These are stories Report on Business is following Monday, Feb. 10, 2014.
Developments in Canada and Switzerland over the past few days highlight how concerns over foreign workers are growing louder.
The issues in the two countries are different but nonetheless underscore a backlash in this post-crisis era of still-high unemployment.
In Canada’s oil sands, a company at the centre of a controversy pledged late Friday to bring back dozens of iron workers who said they were replaced by temporary foreign workers.
Under Canada’s Temporary Foreign Workers Program, such employees cannot be hired if there are Canadians for those jobs. The government moved to investigate the controversy swirling around Pacer Promec Joint Venture and the construction work at the Kearl oil sands mine near Fort McMurray, The Globe and Mail’s Carrie Tait, Josh Wingrove and Joe Friesen report.
“On behalf of PPJV, I regret that our actions, which we believe are consistent with the legislation, led to the current controversy,” managing partner Paolo Cattelan said in a statement on Friday.
“These temporary workers should have been assigned to other projects where there is an existing labour shortage.”
Canada’s unemployment rate stands at 7 per cent, and is forecast to hover around that level for some time yet amid a modest performance in the country’s labour market.
In Switzerland, where unemployment is enviably low, the slimmest majority of voters decided in a referendum yesterday to limit immigrants from the European Union, of which it is not a member.
The issue is more one of identity in Switzerland, where more than one-quarter of the population is reportedly foreign-born.
But there are issues surrounding work, as well, as the outcome would bring in job-related quotas and, as in Canada, see Swiss nationals favoured in job applications.
The Swiss government did not back the move, which was pushed by a right-leaning political party, has sparked outrage across Europe, as it will change the nature of a deal with the EU under which workers flowed freely.
According to Bloomberg News, some companies are worried about the possibility of a program under which businesses have to ask for approval.
Swiss banks, in particular, rely on foreign workers, Reuters reports, and there are now concerns over how the move could affect economic growth going forward.
“The effects of the vote will take a long time to feed through but can’t be good for growth,” said Kit Juckes, the chief of foreign exchange at Société Générale, noting that the vote had a limited, and only temporary, impact in currency markets.
“Maybe more important is that the result will make sterling-watchers look at the slender lead of the anti-independence vote in Scotland in a new light,” he added.
- Carrie Tait, Josh Wingrove and Joe Friesen: Iron workers will be rehired as Ottawa promises review
- Swiss vote to tighten immigration rules could strain EU relationship
- Tavia Grant: Tough labour talks ahead as workers push for wage hikes
- Temporary foreign workers flood into Canada as youth can't find work: Conference Board asks why
Toyota pulls out of Australia
The retreat of the world’s major auto makers from Australia is now complete.
Toyota Motor Corp. said today it would end production of autos and engines in the country by the end of 2017.
“We believed that we should continue producing vehicles in Australia, and Toyota and its work force here made every effort,” president Akio Toyoda said in a statement.
“However, various negative factors such as an extremely competitive market and a strong Australian dollar, together with forecasts of a reduction in the total scale of vehicle production in Australia, have forced us to make this painful decision.”
Toyota employs some 2,500 people in the country, which has already seen Ford Motor Co. and General Motors Co. decide to quit Australia, as well.
- Toyota to stop making cars in Australia from 2017
- Greg Keenan: Canada left behind in auto race as U.S., Mexico make gains
Global markets are mixed so far this morning, though generally up in Asia and Europe.
Tokyo’s Nikkei gained 1.8 per cent, while Hong Kong’s Hang Seng lost 0.4 per cent.
In Europe, London’s FTSE 100 and the Paris CAC 40 were up by between 0.1 per cent and 0.2 per cent by about 8:45 a.m. ET, while Germany’s DAX was little changed.
Dow Jones industrial average and S&P 500 futures were down.
“This week should be a lot quieter in terms of major economic releases, with the key focus being on the central banks, as new Fed chair Janet Yellen testifies on the semi-annual monetary policy report in front of the House Financial Services Committee, BoE governor Mark Carney delivers the quarterly inflation report and ECB president Mario Draghi speaks in Brussels,” said market analyst Craig Erlam of Alpari in London.
“As for today’s, it’s going to be a very quiet start to the week, which isn’t necessarily a bad thing as it allows investors to fully absorb all of the events from the previous seven days.”
Housing starts slip
Canada’s home-building industry suffered a setback as the year kicked off, with home construction on the decline and pointing to a lower level of activity.
Housing starts slipped in January to an annual pace of 180,248 units from 187,144 in December, Canada Mortgage and Housing Corp. said today.
“The trend in housing starts decreased slightly in January, while the inventory of newly completed and unabsorbed units saw a modest downward trend in the last half of 2014, the agency’s deputy chief economist, Mathieu Laberge, said in the report.
“This is consistent with our expectation that builders will continue to gradually adjust activity in order to manage their levels of inventory.”
A six-month moving average shows construction starts dipping to 191,456 in January from 194,518.
“It wasn’t a good start to the year for residential construction with this below-consensus report for January,” said senior economist Krishen Rangasamy of National Bank Financial.
“The decline in [multiple-unit buildings] shouldn’t be surprising considering the accumulating inventories of unsold condos in some parts of the country,” he added in a research note.
“Considering the plunge in residential building permit applications towards the end of last year, it’s unlikely that we’ll get a quick rebound in starts in the current quarter.”
- Housing starts slide in January
- Canada's housing market overvalued by 10%, Toronto-Dominion Bank study finds
- Toronto home prices surge, again 'outpacing family incomes'
HudBay goes after Augusta
HudBay Minerals Inc. has launched an unsolicited bid for Augusta Resource Corp.
It’s an all-stock offer – 0.315 of a HudBay share and worth what the company says is $2.96 a share – that aims to grab control of Augusta’s Rosemont copper project near Tuscon.
“Given the fundamental value of Rosemont and the significant share price re-rating we expect upon securing the project’s two remaining major permits, we view HudBay’s unsolicited takeover offer to be low,” said analyst Christopher Change of Laurentian Bank Securities.
“In our view, a positive permitting decision alone should improve Augusta’s share price by more than 18 per cent.”
Streetwise (for subscribers)
ROB Insight (for subscribers)