BHP pushes ahead with giant fertilizer mine expansion in Canada

RECESSION WHAT RECESSION

Thomas Biesheuvel, Bloomberg News

BHP Group approved an accelerated expansion of its giant potash project in Canada, as fertilizer markets remain buoyed by expectation of tight supplies and as the mining giant seeks to become less dependent on polluting fossil fuels.

The world’s biggest miner, which is entering production of the crop nutrient to add exposure to population growth, has been searching for ways to speed up the Jansen project for more than a year as the long-term outlook for fertilizer prices improves. 

The company said Tuesday that it was now going ahead with its so-called stage two expansion, even before the first phase of the mine is in production. BHP, which had already committed more than US$10 billion to the project, said the second stage would cost another $4.9 billion.

Fertilizer prices surged after Russia’s invasion of Ukraine as soaring natural gas prices — a crucial feedstock — raised costs. Sanctions on Belarusian potash and moves by China to rein in shipments also tightened the market. While prices have come off their highs, companies like BHP expect the market to remain tight.

BHP finally approved construction of the Jansen mine in Saskatchewan in 2021 after years of debate over the huge price tag. Jansen could operate for a century, and eventually grow to a scale that would rival the size of the company’s flagship Pilbara iron ore operations, BHP has said. 

Jansen is expected to start production in 2026, producing just over four million tons a year. The phase two expansion will see that double to around 8.5 million tons a year, making it one of the world’s biggest fertilizer mines.

Cameco shares up after reporting Q3 profit and raising revenue outlook for 2023

RECESSION WHAT RECESSION

The Canadian Press

Shares in Cameco Corp. rose nearly 10 per cent after it raised its revenue outlook for 2023 and reported a profit of $148 million in its latest quarter compared with a loss a year ago.

The uranium miner says the profit amounted to 34 cents per diluted share for the quarter ended Sept. 30 compared with a loss of $20 million or five cents per diluted share a year earlier.

Revenue for the quarter totalled $575 million, up from $389 million in the same quarter last year.

On an adjusted basis, Cameco says it earned 32 cents per diluted share, up from an adjusted profit of three cents per diluted share a year earlier.

In its updated outlook, Cameco says it now expects consolidated revenue between $2.43 billion and $2.58 billion for 2023, up from its earlier expectations for between $2.38 billion and $2.53 billion, primarily driven by higher expected average realized prices under its contract portfolio. 

Cameco shares were up $4.85 at $57.21 in early Tuesday trading on the Toronto Stock Exchange.

This report by The Canadian Press was first published Oct. 31, 2023.

Immigrants are leaving Canada at faster pace, study shows

Randy Thanthong-Knight, Bloomberg

New research suggests more newcomers to Canada have chosen to leave in recent years, a threat to a country that relies on immigration to drive population and economic growth.

The rate of immigrants leaving the country, or onward migration, has been steadily increasing since the 1980s and is rising among recent cohorts, suggesting newcomers “may not be seeing the benefits of moving to Canada,” according to a study on immigrant retention by the Institute for Canadian Citizenship and the Conference Board of Canada.

The report, published Tuesday, underscored the risks of Canada failing to meet expectations of newcomers, who are facing worsening housing affordability, a strained health-care system and underemployment, among other issues. It also highlighted how disillusionment among immigrants can slow down progress even in a country that consistently sets fresh records for population gains.

“It’s a reflection on our broader society and more intractable failings that we have. If immigrants are saying ‘no, thanks’ and moving on, that’s a real existential threat to Canada’s prosperity,” Daniel Bernhard, chief executive officer of the Institute for Canadian Citizenship, a pro-immigration advocacy group, said in an interview. “We need to wake up and recognize that if we don’t deliver, people will leave. And if they leave, we’re in trouble.”

Prime Minister Justin Trudeau’s government has been using immigration to rapidly add more workers to stave off economic decline from an aging populace. But record population growth in recent years has led to growing criticism that its policies have exacerbated existing housing shortages and added more pressure on infrastructure and services like health care.

The report showed spikes in the annual rates of immigrants leaving Canada in 2017 and 2019, reaching 20-year highs of 1.1 per cent and 1.18 per cent, respectively. That’s compared to the average of 0.9 per cent of people who were granted permanent residence after 1982 who leave Canada each year. While the numbers may not sound significant, they add up over time and can lead to attrition of 20 per cent or more of an arrival cohort over 25 years.

Earlier this week, a survey by Environics Institute showed waning public support for high levels of immigration due to concerns of housing affordability and availability. That dwindling support, combined with growing dissatisfaction among newcomers, will be a fresh challenge for a government that’s trying to placate an outcry over an affordability crisis while competing in a global race for skilled workers.

The lack of enthusiasm for staying in Canada, which led to onward migration by some newcomers, is also behind a sharp drop in immigrants choosing to become Canadians, according to Bernhard. The proportion of permanent residents who took up citizenship within 10 years of arrival dropped by 40 per cent between 2001 and 2021.

“If Canada can’t reverse these issues and can’t provide these vital services and affordability, immigrants will leave,” Bernhard said. “We need to be working harder to make sure that they’re happy here, so that they contribute here, become Canadians and contribute to our shared success. We need to realize that on balance, immigrants may owe Canada less than Canada owes immigrants.

Housing to be part of Canada immigration plan as criticism grows

Randy Thanthong-Knight, Bloomberg News

Prime Minister Justin Trudeau’s government aims to integrate residential planning into its immigration policies as it faces a growing backlash over worsening housing shortages and affordability. 

The federal government will take dwellings, health care, infrastructure and important services into consideration when setting the country’s immigration targets, working closely with provinces and municipalities, Immigration Minister Marc Miller said Tuesday in Ottawa. He also released a report that lays out a pathway to “strengthen” the immigration system. 

The plan highlighted the government’s attempt to calm criticism that its policies to bring in record numbers of newcomers to grow the population and economy are exacerbating existing housing shortages and adding more pressure on infrastructure and services like health care. Support for immigration levels dropped to the lowest point in two decades on housing concerns.

Miller’s announcement comes a day before he’s set to announce new annual targets for permanent residents. Last year, the government said it aims to welcome record numbers of 485,000 permanent residents in 2024 and half a million in 2025. In an August interview, Miller said he’d either keep or raise those targets, not reduce them, because “the need is too great.” 

Trudeau’s government has heavily relied on immigration to rapidly add more workers to stave off economic decline from an aging populace. Over a one-year period to July 1, Canada’s population grew at a record 2.9% per cent, among the world’s fastest rates, and international migration was responsible for nearly 98 per cent of that growth as fertility reached historic lows. 

Similar to many advanced economies, the share of Canada’s population that is working age is shrinking. There are now about three workers to each senior, compared with seven workers 50 years ago, and that share is projected to drop close to two workers. Since about two-thirds of recent immigrants are between the ages of 25 and 54, newcomers are helping to rejuvenate the aging workforce.

The government will also position the immigration system to adapt more quickly to growing global humanitarian crises, maintain and increase the demographic weight of French communities, improve its foreign student program, and create a chief international talent officer position, who will more effectively align newcomer pathways with the labour market.

SEE

https://plawiuk.blogspot.com/2023/10/a-housing-panic-breeds-racism-housing.html

CANADA

Housing group brings renters' troubles with corporate landlords to review panel

Michael Tutton, The Canadian Press

A national housing advocacy group delivered about 400 stories of renters' difficulties in dealing with large corporate landlords to federal offices in 10 Canadian cities on Monday.

The Association of Community Organizations for Reform Now, or ACORN, held rallies in cities including Toronto, Halifax, Vancouver and Ottawa as they provided the testimonials to Liberal MPs and to the Canada Mortgage and Housing Corp.

The testimonials describe how tenants faced higher rents and – in some cases – poor maintenance after their rental units were taken over by real estate investment trusts.

The group made the deliveries as their national spokesperson, Tanya Burkart, joined with other advocacy groups providing testimony to an online federal review panel that is examining the impact of rental housing being bought up by large investment firms.

"ACORN would like the federal government to stop financialized landlords from buying more affordable housing and instead create an acquistion fund to allow non-profit, co-operative, land trust and tenant groups to purchase at-risk buildings when they come on the market," she told the panel.

The testimonials were also provided in August to the federal review panel, which will report to the federal housing minister next year.

In the document, one renter who lives in the Toronto suburb of North York wrote of dealing with “bed bugs, cockroaches, mice and peeling paint in the bathroom,” and called for rent control so “we have a choice to move.”

Another, living in New Westminster, B.C., wrote, “There no repairs unless it’s absolutely necessary, like when my ceiling caved in three times since I’ve been here.”

At a rally in Halifax, 65-year-old Heather Clark said she provided a testimonial hoping the federal review panel will make recommendations to the federal housing minister to address a lack of affordable housing for seniors and people with disabilities.

“The province is relying on private, corporate builders to provide affordable housing and it’s not working,” she said.

Lisa Hayhurst, who also attended the Halifax rally, said her building is "not in great shape" since a large real estate corporation took over six years ago.

“I wanted to come out to let them know they can’t get away with it," the 43-year-old said. "They have to be able to fix up their buildings.”

According to a summary of reports prepared for the Federal Housing Advocate, which describes itself as an independent, non-partisan watchdog, financial firms began consolidating ownership of family housing in the late 1990s. Now, the largest financial firms in the country own an estimated 340,000 suites.

The report by Martine August, which was released last year, says institutions hold an estimated 20 to 30 per cent of multi-family rental units, "with consolidation increasing each year."

Brian Doucet, a professor of planning at the University of Waterloo, said in an interview that for too long Canadian governments have focused on building new housing stock, while “losing sight of the housing that already is affordable.”

“This is mostly private housing being lost through demolition but also through evictions as corporations renovate the units and rent them out at higher rates,” he said.

“Having tenants present these testimonials is hugely important because in policy and government discussions, if you don’t have the numbers, it’s almost like the problem doesn’t exist,” he said.

During her testimony before the federal review panel, Burkart said the testimonials showed that many tenants no longer even know who their landlord is, and many are facing potential evictions as their building owners look to bring in renters willing to pay more. 

She gave the example of the rising rent at her own building in Brampton, Ont., which has been taken over by a real estate investment group.

“Lack of rent control gives massive incentives to evict long-term tenants,” she told the three-person review panel, which has a mandate to examine the “financialization of purpose-built rental housing.” 

The National Housing Strategy Act, passed in 2019 by the Liberal government, recognized housing as a human right and committed Ottawa to take steps to further that goal. Review panels can be created under the act to examine "systemic housing issues" that obstruct this underlying goal.

Burkart told the panelists that Ottawa needs to bring its financial leverage into play to "mandate full rent control in all provinces and territories."

She also called for an immediate change to the Income Tax Act provisions that give real estate investment trusts exemptions, or else "require them to convert 20 per cent of each of their buildings to social housing." 

This report by The Canadian Press was first published Oct. 30, 2023.

With a new president who wore an 'eat the rich' shirt, UAW won big

The United Auto Workers agreement with GM likely means the end of the strike. With 25% pay increases and cost-of-living adjustments, the deals add to a run of labor successes.

Public sentiment is pro-union »

How the UAW won a major victory and what it could mean for U.S. labor going forward

United Auto Workers President Shawn Fain’s aggressive tactics and rhetoric proved successful during the 6-week strike.

Christopher Wilson
·Senior Writer
Tue, October 31, 2023 

United Auto Workers President Shawn Fain, center left, and the Rev. Jesse Jackson, bottom center, after a rally for striking workers in Chicago on Oct. 7. (John J. Kim/Chicago Tribune/Tribune News Service via Getty Images)

The United Auto Workers announced a tentative agreement with General Motors on Monday, the union's third agreement in recent days that likely means the end of the six-week strike against Detroit’s Big 3 automakers. Their win came after an aggressive campaign from a new union chief that built on a string of recent labor victories.

Led by new president Shawn Fain, the UAW used what was called a “rolling strike” in which workers at different factories walked off the job at different times versus all the workers at the same time. The tentative contracts with Ford, GM and Stellantis that still need to be formally ratified include 25% pay increases over the course of the deal, cost-of-living adjustments and putting battery plant employees under the UAW agreement, a major step as automakers continue the transition to electric vehicles.
Who is Shawn Fain?

UAW President Shawn Fain and President Joe Biden on the picket line outside a GM distribution center in Belleville, Mich., in September. (Evelyn Hockstein/Reuters)

Fain is the first UAW president directly elected by the membership and the head of an insurgent bloc; his election followed years of corruption by union leadership, including two former presidents embezzling millions. An electrician from Kokomo, Ind., Fain provided constant video updates to his membership via social media, breaking from previous approaches where the work was done behind closed doors. He was combative in his approach to automaker executives, pillorying their salaries while wearing an “EAT THE RICH” T-shirt and expressing a belief that billionaires shouldn’t exist.


"They look at me and they see some redneck from Indiana," Fain said in a speech earlier this month. "They look at you and see somebody they would never have over for dinner or let ride on their yacht or let fly on their private jet. They think they know us. But us autoworkers know better."

Fain also mixes in Scripture with his speeches, telling the Atlantic that his favorite verse was Ecclesiastes 4:9-12 and his favorite line from it was: “A cord of three strands is not easily broken.” Fain says that the passage “speaks about what life’s about: standing together and helping one another and loving one another.”

The UAW benefited from public support, with an August Gallup poll finding that 75% of Americans sided with the UAW in the labor dispute, while only 19% sided with the Big 3. They also had the backing of the White House, as President Biden became the first sitting president to ever join a picket line when he visited strikers in September. It was a move criticized by former President Obama’s auto industry task force head Steven Rattner, who called it “outrageous,” which shows some of the shift in the Democratic Party’s approach toward labor.

“The fact of the matter is that you guys, the UAW, you saved the automobile industry back in 2008 ... you made a lot of sacrifices,” Biden said while wearing a UAW hat. “You gave up a lot. And the companies were in trouble. Now they’re doing incredibly well and guess what? You should be doing incredibly well.”
Building on the win

Factory workers and UAW union members form a picket line outside a Ford Motor Co. plant on Oct. 14 in Louisville, Ky. (Michael Swensen/Getty Images)

The UAW victory follows a recent run of labor successes. In August, UPS averted what would have been a historically large strike by more than 300,000 drivers and warehouse employees represented by the Teamsters union, agreeing to higher wages and protections for workers like air-conditioning in delivery trucks. In September, the Writers Guild of America ended five months of striking with a deal that achieved nearly all of the union’s goals and was ratified by 99% of membership.

Those victories come in a climate with pro-union sentiment across the nation. The August Gallup poll found 67% support for unions overall, down from a high of 71% last year and still above the recent average. Fain is hoping for continued cross-union solidarity and is calling on other organizations to align their contract expirations with the UAW’s new deals, which are set to end on April 30, 2028, and would allow for a strike to begin on May Day, also celebrated as International Workers' Day.

"May Day was born out of the intense struggle by workers in the United States to win an eight-hour day. That's a struggle that is just as relevant today as it was in 1889,” Fain said at a speech Sunday night in Detroit, adding, “We invite unions around the country to align your contract expirations with our own so that together we can begin to flex our collective muscles.”

"If we are going to truly take on the billionaire class and rebuild the economy so that it starts to work for the benefit of the many and not the few, then it's important that we not only strike, but that we strike together.”

GM reaches tentative deal with UAW to end autoworkers strike, joining Big Three rivals Ford and Stellantis

Pras Subramanian
·Senior Reporter
Mon, October 30, 2023

GM (GM) has reportedly reached a tentative deal with the United Auto Workers (UAW), joining its rivals Ford (F) and Stellantis (STLA) in coming one step closer to putting behind an acrimonious labor dispute that has shut down key operations for over six weeks.

Details of GM's tentative agreement were not available, but Bloomberg reports the particulars of the deal mirror those agreed to by Ford and Stellantis. To recap, Ford and Stellantis have agreed to pay union workers 25% wage increases, reinstate COLA (cost of living adjustment) benefits, institute a three-year wage progression to top pay, convert temporary employees to full time, and end wage tiers among other benefits. GM declined to comment on the deal at this time given the sensitive nature of the discussions.

GM’s talks with the UAW reportedly took longer than its rivals because of pension payment obligations and conversion of workers from temp to full time, though it appears those issues have been resolved. The UAW stepped up its strikes against GM over the weekend, calling a strike at GM’s Spring Hill plant in Tennessee, where the Cadillac XT5, the Cadillac XT6, the Cadillac Lyriq EV, and the GMC Acadia are assembled, in addition to engines for various Chevy, GMC, and Cadillac trucks.

With a GM deal likely in place, the next steps will include the UAW’s GM national committee voting on approving the agreement, before submitting the deal to a full member vote.

President Biden praised the agreement. "I think it's great," Biden said on Monday when asked about the deal.

This past weekend more details emerged from Ford’s deal with the UAW. The UAW said Ford agreed to $8.1 billion in new investments in plants in the US, with the 800-page contract revealing plans to spend $2.1 billion at Ohio Assembly for current products and a new electric van; $1.2 billion at Louisville Assembly in Kentucky for a new EV, pickup, and SUV production, including hybrid versions of the Ford Expedition and Lincoln Navigator; $1 billion at Ford’s Kansas City truck assembly plant; and $900 million for F-150 production and a new EV truck.

In addition, Ford agreed to have its battery and EV plants be part of the UAW master agreement, and allow workers the right to strike over plant closures, which the union said was a first.


As for Stellantis, the automaker also has a tentative deal with the UAW signed over the weekend. Most importantly, Stellantis agreed to reopen a Jeep plant the company shut down in Belvidere, Ill., which the UAW roundly criticized at the time. Stellantis will now assemble a new midsize pickup there, as well as build a new battery plant in the same facility.

"[Stellantis] ripped the hearts out of that community [when it closed Belvidere]. And, Stellantis didn't care. Brother and sisters, we made them care," UAW vice president Rich Boyer said.

Finally, early Monday morning Canada’s Unifor autoworker union announced it reached a tentative deal with Stellantis, meaning the big three automakers north of the border have tentative deals in place as well.

"Once again, we've achieved what just weeks ago we were told was impossible," UAW president Shawn Fain said shortly after Stellantis's tentative deal was reached.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

GM reportedly reaches tentative agreement with UAW, ending six-week strike

David Welch
Mon, October 30, 2023 

The tentative GM deal includes a 25% hourly pay raise plus cost-of-living allowances over the more-than-four-year contract, according to people familiar with the matter. (Tony Dejak / Associated Press)


General Motors reached a tentative agreement with the United Auto Workers to end a 6-week-old strike with similar terms to the deal signed earlier by Ford Motor Co., according to people familiar with the matter.

The deal includes a 25% hourly pay raise plus cost-of-living allowances over the more-than-four-year contract, according to the person, who wasn’t authorized to speak publicly. GM’s tentative agreement has similar economic terms to Ford’s but it is unclear if there are differences in retiree benefits, which has been a sticking point, according to the person.

The agreement still needs to be approved by GM’s union members.

GM’s shares jumped 3.9% on the news before paring gains in pre-market trading. The were up 1.1% as of 9:29 a.m. Eastern time.

The UAW expanded its walkout at GM on Saturday by calling for another strike at the automaker’s Spring Hill, Tenn., plants. The UAW had previously targeted eight assembly plants and 38 parts-distribution facilities from GM, Ford and Stellantis since the strike began Sept. 15, including at GM’s Arlington, Texas, facility that makes SUVs and a pickup truck plant in Missouri. The strikes at Ford and Stellantis ended when those companies reached tentative deals with the union.

Read more: Ford and UAW reach tentative deal to end autoworker strike

This story originally appeared in Los Angeles Times.

UAW's record deal could boost others' wages as labor notches another victory

Updated Mon, October 30, 2023 
By Bianca Flowers and Lisa Baertlein

Oct 30 (Reuters) - The tentative agreements reached between the United Auto Workers and the Detroit Three automakers mark another major victory for labor unions that have turned up the pressure on big corporations to put better deals on the table.

Unions have taken an aggressive approach to campaigning with a series of high-profile battles across the industrial, auto, entertainment and healthcare industries. Experts say gains won by unions could spur more organizing and motivate non-unionized companies to try to stave off those efforts.

The UAW's talks, replete with weekly addresses by union President Shawn Fain, were among the most unabashed. The union came to tentative agreements with Ford Motor and Chrysler parent Stellantis in recent days, followed by General Motors early Monday.

"This is a set of negotiations, historically, where gains made in Detroit would be viewed and adapted by many other industries across the economy," said Harley Shaiken, labor professor at the University of California, Berkley.

Union worker compensation has finally caught up to non-union wage increases dating from the COVID-19 pandemic, according to U.S. federal data, as the labor market has remained tight with unemployment at just 3.8%.

The tentative deals are expected to amount to total pay hikes of more than 33% when compounding and cost-of-living increases are factored in. The agreements may be a selling point for non-union shops to push for unionization, said San Francisco State University labor and employment professor John Logan.

"The Big Three would want the UAW to organize Tesla," he added.

Nissan and other competitors may feel compelled to boost wages to retain their workforce. The union made its intention to expand autoworker unionization clear in a series of posts on social media late Sunday that highlighted the length of the contract, which ends in 2028.

"One of our biggest goals coming out of this historic contract victory is to organize like we’ve never organized before," the UAW wrote. "When we return to the bargaining table in 2028, it won’t just be with the Big Three, but with the Big Five or Big Six."

Public support for unions has helped engagement in traditionally unionized industries such as manufacturing and healthcare. A Reuters poll showed the majority of Americans stand behind striking workers.

Employee-led unionization efforts at retailers, such as Amazon and Starbucks, have reflected a consensus among workers who see unions as a means to secure better wages and working conditions.

Organization has been difficult in recent years. About 11.3% of workers were represented by unions last year compared with 23.6% in 1982, according to data analyzed by the Economic Policy Institute.

RIPPLE EFFECT

The UAW contracts are among many deals reached this year, along with agreements at UPS and construction equipment maker Caterpillar. Workers at other companies, like Mack Truck and equipment makers CNH Industrial and Deere & Co have all rebuffed initial deals despite raises that in some contracts appeared significant.

Increased awareness among workers about record profits has translated to company concessions and improved deals, said Marcos Feldman, senior researcher at Jobs to Move America, a labor organizing nonprofit.

"The task is to solidify and institutionalize it," Feldman said. "Unionizing efforts are the most aggressive they've ever been."

President Joe Biden considers unions a cornerstone of his economic policies, including the $1.2 trillion bipartisan infrastructure law to boost American manufacturing.

Employers may respond by boosting worker pay to hold off union efforts, or step up efforts to prevent unionization.

Some Starbucks employees have claimed the coffee chain illegally retaliated against organizers by firing employees and closing stores. Earlier this month the U.S. Department of Labor ordered the company to disclose documents pertaining to anti-union spending.

Amazon has dissuaded unionization, with the National Labor Relations Board (NLRB) recently ruling the e-commerce giant had threatened to withhold wages and benefits from employees at two New York warehouses.

UPS AND ITS RIVALS

The UPS deal in August raised pay and eliminated a two-tier wage system for drivers at the Atlanta-based company. That bolstered organizing efforts among Amazon workers and put pressure on UPS rivals to close a growing gap in pay.

When the new UPS agreement expires in 2028, the average full-time U.S. driver will make about $170,000 annually in pay and benefits, significantly more than peers employed by contractors for Amazon and FedEx.

Amazon in September gave delivery contractors $440 million for the year to raise average driver pay to an estimated $20.50 per hour. Amazon told Reuters that payment was part of normal increases and not influenced by the UPS contract. It did not provide prior-year comparisons. FedEx said it regularly reviews pay for directly employed delivery workers to ensure that it is competitive and that its delivery contractors set their own wage rates.

"One thing we've seen in this economy is that workers are more likely to quit when they are unhappy," said Kate Bronfenbrenner, director of labor education research at Cornell University. "Industries where they're more likely to stay are the ones where they unionize and they stay and fight."

(Reporting by Bianca Flowers; Editing by Jonathan Oatis and Alistair Bell)

'Ground-breaking if not earth-shattering': Robert Reich on UAW wage gains

Jordan Fleguel, BNN Bloomberg

Wage gains won by the union representing U.S. auto workers after a six-week strike are “ground-breaking if not earth-shattering,” according to prominent labour commentator Robert Reich, who predicts unionization efforts will soon spread to other automakers.

“It marks a really substantial increase, not only in wages, but cost of living adjustments,” Reich, a university professor and former U.S. secretary of labour told BNN Bloomberg in a Tuesday television interview.

The United Auto Workers (UAW) reached a tentative agreement with General Motors Co. on Monday, ending a weeks-long strike spanning multiple states. The union had already reached tentative deals with Ford Motor Co. and Stellantis NV. Agreements with the three automakers have yet to be ratified.

The agreements came as the Canadian divisions of the Big Three reached their own tentative deals with Unifor, the union representing Canada’s autoworkers.

Reich said that in the U.S., the UAW is now likely to go after the country’s other automakers without unionized labour forces.

“I would expect that very, very soon, we are going to see the UAW target Tesla, and also the U.S. divisions of some of the foreign automakers like Honda, Toyota, and BMW,” he said.

Reich said that historically, when unions make progress on wages and benefits, non-unionized players in the industry tend to offer increases of their own in order to keep unions out.

“I don't know what's going to happen, but undoubtedly, the pressure is going to be increasing,” he said.

WORKER PRODUCTIVITY

Reich said worker productivity in the auto industry has steadily increased over the last few decades, but traditional ways of measuring it have become less effective due to the increased use of technology in the industry. 

He argued that when real worker productivity is taken into account, wages are still far behind where they should be.

“I don't think there's any question that workers are substantially more productive than they were, say 10 years ago, and yet their wages have not really kept up,” Reich argued.

“That statement could be not only the last 10 years, in terms of relevance, but really the last 40 years.”

Reich said that when adjusted for inflation, wages for workers in the auto industry and other manufacturing sectors have been relatively stagnant for decades, even as profits have risen.

“I think that has generated a very strong, built up desire on the part of workers, and really on the part of the public in general, to increase the wages of these people,” he said.

ARTIFICIAL INTELLIGENCE

Reich said that as artificial intelligence (AI) technology continues to seep into the labour landscape in the U.S. and across the world, it’s going to create a “big issue” when it comes to the bargaining power of workers.

He said he expects AI will challenge and eventually replace not just hourly and industrial workers, but professionals across the board, including himself. 

“We’re going to lose bargaining leverage. Most of us professors and everybody who is part of the knowledge economy, we are going to be replicated and substitutable by artificial intelligence,” he said.

“Not immediately, but certainly that looks like it is in the cards.”

This report was first published Oct. 31, 2023.

CANADA

Economic climate empowers workers for bigger asks, Unifor president says

BNN Bloomberg

The president of Canada’s largest private sector union says the challenging economic climate has empowered workers to make bigger asks in bargaining in order to address the growing cost of living expenses.

Earlier this week, Unifor reached a tentative agreements with Stellantis and the St. Lawrence Seaway, while also recently ratifying deals with General Motors and Ford.

While terms of the St. Lawrence Seaway and Stellantis deals have not yet been disclosed, the other auto contracts each came with raises topping 25 per cent in some cases, with protections for the shift to electric vehicles and other improvements.

“This is a very extraordinary time to be bargaining for workers, there's no doubt about it,” Unifor president Lana Payne told BNN Bloomberg in a television interview.

“The economic climate is raising expectations for workers, whether it's the cost of living, whether it's interest rate hikes, all of these things are making people's individual circumstances tougher and that clearly spills over into the bargaining table.”

When it comes to the auto deals, Payne said the agreements are precedent-setting for the industry and argued that they helped end the United Auto Workers strikes in the U.S.

“That also helped in many ways what our UAW friends were trying to achieve as well south of the border,” Payne said.

“Many of the elements around trying to reduce the progression grid, getting cost of living allowance increases built into the collective agreement, these were things that we were able to establish in that first agreement.”

Payne called the recent slew of negotiations a “marathon” as the union awaits the vote on the Stellantis deal, which is expected over the weekend. 

“These deals are very comprehensive,” she said. 

“I've explained that there are improvements across the board, from pensions to wages and of course, the big issue for us – particularly in auto right now – is what's happening around the transition to electric vehicles and making sure that our members are protected during that transition period.”

This report by The Canadian Press was first published Oct. 31, 2023.

First Quantum plunges again as miner seeks answers in Panama

Jacob Lorinc, Bloomberg News

First Quantum Minerals Ltd. plunged by another 15 per cent as uncertainty deepens over the future of the company’s Panama copper mine, which is set to face a referendum that would also have sweeping implications for the country’s economy and global copper supply.

The latest drop brings the company’s losses this week to 39 per cent, as investors assess the outlook for First Quantum’s most important asset. Cobre Panama, one of the world’s biggest and newest copper mines, has generated the bulk of the company’s revenue since it opened in 2019. The operation is projected to account for almost half of the company’s operating revenue next year if it stays fully operational.

The future of the mine has been cast into uncertainty after weeks of civil unrest over its new operating contract, which would extend the company’s mining license by 20 years. The government says it plans to hold a referendum on Dec. 17 for voters to decide whether to extend or revoke First Quantum’s license, though it is still not clear if the referendum can take place.

In a statement on Tuesday, the company said it had contacted the government to ask for details about plans for the referendum.

First Quantum poured billions of dollars into the project after acquiring it a decade ago, and it has become a company-defining project for the firm.

Mining companies had drilled in the region since the late 1960s but most deserted the concession in Panama after struggling to navigate its challenging terrain. Teck Resources Ltd. and a Japanese consortium abandoned the concession in the late 1990s, and it belonged to Inmet Mining Corp. for nearly two decades before First Quantum acquired the company in a hostile takeover in 2013.

At the time it produced its first copper concentrate in 2019, the project was cast as a safety hedge to First Quantum’s risky projects in Zambia, where the company wrestled with tax disputes and social unrest.

Cobre Panama is Panama’s only significant mine, accounting for roughly four per cent of gross domestic product, according to National Bank of Canada analysts including Shane Nagle. Panama’s economy minister has previously said the country’s growth would have been reduced from six per cent in 2023 to less than one per cent without contributions from Cobre Panama.

The copper mine is also a significant contributor to the world’s supply of the metal used in everything from wiring to cleaner technology like electric vehicles, accounting for about 1.5 per cent of the world’s copper supply. Copper demand is poised to rise in the coming years while supply stagnates. The projections present a looming challenge for the mining industry, which has struggled to expand copper production on budget and on time.

“A disruption of production at this mine would be a positive for copper as it would likely push the market into deficit,” Jefferies Financial Group Inc. analyst Christopher LaFemina said in a note on Monday. “We do not see a clear path to a resolution of this issue aside from either significantly higher royalties or international arbitration.”

 

Mortgage payments outpacing income growth

in Canada: Zoocasa

BNN Bloomberg

Mortgage costs have grown faster than incomes over the past decade, according to a new report from Zoocasa.

The analysis released Thursday looked at average mortgage payments across 17 Canadian cities from 2013 to 2023 and compared the figures against average incomes. 

It highlighted that while home prices in Canada have risen over the past decade, interest rates remained consistent until recently, having risen to 15-year highs after reaching historic lows in 2021. 

“Both of these factors have contributed to an increase in monthly mortgage payments,” the report said. “With income growth struggling to keep pace, some homebuyers are taking a step back from the real estate market.” 

In 10 of the 17 cities analyzed, Zoocasa found that mortgage payments increased by over 100 per cent and incomes by 16 per cent or less during the time period. 

“Over the last ten years, average monthly mortgage payments increased in every city analyzed, with the majority of cities’ mortgage payments increasing by more than $1,000 and four cities increasing by more than $3,000 since 2013,” the report said. 

Cities in Ontario and B.C. may experience higher than average incomes, however, the report noted monthly mortgage payments in both provinces “were up substantially.” Particularly, Hamilton-Burlington and Barrie District were highlighted as having the largest increases in mortgage payments.

In Hamilton-Burlington, the average monthly mortgage payment rose by $3,354 over the past decade, the report said, rising to $5,034 in 2023 from $1,680 in 2013.

Barrie District “followed a similar trajectory,” the report said, with the average monthly mortgage payment rising to $4,778 in 2023 from $1,442 in 2013, marking an increase of $3,336.

The report attributed the increase in mortgage payments in both regions to rising home prices, which increased by over $500,000 between 2013 and 2023. 

The Greater Toronto Area saw mortgage payments increase by 129.8 per cent during the time period, while average incomes rose by only 16 per cent, the report said.

Victoria saw mortgage payments increase 158 per cent on average while incomes rose only 15.2 per cent. 

METHODOLOGY: 

Zoocasa’s report looked at home prices from 2013 to 2023 in 17 cities and calculated average mortgage payments during the time period assuming an average-priced home with a minimum down payment and a 25-year amortization using the five-year fixed rate in September of each year. Average payments were then compared relative to average annual income figures from Statistics Canada, the report said. 

ECONOMICS: RATE PAUSE TO BENEFIT

RENTERS: EXPERTS

Iva Poshnjari, BNN Bloomberg

Oct 25, 2023

An interest rate hold from the Bank of Canada could give the country’s rental market a much-needed break from escalating costs, experts say.
 
The average cost to rent a one-bedroom apartment in Canada hit a record high of $2,117 per month in August, marking a 9.6 per cent annual increase, according to data from Rentals.ca.
 
Rent climbed even higher in the country’s most populated areas. In Vancouver, a one-bedroom apartment rose 13.1 per cent year-over-year to $2,988 in August. In Toronto, the same unit rose 10.5 per cent to $2,620, the data showed.
 
Experts told BNNBloomberg.ca that a rate pause from the Bank of Canada will likely help dampen these dramatic rent increases, because a stable overnight lending rate makes costs more predictable for both landlords and tenants.
 
The central bank announced Wednesday that it would hold its benchmark interest rate at five per cent for the second consecutive time.
 
“This rate hold will make things a lot easier for the rental market because it is signalling stability,” Mike Stewart, a Vancouver-based realtor, told BNNBloomberg.ca in a phone interview.
 
The pause signals that the central bank sees inflation as coming under control, which indicates to renters that their living costs will stabilize overall, he added.
 
“The rate hold might also prompt some sidelined homebuyers to enter the market, thereby freeing up rental supply, which should ease some of the pressure renters are feeling as well,” Stewart said.
 
While some landlords might be tempted to raise rents should their current tenant leave, the market will ultimately set the rates, he argued.
 
“What we’re seeing is an overall softening in Vancouver rents as the market begins to balance out amid rate holds,” Stewart said.
 
Toronto-based realtor Davelle Morrison echoed Stewart’s sentiment.
 
“The rate pause is an overall good thing for the rental market as it gives landlords a sigh of relief that their mortgage won’t go up any further, meaning they won’t need to necessarily increase their rent,” she explained.
 
NOT A LONG-TERM SOLUTION
 
While the decision to keep rates on hold may help cool the rental market, trends in longer term bond yields could provide an offset, according to an economist with the Canada Mortgage and Housing Corporation (CMHC).
 
“The rate pause will help ease the pressure on the rental market, but what worries me is the rise in bond yields,” Bob Dugan, chief economist at the CMHC, told BNNBloomberg.ca in a phone interview.
 
The average first-time homebuyer will usually lock in a fixed-rate mortgage based off a five-year government bond, and these bond prices have risen in the past few months, he explained.
 
“The expectation that the Bank of Canada will keep rates high for longer is being reflected in higher bond yields, and just because the (Bank of Canada) might cut rates in the foreseeable future, it doesn’t mean these bond yields will follow suit,” Dugan explained.
 
The bond moves pose risks of elevated costs for future homeowners, despite what direction the Bank of Canada moves in next, and Dugan argued that the effect will be continued cost pressures sector-wide.

Mortgage payment shocks pose risks to

 Canadian banks: RBC

Daniel Johnson, BNN Bloomberg

Payment shocks from mortgages renewing at higher interest rates over the next three years may pose a substantial tail risk to Canadian banks, according to a new report from RBC Capital Markets. 

The RBC analyst and associates behind the report published Monday wrote that around 60 per cent of all outstanding mortgages with Canadian chartered banks will be up for renewal during the next three years. This will lead to payment shocks, referring to the increased payment at renewal, according to the report, with related risks of possible impacts on loan and revenue growth at chartered banks, as well as have spillover effects on other forms of credit.

Barring any “significant declines in interest rates,” the report says credit losses will rise in 2025 and beyond as a result of the mortgage payment shock trend.

“Some have suggested that mortgage payment shock could be viewed as a tail risk possibility because mortgage payment shock hits harder out in 2025 and very hard in 2026, and it is difficult to see interest rates staying this high for that long,” the report said.

EXPECTED TIMELINE

The research comes as the Bank of Canada has raised interest rates to five per cent from near-zero over the past year and a half, in a bid to bring down high inflation.

The report laid out a timeline explaining for when higher rates at renewals are expected to kick in at the major Canadian banks, and the scale of expected related payment shocks.

“We believe there will be more than $186 billion of mortgages renewing in 2024 at the chartered banks in Canada and at current interest rates (for example, the five-year fixed mortgage rate of 5.54 per cent is over 180 basis points) higher than five years ago), a weighted average payment shock of 32 per cent could be expected,” the report said. 

In 2025, RBC is expecting about $315 billion in mortgage renewals at chartered banks, more of which are variable rate mortgages and many of which are “currently negatively amortizing.” The resulting weighted average payment shock from renewals in 2025 is anticipated to be similar to 2024, at around 33 per cent.

“Fiscal 2026 renewals have the largest proportion of variable-rate mortgages and consequently, unless rates fall meaningfully, the payment shock could be as high as 48 per cent on a weighted average basis,” the report said. 

SPILLOVER

Increased mortgage payment shock is likely to impact loan and revenue growth at banks, the report said. Mortgage payment shocks are expected to slightly impact mortgage delinquency and have a spillover effect on other forms of credit, the report’s authors said.

However, the experts wrote they are not concerned about mortgage losses because mortgage delinquency rates and unemployment rates are currently below pre-pandemic levels. 

“We believe there may be a spillover of credit losses onto other loans (i.e., unsecured credit and auto loans), but we do not yet see evidence of significant credit deterioration except for a specific subset of commercial real estate (office space),” the report said. 

RETAIL BANKING OUTLOOK

The report’s authors maintained a “tepid growth outlook” of about four per cent in 2024 and about three per cent in 2025 for revenue growth in retail banking.

The retail banking industry will be “managing through this phenomenon carefully with slow loan growth, low NIMs (net interest margin), and fee pressure,” the report said.

Net interest margin measures the difference of how much a bank generates from interest on loans compared to how much it pays in interest. 

WHAT ARE THE BANKS DOING?

Canadian banks are working proactively to lower the impact of payment shocks, according to the report. 

“Customers are given a range of options including increasing monthly payments, switching to a fixed rate, making a lump sum payment, or extending the amortization period,” the report said.

The RBC experts wrote they will “continue to track” increases in mortgages with over thirty-year amortization periods while assessing the efficacy of those measures.