Business

Business NOTES

August 3 1998
Business

Business NOTES

August 3 1998

Business NOTES

GM STRIKE IN ARBITRATION

As two strikes against General Motors Corp. dragged on in Flint, Mich., the company and the United Auto Workers union argued their cases before an independent arbitrator. If the arbitrator rules in GM’s favor, he could order an end to the walkouts, which began on June 5. The hearings, held in Detroit and Flint, were closed, but the positions are well-known: the automaker alleges the strikes violate its national contract with the UAW, but the union maintains the strikes are over local issues. The actions have idled 27 of GM’s 29 North American assembly plants, including its truck plant in Oshawa, Ont., which shut down last week, causing 3,000 layoffs.

MARATHON FINES

First Marathon Inc. was hit with a record penalty when the Toronto Stock Exchange fined the brokerage and three of its senior officers more than $4 million. That includes $250,000 against founder and chief executive officer Lawrence Bloomberg for failing to supervise his staff. The punishment arises from a TSE investigation dating back to 1996 into the firm’s involvement as investor, promoter and underwriter of stock in junior mining company Cartaway Resources Corp. In a related investigation, First Marathon also agreed to pay a penalty to the Alberta Securities Commission, with the amount to be disclosed this week.

THE JUICE FIGHT

Pepsi is taking on Coke, the world’s most popular soft drink, on yet another front—fruit juices. To compete with Coca-Cola Co.’s Minute Maid brand, PepsiCo. Inc. is buying Tropicana Products Inc., the leading seller of orange juice with sales of $3 billion last year, for $4.9 billion from Seagram Co. Ltd. The Canadian liquor giant, which owns Universal Studios, is selling Tropicana to help raise money for its $15.6-billion purchase of the PolyGram music company.

CREATING A GIANT

Shareholders of Montreal-based paper giant Avenor Inc. endorsed a $3.5-billion takeover by American competitor Bowater Inc. The deal, reached in March, calls for Greenville, S.C.-based Bowater to buy Avenor’s outstanding shares for $35 each, to create one of North America’s largest forest products companies.

Training in stereotypes

At first glance, the textbook hardly seems controversial. Titled Canadian Entrepreneurial Studies, it is used in a training course developed by the Montrealbased Institute of Canadian Bankers for loans officers at all the domestic banks, although only the Royal Bank makes it mandatory. But last week, in response to inquiries from Maclean’s, both the ICB and the Royal disavowed portions of the text on the grounds that they are offensive and based on ethnic and sexual stereotypes.

Written by Bakr Ibrahim, a business professor at Concordia University in Montreal, the four-year-old book discusses the common traits and characteristics associated with successful entrepreneurs. One important factor, it suggests, is culture: “A survey by Multiculturalism Canada revealed that, among immigrant groups, Greeks and Jews are the most entrepreneurial. Other studies have also revealed that there is a minimal level of entrepreneurial activity among Caribbean and Filipino immigrants residing in Canada.” The book adds: “On an individual level, it has been suggested that entrepreneurs are deviant or marginal characters spurred on

by adverse experiences in early childhood.” Elsewhere, the book notes that many women start their own businesses to escape sexism in the workplace. Even so, “research has found that male-owned businesses perform better than femaleowned businesses,” in part because women’s upbringing “focuses on ‘sharing’ and ‘taking turns,’ rather than on winning and taking risks.” When Maclean’s contacted the Royal Bank about the material last week, spokesman Brian Smith said he saw nothing wrong with it. A day later, however, the bank said it had withdrawn the text from its training program. The bank’s I senior public affairs adviser, d Ray Heard, issued a state| ment describing the book’s f contents as “offensive.” He § added: “As a result of this « lapse, we will be reviewing all 1 course material developed by s ICB to ensure it meets Royal Bank standards.”

A spokesman for Multiculturalism Canada said the department has never studied the links between culture and entrepreneurial ability. Ibrahim, meanwhile, played down the significance of the racial generalizations: “It’s only one school of thought— I’m not really a fan of this cultural approach to entrepreneurial study.”

FINANCIAL OUTLOOK

After two straight years of virtually no growth, Canadian labor productivity—the difference between what is produced and the cost of the labor—rose by 2.9 per cent in 1997. That was its best performance since 1984, when labor productivity grew 3.3 per cent as the economy recovered from the 1982 recession. Despite the sinking loonie, consumers continued their 1998 spending spree. According to Statistics Canada, retail sales were $20.9 billion in May, up 0.5 per cent

from April and the fourth consecutive monthly increase. Furniture store sales, including appliance stores, posted the largest increase.

“We've had back-to-back quarters of GDP growth between 4.5 and seven per cent

since the middle of 1997 and that probably has contributed to the pickup in productivity. ” —Standard and Poor’s “Persistent strength in consumer spending will go a long way to offsetting weakness in other sectors of the economy. ” —Nesbitt Burns “With most countries around the globe con tending with the fallout § from the Asian financial y crisis, this year is shapI ing up to be the worst « year for the global econ omy since 1991. ” I —TD Bank

Iliti EFFICIENCY Growth rates for labor productivity 3.0 2.5 2.0 1.5 10 0.5 0.0: 05L `82 `83 `84 `85 `86 `87 `88 `89 `90 `91 `92 `93 `94 `95 `96 `97 ru~