2017 in business news
The year’s leading headlines in the world of finance
January
After months of speculation, Kevin O’Leary, a.k.a. Mr. Wonderful, announced his candidacy for the leadership of the Conservative Party of Canada. The
Shark Tank mainstay with the eat-what-you-kill business ethos quickly went on the defensive, insisting that his television shtick was not an accurate reflection of his political views. Former Dragons’ Den co-star Arlene Dickinson begged to differ: “Kevin’s total lack of empathy toward these Canadians who put their heart and soul on the line, I can assure you, was genuine.” After skipping more than one all- candidates debate, O’Leary dropped out of the race in April. By year’s end, he could be found on Shark Tank weighing the merits of The Christmas Tree Hugger, which gives the base of artificial trees the bark-like look of the real thing, causing Mr. Wonderful to wonder: “Why would anybody want this? Who cares?”
February
The name Susan Fowler does not have the corporate resonance of, say, Travis Kalanick, yet the one-time Uber engineer gained rapid recognition with a thoughtful, all-the-facts blog post that shone a spotlight on the toxic corporate culture at the ride-hailing company. Sexual harassment. Discrimination. Retaliation. Case in point: Fowler’s receipt of chat messages from her boss prodding her to have sex with him. It was her first day on the job. Fowler promptly went to Uber’s human resources department, which resulted in no action being taken against the offending manager. Fowler was then threatened with firing for doing the right thing. The blog post, deliberately written in a detached, unemotional manner, Fowler would later state, went viral and an investigation led by former U.S. Attorney General Eric Holder was launched. The first recommendation? “Review and reallocate the responsibilities of Travis Kalanick.” By late June, Kalanick was out the door. At year’s end, Fowler was front and centre in Time magazine’s persons-of-the-year cover photo: “The Silence Breakers: The Voices that Launched a Movement.”
March
She wears ankle socks, sports a ponytail and is not much more than a metre tall. But when the all-bronze Fearless Girl planted her feet in front of Wall Street’s charging bull, she was a mighty agent of disruption. Commissioned by State Street Global Advisors, the statue was dismissed by some as a marketing ploy and decried by others who pointed to inequities in State Street’s past pay practices. But through it all, Fearless Girl stood strong for what she believes in: gender diversity.
State Street, to its credit, continues to vote against companies that fail to commit to the representation of women on boards.
By year’s end, it had extended its “guidance” to Canadian and Japanese companies, describing the poor representation of women on Canadian boards as “surprising.”
April
In a chilling move targeting Bombardier and its C Series plane, American aerospace giant Boeing Co. petitioned the U.S. Department of Commerce to investigate allegations of unfairly priced and unfairly subsidized aircraft. “Propelled by massive, supply-creating and illegal government subsidies, Bombardier Inc. has embarked on an aggressive campaign to dump its C Series aircraft in the United States,” Boeing said in its petition. In its preliminary finding five months later, the commerce department announced a whopping countervailing duty of 220 per cent, leading Foreign Affairs Minister Chrystia Freeland to point out that preliminary determinations “almost invariably” find in favour of the complainant.
Yet here was no optimistic news in the offing. Despite Bombardier’s announced partnership with Airbus SE to construct a new facility in Alabama for the manufacture of the C Series craft, the commerce department reaffirmed its finding in the week before Christmas, determining that Bombardier sells the aircraft in the U.S. at 80-per-cent less than fair value and at a subsidized rate of 212 per cent. “Enforcement of U.S. trade law is a prime focus of the Trump administration,” the commerce department said in a release. The final decision now rests with the U.S. International Trade Commission.
May
Nearly 20 years ago, social activist and author Barbara Ehrenreich went undercover to report on the precarity of work and the impossibility of surviving on a minimum wage. Starting out as a waitress in Key West, Fla., at $2.43 an hour plus tips, Ehrenreich soon had to take on a second job to make ends meet. Nickel and Dimed was the insightful result of the author’s “old-fashioned kind of journalism,” shining a spotlight on paltry wages, unaffordable housing and an American dream that was tailored for the few while advocating for a living wage. Two decades on, workplace insecurity moved the Ontario government to announce a rollout of an increase to the minimum wage, to $14 an hour starting January 2018, and to $15 an hour starting January 2019. Additional measures include three weeks’ vacation after five years with a single employer, and a requirement to pay employees for three hours of work when shifts are cancelled within 48 hours of scheduled start time. Well, it’s a beginning.
June
Any hopes that Sears Canada Inc.’s “reinvention plan” would result in a resurgent retailer were dashed when the company sought, and was granted, protection under the Companies’ Creditors Arrangement Act. As part of a hoped-for restructuring, Sears announced the elimination of approximately 2,900 jobs and the shuttering of 59 locations, including 20 full-line stores and 15 Sears Home outlets. The bad news kept on coming. In mid-October, Sears was given court approval for the full liquidation of all stores and assets, signalling the end of work for a 12,000-strong army of employees. The windup continued through the holiday season, a particularly poignant ending for a company that, two decades earlier, had been so bold as to buy the insolvent T. Eaton Co. with a plan to “build upon the fine heritage of the Eaton’s brand in Canada.” Come the New Year, the Sears Canada name will join that of Eaton’s and Simpson’s — scrubbed from the Canadian departmentstore landscape.
July
The world is coming to an end! Or at least the world of cheap money appeared to be coming to an end when the Bank of Canada, signalling its confidence in the economy, raised its benchmark interest rate by a quarter of a percentage point to 0.75 per cent. As you would expect, the big banks swiftly toggled their prime lending rates upward and there was a great rending of garments over whether the first increase in nearly seven years signalled a succession of such moves into the fall. The BoC did follow with a second increase in September, but otherwise stood pat as it contemplated such “vulnerabilities” — despite stricter mortgage lending rules — as Canadians carrying historic levels of consumer debt, an increase in low-ratio mortgages and the ever-present temptation of interest-only lines of credit. One thing is clear: Canadians remain addicted to easy money.
August
NAFTA, NAFTA, NAFTA. One day in August, trade negotiators from Canada, the United States and Mexico agree to “an accelerated and comprehensive negotiating process” as they seek a modernized North American Free Trade Agreement. On another day in August, U.S. President Donald Trump puts his own spin on Washington meetings between Freeland, U.S. trade representative Robert Lighthizer and Mexico’s secretary of economy, Ildefonso Guajardo Villarreal. “Personally, I don’t think we can make a deal because we have been so badly taken advantage of,” Trump told a rally in Arizona. “I think we’ll end up probably terminating NAFTA at some point.” When asked during a year-end interview with Global News what keeps him up at night, Prime Minister Justin Trudeau didn’t hesitate. “Probably NAFTA,” Trudeau said, citing the “level of unpredictability.” There was no need to mention Trump by name.
September
In 1962, Felice Schwartz established a non-profit organization in the U.S. with a mission to tap into the “unused capacities of educated women.” She named her organization Catalyst. More than a half-century later, Catalyst and its global chapters continue to work on removing barriers to the advancement of women in the workplace. All the more surprising that in September, a tone-deaf Catalyst Canada announced that CIBC CEO Victor Dodig had been named to replace departing BMO CEO Bill Downe as chair of the Catalyst Canada Advisory Board. “It’s critical to engage men in the dialogue of gender balance,” Catalyst Canada’s executive director told the Star at the time of Dodig’s appointment. The point missed was this one: it is women who need to be leading the conversation.
In other news, the consumer credit monitoring company Equifax announced a “cybersecurity incident,” by which it meant a data breach that compromised the private information of, oh, more than 140 million U.S. consumers and an unknown number of Canadians. Names. Addresses. Social Security numbers. Driver’s licences. Credit card numbers. To which Congressional leaders asked: how many consumers had even heard the name Equifax? The business model — aggregating credit information and selling it to lenders — has been a multi-billion-dollar bonanza for Equifax and its peer companies. As he exited the company, CEO Rick Smith pledged that starting in January, U.S. consumers will be able to control, at no charge, who has access to their Equifax data. Equifax Canada did not respond to inquiries regarding similar arrangements for Canadian consumers.
October
Who recalls the sorry saga of Stelco under the ownership of United States Steel Corp.? The world-class facilities at Hamilton and Lake Erie became known collectively as U.S. Steel Canada, and the storied operations could but bear weak witness to the resourcing of steel product to the parent company’s U.S. operations.
After a tortured tour through bankruptcy protection, Stelco Holdings Inc. proudly emerged in the fall under new ownership, filing a prospectus full of market share optimism. Cold-rolled. Hot-rolled. Metallurgical coke.
The resurgent steel company particularly has its eye on recapturing market share in the U.S. auto industry, which had collapsed to just three per cent of its business from 37 per cent a decade earlier. No doubt executives are eagerly monitoring NAFTA modernization talks.
During an Oval Office meeting with Trudeau in October, the U.S. president once again played the unpredictability card.
Sayeth Trump: “If we can’t make a deal, it’ll be terminated and that will be fine.”
November
What is Bitcoin? Nobel Prize-winning economist Joseph Stiglitz annoyed believers to no end by forecasting a bad ending for the cryptocurrency: “It’s a bubble that’s going to give a lot of people a lot of exciting times as it rides up and then goes down,” Stiglitz predicted in a television interview. The word “bubble,” as we know, is unloved by traders.
Stiglitz didn’t stop there, adding that that Bitcoin should be outlawed and that it “doesn’t serve any socially useful function,” a concern that has never been top of mind with said traders.
Writing in The Atlantic, Derek Thompson introduced his Bitcoin examination with this: “If every currency is a consensual delusion, then Bitcoin, a digital cryptocurrency that changes hands over the internet, feels more like a consensual hallucination on psychedelic drugs.”
December
Wal-Mart Stores Inc. made the momentous decision to rename itself Walmart Inc., putting an end to that irritating hyphen, the bane of copy editors everywhere. A company spokesperson said the change would not affect the Walmart cheer, in which workers call out the company name, letter by letter, as an exercise in team building. The word “squiggly,” as the hyphen is known, is shouted as workers shimmy their hips, or something. This dance move remains unchanged.
On a more serious note, Loblaw Cos. Ltd. attempted to offer up a lesson in disaster management, admitting to the price fixing of bread products between its bakery company and its grocery stores while framing it as an “industry-wide” problem (George Weston Ltd. is the parent company to Weston Foods and Loblaw.) The collusion at Weston/ Loblaw, which commenced in 2001 and carried on until March 2015, applied to a buffet of bread lines, including those sold under the Stonemill and Country Harvest labels. As a remedy, Loblaw announced it would be offering $25 gift cards to eligible customers, starting in January. At least one grocery competitor took issue with CEO Galen G. Weston’s public relations gambit, calling it unfair, unsubstantiated and possibly defamatory. “We will be closely monitoring the impact of your words on our brand, our business results and our legal rights,” wrote Sobeys CEO Michael Medline in a letter to Weston.
“We will hold you responsible for any damages we may incur due to your actions.” Not the sort of Christmas present the Loblaw heir was anticipating. As the year fell to a close, a proposed class action was filed on behalf of anti-poverty activist Irene Breckon against the half dozen companies investigated by the Competition Bureau, including Loblaw, Sobeys, Metro, Canada Bread and Giant Tiger.
The case has not been certified. The bureau says it continues to investigate allegations of anti-competitive conduct by these companies and other players “known or unknown.”