These are stories Report on Business is following Friday, June 14, 2013.
Bombardier officially out as U.K. awards contract
The British government made it all but final today, awarding a huge rail car contract to Siemens AG over Canada’s Bombardier Inc.
A consortium led by Siemens had been the preferred bidder on the Thameslink deal since mid-2011, but it’s the final word and, a union group warned, a “death blow” to the economy of Derby, home to the Bombardier plant.
There’s still a waiting period of at least 10 days before the contract can actually be awarded, but Britain’s Department for Transport said today that it “confirmed its decision” to choose Siemens.
The deal is worth €1.6-billion, or about $2.5-billion, to upgrade the key Thameslink rail line with 1,140 new cars, part of a total €6-billion overhaul to “radically increase capacity and reliability on one of Europe’s busiest stretches of railway,” according to the government.
Bombardier had warned after the 2011 decision that it would be forced to slash 1,400 jobs at the plant, and, today, the Trades Union Congress decried the final move.
“This will be a death blow to Derby’s economy,” said general secretary Frances O’Grady.
“The Bombardier work force is loyal, committed and highly productive,” she added in a statement.
“It is the exact opposite of the modern industrial policy that this country needs.”
The bulk of the Siemens rail operations are in Germany but, Bloomberg News noted, it has a financing arm, unlike Bombardier.
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Manufacturing sales sink
Canada’s factories suffered their fourth hit in five months in April as sales slumped 2.4 per cent, marking the fastest decline in almost four years.
Statistics Canada cited lower shipments of oil and coal, and primary metals, for leading the decline, at the same time also revising down the increase of a month earlier.
By volume, sales fell 1.6 per cent.
Sales fell in 13 of 21 sectors measured, accounting for 86 per cent of the industry, and the manufacturing centres of Quebec and Ontario were hit hardest, to the tune of 6.8 per cent and 1.3 per cent, respectively.
Inventories rose again for the fourth month in a row, by 0.6 per cent to reach their highest since the agency began tracking such data in 1992.
That was driven by aerospace, computers and electronic products.
The inventory-to-sales ratio rose to 1.43 from 1.39 in March, well the level of unfilled orders slipped 0.1 per cent, the second dip in a row but still marking the fourth-highest on record.
New orders took a dip of 0.9 per cent, on oil, coal, primary metals and food.
“This month’s factory sector weakness suggests April GDP could eke out, at best, an only mild gain,” said Emanuella Enenajor of CIBC World Markets.
BoE official quits
The man who lost out to Mark Carney for the governor’s post is leaving the Bank of England.
Paul Tucker’s resignation shouldn’t come as a surprise, The Financial Times notes, given that observers hadn’t expected him to stay after Mr. Carney was courted and appointed by the British government.
Mr. Tucker, deputy governor for financial stability since 2009, announced his decision to leave today.
But, according to the news organization, his chances of getting the job had eroded in the wake of the Libor scandal, and, in particular, a phone chat with Barclays head Bob Diamond in the fall of 2008.
The Bank of England said in a statement that the timing of Mr. Tucker’s departure is still to be decided, but that “it is likely to be in the autumn after Paul has provided support to the new governor.”
- Bank of England's Tucker to leave after losing out to Carney
- Financial Times: Paul Tucker, the BoE 'lifer' who lost out in race for the top job
Sears cuts two key stores
Sears Canada Inc. is selling leases of two of its high-profile stores back to their landlords for $191-million, plus options on a third store for $1-million that could raise another $53-million within five years, The Globe and Mail’s Marina Strauss reports.
Sears has agreed to sell the leases of its stores at Yorkdale Shopping Centre in Toronto and Square One Shopping Centre in Mississauga, Ont., back to their landlords, Oxford Properties Group and Alberta Investment Management Corp., and will leave the sites by March 31 next year.
The moves come as Sears races to revive its struggling business amid intensifying competition in Canada and the arrival of U.S. heavyweights Target Corp., which started to open its first stores here in March, and Nordstrom Inc., which launches in Canada next year.
Wilson had no influence, assistant says
Lululemon Athletica Inc. chairman Chip Wilson had no influence on almost $50-million (U.S.) in stock sales made just a few days before this week’s rout, a spokeswoman says.
The sales, made before chief executive Christine Day sparked a decline in the stock by announcing her plans to quit when her successor was named, were prearranged and done by Merrill Lynch, Mr. Wilson’s executive assistant said today.
Such plans, known as 10b5-1, have been ongoing for years and, these sales by Merrill Lynch done under established criteria with no influence by Mr. Wilson.
Mr. Wilson’s assistant ran through the details of the sales since the summer of 2010 and added:
“Subsequent to adoption of each plan, Mr. Wilson has had no influence on trades conducted by Merrill Lynch pursuant to either of these plans. Any suggestion of impropriety by Mr. Wilson is inaccurate and irresponsible.”
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