avenue’s comparable sales grew 0.6 per cent, while Hudson's Bay's comparable sales fell 3.4 per cent in the quarter. Saks Off 5th comparable sales increased 3.4 per cent.

The company's results came as it evaluates an offer by a group led by HBC chairman Richard Baker to buy the retailer and take it private.

The Baker group has offered $9.45 per share, but the company has said an initial analysis suggested the bid was "inadequate."

Potash mines face shutdown

Up to 700 workers are to be temporarily laid off this fall at three Nutrien Ltd. potash mines in Saskatchewan.

Nutrien says it expects to proactively take up to eight-week inventory shutdowns at its Allan, Lanigan and Vanscoy potash mines starting in November.

It says the production downturn is due to what it calls a short-term slowdown in global potash markets.

Nutrien says the mine shutdowns would affect between 600 and 700 workers.

The Saskatoon-based fertilizer company says if all three facilities were to remain idle for the full eight weeks, potash production could be reduced by approximately 700,000 tonnes.

Nutrien, created by the merger of Potash Corp. and Agrium Inc., calls itself the world's largest provider of crop inputs and services, producing 27 million tonnes of potash, nitrogen and phosphate products world-wide.

In July it lowered its estimate for 2019 adjusted earnings to reflect the impact of wet weather on U.S. planting and other factors that would reduce demand for potash in North America, China and India.

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