The Ottawa Citizen from Ottawa, Ontario, Canada • 35

'y p't 'i 3 QEI 9 OQ C3 0 Pages B11-B20 Stocks Noticeboard THE OTTAWA CITIZEN THURSDAY; AUGUST 20. 1987 B11 eceiver ship kill ho pe TCfv bell's of Camp recovery By Don Butler Citizen staff writer 0 j1 "There was some concern about their position and they had to get a lot of legal opinions to decide how they should proceed." Campbell said the firm's employees, who were laid off about three weeks ago, should be able to recover their vacation pay. "About the worst that will happen is that they may miss out on their last two weeks' pay," he said. Campbell said his plans are uncertain, but held out little hope that he will be able to start over again. "Everything that I had was put back into the business," he said, adding that he might have to file for personal bankruptcy.

"I'm broke now." At its peak, Campbell employed 430 workers and dominated the local printing market. But an ill-timed expansion to Toronto six years ago started the financial problems that eventually led to the company's demise. The firm closed its doors nearly three weeks ago when its landlords served notices of eviction for unpaid rent and Quebec Hydro cut off power to Campbell's plant in Hull. Until recently, Keith Campbell had not been involved in the day-to-day management of the com-' pany, though he was chairman of the board and ran the firm's Quick Print division. But he was forced to take over as president when the company's top executives and board of directors resigned several weeks ago.

After teetering on the brink for a week, K. G. Campbell Corp. finally fell into receivership Wednesday. With it went the jobs of about 200 employees and any hope that the firm that once dominated the local commercial printing market will ever open for business again.

"We are now in receivership," Keith Campbell, the firm's founder and recently appointed president, told the Citizen late Wednesday. The firm of Clarkson Gordon is the receiver. Campbell said there is now no chance that the company he formed 25 years ago can escape bankruptcy. "There's no hope of selling the company out of receivership," he said. "It's too far gone.

The receiver will sell off the assets and pay the creditors whatever can be paid." Campbell said the firm was put into receivership by its biggest creditor, Roynat which makes long-term loans to businesses for the purchase of fixed assets such as equipment. "They have first charge on the lion's share of the company's fixed assets," he said. Campbell had expected Roynat to trigger the receivership a week ago, but said the jurisdictional complexity of the company's situation it operates in Ontario and Quebec posed problems. Chris Mikula, Citizen Alan Schwartz, left, and Tom Lamb in new store at Bayshore mall Steinberg banking on store being phoenix for Miracle Mart Competitors eye $25M trade By Kathryn May Citizen staff writer By Karen Benzing Citizen staff writer The collapse of printing giant K. G.

Campbell Corp. has put $25 million worth of business up for grabs, and its competitors are scrambling for a piece of the action. But printers and their suppliers say a large portion of Campbell's business could leave the local market. Campbell did a lot of printing for the federal government and those contracts will be tendered to printers across the country. The firm also had many clients outside of the region, and that trade likely won't be picked up locally either, said one major printer.

At least three new companies have sprung up under former Campbell employees. But none is feeding off the spoils like the former 10-man operation of Sales Data Systems. In five months, the company has invested more than -mil reau, specializing in data and word processing. The firm is based at 200 Catherine Street with its production centre nearby at 141 Catherine. Hurrle said the biggest blow from Campbell's fall is the industry's loss of lucrative government contracts.

Once word spread about Campbell's problems, Hurrle said the government began doing a lot of its laser printing in-house, taking the printing of two million pages a month out of the market. Industry spokesmen say they expect most ex-Campbell employees, especially the skilled tradesmen, production and sales staff, will find jobs. Many had already quit the firm to find other jobs before Campbell shut down its operations several weeks ago. One industry source said the printing market is fiercely competitive and Campbell's demise will help stabilize the volatile pricing of the past several years. "It will have a positive impact on the market because prices will stabilize and the work Campbell did will have to go somewhere and local printers will all be getting some of it," one salesman said.

"It's really unfortunate but the fall of K.G. Campbell Corp. is the best thing that could have happened to us," said vice-president Jeff Hurrle. Hurrle admits each move in the firm's expansion carefully tracked the slow sinking of Campbell fortunes. Company executives had long toyed with the idea of moving into laser printing, but didn't want to risk the high start-up costs, especially with Campbell in the market.

When rumors of Campbell's troubles began circulating in the industry more than a year ago, Sales Data Systems started hatching its expansions plans. It put them into place in the spring, when all signs pointed to Campbell's collapse. The new division is eyeing the $6-million local laser printing market, which Hurrle says was all but controlled by Campbell's laser and direct mail operations. It has bought the state-of-the-art equipment so it can handle any job. Hurrle estimates the company can easily boost sales by 300 per cent over the next two years.

Sales Data Systems, owned by John Belanger, opened 11 years ago as a computer service bu "Miracle Mart has not been profitable to the corporation. If we didn't do something drastic, it's probably a matter of time before (Steinberg) would have closed it down," he said. stores are emphasizing medium-priced fashions, shoes and accessories at the expense of such hard goods as toys, sporting goods and housewares. While Miracle Mart stores devoted about 60 per cent of retail space to hard goods and the rest to fashions, stores have reversed the ratio. In addition, the assortment of hard goods has been chopped by 90 per cent to about 1,600 of the top selling brands.

"In hard goods it's tough to make a buck, most of the items don't sell," said Schwartz. "We don't want items gathering dust on the shelves." Along with the merchandising shift, the chain has introduced a catalogue starting with the fall edition. A Christmas edition will be out later. The changes appear to be paying off in stores that were converted last year. Schwartz said hard goods inventory, which bad been turning over on average twice a year, is now turning over six times.

However, the shift to apparel could place Miracle Mart Inc. on the same rough road as major and junior department stores, which experienced sluggish sales and swelling inventories in the first half of the year. According to Statistics Canada, department store sales inched up 1.4 per cent to $5.46 billion in the first six months. When inflation is taken into account, sales actually dropped by two per cent. Department store chains with outlets in the west suffered the most because the western economy is still depressed.

Miracle Mart stores in Nepean, Hull and other Quebec centres opened Wednesday as stores, a new merchandising concept the Montreal-based retailer hopes will increase market share and return the 20-store chain to profitability. The conversion of 11 Miracle Mart stores, including eight in Quebec and three locally, marks the final phase of a upgrade that started two years ago. Renovations to nine other stores were completed earlier. Last year, Miracle Mart a money-losing subsidiary of Steinberg closed 11 stores and its Montreal warehouse. Alan Schwartz, a Miracle Mart vice-president, said the company spent about $525,000 on minor renovations in the local stores, such as painting, changing the layout of aisles and counters and installing new shelving and lighting.

New staff members are also being hired to increase customer service. Tom Lamb, manager of the Bayshore store, is looking for between 10 and 20 people, mostly to work part time. The store has a staff of about 65 full-time and part-time employees. Within the next 18 months, a further 17.5 million will be spent on major renovations to eight stores, including the three local outlets in the Bayshore Shopping Centre, Galeries de Hull and on Merivale Road. Schwartz said the company wanted to convert the whole chain to stores as quickly as possible and so didn't spend the time or money on major changes in every location.

lion to set up Laser Direct, a new laser printing and direct mail division, to fill the void left by Campbell. It also has more than quadrupled its staff, mostly hiring ex-Campbell employees. And the firm is still hiring. Bank share values tumble as TD raises Third World loan reserves by $736M been falling since Mackenzie's announcement Monday. TD banks shares closed at $30 down Vi for the day and Vi since Friday's close.

Bank analysts say the market has reacted badly out of a fear that the banks will make up for the loss of capital caused by the increased provisions by issuing new stock. institutions, announced that Canada's top six banks had agreed that the banks would raise their provisions against their Third World debt to anywhere from 30 to 40 per cent of their loans. Previously, the banks had set aside provisions equalling about 15 per cent of their outstanding debt. The Canadian banks were following moves made earlier this year by other international banks with large Third World loans. Citicorp, the largest U.S.

lender, set aside 20 per cent of its loans but some European banks have reserves of as much as 40 per cent of their outstanding loans. The stock market responded to Citicorp's surprise move in May by bumping up its stock price $10 to $67 U.S. But in Canada bank share prices have cent of its total loans outstanding to 34 Third World debtors, including Mexico, Brazil and Argentina. Late Tuesday, after the stock market closed, the Bank of Montreal said it was setting aside an additional $753 million to bring its provisions up to 35 per cent of its outstanding Third World debt. Earlier this week Michael Mackenzie, the federal superintendent of financial Honey and Markets OECD's report something to write home about TSE DOW 2,677.14 11.32 4,040.00 23.10 7 I yf John Ferguson aJ Southam News VSE ME I TORONTO (CP) The Toronto-Dominion Bank on Wednesday became the second Canadian bank to announce a massive increase in its reserves against loans to Third World countries.

However, contrary to expectations, the stock market reacted negatively to the move. The TD announced it is setting aside an additional $736 million in special reserves, bringing its reserves to 40 per Leigh wraps up banner fiscal year By Karen Benzing Citizen staff writer Sales of navigational aids, avionics and communications systems boosted Leigh Instruments annual revenue 37 per cent to $52.7 million in the fiscal year ended June 30, the Ottawa aerospace firm reported Wednesday. Profits before extraordinary items were $4.8 million, more than double the $2 million recorded in the last fiscal year. Per share earnings were 31 cents, compared with 17 cents. Including a one-time gain of $1.4 million in tax losses carried forward, profits were $6.2 million (44 cents a share), up 50 per cent from the comparable figure of $4.1 million (37 cents a share) last year.

The company attributed the growth to improved sales in all segments except the highly competitive components part of Leigh's business. However, Leigh president Barry Flower said today that components don't contribute significantly to the company's revenue. Flower said sales accounted for only about $4 million of the $52-million in revenue and fell by only about $300,000 in the fiscal year just ended Based on orders received part way through the first quarter, which ends in September, revenue should continue to grow, although not at the same pace, he said. Flower forecast about $65 million in revenue for this fiscal year, an increase of 23 per cent over last year. "Last year's revenue growth was an exciting gain for defence electronics.

This year will be a good gain for defence electronics," he said. He expects Leigh's performance to be on par with others in the avionics indus- try. 1,909.04 10.39 2,014.31 9.37 sap DOLLAR ports to the booming U.S. Next came a phase of domestic expansion where exports became relatively less important and newly-confident consumers started spending and led the way. Now the latest survey of investment intentions suggests that finally business investment is about to become the engine driving economic expansion.

The spring survey indicates spending will be up by more than 11 per cent this year, compared to a five per cent increase a year earlier, mainly because of a dramatic improvement in business confidence. Energy prices seem to be settling higher than most oil companies had forecast, meaning that profits will be up and so will exploration and development. And stronger prices for commodities should mean a healthier outlook for the mining sector, which will benefit Northern Ontario, Quebec and the West, with their large mineral base. The main threat lies outside our borders. If Japan, West Germany and the United States can't get (heir trade balances more in line, for example, we could see a sharp decline in the value of the dollar.

And that could force the U.S. Federal Reserve to jack up interest rates to defend it, which would drive up rates here. A blowup in the Middle East could put oil prices on a rocket again Both these scenarios are a recipe for world recession, meaning an end to the gradual headway we've been making against unemployment and the federal spending deficit. But so far the world is muddling through. And we're along for the ride.

Like slipping into a warm bath, reading the international report card on Canada's economy this year can soothe away all your cares. Continued growth including a better balance across the country lower inflation, stronger business profits and healthy business investment they're all there in the annual review and forecast by the Paris-based Organization for Economic Co-operation and Development (OECD). Officials at the Finance Department this week were grinning ear-to-ear as they talked about the report, the kind most kids would be happy to bring home. Inflation: "performance is expected to improve somewhat and the rate of price increase is expected to fall below that in the United States." Deficit reduction: "broadly on track." Interest rates: "projected to remain essentially flat over the forecast period." Cost competitiveness: "has improved considerably over the last few years." It follows an even more timely Quarterly Report issued by the Finance Department a few days earlier that was jammed with more rosy figures. Just a few snippets from the Table of Contents will convey the drift: "Very robust growth in final domestic demand" in the first quarter.

"Housing starts in the first quarter were at a uine-year high." "Growth in business investment has strengthened markedly in response to improved business conditions." "Consumer expenditure strengthened in the first quarter." 329.83 0.59 75.43 U.S. 0.09 SILVER GOLD And if that isn't enough evidence that the economy is on a roll, there's that stock market bull that just keeps on running, so far defying all those who have predicted an end to the good times. With nearly five years of recovery under our belts, the odds are increasing that one of these days the doom gloom-ers are going to be right. But on the other hand, there are plenty of forecasters who think that the so-called "sluggish growth" the world has been experiencing for the last few years is the kind of growth that could be sustained for a lot longer. In other words, we could be into a period of growth like the 1961-69 expansion.

That could mean no recession for another three or four years. Finance Department economists, who generally take a brighter view of the future (at least publicly) than their private sector colleagues, believe lots of signs point to that happening. They argue that strong growth in the first half of this year, following little growth in the last half of 1987, suggests that rather than showing signs of age, we're simply into a new phase of the growth cycle. In 1983-84, during the first two years of the recovery, our strong growth was fueled largely by exports, primarily ex I iS. $457.40 U.S.

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