January 2008 Market Research

[BMironov]

Globe and Mail:GM`s move south a blow to Ontario (Jan 24, 2008)
http://www.reportonbusiness.com/servlet/st...y/Business/home

Rear-wheel-drive cars scrapped or moved to Michigan; company blames new fuel economy rules

QUOTE General Motors Corp. has scrapped plans to build some rear-wheel-drive cars at its giant operations in Oshawa, Ont., a move that could threaten the long-term future of the largest vehicle assembly plant in Canada and thousands of jobs.

The auto maker has scuttled the rear-wheel-drive version of the Chevrolet Impala, which was scheduled to represent half the output of a leading-edge flexible assembly plant now under construction in Oshawa, industry sources said.

Production of rear-wheel-drive Cadillac and Buick sedans originally slated for Oshawa will be shifted instead to Lansing, Mich., the sources added.

GM will begin producing the reborn Chevrolet Camaro as a rear-wheel-drive muscle car in Oshawa later this year.

The move comes as GM prepares for crucial contract talks with the Canadian Auto Workers union this summer and seeks government financial help for an investment in St. Catharines, Ont., on top of $435-million Ottawa and Ontario have already agreed to give the company as part of a $2.5-billion plan to upgrade its Canadian operations.

Much of the $2.5-billion will be spent consolidating two Oshawa car plants into one flexible plant that will turn out the Camaro.

 

[BMironov]

Globe and Mail:Canadian home market safe as houses: CREA (Jan 23, 2008)
http://www.reportonbusiness.com/servlet/st...ry/robNews/home

QUOTE Canada`s resale housing market will remain at or near record levels this year, the Canadian Real Estate Association predicted Wednesday.The industry group said multiple listing service activity totalled a record 520,747 units in 2007, up 7.6 per cent from 2006 in the steepest increase since 2002, and this year`s MLS transactions are forecast to remain solidly above 500,000.

“The results in 2007 show the strength and the affordability of the Canadian residential market,” said CREA president Ann Bosley.

“The statistics again show just how different the housing markets are in Canada and the United States. Canadian realtors know that Canadian mortgage lenders correctly see that home prices will continue rising.”

The association sees three factors that it believes will save Canada`s housing markets from the woes engulfing the sector in the United States: consumer confidence, employment and affordable interest rates.

 

[BMironov]

RBC Economics:Housing affordability (Jan 2008)
http://www.rbc.com/economics/market/pdf/house.pdf

Housing affordability is forecast to improve in 2008


QUOTE Housing affordability worsened for the third consecutive quarter in the third quarter of 2007, and our newly developed econometric models are estimating another deterioration in the fourth quarter before an improving trend unfolds this year. This will tilt the balance in housing markets more towards buyers and away from sellers. Some markets like Calgary and Edmonton are already near that point.
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New all-time record highs for the share of income going towards homeownership costs are now the norm across most housing classes in British Columbia, Alberta and Saskatchewan. Their economies have been strong, but the gains have been increasingly leveraged. The Saskatchewan-Manitoba border remains the dividing line on talk of overheated markets in Canada. Everything from Manitoba eastward remains well below the previous record highs for affordability that were set in the late 1980s and early 1990s. ...
We expect the rate of resale house price appreciation to slow to about the 5-7% mark in 2008, with Saskatchewan likely to lead the pack again (see chart at left). New home construction volumes and income growth are also expected to gear down from previous highs. The popular five-year posted mortgage rate is also forecast to drift about 50-75 basis points lower by year-end, and the Bank of Canada`s overnight rate is forecast to drop a further 100 basis points.

While our base-case forecast is for affordability to improve, risks to this forecast are reasonably well-balanced. If credit problems worsen, fixed mortgage rates could be higher than we are assuming amidst softer income and price growth, with the net effect being worsened affordability. Or, a further acceleration in the adoption of new mortgage products could also lead to a faster-than-expected deterioration in affordability in line with last year`s experience.

Regional overviews:

• British Columbia — Stressed conditions to slow market
• Alberta — Markets take a breath
• Saskatchewan — Affordability to stabilize in 2008
• Manitoba — A more sustainable story
• Ontario — On the brink of affordability improvements
• Quebec — Steady but soft Atlantic — Price gains to moderate in 2008
  Metro markets: Vancouver — Affordability crunch to ease Calgary and Edmonton — Easy money no more Toronto — Balanced market guides controlled cooling Ottawa — Active construction markets Montreal — Steady, steady

 

[BMironov]

Regina Leader Post:Local refinery to see $1.9-billion expansion (Jan 24, 2008)
http://www.canada.com/reginaleaderpost/new...583&k=26575

QUOTE The proposed $1.9-billion expansion at Consumers` Co-operative Refineries Ltd. (CCRL) in Regina was given the green light Thursday by the board of directors of CCRL, which is owned by Federated Co-operatives Ltd.

The refinery expansion project will increase refining capacity to 130,000 barrels a day from the current 100,000 barrels a day when completed in 2012.
...
While conceding the cost of the project was "huge," Banda said the growing needs of the co-operative retailing system necessitated the expansion of the refinery.

"We`ve seen substantial growth in the retail (system),`` Banda said, referring to the 275 retail co-operatives across Western Canada. "The retail co-ops continue to build new facilities and expand gas bars and all of that leads to demand in our system. They`re in the fortunate position -- the retail co-ops -- of owning the refinery."

Bud Van Iderstine, senior vice-president of refining for CCRL, said the project will take 4 1/2 years to build, create about seven to eight million-person hours of work and employ about 1,200 at peak construction in mid-2010 and 2011.

About 90 full-time jobs will be created at the refinery following completion of the expansion project, which will take place on the eastern side of the complex in north Regina. The workforce at the refinery is currently about 575.

Van Iderstine said the anticipated shortage of skilled labour will be accommodated by extending the construction phase of the expansion project over 4 1/2 years, rather than three years with the previous expansion project (2000-2003).

 

[BMironov]

Statistics Canada:Consumer Price Index (Dec 2007) (Jan 25, 2008)
http://www.statcan.ca/Daily/English/080125/d080125a.htm

QUOTE Consumer prices increased 2.4% between December 2006 and December 2007, a slight deceleration from the 12-month change of 2.5% posted in November.

Again this month, higher gasoline prices and mortgage interest costs were the main factors driving the increase.

The Bank of Canada`s core index, which is used to monitor the inflation control target, rose by only 1.5% in December, the sixth consecutive month in which the index has decelerated. It was the slowest 12-month change in the core index since December 2005.

• 12-month change: Another strong increase in gasoline prices
• The provinces: Biggest slowdowns in consumer prices posted in Alberta and Saskatchewan
• Monthly change: Gasoline slows the rise in the all-items index Annual change: Consumer prices rise 2.2% in 2007 Impact of decline in Goods and Services Tax (GST)

 

[BMironov]

Financial Post:BP makes big splash with B.C. gas project (Jan24, 2008)
http://www.financialpost.com/story.html?id=261225

QUOTE A month after its dramatic re-entry into the oilsands, BP PLC is charting a big comeback into Canadian natural gas with a $1Âbillion project in northeastern British Columbia that uses new environmentally friendly methods.

In addition, Randy McLeod, president and CEO of BP Canada Energy Co., said the British oil supermajor has started evaluating oilsands leases it owns in Alberta`s Kirby area that could support a 60,000 to 70,000 barrels a day in-situ project.

The Kirby project, located in the southern part of the Athabasca oilsands, would build on the US$11.7-billion joint venture BP struck with Husky Energy Inc. in December that gave BP half ownership of Husky`s Sunrise thermal project, and Husky half of BP`s Toledo refinery.
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The company is using technology, developed at a cost of $100-million in the United States, where it is a major tight gas producer that unlocks tight reservoirs while reducing carbon emissions by 80% relative to a conventional development. The footprint on the environment is a third smaller.
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It involves reducing well density by extending the reach of horizontal wells, producing more from those wells, using zero-emission well sites powered by wind turbines and solar panels, using electricity instead of gas to powering compressors, collecting seismic data by using satellites rather than cut lines and big vibrating machines.

While the technologies increase costs by 20%, BP will still make money, Mr. McLeod said.
...
It has the potential to add at least 125 million cubic feet a day, up from 10 million to 20 million now coming from a dozen test wells. The $1-billion in spending would be distributed over nine to 10 years.

 

[BMironov]

CIBC World Markets:An island of stability (Jan 28, 2008)
http://research.cibcwm.com/economic_public...da-20080128.pdf

QUOTE In the current storm of bad news, the Canadian labour market has been an island of stability. Not only did the Canadian economy generate close to 400,000 new jobs in 2007, but the vast majority of them were in high-paying sectors.

Our employment quality index, which combines information on the distribution of part-time vs. full-time jobs; self-employment vs. paid employment; and the compensation ranking of full-time paid employment jobs in more than 100 industry groups, rose by 2.8% in 2007—the largest yearly increase since 1999 (Chart 1). And the combination of rising employment and improving quality is a sure recipe for rising personal income, which as of the third quarter of 2007, rose by more than 6% on a year-over-year basis.

Note that the experience in Canada is very different than the situation in the US where the quality of employment fell by 1.9% in 2007 and it is now almost 12.5% below the level seen earlier in the decade (Chart 2). It seems that in Canada the loss of manufacturing jobs is being offset by job gains in sectors with equivalent and higher employment quality. That`s not the case in the US where the jobs now being lost in sectors such as construction/real estate and manufacturing are being replaced by lower quality jobs.

 

[BMironov]

Calgary Herald:244,000 new workers needed by 2017 (Jan 30, 2008)
http://www.canada.com/calgaryherald/news/s...30-cbfcfd1c8518

QUOTE Nursing and health-care occupations in general are projected to be among the jobs in highest demand in Calgary over the next decade, according to a landmark study and forecast released Tuesday by Calgary Economic Development.

The forecast concludes the Calgary region could add 244,000 jobs over the next decade. But strong efforts by government, employers and workers themselves will be needed to hit that number.

"It is important to recognize that not all of this demand will necessarily be even met at all," said Adam Legge, Calgary Economic Development`s chief economist.

"The need for labour-force solutions in Calgary is critical," said Legge.

The $45,000, 10-year jobs forecast for Calgary pegs retail, health care, professional services and construction as the big growth areas that could add 244,000 people by 2017.

However, that will only occur if adequately trained and educated people can be found -- and Calgary is far from alone in competing for talent.
...
"If anything, those forecasts for demand are conservative," said Byrne Luft, a former principal with the Calgary office of Manpower Inc. and former chairman of the human resources committee of the Calgary Chamber of Commerce.

"Action is required, and in a very big way," said Luft.

The Calgary Economic Development forecast conservatively sees overall labour demand growing at a 2.9 per cent annual rate to 2017, down markedly from the 3.8 per cent average experienced over the past decade, which has produced widespread worker shortages and all-time low unemployment rates at or below three per cent at both the provincial and city levels.

The employment outlook is based on the Calgary economy expanding at an annual rate of 3.8 per cent per year, down significantly from the 4.9 per cent average seen in the past decade.
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In terms of high-demand occupations, the top 10 growth jobs over the 10-year period in the forecast are all in health care.

 

[BMironov]

Financial Post:Suncor plans major oil sands spending (Jan 30, 2008)
http://www.financialpost.com/story.html?id=274463

QUOTE Suncor Energy Inc. unveiled a $21-billion capital spending plan on Wednesday aimed at increasing production at its oil sands operations.

The announcement comes a day after Suncor announced it had reached a new royalty agreement with the government of Alberta that could increase the rates it pays on its mining operations by up to 20% starting in 2010.

The company`s board of governors green-lighted the capital spending plan, which aims to increase its daily crude oil production by 200,000 barrels.

"Our long term growth strategy called for us to double our business and now, with the board`s support, we`re constructing an expansion project that is thoroughly planned and engineered," said chief executive Rick George in a statement.

The expansion calls for, among other things, the construction of four new stages of in-situ bitumen production and a new upgrader to convert the bitumen into crude oil.

In a separate announcement, Suncor said its board has approved $7.5-billion of the overall capital spending plan for use this this year.

The company said it has already spent about $2.5-billion on the expansion, whose ultimate goal is to increase total daily crude oil production to 550,000 barrels.

"Our long term growth strategy called for us to double our business and now, with the board`s support, we`re constructing an expansion project that is thoroughly planned and engineered," said chief executive Rick George in a statement.

The expansion calls for, among other things, the construction of four new stages of in-situ bitumen production and a new upgrader to convert the bitumen into crude oil.

In a separate announcement, Suncor said its board has approved $7.5-billion of the overall capital spending plan for use this this year.

The company said it has already spent about $2.5-billion on the expansion, whose ultimate goal is to increase total daily crude oil production to 550,000 barrels.

Read more at:
http://www.suncor.com/links_popup.aspx?ID=3250

Presentation for investors:
http://www.suncor.com/data/1/rec_docs/1621...R_022008ntr.pdf

 

[BMironov]

Edmonton Journal:Tories unveil $6B annual spending plan (Jan 30, 2008)
http://www.canada.com/edmontonjournal/stor...85eb&k=3095

Document outlines priorities for public building projects that could stretch out for the next 20 years

QUOTE Expect the province to spend about $6 billion a year on roads, schools, hospitals and other capital projects over the next few years, and possibly more further out towards 2028, under a long-promised strategic plan.

Prodded by criticisms that the government has lacked such a plan for capital spending, Premier Ed Stelmach unveiled the 100-page guide Tuesday, setting overall spending targets based on the value of today`s dollar.
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While it gives only general long-range direction, the document is clearer about already proposed government initiatives. It says the province will turn the Edmonton-Calgary QE2 highway into a six-lane freeway, gradually twin Highway 63 to Fort McMurray, and overhaul the legislature grounds.The plan avoids specific funding promises or timelines.

The overall figure of $6 billion a year is slightly less than the province spends now, but Stelmach says his government has been in a catch-up phase.
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A proposal for a high-speed train link to Calgary remains uncertain, although the plan says the government will continue buying land for a right-of-way between the two cities. It commits the government only to "investigate and plan for passenger rail options that provide commuter-type services."

Long Term Capital Plan: http://www.treasuryboard.gov.ab.ca/docs/20YSCPweb.pdf

More info: http://alberta.ca/home/735.cfm