CANADA – MANUFACTURING

SALES – MARCH 2017BY: PAUL YOUNG CPA, CGA

APRIL 13, 2017

AUTHOR / BIO

September 9, 2014

• Paul Young, CPA, CGA• SME – Financial Performance Management (TM1, Cognos Controller

and Cognos Disclosure Management, OpenPages, Algorithmics, Cognos Integrated Server, Cognos Command Center and Datawatch)

• Industry Experience• 15+ years in Corporate Reporting, Budget & Forecasting,

Costing, Business Process Management, Internal Audit and Controls, Risk Management, Financial Analysis, Costing

• 11+ years in financial solutions (FOPM, FPM, Risk, Office of the Finance, Risk Management)

• 8+ years teaching Advance Finance, Advance Accounting, Public Finance and Advance Management Information Systems

• Blogger in areas like Finance Analysis, Government policies, market segment

AGENDA• PMI Index• Softwood Lumber• NAFTA• Hydro Rates/Ontario• Commodity Index• Sales by Segment• Sales by Province

HEADLINES

Globe and Mail – April 13, 2017

Reuters – April 13, 2017

PMI - INDEX

Economic Calendar.com – April 3, 2017

• There was a small decline in order backlogs with companies citing productivity improvements and greater staff hiring. In this context, the rate of employment growth was the fastest in five years.

• Delivery times continued to lengthen for the month due to greater demand and low stocks among suppliers.

• The rate of increase in input costs was the strongest since May 2014 and output prices also increased at a faster pace for the month. The lengthening delivery times will also tend to put further upward pressure on prices.

• The Bank of Canada has maintained a generally cautious outlook surrounding the economy and continued to insist that there is significant spare capacity in the economy.

SOFTWOOD LUMBER“My experience has been that the Obama administration was not particularly interested in getting a softwood deal,” Clark told reporters after delivering her keynote address. “I mean, they talked a nice talk and they put out nice press releases, but in all that time there wasn’t any real progress to getting a deal.”

The softwood lumber trade dispute has been a thorn in the side of federal and provincial governments for decades. The issue flared up again in late 2015 after the expiry of a nine-year agreement that had quelled the discord.

American lumber producers are pushing for their government to restrict trade on Canadian imports that they claim are unfairly subsidized.

Premier for BC – Christy Clark – Plant.ca – April 11, 2017

Trump’s NAFTA proposal looks a lot more like reform than revolution

For instance, there’s discussion of the need to update NAFTA in order to develop rules regarding e-commerce, digital sales, and data housing requirements — basically ensuring that there are new regulations specific to the information economy, which has blossomed since the accord was first negotiated decades ago. Canada and Mexico are on board with having those discussions.

There are also proposals to make labor and environmental regulations stricter, which would mainly affect on Mexico. The idea is that by demanding more stringent standards and enforcement of standards regarding issues like minimum wages, union organizing rights, workplace safety, and environmental impact, the cost of doing business in Mexico will go up, blunting some of the edge that lower-paid Mexican workers have over more expensive US workers.

VOX.Com – April 11, 2017

Proposed amendments

Trump’s NAFTA proposal looks a lot more like reform than revolution

• The biggest one is probably the call for allowing a country to use tariffs as a safeguard if a set of imports causes “serious injury or threat of serious injury” to a domestic industry (these are known as “snapback tariffs”). Under NAFTA, the norm is zero tariffs on goods crossing borders; this would create temporary exceptions to preserve industries particularly hard hit by competition. It would allow the US to say that, for example, a certain Mexican auto part deserves to be taxed at the border because it is killing the US industry that makes comparable auto parts.

• Government procurement could be another big issue. Under NAFTA, when the US government is overseeing domestic projects like infrastructure, it’s required to consider Canadian and Mexican companies alongside US bidders. But the proposal’s language suggests the administration could push for rules that allow US companies to have a competitive advantage over NAFTA partners’ companies. That’s probably not going to go down so well during talks.

VOX.Com – April 11, 2017

Contentious issues

Ontario manufacturers say hydro plan doesn’t help them

The Industrial Conservation Initiative program for large manufacturers and businesses was also expanded so that more industrial customers will qualify.

However, there are thousands of Ontario businesses that are too big for one program and too small for the other, and the government estimates they will only see about two to four per cent off their bills.

Jocelyn Bamford, with the Coalition of Concerned Manufacturers – Global TV – April 11, 2017

COMMODITY INDEX

Scotiabank – April 12, 2017

SALES BY SEGMENT

Stats Canada – April 13, 2017

• Sales in the motor vehicle assembly industry were down 5.3% to $5.7 billion in February, following two months of gains. The decline in February was mostly attributable to fewer vehicles produced. After removing the effect of price changes, sales in volume terms decreased 4.6% in February.

• Following four consecutive monthly gains, sales in the petroleum and coal products industry fell 5.0% to $5.1 billion in February, reflecting lower prices and volumes. After removing price effects, sales volumes of petroleum and coal products were down 2.0%.

• These declines in current dollars were partially offset by increases in the aerospace product and parts (+27.0%), primary metal (+2.8%) and machinery (+3.1%) manufacturing industries. Once the effects of price changes are taken into consideration, sales volumes increased by 30.7%, 2.0% and 3.2% respectively in these three industries

RBC – ECONOMICS

NATIONAL BANK OF CANADA

National Bank of Canada – April 14, 2017

SALES BY PROVINCE

Stats Canada – April 13, 2017

• Sales decreased in seven provinces in February, led by Ontario.

• Sales in Ontario fell 1.1% to $25.7 billion, mostly attributable to lower sales in the motor vehicle (-5.5%), motor vehicle parts (-3.4%) and petroleum and coal product (-6.1%) industries. These decreases were partially offset by a 5.4% increase in sales in the primary metal manufacturing industry.

• In Quebec, sales rose 2.1% to $12.9 billion in February, their highest level since July 2008. The increase was mainly attributable to a 27.4% gain in the transportation equipment industry. Sales also rose in the food (+0.9%) and machinery (+2.1%) industries. These increases were partly offset by declines in the petroleum and coal products and the chemical product industries.

• In Alberta, sales rose 1.4% to $5.7 billion, the fourth straight monthly increase. The overall gain was largely driven by higher sales in the machinery (+13.6%) and fabricated metal product (+11.1%) industries.

Source – World Steel Institute

QUESTIONS/ANSWERSCONTACT: PAUL_YOUNG_CGA@HOTMAIL.COM