The Gazette from Montreal, Quebec, Canada • 41

Business ME T8E 1682.SS 3135. OS MMT up il DOW aOLD DOLLAR 2535.4 S384.9B 85.72 DOWN 4.85 JPH.8 UP 0 08 I I Computers D6 Sports DU vim 1 II Canadian stocks climb Wane sefflemeiDts reac Canadian stocks followed Monday's strong advance with modest gains. In New York, more bluster 0-year high about war in the Gult drove oil prices higher, dampen ing interest in stocks. PAGE D3 ERIC BEAUCHESNE SOUTHAM NEWS OTTAWA Despite the plunge into a recession and rising unemployment, unionized workers are winning the big gest wage M.llltnieiib in tight ycais, La TSE eliminates S2 jobs bor Canada reported yesterday. TORONTO The Toronto Stock From July through September, an nual wage increases resulting from ma Exchange is cutting 92 staff posi jor settlements averaged 6.5 per cent, tions and reducing expenses by more than a mil percentage point higher area plunged by 38 per cent to 256 units from 4 1 3 a year earlier.

Starts of condominiums and single family homes on the Island of Montreal took the biggest beating, dropping by about 80 per cent and 50 per rent re spcctively. Only starts of apartment buildings, many of them for public housing, strengthened in October over a year earlier. Housing starts in Quebec did improve from September to October, to a seasonally adjusted 31,000 units in October. The agency said housing starts in Quebec in September were a seasonally adjusted 25,000. But despite the month-ovcr-month increase, CMHC said the October figure was well below the average of 4 1 ,000 housing starts recorded by the province in the first nine months of the year.

A00TI0NAL REPORTING BY THE GAZETTE. CP. DOW JONES who in a speech yesterday in Paris warned again that the bank will not tolerate inflationary wage settlements, dimming the prospects for any quick interest-rate relief. A text of the speech was made available in Ottawa. Referring to increases resulting from the jump in world oil prices, Crow warned "these could easily turn into an inflationary spiral" if they lead to increased wage demands "which in turn feed back into consumer prices, and so on.

Unions have warned that their workers will not meekly swallow expected increases in inflation. Crow has tenaciously pursued a tough policy of squeezing inflationary pressures out of the economy, resulting in high interest rates. Labor Canada figures cover unionized wage settlements involving 500 or more workers. In the July-to-September period, a total of 94 settlements were reached covering 187,000 employees. Figures made public yesterday by Canada Mortgage and Housing Corp.

suggest the recession is continuing to deepen. Construction began on 1 2,222 homes across Canada in October, which translates into an annual seasonally adjusted rate of 143,000 units, down slightly from the 144,000 in September. Starts hit 221,000 units at the crest of the economic boom in October 1989. "We feel the level of starts will decline further in the coming months due to lower consumer confidence and higher inventories of single-housing units in Toronto and Vancouver," CM HC economist Mark Burchinsaw said. The federal agency said housing starts in Quebec slid by 3 7 per cent to 2,590 in October compared with 4,082 starts in October 1989.

Starts in the Montreal $8.5 million to cope with the re than the 5.4 per cent recorded in the previous three months. It was also the greatest wage jump cession, its president said. The exchange, which depends on fees charged on each transaction for since 1982 when wage settlements averaged 7.4 per cent. There one big difference between most of its revenue, has been hurt by a drastic decline in trading this now and 1 982. Eight years ago wage settlements at the end of a recession were on their way down not up.

year, Pearce Bunting said. Fifty-eight positions have already been eliminated through attrition and 34 people received layoff notices this week. The TSE will have The news will not be greeted warmly by Bank of Canada governor John Crow 496 employees after the cuts. The value of shares traded each day has dropped to an average of $261 million from $335 million last Eaton Centre opens today 130 of possible 230 stores are ready year and $396 million in 1987, Bunting said. Spending on research to grow OTTAWA Despite the recession, Canadian busi nesses plan to increase spending on research and development by 6.9 per cent in 1991, the Conference I 3 iTfThB i Wit Lmw SHEILA McGOVERN THE GAZETTE Board of Canada said.

A board report, based on a survey returned by 184 companies, found companies believe that research and development is a necessity The last-minute scramble was evident from afar. Pedestrians scurrying along St. Catherine St. yesterday afternoon were greet that can be cut even in an economic downturn. The Conference Board said the 6.9-per-cent increase in spending is up from 6.7 per cent projected in last year's survey despite fears about the shape of the economy.

Ford names 1st woman to board 1 I jPrx i iMfJ OAKVILLE, Ont. Ford Motor r.n nf Panada I trf annnimrprl Marie-Josee Drouin has been T'1 XL. 1 namea to me company Doara. She is the first woman director in the company's 86-year history. Drouin is executive director of the Montreal-based Hudson Institute of Canada Inc.

She is an economist trance is the result of construction work on a tunnel being burrowed to Place Ville Marie. Mall manager Pierre Cousineau said it should be completed in nine to 10 months. It was the location, two-storey-high windows and a street-level entrance that lured Dalmy's back to St. Catherine St. after an absence of more than 20 years.

The company a nation-wide retailer of women's and children's clothing began on St. Catherine St. in 1939. So it has decided to turn this new store into a showpiece, and has incorporated one-of-a-kind fixtures and works of art into its displays. The store is also a prototype of Dalmy's new approach to marketing.

It has incorporated three of its companies Dalmy's, Dalmy's Kids and Antels, which caters to larger sizes into one large store on two levels with its own internal staircase and elevator. Cactus, the company's higher-priced clothing chain, is located next door. Patricia Quill, the company's advertising director, acknowledged these are not the best of times to open new stores. Martin Kaufman, a retail analyst for Nesbitt Thomson figures stores going into the centre will face at least a year of tough times. And they won't be the only ones suffering, he said, "there's no doubt this will cannibalize sales done at other retailers" such as Place Montreal Trust and Place de la Montreal consumers don't need any more stores, he said, and with all the building that's gone on in the past few years "there is going to be a glut of floor space well into the next century." ed with the disconcerting sight of half a hoofed animal suspended from a crane.

But as one drew closer one could readily spot resting gently on the ground a head with a distinctive red nose. Workmen buzzed about the crane and the creature. And one could finally believe that by this morning Rudolph would be whole, safely perched atop Montreal's own Eaton Centre, and the long-touted shopping mall would open. It's about 1 Vi years opening its doors on to a street already crowded with competitors. And the economy is in a tailspin, knocking the wind out of retail sales.

But the Eaton Centre has arrived. It has a prime location next door to the main Eaton store on one of downtown's busiest blocks. And it's spiffy. It's interior is highlighted by a spiralling atrium ceiling that allows daylight to flood through all five floors. The centre is capable of holding 230 stores, but only 130 will open at 9:30 a.m.

today. Another 40 will open within the next few weeks, but 60 have yet to be leased. The centre can be entered at street level on all sides. It is also directly connected with the McGill Eaton and Place Montreal Trust. And that big hole in the ground in front of the main St.

Catherine St. en specializing in public-policy analysis and strategic planning. Drouin was also recently appointed to the dispute-settlement panel established under the free-trade agreement. Ford also announced that James O'Connor, who became president and chief operating officer on Oct. 1 was named a director.

Creeds in voluntary bankruptcy IU i iii 1 1 hi ii win im mi. fa teivM M. i rf fill fjMkiiHWl: it i TORONTO Creeds a Toronto fashion retailer catering to the carriage trade, has filed a petition for voluntary bankruptcy, president and chief executive officer Tom Creed said. The company is taking the initiative on the bankruptcy "so as to stay open for the next 90 days," Creed said. In the meantime, "we have a corporation willing to invest in Creeds.

It is conditional on our success in restructuring," he said. Creed said he needs $4 million to discharge past debts and to pay for spring merchandise already ordered. Daylight floods five floors of stores. A tunnel will join mall with Place Ville Marie. Some investment professionals are using the D-word In polite and civilized company, few people dare to mention the possibility that the recession of 1990 PETER HADEKEL Midland VValwyn chairman quits TORONTO The chairman of Midland Walwyn Canada's largest retail brokerage house, has resigned less than six months after the company was formed in a merger.

The company said yesterday in a brief statement that Anthony Arrell has resigned but offered no reason for his departure. Industry sources quoted by the Toronto Globe and Mail said Arrell was forced out of the firm because of its continuing losses. However, the Toronto Star quoted an unnamed source as saying it was the result of a personality clash between Arrell and president Tim Miller. ICI plant to triple paint output ICI Canada Inc. will triple production capacity at a plant in Boucherville that manufactures Glidden and CIL-Dulux paints.

The company said the $3-million expansion will create about 15 jobs during the next three months. Most of the investment covers new machinery, and additional equipment is being transferred from a Toronto-area plant that closed in late September. The South Shore plant will reach annual capacity of 3 million gallons. ICI ranks as Canada's leading paint maker with sales of about $200 worthy and banks are unable to assume any additional risk. The result is that when the central banks try to kick- start the system with lower interest rates and easy money, nothing happens.

It's the financial equivalent of pushing on a string. This, of course, is a nightmare scenario, and it's not shared by everyone, even among pessimists. "A lot of people make parallels with 1929-30, but I don't think they hold," says Tony Boeckh, editor of the Bank Credit Analyst, a widely followed economic newsletter. Back in the Depression era, banks were allowed to go belly up and depositors lost all their savings. "But there's no way central banks would allow that today," he says.

Yet Boeckh concedes it won't be easy to emerge from this recession. "It's not as simple as having two or three bad quarters and then letting the central bank step on the gas." Instead, we're likely to see the econ- -omy limp along for three or four years, he says. Investment dealer DIouhy believes things will get a lot worse in Canada before they get better. The explosion of public debt and the inability of governments to get the deficit under control mean "it's too late" to avoid painful medicine. DIouhy says it's entirely possible that Canadian government debt may be put on a credit-watch and that the International Monetary Fund will have to be called in to impose tough financial discipline on the country.

The other alternatives are too horrible to contemplate, he adds. could become an honest-to-goodness depression. The thought is, well, too depressing. Most economists continue to argue that the contraction we're now experiencing will not be as bad as the one in 1981-82. But there are some investment professionals who are starting to utter the D-word.

One of them is Dominik DIouhy, a veteran Montreal investment dealer and former chairman of the Montreal Exchange who now runs his own firm, DIouhy Investments Inc. He's been telling clients that the risk of a depression, or at least a severe deflation, is growing in North America because of the colossal debt piled up by governments, corporations and consumers. He says deflation, or falling prices, is now affecting financial assets such as stocks and bonds; real estate and many commodities. DIouhy believe U.S. and Canadian stock prices will fall a further 50 per cent before it's all over and the currencies of both countries will come under attack.

He's advising clients to put their liquid assets into strong currencies such as the German mark and the Swiss franc. DIouhy is not the only market pro issuing warnings of a collapse in asset values. Another is William Tehan, a well-known New York money manager, who has been pushing gold as a safe haven. Analyst Ray Dalio of Bridgwater Associates, quoted in a recent issue of the U.S. weekly Barron's, also argues that "using the word recession to describe what is unfolding is misleading." We're in for something completely different from the seven recessions experienced since the end of World War II, Dalio says.

"A depression isn't just a very severe version of a recession; it is an entirely different process." Recessions occur when the central bank raises interest rates, usually to fight inflation. They come to an end once rates are lowered. But a depression is "a self-feeding contraction, brought about by incomes falling faster than costs." As corporations fail to meet their debt burdens, they lay off workers or cut their wages. This falling income means that consumer spending collapses, producing a further contraction and leading to a downward spiral. The debt burden in the economy cannot be serviced, which in turn leads to bank failures.

Lending becomes next to impossible because few businesses are credit If you miss you may -4 C2UL, where Economic Reports TnVTT TIT The news jou neel lo know crcr put your Oil -1L JMIKJ.