Showing posts with label Canada's GDP growth. Show all posts
Showing posts with label Canada's GDP growth. Show all posts

Saturday, February 8, 2014

CANADIAN POLITICIANS: IT IS TIME TO FOCUS ON THE ECONOMY, COMMON MAN AND COUNTRY’S OVERALL WELL BEING

The Canadian economy is passing through a very critical phase wherein:
-      Canadian economy is looking up but still hobbling a bit moving forward with some unsteady steps: disinflation, less than expected increase in exports, and tardy rate of full time job creation being some of the issues staring in the face;
-      The global economic recovery is fragile, unpredictable;
-      Chinese economy is not going to be the locomotive of world economic rejuvenation;
-      US economy is just turning the corner but remains unpredictable due to political circus in Washington DC and gradual withdrawal of artificial respiration, i.e., Quantitative Easing;
-      European economy is far from having come out of the after effects of bail-out support provided to some its members to prevent them from sinking;
-      Emerging economies have their own woes to deal with and are clearly struggling;
-      International political scenarios are not providing any sense of calmness settling in.

At such a juncture, what is expected of the people who practice politics at federal and provincial level, i.e., politicians? Answer is simple: They need to focus on working together to strategize how to reinvigorate the Canadian economy, put it back on a firm footing, and in the process ensure continuation of a prosperous, happy, less stressful existence of the people.

If the country’s economy does not get the proper focused direction, guidance and support what could be the potential consequences? There could be:
-      Cuts in Federal and Provincial budgets for the various services Canadians have been benefitting from for many decades;
-      Cuts in Federal and Provincial budgets for many important sectors, like, education, health care, senior citizen care, child support, R&D and many more;
-      Deterioration of overall quality of life of Canadians which is matter of envy world over;
-      Delayed retirement of thousands of people;
-      Nucleation/initiation of social discontent/tension which may simmer and eventually stress the very fabric of social integration and diversity;
-      Cut in funding for international causes for which Canada has been a beacon of inspiration and support.

So, at such a crucial phase of country’s journey in this and future decades, the Federal and Provincial politicians’ paramount objective should be to close ranks and focus on the solutions, planning and implementation of strategies instead of diverting attention on issues which are:
-      Either nor germane to the above mentioned scenario – in other words, they are secondary; or,
-      Solvable in parallel while working on the PRIMARY issue of the nation, i.e., economy of today and future.

At the moment, the Federal parties seem to be spending their intellectual resources more on the secondary issues, like, mis-appropriation of Senate funds. There is another issue which can potentially divert the energy and focus of the Federal parities for next several months, and that is: Electoral Reform. This is an important issue, and some opposition parties may want more debate and analysis of the pros and cons but if all the energy of the policy makers gets diverted to this one – there may be some other issues too that may be thrown out there before the next Federal election in 2015 – it could herald serious harm because the policy makers would not be able to focus on the PRIMARY issue facing the country: economy.

Issues like electoral reform (and others which may be raising the passions of the political parties of different stripes) should be dealt with in parallel with the focus on the PRIMARY issue. While discussing the PRIMARY issue (economy), the parties need to close ranks and contribute all the wisdom they can marshal for getting the most effective strategy detailed out and implemented.

Canada does not have the luxury of time – the folks at Federal and Provincial level got to act fast. Whether it calls for laying out new policies, making decisions on critical matters, removing road blocks, facilitating coordinated action within and outside Canada, whatever they may be, they got to be done fast. There is no time to lose.


If the folks at Federal and Provincial level spend their time and energy on inter-party shenanigans, the ultimate losers would be Canadians of the present and the ones to come in future. Time and tide waits for nobody – if the politicians of today fail to see the need to act on the PRIMAY issue, there won’t be any point in ruing in future and wringing hands in despair and muttering “Alas, we had acted unitedly then for the sake of the country instead of frittering away precious time on secondary issues.” There is an old saying: God helps them who help themselves, hope politicians of today would realize this!!

Sunday, January 5, 2014

DO THE CANADIAN CEOs DESERVE THE HIGH COMPENSATIONS THEY ARE GETTING?

According to an annual review published by the Canadian Centre for Policy Alternatives in January 2014, the average compensation among Canada's top 100 CEOs was $7.96 million in 2012 whereas the average annual Canadian worker's salary was $46,634.

The review further found that the top-earning executive in Canada was the head of the Canadian Pacific Railway, Hunter Harrison, who was paid $49.1 million in salary, stock options and bonuses in 2012. The second-highest paid CEO was James Smith of Thomson Reuters Corp., who took home $18.8 million. The lowest-paid CEO on the top 100 list was Lino A. Saputo, of Montreal-based dairy Saputo Inc., who earned $3.85 million.

The report’s author also said in a statement "….. There is no clear relationship between CEO compensation and any measure of corporate performance.” So, a question that might inevitably come to mind is: Do the Canadian CEOs really deserve the high compensations?

The answer should actually depend on whether the CEO in question also meets some criteria mentioned below (which may include some intangibles also apart from SMART goals) and not just measured against the usual main criterion of share price increase (and earning per share):

§  Has s/he expanded the company in real terms within and/or outside Canada?
§  Has s/he secured the foundation of future growth of the company?
§  Has s/he been able to make the company financially stronger than before?
§  Has s/he been instrumental in achieving some innovative outcome with regard to product of the company?
§  Has s/he been able to enhance the brand/reputation equity too of the company?
§  Has s/he made suitable succession plans?
§  Has s/he made sure of the proper training and grooming of middle and senior middle layers of the organization?

If one applies the above yardsticks to the top 100 earning CEOs of Canada, one may come to the conclusion that a number of them just do not deserve the high compensations they have wangled for themselves. In fact, may be the majority may turn out to be just a bunch of mediocre executives who by admixture of luck, some clever and strategic positioning and some hard work have reached the position they hold now.

If one reviews the performance of Canadian companies as a whole, one may not find any true outstanding CEO of the ilk of Charles Schwabs, Lee Iacoccas, Jack Welches, Steve Jobbs and so on – folks who were outstanding leaders and visionaries at the same time . May be one CEO in the top 100 list comes close – he is former Suncor CEO Rick George. Otherwise most of the others on the list are what one may call “Manager Leaders” rather than “Leader Leaders” – hardly manifesting attributes of a leader with a vision, drive and tenacity.

No wonder then that one finds a general decline (and some cases demise) of Canadian companies (examples of Nortel and Blackberry come to mind immediately while there are others too).

If one looks at the CEOs, for instance, of oil and gas companies (including pipeline companies) operating in Canada one finds most of them to be pathetically mediocre – they seem to be somehow surviving by hanging by the coat tails of the provincial and federal minsters whether in getting their major projects pushed forward or solving their issues stemming from their (CEOs’) incompetence. These CEOs seem so woefully incompetent in being proactive, in anticipating risks to major projects, so inept in tackling the public issues on their own. And this is not just a subjective view, time and time again these CEOs have demonstrated their crass incompetence on the fronts mentioned above in the past months and recent years.

If one looks at the middle and senior middle management levels too, one finds square pegs in the round holes – people not properly trained and groomed being thrust in positions they are not competent to hold. Consequently, they are not only struggling themselves in discharging the role expected off them, they are making lives of people of other organizations, they are having to interact with (in connection with their work, e.g., new projects), absolutely miserable. They become such a pain to work with, worst of all they are potentially rendering the corporation weaker.

So, what would happen if there is mediocrity at the top and middle of an organization – they become weak and a potential target for being swallowed by others (if the organization is worth taking over). This is a serious situation, a ticking time bomb, which the Canada Inc. is not taking cognizance of and also not taking any action about: may be the corporate Canada is not capable of realizing it (again because of mediocrity and foolish arrogance that they know the best).

In summary, not only the compensation package of the CEOs of Canadian companies need to be evaluated against set of tangible as well as intangible criteria, the CEO material also needs to be improved – the creeping mediocrity needs to be discouraged with heavy hand and top class leaders identified and installed. If the mediocrity at top is not tackled soon, the long term negative consequences for the Canadian economy could be potentially catastrophic and Canada's pride of being a true first world country might be irreparably damaged.

 

Friday, January 3, 2014

PREDICTIONS FOR 2014 FOR NORTH AMERICA – ECONOMIC (AND SOME POLITICAL)

UNITED STATES

Republican and Democrat tussle on budget, Obamacare and overall deficit will negatively impact the economic growth US could potentially have in 2014.

Attempts to scale back Quantitative Easing will meet some setbacks.

US may have to make some tough choices in regard to getting militarily involved (covertly and/or overtly) in certain countries resulting in strain on the economy.

In order to improve economic situation, US will have to find ways to reduce imports and enhance exports. Oil is one area where imports could be further reduced by increasing domestic production.

US would heighten its efforts to find ways to increase exports of real goods, and services: New materials (using new technology), new products (military hardware, products that can find use in industrial and domestic sectors), virtual products etc. besides the traditional exports items. New efficiencies would need to be found in services industry and export opportunities would need to be identified.

2014 congressional elections are likely to throw some unexpected results for both parties. The results would further confuse the incumbent president as to which path he should tread on – should he stick to policies that may leave behind some sort of legacy or make some radical shift in policies that have greater chances of helping the party in 2016 elections.

The front runner democrat presidential candidate would be publicly at loggerheads with the incumbent president on various policy issues.

There would be more challenges to US domination in international political arena. Confused signals from US would weaken its position on number of issues.  The incumbent president may be impelled to make some abrupt shifts in US stances which could make the situation further complicated vis-à-vis its allies and opponents alike.

CANADA

Economy would struggle to keep up a growth rate of greater than 2.0%. Commodities sector would struggle, so would the manufacturing sector.

Lack of unity amongst the political parties regarding development of oil and gas resources might hurt Canada’s short and long term prospects.

Slow progress on LNG, oil pipelines policy decisions by government as well as the companies would further complicate economic outlook. Competition from Mexico and US would pose newer challenges for Canadian policy makers and corporate bigwigs.

Canada may have to think in terms of resorting to some form of quantitative easing to prevent build-up of deflationary tendencies.

Canada would need to significantly enhance its exports by finding new avenues as well as more and diverse products.

The ruling party at the federal level would adopt some populist measures to improve its chances at the 2015 hustings.  The leadership would try to appear more decisive and focused – some efforts though would cause confusion and some backlash.