Go to the Globe and Mail homepage

Jump to main navigationJump to main content

The Rona hardware chain will have to show a marked increase in profits to quell disgruntled shareholders. (Chris Young For The Globe and Mail)
The Rona hardware chain will have to show a marked increase in profits to quell disgruntled shareholders. (Chris Young For The Globe and Mail)

A make-or-break year for Quebec Inc. Add to ...

You gotta love Vegas. Sin City is even glitzier than usual as it showcases the latest gizmos we technological laggards will take years to adopt – or not.

What should have been the star product of the International Consumer Electronics Show is noticeably absent, however. The new BB10 phones from Research In Motion will only be unveiled on Jan. 30 – after the show and the crucial Christmas shopping season. The long-delayed smartphones (one with a touchscreen, one with a physical keyboard) will nonetheless attract intense scrutiny, as RIM’s future rests on the success of its new operating system and its ability to reclaim the rich North American market.

RIM is not alone. Three Quebec companies are also facing a make-or-break year: Bombardier, Rona and Yellow Media.

By rail or by air, Bombardier can pretty much go anywhere. Yet the plane manufacturer’s ability to fly commercial rests squarely on its new C Series, a family of single-aisle jets built from scratch, seating 110 or 130 passengers.

The C Series’ maiden flight was postponed by six months to next June, a delay about as predictable as the long waiting lines for customs at American airports. With advanced materials, a new motor and a complex supply chain that spans continents, engineers locked up in the Mirabel plant have been racing against time to piece the plane together.

While Bombardier minimized the delay, there are good reasons the aerospace company is in a hurry. With every month that passes, the window the manufacturer has to secure orders before aerospace heavyweights Airbus and Boeing release upgraded versions of their smallest commercial jets narrows.

Delays are suspicious to airline executives, who have come to distrust aircraft manufacturers after they failed to deliver technologically advanced planes such as Boeing’s Dreamliner, a production nightmare. Plagued with engineering problems, the plane arrived three years late and is still making headlines after a Japan Airlines jet just caught fire after landing in Boston.

Many airlines are reportedly waiting to see if the C Series, attractive on paper, will live up to its claims of a 20-per-cent reduction in fuel burn and a 15-per-cent decrease in operating costs. Those savings are partly made possible by a new Pratt & Whitney engine that will also power the newest version of Airbus’s competing A319, which should be available in 2016. Airlines that already own jets from Airbus and Boeing often favour their current suppliers to reduce maintenance and pilot training costs.

While Bombardier secured an order from Air Baltic Corp. and a letter of intent from an undisclosed airline before Christmas, C Series orders have not been flying higher than wild turkeys. Bombardier has only received 138 firm orders from 10 customers since its board green-lighted the program eight years ago. This is a $3.4-billion bet Bombardier cannot afford to lose.

Rona is similarly pressed for time. Interim CEO Dominique Boies is faced with the daunting task of remodelling Canada’s number one hardware specialist. Robert Dutton’s successor hopes to simplify Rona’s complex business model by divesting businesses and rethinking its store formats. What the new downsized Rona will look like will be unveiled when the Boucherville company reports its end-of-year results on Feb. 21.

Yet Rona’s network of around 800 stores will have to show a marked increase in profits to quell disgruntled shareholders. Toronto fund manager Invesco Trimark wants to eject all of Rona’s directors at the next general meeting, on May 14. Even the Caisse de dépôt et placement du Québec, Rona’s biggest shareholder, is losing patience.

Barring a miraculously quick turnaround, Mr. Boies’s efforts might look like home-staging for a buyer like Lowe’s, the American retailer that submitted an unsolicited $1.8-billion proposal and is still eyeing an acquisition in Canada. Especially since the Quebec government has yet to table legislation that would make it easier for provincially incorporated companies to fend off hostile takeovers.

For its part, Yellow Media just completed its extreme makeover, a painful operation for shareholders and creditors. After an outrageously expensive shopping spree, the company reduced its debt by $1.5-billion to $900-million after the restructuring.

Yellow Media still has to prove that there is a life after printing phone directories, its bread and butter since 1908. While its long-standing relationship with small businesses is an asset, the company needs to win those clients over with its Internet advertising and marketing services. With little barriers to entry, competition is fierce and margins are thin. But as CEO Marc Tellier gets a rare second chance to prove his business acumen, miracles can happen.

Triskaidekaphobia – the fear of 13 – may finally prove it is unwarranted. 2013 may even be lucky. Just maybe.

Report Typo/Error

Follow on Twitter: @S_Cousineau


Next story




Most popular videos »

More from The Globe and Mail

Most popular