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IMF eyes elevating loonie OTTAWA — The highflying Canadian loonie may soon be joining the elite club of global reserve currencies. The International Monetary Fund signalled in a new report it is considering asking foreign countries to report their holdings of Canadian and Australian dollars separately, which would technically make them global reserve currencies. It would be the first addition to the list of five reserve currencies — the U.S. greenback, the Japanese yen, the euro, the British sterling and Swiss franc — since 1999. Previously the two were lumped together in the “other currencies” category. The rise of the loonie in the past decade has also been blamed for the continued deterioration of Canada’s manufacturing sector.
BCE reworks Astral deal MONTREAL — BCE Inc. expects that its new proposal to buy Astral Media will address the federal regulator’s concern about the telecom giant dominating the television market. Bell’s chief regulatory officer Mirko Bibic wouldn’t comment Monday on the possible sale of any radio or TV assets owned by Montreal’s Astral to make the deal work. But Bibic said the new $3.38-billion proposal to buy Astral (TSX:ACM.A) will address the CRTC’s concern about market dominance. “The proposal that we filed today will address the issue of viewing shares from the CRTC’s perspective,” Bibic said from Ottawa. However, the companies said they cannot give specifics about the new application until the CRTC makes it public, which it is expected to do in early 2013. Astral has 25 specialty TV services, including The Movie Network, Family Channel and Disney XD, and 84 radio stations. — The Canadian Press
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BUSINESS
Tuesday, Nov. 20, 2012
Harley Richards, Business Editor, 403-314-4337 E-mail editorial@reddeeradvocate.com
A concrete decision PRECISION PRECAST LTD. PLANS TO BUILD A $15-MILLION PLANT IN PONOKA COUNTY BY HARLEY RICHARDS ADVOCATE BUSINESS EDITOR Tom Kentz says his company’s inability to keep pace with demand is costing it millions of dollars in sales. So it’s moving aggressively to plug the leak. Precision Precast Ltd., which currently operates in Lacombe as Precision Projects Ltd., plans to build a $15-million plant in Ponoka County. It’s struck a deal to buy 52 acres north of Wolf Creek Golf Resort and has applied to county council to have the parcel rezoned to rural industrial from agricultural. If all goes according to plan, said Kentz, work on the new plant will begin next month and it will be operational by spring — helping to fill a market void when it comes to precast and hollow-core concrete products. “We’ll have one of the largest
hollow-core machines in Western Canada,” he said, adding that the facility is expected to serve an area extending from Manitoba to British Columbia. Precision currently produces precast concrete products at Lacombe, but not nearly enough to keep pace with demand. “We turn away probably $15 million a year, which is crazy,” said Kentz, who owns the private company with partners Harold Jahn, Fred Belt and Del Grovet. “That’s why we took the leap to go bigger into the precast side.” Although precast concrete has been used for decades, it’s growing in popularity because its cost has remained constant relative to other building materials. Insulated concrete also has a very high R-value — even qualifying for LEED (Leadership in Energy and Environmental Design) certification, added
Kentz, and precast concrete buildings can be constructed quickly. “Most buildings will take six to nine months (using traditional materials); in most cases precast is done in three months, all complete.” In addition to commercial and industrial buildings, precast concrete has become common in residential buildings. “We’ve got about 2,500 homes to produce out of precast already,” said Kentz of the residential market. Precision’s existing operations will move to the new Ponoka site, which Kentz said is centrally located and has good access to transportation routes. Ponoka County has been very good to deal with, he added. County council is scheduled to vote on the rezoning application next Tuesday. Charlie Cutforth, the coun-
ty’s chief administrative officer, said Precision’s project is appealing because it would help spread the municipality’s economic base beyond agriculture and energy. “Diversity is critical. We’ve seen what happens when the oil business goes south for a while.” Cutforth said there’s been a great deal of interest in the Hwy 2 corridor for industrial and commercial development “We have inquiries on a fairly regular basis from various businesses.” As for Precision, Kentz and his partners are already looking farther afield, with plans to build another plant at Campbell River, B.C. Others could follow. “We’ll be expanding to every province in Western Canada,” said Kentz. hrichards@reddeeradvocate. com
FISCAL CLIFF
Harper warns of new woes BY THE CANADIAN PRESS OTTAWA — Prime Minister Stephen Harper says if President Barack Obama and U.S. lawmakers can’t find a solution to the looming fiscal cliff it could spark other unforeseen economic woes. Harper told a Canada-United States business forum in Ottawa on Monday that he hopes “reasonable people” can come to a solution now that the election south of the border is over. “To the extent I hear some people talking about a bungee cord, I think that kind of talk is foolish,” Harper said. “If you go over a cliff, you can’t be sure what will happen next. Like we saw with the collapse of Lehman Brothers, how a single major event can trigger a series of events that’s very hard to pull back from.” The fiscal cliff refers to the combination of imminent spending cuts and tax increases due to take effect Jan. 1 that could push the fragile U.S. economy back into recession, dragging Canada’s along with it. Harper also lauded American entrepreneurship, saying it would be the driving force that would one day allow the world’s largest economy to overcome its current economic problems. But not, he added, without some govern-
Photo by THE CANADIAN PRESS
Prime Minster of Canada Stephen Harper takes part in a question and answer session at the Canadian American Business Council in Ottawa on Monday. ment support. “This is still at its heart, the most entrepreneurial, dynamic, developed economy in the world,” Harper said. “My sense is that if it could be given any kind of stability, not just for the next two months, but for the next few years that the energy of the business community in the United States is just looking for the opportunity to get growth going again.” Harper said he doesn’t think the U.S. economy can reach the heights of a decade ago, but it can improve over the situation of the last few years of the economic downturn.
WestJet CEO says regional airline will spur demand BY THE CANADIAN PRESS MONTREAL — WestJet’s new regional service will spur passenger demand by offering fares at up to half the amount charged on those routes by monopoly operators such as Air Canada, chief executive Gregg Saretsky said Monday. “Vive la competition (long live competition),” the head of the Calgary-based airline (TSX:WJA) told the Canadian Club in Montreal. “WestJet Encore is out to liberate Canadians from the high cost of air travel in smaller communities as well as those not yet served by our jet aircraft and we think that Canadians are ready for that,” he said of the service set to launch next year. He said representatives from small towns, including Quebec’s Saguenay, Sherbrooke and Bagotville, asked WestJet to launch service in their communities because the airline has a history of driving down fares when it comes to town. Saretsky said since the lowcost carrier was founded 16 years ago, it has a history of causing fares to drop by about 50 per cent in the markets it
has added. “I would expect that as WestJet Encore gets airborne we will continue to do the same in the smaller Canadian communities and up to 50 per cent would be something that would be reasonable.” Shunning the moniker “price war”, Saretsky said “more rational pricing” will create new demand by encouraging people to take more air trips each year. He pointed out that the number of passengers from Comox on Vancouver Island surged to 121,000 per year from 5,000 when WestJet launched service. “This isn’t about carrying the same number of people at half the price. It’s about growing the market by 100, 200, 300 per cent and allowing Canadians access to more affordable airfares,” he said. WestJet will announce the regional service’s schedule in January. It will initially service either eastern or western routes starting in the second half of 2013, followed nine months later by the other half of the country. It expects to add up to 45 Bombardier (TSX:BBD.B) Q400 turboprops over five years.
Please see WESTJET on Page C4
Harper’s optimism was reflected in the North American stock markets, which rallied Monday amid hope that divided U.S. politicians can come together and agree on a budget deal. Concerns began to ease Friday after Obama met with congressional leaders. Republicans and Democrats emerged striking a noticeably more conciliatory tone. “I am confident we can get our fiscal situation dealt with,” Obama added Sunday. Added Harper: “I know most of these people. They should be able to come to some kind of agreement of what to do about Jan. 1.”
Mortgage brokers say new rules hitting too hard BY THE CANADIAN PRESS Canada’s mortgage brokers say recent changes to federal rules have taken too big a bite out of an already cooling housing market and they suggest policymakers should address the needs of their industry. The Canadian Association of Accredited Mortgage Professionals says a survey of 2,000 consumers in October, conducted on CAAMP’s behalf, suggests that first-time buyers have been hard hit by the tighter mortgage rules. “We worry that this is having a dampening effect on what was an already cooling market and we hope policy-makers will give some thought to addressing the needs of this key sector of the market,” association president and CEO Jim Murphy said in a statement. CAAMP chief economist Will Dunning said the smaller number of first time buyers has already affected the resale market. “The housing resale numbers behave like a canary in the mine for us,” Dunning said. “My concern is that a policy-induced housing market downturn creates unnecessary risk that directly affects not just housing but job creation and the economy as a whole.” Finance Minister Jim Flaherty has said the new rules were intended to deal with overpriced real-estate in certain cities and
certain types of housing. He has said the tighter mortgage rules reduce the risk of buyers taking on too much debt. Bank of Canada governor Mark Carney has also warned that Canadian personal debt levels have reached record high levels, posing a risk to the economy if consumers can’t afford to carry their debt once interest rates rise. CAAMP is the national organization representing Canada’s mortgage industry. With over 12,250 mortgage professionals representing over 1,700 companies Among findings of the association’s semi-annual report: — Since the most recent round of mortgage tightening in July, housing resale activity in the August-October period is down eight per cent compared with a year earlier. — About 17 per cent of high ratio mortgages funded in 2010 cannot be funded today, including 11 per cent of prospective high ratio homebuyers who can’t qualify under the new 25-year amortization rule. Flaherty has reduced the maximum amortization for Canadian mortgages several times in recent years. Most recently, the maximum was cut from 30 years. Previous reforms included reductions in the maximum amortization period to 35 years from 40 and then to 30 years from 35.