B2 RED DEER ADVOCATE Wednesday, April 10, 2013
Jana defeated at Agrium election BY THE CANADIAN PRESS CALGARY — Jana Partners LLC was defeated Tuesday in its battle to win seats on fertilizer giant Agrium Inc.’s board but the New York hedge fund suggested the fight may not be over. All 12 of the company’s nominees were elected to the board — some by a much wider margin than others — denying a spot to the five that had been nominated by activist investor Jana. “We’re very pleased that this proxy battle is behind us,” Agrium CEO Mike Wilson told reporters after the meeting. “It’s been a long 10 months and now we can go and focus on what’s very
important to our shareholders, and that’s growing the company, continuing to improve in the way we operate the company, looking at how we return capital to shareholders and embracing all kinds of new ways to expand shareholder value.” Jana managing partner Barry Rosenstein told shareholders the vote was “tainted” and said the fund intends to investigate whether Agrium lobbied investors to switch their vote after Friday’s deadline and whether the company engaged in “vote buying” to sway the results. He vowed Jana would “pursue all appropriate remedies.” Jana, which is Agrium’s largest shareholder, said it had enough votes as of Friday to get two of its nominees
GASOLINE ALLEY
100-room Microtel hotel approved A 100-room hotel in Red Deer County’s Gasoline Alley lined up planning approval on Tuesday. The county’s municipal planning commission approved a 3.8-metre height relaxation to allow construction of a four-storey hotel that will be operated as Microtel Inn and Suites. It will located on Leva Avenue just south of Hampton Inn and Suites, and will include a pool, waterslide, fitness area and two meeting rooms. The project is expected to be worth more than $10 million. Microtel is part of the Wyndham Hotel Group and is known as an upper-end economy brand. Two as-yet-unnamed restaurants are also proposed nearby in a sec-
ond construction phase. A nationally branded restaurant chain and a national breakfast restaurant are being courted for the spaces. Construction will be underway soon and the hotel is expected to open by May 2014. Some work still needs to be done on the site plan. The initial proposal included a direct access to Leva Avenue, which the county does not favour because it could lead to congestion on that road as the area develops. Access to the side road is preferred. A motion to remove the Leva Avenue access was passed unanimously. Hotel builders plan to meet with county staff to review alternatives.
STORIES FROM PAGE B1
SLOWDOWN: Not crashing “The slowdown suggests we are not crashing, people are not panicking, especially condo builders,” said Benjamin Tal, a senior economist with CIBC World Markets. “All the indicators we are seeing as of today, in the resale market and in the housing start market, suggest this is a market that is slowing softly.” Canada’s housing market, which had been among the world’s hottest following the recession, began to slow at about this time last year and braked sharply after Finance Minister Jim Flaherty tightened mortgage rules in July. The policy move, which made it more difficult for first-time buyers to enter the market, was widely praised at the time as necessary to avoid a U.S.-light housing crash that would be crippling to the economy. Recently, Flaherty has upbraided lenders from cutting mortgage rates too far and undercutting his policy objectives, succeeding in having both the Bank of Montreal and the Manulife reverse mortgage rate cuts. Arlene Kish of IHS Global Insight said she expected residential construction to remain subdued for the rest of the year, but added that it has become “increasingly unlikely there will be any kind of precipitous collapse in new home building activity.” A major ballast for the market is that despite Flaherty’s recent efforts, mortgage rates remain at historic lows, and affordability — the measure of household disposable income in relation to home ownership costs — remains near historic levels. Tal said the cooling, if it continues for a year so, will prepare the market for the eventual squeeze when interest rates start rising, likely in 2014. Regionally, urban starts decreased 15.7 per cent in Ontario on a seasonally adjusted annual rate and were down 13.5 per cent in Quebec. However, urban starts jumped 27.1 per cent in Atlantic Canada, were 13.8 per cent higher on the Prairies and 13.1 per cent higher in British Columbia. With files from The Canadian Press.
SCANNING: ‘The only guy who...can do this’ “As a result, Alex Tagliani won the pole at the 100th anniversary of the Indy 500.” Roddis has had discussions with representatives of other North American racing series about scanning applications, and Ganassi Racing asked him about the use of optical technology to measure race cars travelling at 220 m.p.h. (354 km/h) — an exercise they felt would reveal how components like tires distort at high speeds. He’s also conducted other demonstrations for IndyCar Series officials, earning Roddis 3D its place in the Indy 500 technical inspections garage. “I’m the only guy who has the right to go down and do this,” said Roddis. He pointed out that laser scanning helps ensure consistency in testing, which is something all racing teams want. The technology could become an essential service in the future if aero kits — custom, manufacturerspecific bodywork — are allowed by IndyCar officials. That’s because the physical templates currently used to test car components would be inadequate for the broad range of kits likely to be used by racing teams. As as an IndyCar sanctioned entity, Roddis 3D is able to accept sponsors — just as race teams do. Sponsorship opportunities range from packages with naming privileges and inside passes for IndyCar races, to the display of small logos on Roddis 3D banners and its website. Additional information about Roddis 3D can be found on the company’s website at roddis3d.com. hrichards@reddeeradvocate.com
— Rosenstein and former UAP executive David Bullock — on the board. However, Rosenstein said Tuesday that enough votes were revoked over the weekend to sway the election. He said Jana will continue to be a big shareholder in Agrium and that “we’re not going away.” For its part, Agrium said the vote was done according to the rules. “The loss was pure and simple, fair and square,” said Walied Soliman, a lawyer working on behalf of Agrium, following the vote count. “The results speak for themselves and stand up to any scrutiny. “All of Agrium’s shareholders had their say today and they supported Agrium.
“The victory of Agrium’s nominees was decisive, unequivocal and beyond reproach.” New York-based Jana, which has spent more than $1 billion for a 7.5 per cent stake in Agrium, has made a number of proposals for changes at the company — the most controversial of which has been to spin off Agrium’s retail business into a separate company. Agrium said the board has weighed the idea of a split and determined such a move would destroy shareholder value. Jana has said it merely wants Agrium to thoroughly and independently review that option, as well as better manage capital, improve governance and cut costs.
More tough times ahead, housing correction included ECONOMIC GROWTH TO SLOW THIS YEAR, SAYS FORECASTER THE CANADIAN PRESS OTTAWA — A leading international forecasting firm says Canadians should brace for tough economic times lasting another two years, lifting the jobless rate once again beyond eight per cent and setting back Ottawa’s plans to balance the budget. In one of the gloomiest forecasts issued on the Canadian economy since the recession, Capital Economics predicts a sharp and protracted housing correction, in conjunction with muted business investment and government austerity, will keep Canada’s economy in stall mode throughout 2013 with a one per cent growth rate, only improving slightly to 1.3 per cent in 2014. That’s half the current Bank of Canada estimate on both years, and well below the 1.6 per cent consensus used by Finance Minister Jim Flaherty in the March budget for the current year. “Canada’s economy has lost considerable momentum and signs unfortunately point to continued slow growth ahead,” says the new outlook. “With the housing downturn intensifying, business investment intentions softening and government plans to restrain spending, we expect GDP (gross domestic product) growth of only one per cent in 2013 and 1.3 per cent in 2014.” In an interview, the
‘CANADA’S ECONOMY HAS LOST CONSIDERABLE MOMENTUM AND SIGNS UNFORTUNATELY POINT TO CONTINUED SLOW GROWTH AHEAD.’ — CAPITAL ECONOMICS FORECAST
firm’s chief Canadian economist David Madani agreed that his view is darker than most, but noted the consensus — the average of forecasts — has been steadily dropping for months and coming closer to his position. And recent indicators all point to weak growth, he added. Job creation for the first three months of the year has been non-existent. In fact, there has been a net loss of about 26,000 jobs, while exports remain weak. On Tuesday, the Canada Mortgage and Housing Corp. reported housing starts inched up to 184,028 annualized in March from the previous month, but were still 13.6 per cent below a year ago. As well, Statistics Canada said February building permits for residential construction fell 7.2 per cent. Madani said where he differs from many other economists is that he believes Canadians are in for a rough ride in the housing market, one of the pillars of economic growth until recently. “I wouldn’t be surprised to see housing starts fall to 150,000 by the end of the year,” he said.
“Historically housing markets are either overbuilding or underbuilding and this boom we’ve been in the last decade has been enormous ... and that why I think the correction process will be fairly severe and protracted.” Over the long term, Madani says Canadian home prices, which have held up remarkably so far in the face of falling sales and starts, will drop by 25 per cent. The only bright spot in the outlook is exports, said Madani, which will benefit from the recovery in the United States, particularly in the auto sector and housing market that support shipments of Canadian lumber. But given the size of the Canadian housing market, and weakness elsewhere, Capital Economics sees only minimal employment growth in the next two years, in the range of 11,000 jobs a month. That won’t be enough to absorb population growth causing the unemployment rate to rise from the current 7.2 per cent to 8.1 per cent by the end of 2014. With the economy underperforming, and low inflation, government revenue growth will also suffer, the firm says.
The Harper government has staked political capital on eliminating the deficit in 2015 so it can fulfil several campaign promises to bring in partial income splitting and doubling taxfree savings account limits in time for the next election. “Unfortunately, eliminating deficits will take much longer than federal and provincial governments currently expect, even if the focus remains on controlling spending,” the report states. ● The average firsttime homebuyer in Canada is 29 years old and expects to be able to put down a down payment of $48,000 on $300,000 home, according to a recent poll by the Bank of Montreal. But the study, released Tuesday, also found that price expectations vary widely, depending on where the homebuyer lives. Buyers in Atlantic Canada say they expect to spend the lowest in the country with an average of $202,000 on a first home, followed by Quebec with $224,000, Ontario with $326,000, British Columbia with $384,000 and Alberta with $406,000. The sample size used in the Prairies was too low to be included in the survey. Meanwhile, the data also found Vancouver to be the most expensive city, with first-time homebuyers there saying they plan to shell out an average of $443,000 for a home, followed by Toronto at $347,000.
Risk reversal for increased sales E-commerce spending in Can- world’s largest Internet shoe reada topped $22 billion in 2012, up tailer. almost 10 per cent over the previWhat contributed to the comous year. Canadians consumers pany’s success? Granted, they do made over 105 million transac- offer a wider variety than most tions last year, an increase of 17 traditional shoe stores. They know per cent. (1.) On averthat their prices are age, these statistics surcompetitive. pass those in the U.S. What really transJust a few years ago, forms prospects into e-commerce in genloyal customers is their eral was unproven. It risk reversal guarantee. was logical to assume No matter if the colour that customers would is wrong, the size needs not purchase without to be larger/smaller, seeing the products or or the customer just consulting with knowlchanges their mind, edgeable salespeople Zappos will accept the first. return and pay the cost There are many facof shipping. JOHN tors contributing to the They eliminate the MACKENZIE surge and success of perceived risk, and online sales, including ACTION COACH t h e r e f o r e i n c r e a s e technology advanceconsumer confidence. ments, trust in online Happy customers are security and the ease and confi- repeat customers, and tell friends dence the younger generation has and family about their experiwith purchasing over the Internet. ence. Internet retailers are always Even though your business looking at ways to increase visibil- may not use the Internet to sell ity and connect with customers. products and services, there are Those that are most successful ways to implement risk reversal have gone beyond making it easy policies, effectively removing the to buy for the customer, to revers- buyer’s risk. ing the risk almost entirely. Try and then buy Let’s look at a company called This type of guarantee works Zappos as an example. best with specific products. The Who in their right mind would buyer pays nothing, or a small start an Internet shoe company? percentage up front, knowing that Shoes are something you need to they will be billed at a later date. try on before you buy. Custom- They get to test the product beers want to examine the material, forehand for a minimal fee. look at the colour. Guaranteed results or a full reThere are a multitude of rea- fund sons not to buy shoes online. What are you prepared to offer Zappos entered the shoe busi- to your customers? Better relaness in 1999. In just 10 years, the tionships? Greater investment? company was doing $1 billion in Reduced stress? Safety and secusales. rity? Amazon purchased the comThink what a satisfied custompany for $1.2 billion in November er looks like in your business then that same year. Zappos is now the determine how you can guarantee
the outcome. Do not simply guarantee satisfaction, but state exactly what the customer can expect before they buy. Customer always wins In this situation, bonus or sample items are supplied with the purchase. Allow the customer to return the product within a defined period if not totally satisfied, and keep the bonus items or samples. Become the go-to company; educate the customer. Create a risk reversal guarantee in your business. Do some research to determine what your competitors offer. Look outside your specific marketplace and compare the information to your industry. Evaluate your own strengths. What area of your business is a strong point? Installations, maintenance, or do you respond quickly to customer queries? Do your products or services produce consistent results? Do you have the widest selection in town? Will your customers really save money? Be fully prepared to stand behind and honour these claims. Anywhere from 0.5 to two per cent of customers will exercise a guarantee. An attractive payback won’t cost much but will have a high perceived value. A hassle-free, money-back guarantee is a good place to start. Reversing the risk, as Zappos does, is the best guarantee of all. www.internetretailer. com/2013/03/07/canadians-browseand-buy-more-online-2012 ActionCoach is written by John MacKenzie of ActionCoach, which helps small- to medium-sized businesses and other organizations. He can be contacted at johnmackenzie@ actioncoach.com or by phone at 403340-0880.