The Gazette from Montreal, Quebec, Canada • 49

k. TSE lsp7S3i iipvpl THEY 4. ik. CLOSED I I 1 I 1796.45 3403.98 UP 11.79 UP 16.05 DOW GOLD DOLLAR INSIDE Horoscope, E7 ioi loi io 3413.21 UP 16.33 $337.60 UP $1.35 83.09 DOWN 0.02 be shut: analvsl Stocks make modest gains 'Stock markets in North America rose yesterday in moderate trading. The markets were" down most of the session before staging a late rally, said John Ing, president of Maison Placements Canada.

The U.S. National Association of Purchasing Management reported a sizable jump in its monthly index of business. PAGE E4 No buyers for Steinberg's money-losing department-store chain, insiders say CRAIG TOOMEY THE GAZETTE million to the Caisse de Depot et Placement du Quebec. Steinberg's co-ordinator, Paul Bertrand of Samson Belair Deloitte Touche, wasn't available for comment. Steinberg spokesman Marcel Knecht suggested that the bankruptcy-protection filing not only ensures the previously announced sale of Steinberg's supermarkets will go through unhindered, it also buys the company time to find solutions for its other assets.

However, he insisted it's too early to say whether these will be "liquidated." Steinberg's remaining assets include 16 Quebec supermarkets not being picked up in the $275-million sale to Quebec's three major food chains. In addition to the Stores, it also owns the Valdi food network in Ontario and Quebec, and Smitty's Super Valu, a supermarket chain in Arizona. Knecht acknowledged that the Store chain "is not a viable company" and said a decision about its future will be made very soon. He added that Steinberg is the chain's largest creditor, owed $20 million. Steinberg is also expected to look for buyers for its Smitty's and Valdi subsidiaries.

But it won't be easy. Smitty's, which has never been a contributor to the company's bottom line, has been on and off the market several times in recent years, while Valdi is smarting from a price war in Ontario. Knecht said Steinberg "has no immediate solutions" for its orphaned supermarkets in Quebec but said three options include closing, selling or converting them to other uses. The stores account for many of the 800 jobs not being guaranteed in the sale of Steinberg's Quebec food operations. Knecht said Steinberg handed over 10 of its stores to Provigo and MStro yesterday and expects to sell 30 more in the next two weeks.

The federal government's competition watchdog issued a statement saying he wouldn't oppose yesterday's sales but reserved judgment on the entire transaction. Knecht said Steinberg sought protection under the Companies' Creditors Arrangement Act to prevent any unhappy creditors from throwing a wrench into the carefully planned transfer. "We do not want any unexpected angle to sort of materialize," he said. "We want to have complete peace of mind." At least one Steinberg creditor went to court in recent weeks seeking to push it into bankruptcy before quickly being paid off and Knecht acknowledged others have balked at supplying the company. "Now we're back in business," he said, noting the court protection obliges suppliers to honor any contracts they have with Steinberg stores.

Hudon et Deaudelin, a unit of Os-hawa Group confirmed that it will buy 25 of the Steinberg stores after they have been transferred to Provigo, for $65 million. It said most are in Montreal and Quebec City. Steinberg decision to obtain court protection from its creditors signals that the supermarket and general-merchandise chain is likely to be completely dismantled. One of the first casualties will be Stores, the 19-storc general-merchandise chain. Industry sources say the money-losing, unionized chain cannot be sold and is likely to be shut down gradually over the next few months.

As Steinberg yesterday started transferring 107 of its 123 supermarkets in Quebec to rivals Provigo Metro-Richelieu Inc. and Hudon et Deaudelin Lt(e, a court-appointed co-ordinator began working on a repayment proposal to be presented to Steinberg creditors by Oct. 23. The company's debts include more than $200 million owed to 14 banks, about $60 million to suppliers and $90 'W mm 1 GATT chief leaves door ajar on farm marketing boards Dunkel sidesteps question on limiting imports mtmmBmmmm STUART LAIDLAW CANADIAN PRESS Nortel lands $1 -billion contract Northern Telecom Ltd. has announced a SI -1 -billion contract, its largest ever, to provide digital office switching equipment to Bell Canada in 1992 and 1993.

"The agreement will accelerate the conversion of Bell Canada's network to fully digital technology," a statement said. Most of the hardware and software involved in the deal will come from Northern Telecom's plant in Brampton, just west of Toronto. Northern Telecom and Bell Canada are both subsidiaries of Montreal-based BCE Inc. Job outlook worsens: Manpower Following a brief period of cautious optimism, employers in the Montreal area have returned to pessimistic work-force projections as they enter the summer season, according to Manpower Temporary Services. For the July-August-September period, 12 per cent of the survey respondents affirm plans to add staff but 27 per cent expect to scale down.

Another 60 per cent of respondents foresee no changes and one per cent are uncertain of coming needs. A slight ray of hope was expressed in the previous three-month period when 12 per cent indicated new hirings and only 15 per cent anticipated cutbacks. First City shareholders okay sale TORONTO Shareholders have approved the sale of First City Trust Co. to North American Life Assurance the company announced. The remaining step in the sale of the country's seventh-largest trust company is final approval from the Court of Queen's Bench in Alberta, where First City Trust is incorporated.

Toronto-based North American Life is buying First City for $51 million, with the Canada Deposit Insurance Corp. and Quebec Insurance Board providing additional loans and guarantees amounting to about $500 million. SR Telecom wins Mexican order SR Telecom Inc. of St. Laurent has been awarded at $13-million contract to provide first-time telephone service to 535 towns and villages in rural Mexico.

The sale is with Telefonos de Mexico SA de CV. Quebec law firms merge Desjardins Ducharme Stein Monast of Montreal and Stein, Monast, Pratte Marseille of Quebec City have merged. The new law firm will be known as Desjardins Ducharme Stein Monast. It is one of the largest law firms in Quebec with more than 110 lawyers. Alcan rating downgraded Dominion Bond Rating Service reduced it ratings on Alcan Aluminium sinking-fund debentures to A (low) from A.

The agency said Mean's cost advantage over competitors has been eroded by low oil and gas prices. It said the aluminum market has been hard hit by the recession. i more than 18 months behind schedule. A subsidy war between the U.S. and Europe has driven clown world gfain prices, severely hurting Canadian wheat, corn and soybean farmers.

Ralph Jespersen. president of the Canadian Federation of Agriculture, said he was encouraged by Dunkel's comments, saying they hold the door open for Canada's marketing-board system to survive under a new GATT deal. To fight for exemption "It's still there," he said after Duntcl's news conference, but added he's not sure what the marketing boards would do if they couldn't limit imports. In Ottawa. Agriculture Minister Bill McKnight said Canada will continue to push for an exemption for its boards.

He said he wasn't disturbed by Dunkel's comments. "Dunkel is a facilitator in the negotiations: it's the individual nations that will decide what they can accept in an agreement." He said he was confident that Canada will win its case because supply-management marketing boards don't distort international trade. But Dunkel said during his speech that domestic-farming policies can "nullify" any actions taken to liberalize world trade. "One country's internal market is part of the world market for other countries." Dunkel said farmers would benefit from a deal through higher produce prices and lower costs for supplies such as fertilizers and farm equipment. The U.S.

is studv ing a plan by the 1 2-member European Community to cut the price paid to grain farmers by 29 per cent. It would compensate them for the loss of income if they take 15 per cent of their land out of production. Dean Kleckner. president of the American I arm Bureau, said the European plan doesn't go far enough to cut subsidies, adding thai U.S. farmers want no subsidies at all.

QUEBEC Canada's marketing boards might have to change under a new GATT deal aimed at liberalizing world trade into the next century, the man who wrote the proposed deal says. "We have to examine very seriously how they function and how they can be changed in order to see how they can cope with the objectives of the package." Arthur Dunkel, secretary-general of the General Agreement on Tariffs and Trade, told a news conference yesterday. Hut Dunkel, a former civil servant from Switzerland, sidestepped questions about whether Canada would be allowed to continue limiting imports under its supply-management system. He has proposed replacing import limits with tariffs that would be reduced by 36 percent over six years. "I don't want to express a view on a mechanism whose functioning is still the subject of exploration in good faith." Canada limits the import of milk, eggs and poultry to protect farmers from foreign competition, and has proposed that it be allowed to continue the practice during current GATT negotiations.

But Dunkel. 60. appeared to disagree with any such exemption during a speech to 300 delegates to the World Farmers Congress meeting in Quebec, saying countries cannot "pick and choose" the policies that suit their domestic needs and reject the rest. 'Domino effect' "One exemption leads to another, and so on. This is the so-called domino effect," he said.

Dunkel's 500-page plan, made public in December, is aimed at ending a deadlock in world trade talks over agriculture subsidies. The logjam has held up the latest round of GATT negotiations, which have eaten through six years and are -i. Yf All K. vXJjZ- CP GATT official Arthur Dunkel speaks at World Farmers Congress in Quebec City. Bell says it will abide by CRTC ruling on long-distance 1 JAN RAVENSBERGEN THE GAZETTE controls the telephone networks in Atlantic Canada and the North.

Neither prospective competitor intends to duplicate Bell's local-telephone networks. Instead, they want to use Bell's local networks, at both ends, to channel calls through long-distance lines not controlled by Bell. Both Unitel and "I just don't think that would be the path to follow," L.R. (Red) Wilson, president and since April I chief executive of Montreal-based BCE added following a luncheon speech to the Canadian Club of Montreal. The Canadian Radio-television and Telecommunications Commission is expected to rule within the next few weeks on applications to offer competing longdistance services submitted by Unitel Communications Inc.

owned by Montreal-based Canadian Pacific and Toronto telecommunications czar Ted Rogers and a smaller consortium. The latter group consists of B.C. Rail Telecommunications and Lightel, a company associated with Call-Net Telecommunications Canada's leading long-distance reseller. Bell's monopoly covers most of Quebec and Ontario. BCE also effectively 301 Even if Bell Canada's most lucrative cash cow its monopoly on long-distance telephone service is cracked wide open by federal regulators, "I don't think we will be appealing to the federal cabinet under any circumstances," the man running Bell's parent company said yesterday.

Clew FmoiCaimm Near the end, Lloyd could read the writing on the wall. PLEASE SEE BELL, PAGE E3 For those clinging to economic lifeboat, good news recovery ship has left port 1 living is for Canadian companies to operate at world-class levels of efficiency and quality. Our performance in export markets, where we must compete on equal terms with the world's best, is a good yardstick of how well we've managed to do this. In March. Canada's exports of merchandise reached a record $12.8 billion.

While this performance wus heavily influenced by the economic upturn in the U.S., a huge market where we sell three-quarters of all our exports, it also reflects something very encouraging about Canadian business. Even while the recession drove bankruptcies sky-high, depressed corporate profits to their lowest level in generations, and made mass layoffs a regular feature in the daily news, it seems Canadian companies were hopeful enough ubout the future to invest heavily in the new machinery and equipment they needed to make themselves more competitive. East year, us the recession hqueced the hardest, such investment expanded steadily, growing by 7 per cent between the end of 1 VW and the end of 1991, calculates the Royal Bank's economics department. I his was at a time when some of the country's manufacturers were complaining bitterly about a monetary policy that was intended to squeeze infla tionary pressures, but made it harder lor them to compete by keeping both interest rates and the Canadian dollar high. That policy, which looked like insanity to a lot of export-oriented business people then, looks pretty good now.

Inflation in Canada is the lowest among all the major industrial nations. It will stay low, giving exporters the ability to win back markets lost during the past decade to U.S. competitors, believe the economists at Wood Gundy, a big Toronto investment bank. Of course, the cost in terms of lost jobs lias been terrible. Hut today there is finally a consensus among leading forecasters that we'll be seeing growth employment by sometime this summer.

I hat in turn will reassure consumers, permitting them to spend vine of the money they've kept aside just in case and stimulating economic growth further. or all its mistakes, the Mulroney povcrnment deserves some credit lor helping make this possible with its efforts to rein in monetary policy and open the economy to competition. Mavbe now that belter tunes arc at hand, it can keep another promise and end the upward spii.il ol federal debt tlt.il si ill threatens to undermine all its economic accomplishments. You need a certain dev il-may-care ftxilhardiness to predict anything g(Xd about Canada's economy, given the history of the past two years. First we had a "soil landing" that was hard.

Now we have a "recovery" that feels more like Recession II. the Never-Ending Story. But what the heck, I'm willing to stick my neck out. After all, there are worse fates than losing 10 pounds of ugly fat. The lifst thing that must be confessed is that while there really is good news, we're not likely to see an immediate rush by economic forecasters to trade in their linir shirts and sackcloth suits on party hats and noise-niakcrs.

That's because it will take more than the long-awaited upturn in the economy to eliminate the country's massive government debt and persistent high unemployment. Still, there's more and more evidence that we have a real, live economic recovery here in Canada. Heller, it looks like the kind of solidly based recovery that promises a long period ol growth and low inflation. Economic statistics are always a couple of months out of date, but as of last I rid.iy, the latest figures indicate thai ula's economy, which actually shrank in December, grew steadily during the first three months of his) ear, JAY BRYAN Perhaps more important, the most recent figures, for i-vh, indicate that this growth was pushed along by booming export sales. I hat's not particularly significant in the short term, because eMrt sales generate a lot less economic activity than do sales to Canadian coiiMimeis.

And consumers, guile rationally, continue to sit on their wallets, hoarding their money while they wait nervously to see if there is a pink slip in their future. Hut the longer run. the strong recovery in exports is enormously significant, because the only way lor the economy to produce more jobs and i rising standard of 1.