The Gazette from Montreal, Quebec, Canada • 49

TSE 5173.88 12.82 LONDON (106f 3905.70 2.00 TOKYO 20910.27 26.53 INSIDE Careers F3 Computers F4 GOLD (n.y.) 3:33.75 73.58 $389.30 500 73.CS 0.12 THE GAZETTE WEDNESDAY, AUGUST 28, 1996 i eeoMifltf? Hot for bio taiEcs Keep tabs on your stocks with The Gazette's Stock Quote Hotline. Call 555-1234, code 3500. Each call costs 50 cents. Scotiabank, Bank of Montreal see double-digit profit growth SANDRA RUBIN CANADIAN PRESS Seniors hurt by decline in interest rates Their GICs bring in less BRAD EVENS0N SOUTHAM NEWSPAPERS Caribbean, Asia in all areas we're doing well." Profits for the first nine months of 1996 were $786 million, up 22 per cent from last year and a sure bet to better last year's record of $876 million. Chisholm said of the $4 billion in gross revenue so far in 1996, just $121 million comes from fees and that's before taxes and operating costs.

But not everyone was impressed by the banks' defence. "They're still charging 18 per cent on the unpaid balance on your credit card," said Tom Delaney, a spokesman for the Consumers Association of Canada. "That's usury. He added, "They attribute their profit gains to sources other than the Canadian consumer. But they don't provide a detailed breakdown.

And that's what we really need." ADDITIONAL REPORTING: BLOOMBERG BUSINESS NEWS business from mortgages and loans to new businesses. "We're still seeing very good perfor-, mance from our focus on small business," said Barbera. "And mortgage business is up substantially, which reflects the growth in the real-estate market that's occurring thanks to low interest rates." For its part, Scotiabank said it made a $275-million profit in the third quarter, an increase of $50 million or 22 per cent from the same period a year ago. That's what analysts had been expecting. "We're very pleased," said Scotiabank vice-chairman Robert Chisholm.

"The increase was extremely widespread. "Basically all areas of the bank are performing very well and on target: domestically, internationally, our corporate banking, U.S. operations, the And those earnings were stronger than expected. The bank made a $300-million profit in the three months ended July 31, up $36 million or 14 per cent from thesame period last year. The est profit was about 10 per cent better than analysts had forecast About $20 million of the profit came from fees, Barbera said.

Profits for the first nine months of 1996 were $877 million 22 per cent higher than last year and closing in fast on the record $986 million the bank made for all of 1995. Barbera credited stepped-up international operations, with 45 per cent of profits so far this year coming from outside the country. But things were also looking good here at home. Brokerage unit Nesbitt Burns was again a star performer, while lower interest rates helped boost all kinds of TORONTO Canada's big banks continue on pace to shatter last year's record earnings. Both the Bank of Montreal and the Bank of Nova Scotia reported third-quarter profits yesterday that were sharply higher than in 1995.

The banks were quick to say the money's not being made on the backs of regular Canadian customers. "Unfortunately, there is a perception that service charges fuel the banks' profits," said Bank of Montreal spokesman Joe Barbera. "But in our case it's really international business and large corporate investment banking, those are the things that are fueling earnings. "Not the service charges that Canadians pay." OTTAWA Shirley Cameron, 66, thought she'd be comfortable when she retired in 1990. She had worked for 25 years, inherited her husband's estate and sold her house in Toronto.

But like many seniors, she keeps her money in guaranteed-investment certificates, which are fixed to interest rates. They earned 15 per cent a year when she retired. Today, GICs have plummeted to 3.25 per cent a year. "It means you've got a hell of a lot less to spend," Cameron said. Investment income for seniors has fallen precipitously in recent years, mostly because of declining interest rates, forcing them to depend more heavily on government pensions.

A low interest rate "may be good for someone starting out, who wants to buy a house, but it's a bum on seniors," said Cameron, who now lives in a Toronto seniors' building. Investments tail off A Statistics Canada report released yesterday says investment income for husband-wife families with a spouse 1 20-screen theatre to be Cineplex' French 'flagship MARY LAMEY THE GAZETTE earn wJiH aged 65 and older fell to 12 per cent of total income in 1994. That's down two percentage points from 1993 and a sharp drop from 1990, when 26 per cent of total income came from investments. r' The numbers reflect a sharp division in the way society enjoys the benefits of affluence. Despite a healthy stock market, which has generated strong returns for investors since 1990, many seniors have not received a significant share.

They generally opt for conservative investments, like GICs and government bonds, with returns declining in lockstep with the Bank of Canada rate. Nonetheless, the median income for senior families, despite the drop in interest rates, rose by 1 per cent in 1994 to $32,700, reflecting the fact more seniors continue to work and earn income than in previous years. The median income for senior families ranged from $23,200 in Newfoundland to $37,800 in the Yukon. Quebec came in at $29,100. Sherbrooke's the worst Among metropolises, Ottawa-Car-leton had the highest median income at $50,900, followed by Victoria with $41,900.

Sherbrooke had the lowest at $27,700. Montreal's median was $39,400, up from $39,190 a year earlier. In 1994, seniors depended on pensions as their major source of income, which made up 54 per cent of what they received. Government pensions made up 60 per cent of this amount while 40 per cent came from private pensions. Much of the remainder of their income comes from employment.

Dependence on government funds grows with age. Seniors aged 75 and older relied on pensions for 66 per cent of their total incomes. Seniors also turned to their registered retirement savings plans for additional funds. People aged 65 and older took an average $5,514 from their plans in 1994, excluding the regular annuities that come from converting these plans to retirement income funds (RIFs). SOUTHAM NEWS Montreal's vibrant but slightly seedy Latin Quarter will undergo a facelift when Cineplex Odeon in conjunction with Compagnie France Film begins construction of a 20-screen megaplex in the coming weeks.

The theatre will be built on a lot on the south side of Emory St. between St. Denis St. and Sanguinet St. and around the corner from the Theatre St.

Denis, owned and operated by France Film. The project will involve a $25-million investment and is expected to create 100 permanent full-time and part-time jobs. Construction is to begin this fall for completion by the end of 1997. The complex will include 11 auditorium-type theatres with curved screens and stadium-style seating. It will also house boutiques, restaurants and a "Cinescape" multimedia centre featuring electronic and video games and animated video attractions.

An underground parking garage to accommodate 200 vehicles is also planned. The entertainment complex will replace Cineplex Odeon's five-screen Berri theatre at St. Denis and Ste. Catherine streets and become "the flagship for the French-speaking market," said Allen Karp, Cineplex Odeon's president and chief executive officer. The Berri theatre will become a discount movie house, showing sec-ond-run films.

France Film will own the site, which Cineplex will lease for a 20-year period, with renewal options. The cinemas are to cater to the "sophisticated" tastes of Quebec moviegoers, showing local, Hollywood and international films. In June, Cineplex Odeon announced an ambitious three-year expansion and refurbishment push, which will see it add 500 screens to its current net lit a. sawwww .1 7, i Tin fit If Illfili-llhiM! t- I i--r'-t ABOVE: PIERRE OBENDRAUF. GAZETTE: BELOW: ARTISTS' DRAWING Construction of the theatre is to start this fall at the site above.

When it's completed around late 1997, it should look like the rendering at right. work of 1,461 screens in 312 Canadian and U.S. locations. For 10 years, France Film has been talking about developing an entertainment complex in the neighborhood as notable for the number and persistence of its panhandlers and drug dealers as it is for its restaurants and night clubs. Yesterday's announcement came rwo weeks after city council approved a zoning change to allow the redevelopment of the Forum.

Canderel Properties Ltd. has signed an agreement with the Club de Hockey Canadien to purchase the venue and turn it into a multi-purpose entertainment centre with 30 movie screens, restaurants, retail stores and virtual-reality games. Canderel says it is close to signing a deal with AMC Entertainment a Kansas City, movie-theatre chain, to develop the site. The administration of Mayor Pierre Bourque strongly (of downtown) we'll be addressing what is state-of-the-art. We will be building theatres in that part of the market, but I can't give details," he said, adding that the company is "discussing the Forum and other opportunities." But a Canderel spokesman said negotiations with AMC are at an advanced stage.

"We are right on the verge of signing with AMC. That would be the flagship signing for us. A lot of other signings are contingent upon completing that deal," said Leslie Quinton, Canderel's director of communications. I. backs the Forum megaplex deal, which it views as a first step towards revitalizing the downtrodden stretch of Ste.

Catherine St. between Guy St. and At-water Ave. Asked whether Cineplex has discussed its competing plan with the mayor, Karp answered dryly, "I don't think he runs theatres, does he?" But Karp hinted that Cineplex might still be eyeing the Forum itself. He acknowledged that the company's aging Atwater and Centreville theatres "do not represent what Cineplex builds today." "We anticipate that on the west side Contrary to forecasts, Canada's manufacturers grow stronger "So we said: 'Why don't we do a fact-based study and see what's going Since 1992, manufacturers' shipments have increased from $286 billion to $390 billion and their share of gross domestic product has climbed from 18.6 per cent to 20 per cent This partly reflects a weak machinery and transportation equipment, have enjoyed "double-digit growth in new investment The bad news is that employment and productivity haven't kept pace.

New investment has been made to improve operating efficiency but the Deloitte study found the productivity of Canadian PETER HADEKEL After experiencing two bitter recessions in the last 15 years, the Canadian manufacturing industry was supposed to be dead and buried by now. Indeed, until a few years ago, the notion that we could actually be good at making things was widely dismissed in this country. The future of manufacturing clearly belonged to hard-working Asians and underpaid Mexicans while complacent and uncompetitive Canadians would be left with McJobs in the service sector. Well, it turns out that reports of manufacturing's death were greatly exaggerated. During the 1990s, manufacturing as a percentage of the Canadian economy has increased while investment in the sector has grown faster than in the rest of the economy and employment has re-mainedstable.

1 These are among the findings of a study by consulting firm Deloitte Touche Tohmatsu International that takes a closer look at manufacturing's role in the Canadian economy "So many people were concerned that there was no future for the Canadian manufacturing industry that the service industry was taking over. Working with our clients, we didn't have that feeling," said Deloitte consultant Jean-Pierre Naud. Nevertheless, it's simplistic to argue that manufacturing capital will always seek the lowest: cost destination. If that were true, Mexico would be a world leader in making telecommunications equipment -VZ Instead, Canada is. We have a skilled and computer-literate work force, perhaps even more so than in the U.S., with some 48 per cent of employed Canadians using computers, compared to 43 per cent in the U.S.

Naud is relatively confident about the future of manufacturing in this country, noting that the service sector seems to have peaked in terms of its own growth rate. However, he concedes that some of the recent gains in manufacturing have come on the back of a devalued currency. Too many manufacturers are not productive enough to withstand an upward move in the Canadian dollar. It's also time for Canadian manufacturers to grow their businesses, rather than continuing to focus on restructuring and lowering costs, he argues. One obvious place to try is by selling to emerging markets, which offer more growth po-tential than our traditional mainstay, the United States.

manufacturers lagging behind all other Group of Seven economies except Britain. For example, productivity in the Canadian automotive industry once surpassed that in the U.S. but since 1994, it's begun to drop back. A U.S. autoworker now produces an average of 3.37 vehicles per year compared with 3.2 by a Canadian worker.

The other source of concern is the amount of investment by Canadian-based manufacturers being made outside the country. Over the last dozen Canadian dollar but also il- lustrates the big push by Canadian companies into export markets. And it points up an interesting trend. The manufacturing industries that died during the last two recessions have hot been resurrected! Instead, we've seen growth coming from several of the so-called New Economy sectors including aerospace, pharmaceuticals andcomputer hard- ware. A very encouraging sign is the amount of new investment pouring into manufacturing facilities.

Since 1993, this has been growing by 6.5 per years, outbound investment by manufacturers has grown faster than inbound investment, which cent a year, compared to an average of 1.8 percent for the economy as a whole. Some sectors, such as is not the kind of trend you'd want to continue..