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B.C. FIRST NATION SIGN DEAL AIMED AT FAST-TRACKING NATURAL GAS EXPORTS VANCOUVER — The B.C. government has struck a deal with the Haisla First Nation that the province says could help fast track a liquefied natural gas plant near Kitimat. The agreement would allow the purchase or lease of land that will enable the Haisla to work with the industry to develop both the plant and an export terminal on Douglas Channel. The deal is part of the B.C. government’s natural gas strategy launched last year that would see three plants built on the coast to develop liquefied natural gas for export to Asia. Aboriginal Relations Minister Ida Chong said the deal is the key to unlocking a whole new natural gas export industry in the province. In its jobs plan, the government committed to having three terminals running by 2020, and said the plan could create more than 1,400 jobs and generate $600 billion in economic activity.
CONSUMERS BECOMING DESENSITIZED TO GAS PRICE JUMPS: TRACKER CALGARY — The cofounder of a popular gas price-tracking website says consumers are becoming increasingly desensitized to wild swings at the pump — like the 13-cent wallop Montrealers experienced earlier this week. Gasbuddy.com’s Jason Toews recalls Canadians being “on the edge of revolt” in 2005, when the damage wrought by Hurricane Katrina rippled north of the border and sent the national average to a then-record of $1.23 per litre. “People were really upset by the high gas prices and they’re talking about boycotting the oil companies and gas stations,” he said. “Ironically enough, it doesn’t seem that expensive anymore — $1.23. That’s kind of the new norm.” The national average for gasoline sat at $1.33 per litre on Thursday and early Friday. Toews said he expects it to dip into the $1.20 per litre range by December. — The Canadian Press
C9
BUSINESS
Saturday, Sept. 15, 2012
Harley Richards, Business Editor, 403-314-4337 E-mail editorial@reddeeradvocate.com
No progress in auto talks BY ROSS MAROWITS THE CANADIAN PRESS The head of the Canadian Auto Workers union says it has made no progress in talks with the Big 3 automakers as the countdown continues to a strike. “Here we are three-and-a-half weeks of intense meetings and the companies are taking the same position they did from day one,” CAW president Ken Lewenza said Friday afternoon during a break in marathon talks. He said General Motors, Ford and Chrysler have dug in and are not backing down on their proposals to reduce fixed costs. Demands include eliminating cost-ofliving allowances, requiring employees to make contributions to the defined benefit pension and a new hire rate that never progresses to the top level. Lewenza said the automakers have responded unfavourably to the union’s lat-
est offer that proposed some concessions particularly in conditions for newly hired workers in a bid to win some guaranteed investments in Canada. “Where we have shown some flexibility, they’ve been very, very stringent on their positions.” He said the union isn’t going after GM and Ford’s record profits or Chrysler’s almost miracle turnaround. “All we’re saying is that we want some modest improvements.” The union is gearing up for a strike at 11:59 p.m. on Monday but Lewenza said the deadline can be extended if it sees progress in the final few days of talks. “If it’s five to 12 on Sept. 17th and we see light at the end of the tunnel then we’ll just keep going until the deal is done. But there would have to be a mega-shift in responses from the companies for that to happen.” Debt rating agency Moody’s said Friday that even a short strike could be “painful” and hurt the country’s weak economic
growth for months to come. “Even a one-week walkout could jeopardize Canada’s increasingly listless growth, shaving 0.25 percentage point from September GDP while disrupting North American supply chains and retail spending into the fourth quarter,” Moody’s Analytics senior economist Mark Hopkins. Automakers are seeking to reduce labour costs because health-care costs are rising and the strong Canadian dollar is eroding competitiveness. In June, General Motors announced it would shut down its consolidated plant in Oshawa, Ont., next year, a move that will eliminate 2,000 direct jobs. The planned closure comes as the big automaker restarts production at the former Saturn assembly plant in Spring Hill, Tenn. Moody’s said the auto industry is one of “the few bright lights on the Canadian manufacturing landscape.”
Please see TALKS on Page C10
WIRELESS
Texting trickery prompts lawsuit BY LAUREN KRUGEL THE CANADIAN PRESS The Competition Bureau is suing Canada’s three biggest wireless carriers and an industry association for allegedly enabling providers of premium texting services to trick consumers into paying fees they weren’t expecting. The watchdog is seeking $10 million each from Bell (TSX:BCE), Rogers (TSX:RCI.B) and Telus (TSX:T) and $1 million from the Canadian Wireless Telecommunications Association. The industry, for its part, says the bureau is going after the wrong target and that its suit could have a chilling effect on e-commerce. The so-called short-codes enable users to do anything from make charitable donations, to pay for parking or to vote for contestants on “So You Think You Can Dance” from their phones. There are some 700 such codes in use in Canada. The bureau says premium services — it cites trivia questions and ringtones as examples — can cost up to $10 per transaction and up to $40 for a monthly subscription over and above standard texting plans. “Our investigation revealed that consumers were under the false impression that certain texts and apps were free,” said bureau commissioner Melanie Aitken. “Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills.” In addition to the financial penalties, the Competition Bureau also wants full refunds for customers, a stop to advertisements that don’t clearly disclose the price of the premium-rate digital content and a “corrective notice” informing the public about any order issued against them. The suit, which follows a five-month investigation, is before the Ontario Superior Court of Justice. The allegations have yet to be proven in court. While the case currently names the three companies and the CWTA, bureau spokesman Bryan Parker said the investigation is ongoing.
Photo by HARLEY RICHARDS/Advocate staff
Chuck Easy, left, and Cam Clark in the Festival Ford showroom. Red Deer’s Ford dealership is now part of the Cam Clark Ford Auto Group.
Festival Ford sold BY HARLEY RICHARDS ADVOCATE BUSINESS EDITOR Chuck Easy never planned to work in the auto sales industry. In fact, the longtime owner of Festival Ford was determined to avoid it. “I told my wife many times, ‘If I ever tell you that I want to get into the car business, slap me on the side of the head and wake me up.’” Not only did Easy end up there anyway, he remained for 42 years — his career finally ending on Aug. 27 with the sale of his Red Deer dealership to the Cam Clark Ford Auto Group. The decision to retire was softened considerably by the fact that Cam Clark is a trusted friend. Easy’s son Darren remains general manager of the dealership, which has about 50 staff, and for all intents and purposes it’s business as usual. “It was just that one day I wasn’t going to be there anymore, and I’m away half the year anyway,” said Easy, who at 69 spends his winters in California. Clark did offer Easy an office at Festival Ford. He declined, but still expects to drop in on a regular basis. “I have employees there, believe it or not, who were working there when I bought the business in 1983.” The Cam Clark Ford Auto Group consists of Ford dealerships in Olds, Airdrie and Vancouver. Adding Festival Ford to the mix will create new synergies and reduce costs, said Clark.
“It will enable us to be more competitive in the marketplace.” Reflecting back on his lengthy career, Easy said he was reluctant to enter the auto sales industry because of its unsavoury reputation at the time. He related, with a laugh, an old joke about a man who feared rejection by his fiancée — whose father was a convicted drug dealer and whose mother and sisters were involved in prostitution — if she discovered that his brother was a used car salesman. “There were not a lot of ethics in the business.” Originally from Nelson, B.C., Easy worked for a finance company in Edmonton in the late 1960s. He quit to avoid having to travel away from his young family. A chance encounter with Ken Haywood, who was preparing to open Kentwood Ford Sales in Edmonton, resulted in a job offer. Easy’s skepticism was lessened by Haywood’s enthusiastic commitment to customer service and business ethics. Starting as assistant new car sales manager, Easy advanced to new car sales manager before moving to Calgary in 1974 to serve as general sales manager at Marlborough Ford. Three years later, he bought into the Ford dealership at Brooks. A longtime friend, Jim Balkan, had owned Festival Ford since 1969, and in 1983 Easy arranged to buy him out. With the Alberta economy emerging from recession, the timing proved fortuitous.
Please see DEALERSHIP on Page C10
Rising gas prices cut into U.S. consumer spending BY THE ASSOCIATED PRESS WASHINGTON — Higher gas prices are crimping consumer spending and slowing the already-weak U.S. economy. And they could get worse in the coming months. The Federal Reserve this week took steps to boost economic growth. But those stimulus measures are also pushing oil prices up. If gas prices follow, consumers will have less money to spend elsewhere. The impact of the central bank’s actions “is likely to weigh on the value of the U.S. dollar and lift commodity prices,” said Joseph Carson, U.S. economist at AllianceBernstein. “We would not be surprised if (it) fueled more inflation in coming months, squeezing the real income of U.S. workers.” Americans are already feeling pinched by high unemployment and slow wage growth. Consumers increased their spending at retail businesses by 0.9 per cent in August, the Commerce Department reported Friday. But that was largely because they paid more for gas. Excluding the impact of gas prices and a sizeable increase in auto sales, retail sales rose just 0.1 per cent.
Perhaps more telling is where Americans spent less. Consumers cut back on clothing and electronics and at general merchandise outlets — discretionary purchases that typically signal confidence in the economy. Gas prices have risen more than 50 cents per gallon (3.7 litres) in the past two months. The national average was $3.87 a gallon on Friday. Most of the increase took place in August, which drove the biggest onemonth increase in overall consumer prices in three years, the Labor Department said Friday in a separate report. “Consumers were not willing to spend much at the mall since they are feeling the pump price pinch,” said Chris Christopher, an economist at IHS Global Insight. Weaker retail sales will likely weigh on growth in the July-September quarter. Economists at Bank of America Merrill Lynch slashed their third-quarter growth forecast to an annual rate of only 1.1 per cent, down from 1.5 per cent. That’s not nearly fast enough to spur more hiring, which has languished since February. The Fed is hoping to kick-start growth with a series of bold steps announced Thursday that could make borrowing
cheaper for years. It plans to spend $40 billion a month to buy mortgage bonds to make home buying more affordable. It also pledged to keep short-term interest rates near zero through at least mid-2015. Chairman Ben Bernanke said the Fed will continue its efforts — and intensify them if necessary — until the job market improves “substantially.” The announcement ignited a two-day stock market rally that sent the Dow Jones industrial average to its highest level since December 2007, the first month of the Great Recession. But the Fed’s actions also helped move oil prices briefly above $100 a barrel Friday for the first time since May. They fell back slightly but were still up 74 cents to $99.04 a barrel in mid-afternoon trading. Carson noted that the Fed’s previous rounds of bond-buying pushed up commodity prices and fueled greater inflation. That weakened the ability of U.S. consumers to spend and likely slowed growth, he said. He expects the same thing to happen again.
Please see ECONOMY on Page C10