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CHHMA NEWS

 
   
 

     Volume 11, Issue 10, March 10, 2011

                         
                               
                                     Association News

2011 Spring Conference & AGM: "Boom, Bust & Bounce Back"

Registration is now available for this year's CHHMA Spring Conference & AGM taking place on Tuesday, April 5th at the International Centre Conference Facility, 6900 Airport Road, Mississauga, Ontario.

The value-packed one day conference for CHHMA members offers a great line-up of speakers and topics that address current issues and will provide you with helpful information to succeed in the new economy.

Corporate packages are available for $1,000 + HST and include tickets for four attendees plus any additional tickets for a reduced price of $250 + HST.

Individual conference tickets are available for $350 + HST. 


In addition to four keynote speaker presentations, this year’s Spring Conference & AGM offers two sets of break-out sessions that cover a variety of topics for you and your colleagues to choose from.

In the first break-out sessions, Jim Moore from SkillPath Seminars will talk about doing more with less in the new economy, where you can learn lots of ‘best practice’ tips to reduce stress, get more done and boost profitability. Mike Trepanier from Ernst & Young will present on foreign currency, hedging and pricing strategy while Frank Turco, senior manager, trend & design, global sourcing, The Home Depot Canada, will discuss the latest trends in home improvement and design.

In the second set of break-out sessions, Jim Moore from SkillPath will once again be available to show how to develop a peak performing team that is motivated, knowledgeable and focused on results. Mike Morley will offer an entertaining and informative session on everything you never wanted to know about finance (for non-financial managers) and Paul Publow from Logistics Solutions & Services Inc., will be on hand to provide his insight on importing & exporting. This session will also have a customs expert present to answer any questions. 


For further information or to register for the Spring Conference & AGM, click here.


                           
                                     Industry News

CHHMA President Tells Globe & Mail That Retailers Must Take All Costs into Account
The rising Canadian dollar has touched off yet another heated battle between Sears Canada and its suppliers according to an article in last Saturday’s Globe & Mail. As noted in the article, the retailer recently notified some of its suppliers that it is retroactively chopping their payments by hundreds of thousands of dollars because of vendors’ savings from a stronger Canadian dollar. Some housewares suppliers have stopped shipping to Sears as a result of the demands.

It is the third time in almost as many years the company has tried to claw back money from suppliers arguing that Sears and its customers should share in the benefits it says the vendors reaped in past months as the loonie climbed. Suppliers purchase many of their raw materials and goods in U.S. dollars but sell their products to Canadian merchants in Canadian dollars.

In talking to retailing reporter Marina Strauss for the article, CHHMA President Vaughn Crofford stressed the importance of retailers taking into account all costs, “The frustration for the vendors is that they have other costs that are going up and they’re eating that in most cases.”

Suppliers and retailers are being squeezed by skyrocketing costs of everything from oil to cotton over the past year. Some suppliers are even starting to ask retailers for higher prices.

Sporting goods specialist Forzani Group Ltd. said they have refused suppliers’ requests for higher prices to cover their increasing costs. While suppliers’ expenses are rising faster than the value of the loonie, “it’s close enough that we can make that demand,” said Mike Lambert, chief financial officer at Forzani. “We’ve asked them to absorb these inflationary costs so that our customers don’t have to pay more for the products they buy, vendors have agreed,” he said.

In the case of Sears, it may face fewer squabbles with suppliers in the future. As of January, it started to switch its purchasing to U.S. dollars.

For a complete copy of the Globe & Mail article, click here.

                     
Home Depot Canada Names New President 
Last Friday, Bill Lennie was named president of The Home Depot Canada, replacing Aaron Carmack who is taking an extended leave of absence to attend to a personal illness. According to the company, Carmack will assume a different leadership role within the organization when he returns.

Lennie served most recently as the company’s vice-president of merchandising, international and sourcing where he was responsible for proprietary brands, environmental innovation and providing strategic direction on products and pricing to the company’s international operations, including Canada. He began his career at the Home Depot in 1992, being promoted to senior vice-president of decor in 2002. He left the company in 2006, but returned in 2009 from Dick’s Sporting Goods, where he was senior vice-president of merchandising, hardlines.

“We are fortunate to have an executive with Bill’s experience and leadership abilities who can quickly step into this critical role,” said chairman and CEO Frank Blake. “We wish Aaron the best and look forward to his return.”
  
 

                                       
Economic News

Housing Starts Rise 6.5% in February
The Canada Mortgage and Housing Corp. (CMHC) reported on Tuesday that the seasonally adjusted annual rate of housing starts was 181,900 units in February. This is up 6.5% from 170,600 units in January. The rise was due primarily to increased activity in multi-family starts in Ontario and the Prairies.

Urban starts increased by 9.4% to 161,000 units in February. Urban multiple starts were up by 14.5% to 94,900 units, while single urban starts edged higher by 3% to 66,100 units. Rural starts were down 11% to 20,900 units in February from the previous month.

Robert Kavcic, an economist at BMO Capital Markets, said “activity should perk up modestly in the quarters ahead in response to improved sales and the broader economic recovery.” 
   
Building Permits Fall 5.1% in January
The value of building permits fell unexpectedly in January, as both residential and non-residential activity weakened, Statistics Canada said on Monday. Lower construction intentions, particularly for the residential sector in Ontario and the non-residential sector in Alberta and B.C., were behind the decline.

The overall value of Canadian building permits dropped by 5.1% in January to $5.4 billion after a gain of 2.6% in December. Analysts had expected a 0.5-0.7% increase in the seasonally adjusted figure.

The value of non-residential permits fell by 13.3% to $1.7 billion in January, the third consecutive monthly decline, and the lowest level since February 2009. Industrial building permits tumbled by 33.5% to $303 million, institutional dropped by 19.4% to $346 million, while the commercial component was off by 1.7% to $1.0 billion.

Residential permits slipped 0.9% to $3.7 billion, following a 19.6% jump in December. Municipalities issued $1.4 billion in building permits for multi-family dwellings in January, down 17.5% from the previous month. Permits for single-family dwellings increased for a third consecutive month, rising 12.2% from December to $2.3 billion in January. This was their highest level since April 2010.

In January, the total value of building permits fell in six of ten provinces, with the largest decreases occurring in Ontario and Alberta. 
  

BMO Report: Home Prices Nearing Bubble Territory but Expected to Cool Off
Canada’s hot housing market should cool down somewhat this year according to a report from BMO Capital Markets, which says the kind of correction some observers have been warning about is unlikely, though not impossible, given the right circumstances.

The question of a correction comes down to whether increases in household incomes can keep up with rising home prices. If prices outpace increases, the bank says a correction would be inevitable. However, there should be no major correction if incomes increase faster than home prices in the future, as expected.

While incomes and average home prices kept pace with each other over most of the last three decades, both rising 5.7% a year, the report said that prices more than doubled in the decade to late 2007, and grew twice as fast as incomes from 2002 to 2007. Even after sliding 13% through the recession, prices quickly rebounded and are now 10% above their 2007 peak. The ratio of average resale prices to personal incomes is currently 14% above its long-run mean, suggesting the national market is moderately over valued.

But that is not the case in all markets. Five provinces are currently in the danger zone, led by Saskatchewan, where the ratio is 39% above historic norms. Also well above the long-run levels is Newfoundland, 34% higher; B.C. and Manitoba, 31%; and Quebec, 23% above. By comparison, in Ontario, the price-to-income ratio is only 10% higher than historic norms, suggesting prices are moderately overvalued but not in bubble territory.

BMO expects gains in income to outpace advances in housing prices for the next 18 months, during which time the bank expects interest rates to rise by two percentage points. Growing incomes are also expected to offset costs associated with rising interest rates.

Currently, the housing market is relatively balanced the report says. New home construction has fallen back and there are about two new listings for every sale. Average resale prices rose 5% over the past year, but excluding Vancouver, that increase would have been less than 2%, and new home prices rose just 2%, while land sales are flat. Tighter mortgage rules, which come into effect March 18, along with higher interest rates, lower affordability and elevated household debt, should keep prices on a tight leash.

Most analysts see a soft landing rather than a crash, in part because the Bank of Canada is unlikely to raise rates sharply or quickly.
  
Underwater Mortgages Rise in the U.S.
The number of Americans who owe more on their mortgages than their homes are worth rose at the end of 2010, preventing many people from selling their homes in an already weak U.S. housing market.

CoreLogic reported on Tuesday that about 11.1 million U.S. households, or 23.1% of all mortgaged homes, were underwater in the fourth quarter of 2010. That’s up from 22.5%, or 10.8 million households, in the third quarter. The number of underwater mortgages had fallen in the previous three quarters. But that was mostly because more homes had fallen into foreclosure. In addition, about 2.4 million people have only 5% equity or less in their homes, putting them near the tipping point if prices fall in their area.

Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point since the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5% of homeowners are underwater.

The slide in home prices began stabilizing last year. But prices are expected to continue falling in many markets due to still high levels of foreclosure and unemployment. That means homes purchased at the height of the real estate boom are unlikely to recover lost value for years.
  
U.S. February Job Growth Picks Up
U.S. employers hired more workers in February than in any month since last May and the unemployment rate fell to a new two-year low, raising hopes the U.S. economic recovery has become self-sustaining.

The Labor Department reported last Friday that nonfarm payrolls increased 192,000 in February. Data for December and January was also revised to show 58,000 more jobs created than previously estimated. As in previous months, the private sector accounted for all the job gains in February, with an addition of 222,000 positions, the largest gain since April 2010. That was up from 68,000 in January. Government employment fell 30,000, contracting for a fourth straight month, pulled down by state and local governments, which are under heavy budgetary pressures.

The unemployment rate dipped to 8.9%, the lowest since April 2009, and down from 9.0% in January.

Economists believe the federal government will want to see payroll gains in excess of 200,000 for at least six to nine months and a significant decline in unemployment before starting to withdraw its massive monetary support from the economy. With the jobless rate far from its natural 5-6% level and inflation still short of the Fed’s target of close to 2%, analysts expect the federal government to complete its $600 billion government bond-buying program through to June to help the economy.

Upcoming CHHMA Events For 2011

Spring Conference & Annual General Meeting
Tuesday, April 5
International Centre, Mississauga, Ontario

Maple Leaf Night
Tuesday, May 10
The Mirage Hotel & Casino, Las Vegas, Nevada

Quebec Golf Tournament
Tuesday, May 17
Le Fontainebleau Golf Club, Blainville, Quebec

Ontario Golf Tournament
Wednesday, May 25
Angus Glen Golf Club, Markham, Ontario

Night at the Races
Wednesday, June 15
Woodbine Racetrack, Toronto, Ontario

Industry Memorial Golf Classic
Tuesday, September 27
Blue Springs Golf Club, Acton, Ontario

To register for all events visit our website at www.chhma.ca or call Pam Winter at (416) 282-0022 Ext. 21

CHHMA Cost Savings Links
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"Eye On Our Industry" is published by the CHHMA as an information resource for our members. Member input regarding content and format is welcomed. Please contact Michael Jorgenson by email: mjorgenson@chhma.ca or call (416) 282-0022, ext. 34.

 

 

Canadian Hardware & Housewares Manufacturers Association | 1335 Morningside Ave., Suite 101, Scarborough, ON M1B 5M4
Telephone: (416) 282-0022   Email: pwinter@chhma.ca