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A woman smokes a cigarette on the pavement terrace of Les Deux Magots cafe-restaurant at Saint Germain des Pres square in Paris, Jan. 2, 2008 (Remy de la Mauviniere/The Associated Press)
A woman smokes a cigarette on the pavement terrace of Les Deux Magots cafe-restaurant at Saint Germain des Pres square in Paris, Jan. 2, 2008 (Remy de la Mauviniere/The Associated Press)

Business Briefing

How France lost its iconic, once romantic Gauloises cigarette brand Add to ...

These are stories Report on Business is following Wednesday, April 16, 2014.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

Gauloises plant to close
They were, decades ago, something of a symbol of France and the romance of Paris. Jean-Paul Sartre smoked them, as did Albert Camus, Serge Gainsbourg, and even, at one time, George Orwell.

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But the days of Gauloises, those strong cigarettes not for the faint of heart, are now numbered.

Imperial Tobacco Group PLC, which through its Seita subsidiary owns Gauloises, announced a restructuring today that will close plants in Britain and France, with an expected loss of some 900 jobs.

The French plant, near Nantes, produces Gauloises “blondes,” or light cigarettes, and Gitanes. Production of the traditional Gauloise shifted to Spain almost a decade ago, which, according to Reuters, makes today’s move symbolic.

Symbolic is an apt word.

Bloomberg notes that Seita, which merged with a Spanish company in 1999 to form a concern that was eventually acquired by Imperial, held a production and distribution monopoly granted by the finance chief of Louis XIV.

The Gauloise brand dates back to the early 1900s, kind of a foul thing that would eventually lead to a filtered cigarette and, ultimately, the lighter version.

Not that one should romanticize smoking, but Reuters notes the iconic nature of the cigarette:

“Philosopher Jean-Paul Sartre haunted Left Bank cafes in postwar Paris with a pen in one hand and a Gauloise in the other … Included in French combat rations during World War Two, the light blue pack of Gauloises with the military helmet logo and working class panache remained the most popular brand in France until the 1970s, when lighter, sweeter American brands like Marlboro took over.”

Imperial, which has no connection to the Canadian company of the same name, said today that the British and French plants would be shuttered over the next two years, part of a cost-cutting program the tobacco company says will save some £300-million a year beginning in the fall of 2018.

“The proposed closures reflect declining industry volumes in Europe, impacted by tough economic conditions, increasing regulation and excise and growth in illicit trade,” Imperial said in announcing the shutdowns.

“Production has been affected at the Nottingham and Nantes sites, which now utilise less than half their manufacturing capacity.”

The Nantes plant employs more than 300 workers, with capacity for 21 billion cigarettes annually, though only 9 billion are expected to be turned out this year. Production will be moved elsewhere in Europe.

Home sales inch up
Canada’s realtors blame winter’s frost for a sales increase of just 1 per cent in March from February.

Having said that, last month’s showing was 4.9-per-cent better than a year earlier, The Globe and Mail’s Tara Perkins reports.

Average prices, meanwhile, climbed 6 per cent in March from a year ago, while the MLS home price index, deemed a better measure, rose 5.2 per cent.

Sales rose in more than half of the cities monitored, the Canadian Real Estate Association said, led by the provinces of British Columbia, Alberta and Ontario.

New listings inched up just 0.5 per cent on a month-over-month basis.

“There’s little doubt that winter’s icy grip prompted many potential home buyers to put off house hunting,” said CREA’s chief economist Gregory Klump.

“That said, we’ll have to wait and see what happens in April because while overall sales improved in March, there was little evidence of a flood of pent-up demand being released.”

Manufacturing climbs
Canada’s factories have marked a milestone, as sales climbed in February to their highest level since before the recession.

Manufacturing sales rose 1.4 per cent in the second month of the year, Statistics Canada said today, and have no increased in eight of the last 10 months.

“The sales level was the highest since July 2008, the peak that was reached before the last recession began,” the federal agency said.

February’s increase to shipments of $51.2-billion were led by transportation equipment and the energy sector, notably oil and coal.

Notable, too, is that the increase was centred in the manufacturing heartland of the province of Ontario.

On a straight volume basis, sales rise 0.8 per cent, so it's not as rosy as that headline gain suggests.

"In volume terms the series advanced a more muted 0.8 per cent, reflecting the strong price trends we had seen in February, leaving the overall real trend in manufacturing still flat from early 2012," said Nick Exarhos of CIBC World Markets.

Unfilled orders, meanwhile climbed 16.5 per cent to $91.6-billion, marking the fastest monthly pace since Statistics Canada began tracking the numbers in the early 1990s.

“Unfilled orders for the manufacturing sector have risen substantially over the past four years,” it added.

“The level reached in February was 79.6-per –cent higher than the post-recession low of $51-billion posted in November 2009.”

Inventories increased by 1.1 per cent, while the inventory-to-sales ratio inched down to 1.41.

Walter to idle coal mines
A major U.S.-based coal producer plans to temporarily halt its Canadian operations, dealing a blow to the province of British Columbia.

Walter Energy Inc. said today it will immediately suspend work at its Wolverine mine, and expects to idle another by July, putting some 700 workers on temporary layoff, The Globe and Mail's Brent Jang reports.

"These layoffs are particularly unfortunate because our employees have worked very hard to keep these mines competitive in the face of daunting market conditions," said chief executive officer Walter Scheller III.

"These coal reserves remain valuable assets," he added in a statement. "However, given the current met coal pricing environment, our best course of action at this time is to idle these operations until we can achieve reasonable value from these reserves."

U.S. inflation on rise
Consumer prices in the United States are picking up the pace.

The monthly inflation reading for March came in today at 0.2 per cent, and the annual rate at 1.5 per cent, according to the U.S. Labor Department.

So-called core prices, which strip out volatile prices, rose 1.7 per cent on an annual basis.

"Over all, prices look generally tame outside of some categories, namely food," said senior economist Jennifer Lee of BMO Nesbitt Burns.

"Note that, on a three- and six-month basis, prices are creeping higher, which is something to keep an eye on but with wage growth still modest and lots of retail competition, inflation should remain in check for now."

All of which means there's little to get the Federal Reserve particularly anxious.

DSW buys Town Shoes stake
Another fast-growing U.S. retailer is setting the stage to launch in Canada, The Globe and Mail's Marina Strauss reports.

DSW Inc., a leading shoe chain known for selling high-profile brands from Nike to Nine West at discount prices, is buying a 44-per-cent stake in Canadian rival Town Shoes for $62-million, with options to buy the rest after four years.

The deal gives DSW, which stands for Designer Shoe Warehouse, a way to enter Canada in a market that has stumped some other U.S. chains. DSW has chosen to come here with a domestic partner – Town Shoes, which is familiar with the local landscape and can help DSW in setting up retail locations, logistics and other operations.

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