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Dax Dasilva, founder and chief executive officer of Lightspeed POS Inc., at the company's head office in Montreal.

Montreal software firm Lightspeed POS Inc. has struck a global retail partnership with Alphabet Inc.’s Google to allow small businesses — many of which were devastated by pandemic closures — to advertise to local shoppers looking for alternatives to e-commerce giants.

After more than a year of pandemic lockdowns that forced retailers and small merchants to close their doors, Lightspeed — which provides cloud-based point-of-sale services for the retail, hospitality and golf industries — is betting that customers are shifting their buying habits online but still want to support local merchants.

The partnership, which will allow Lightspeed to embed Google’s advertising tools directly into its commerce platform, is aimed at attracting customers searching for products online, but unsure of how to conveniently view stock at nearby small merchants.

Retailers will be able to post local inventory ads on Google via the Lightspeed platform, pay to host marketing campaigns using Google’s artificial intelligence software, and manage business information listings on the search engine.

“When you put those three things together, you put the independent retailer on a much more equal footing than much larger stores and brands, and it gives them a real ability to compete with Amazon,” said founder and chief executive Dax Dasilva in a phone interview.

Google has seen searches for local businesses spike 80 per cent year-over-year, and inquiries on product inventory at nearby small merchants — “who has gym equipment in stock,” for example — have surged by 8,000 per cent, the company said.

Dasilva said that the partnership has been in development for two years as they ran a pilot project to test the offering with small businesses on Lightspeed’s platform. A diving equipment retailer and scuba school in the Netherlands posted local ads through the program and saw their online traffic increase 24 per cent in the first month, in-store visitors rose by 48 per cent, and the average revenue by transaction jump 50 per cent, he said.

Google’s services will be integrated into Lightspeed’s supplier network, which it launched in January to help small retailers and independent suppliers restock their inventory.

“The local ad piece is free because we want our platform to be the default for these sophisticated retailers,” Dasilva said. “We think that this is a reason to buy Lightspeed, and a reason to be on the platform that’s considering all the angles of what a modern retail business will want to be.”

Lightspeed has had a busy year. It went public in Canada in 2019 before debuting on the New York Stock Exchange in September.

It has also taken steps to broaden its services from its roots as a point-of-sales service provider and the company has been on a global acquisition spree. In December, Lightspeed purchased Rhode Island-based internet-based restaurant management software maker Upserve Inc. for US$430 million, and New York’s ShopKeep Inc. — which offers similar services — for US$440 million. In March, it purchased New Zealand retail-management software maker Vend Ltd. for about US$350-million in cash and stock.

Dasilva said that, as the pandemic eases and businesses welcome customers back, small businesses will need to integrate their in-store experience with online. He says that the pandemic accelerated omnichannel adoption by three to five years.

“This has been a transformational year for retail, and it’s accelerated our customers’ use of digital tools,” he said.

“The re-openings are going to mean a totally different way to look at business for retailers. When new retailers open or existing retailers move to these new systems from their legacy systems, they’re going to see that Lightspeed’s offering is from the back end with suppliers and operations, and then the front end with marketing and getting traffic.”

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5/11/2021 6:00:23 AM

A closed sign is displayed on the door of a restaurant in Toronto during the coronavirus pandemic. Women and younger workers are feeling the brunt of job losses because they tend to dominate the industries that have been effectively closed for much of the past year.

The latest batch of hiring data has reignited fears that the COVID-19 crisis will impact women’s job prospects more harshly than men’s, causing the recovery to stretch on for even longer.

Statistics Canada published data on May 7 that showed that women account for two-thirds of the 500,000 jobs that have yet to be reclaimed during the recovery from last year’s historic economic collapse.

Armine Yalnizyan, an economist and Atkinson fellow on the future of workers, was surprised by the degree to which women continue to trail men. Overall, the population of employed people aged 25 to 54 fell by 48,000 positions in April from March, Statistics Canada said. The majority of the losses in that group were women with full-time jobs. The participation rate of women aged 15 to 24 further exemplified the unequal nature of the recovery, as younger men are now working at roughly the same rate as they were before the crisis, whereas the participation rate of younger women remains four percentage points lower.

“Mathematically speaking, we cannot get to an (economic) recovery without a she-covery,” Yalnizyan said. “There just aren’t enough men to make up the difference.”

The numbers are a reminder of why the Bank of Canada continues to press ahead with aggressive monetary policy despite signs that inflation is heating up, and why Prime Minister Justin Trudeau’s government has spent so heavily on emergency benefits. A decade ago, the recovery from the Great Recession was frustratingly slow, in part because governments ended their stimulus efforts too soon. This time, policy-makers have pledged to err on the side of growth.

Still, low interest rates and big deficits can only do so much to offset the lockdowns and partial lockdowns that authorities have adopted to slow the spread of the virus. Women and younger workers are feeling the brunt of those measures because they tend to dominate the industries that have been effectively closed for much of the past year.

The stimulus is keeping the economy afloat, but the longer men and women remain unemployed, the harder it will be for them to get back in the labour force. A legacy of the crisis could be tens of thousands of workers who never reach their full potential, as businesses are more inclined to hire fresher prospects.

“As you fall out of the workforce, you’re not using your skills and that’s a real concern in the long-term,” said Leah Nord, the senior director of workforce strategies and inclusive growth at the Canadian Chamber of Commerce. Nord said women are especially at risk of being left behind because they tend to be the first to abandon paid work to care for their household’s children.

To be sure, men in vulnerable industries are struggling, too. Statistics Canada said the number of young men working either full-time or part-time jobs plummeted 4.7 per cent in April. The drop for younger women was a less severe 3.6 per cent.

Overall, women in all aged 25 to 54 worked 7.7 per cent fewer hours last month, compared to a 5.5-per-cent drop for men in the same age category.

From Yalnizyan’s perspective, one of the more pertinent ways Canada can ensure an equal recovery is for the governments to boost support for childcare, which has become excessively expensive in many of Canada’s biggest cities. If a lack of adequate childcare bars women from entering the workforce, “it will take us much longer to get back to so-called normal,” she said.

Finance Minister Chrystia Freeland promised to spend $10 billion on a national childcare program in her budget last month, but she didn’t pretend all that money would make a big difference soon. The provinces govern daycare and no program will go ahead until they agree to participate. Freeland set a target of five years.

It might be faster to train women to work in the trades and other professions that struggle to find qualified labour. Nord said that it’s imperative policy and the private sector encourage women back into the workforce by way of proper retraining.

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5/10/2021 1:05:26 PM

Roqutte's $600M plant in Portage la Prairie, Manitoba, is considered by many to be one of the best examples of Canada’s modern manufacturing power.

An industrial complex sprawling across a 67-acre lot in rural Manitoba has more than 60 kilometres of pipe connecting silos, grinders and spray dryers, all devoted entirely to the pea. The plant in Portage la Prairie, Man. — an hour or so west of Winnipeg — is so singularly focused on this one crop that its optical sorting system can spot a soybean in a sea of peas and get rid of it.

“We absolutely have a very strict specification about having no soy beans in our peas,” said Dominique Baumann, the chief executive who runs the Canadian operations of France-based food processing giant Roquette Frères SA.

The reason for such vigilance, he said, is that a genetically modified soybean would taint the plant’s non-GMO product.

Roquette chose Portage la Prairie for the more-than-$600-million plant, in part, because peas are grown in abundance in Manitoba and Saskatchewan. Peas are big business, especially now that the protein extracted from them has become a main ingredient used by the burgeoning plant-based protein industry.

The pea, it turns out, is not just a mere pea. It is starch, fibre and protein, and each component has a use and a market: the starch can be used for glue in cardboard boxes; the fibre can go into livestock feed and pet food; and, of course, the protein is destined for everything from veggie burgers and dairy substitutes to nutritional bars and shakes.

As Baumann put it, nature has put the pea together and it’s the plant’s job to break it apart.

The Portage la Prairie operation, expected to be operating at full capacity by early next year, comes up a lot in discussions on the future of how Canada feeds itself. It is considered by many to be one of the best examples of this country’s modern manufacturing power. But it’s also a rare example.

It’s rare, some in the industry believe, because over-regulation, labour shortages and heavy concentration in the grocery business have historically tamped down Canada’s ability to process what it grows, leaving the country dependent on other countries to turn crops into food. That dependence can be precarious, especially in uncertain times that send shock waves rippling through global supply lines and countries grow reluctant to share.

Much of Canada’s food processing infrastructure is aging and understaffed, due in part to a slow procession of multinational manufacturers relocating their Canadian operations to countries with less regulation and longer growing seasons.

More than half of all the crops and livestock produced in Canada are now exported to another country to be processed, according to a report last week by the parliamentary standing committee on agriculture and agri-food.

Processed food, for many, may sound like junk food — say, chicken parts blitzed with additives to form nuggets. But in the agricultural sector, processed food involves anything that adds value to a raw material. For example, crushing canola seeds into oil is processing, as is freezing corn niblets or canning beans.

For a country so rich in raw materials, untapped processing potential means untapped value. But more importantly, it can make the national food chain more vulnerable.

It’s normal for an agricultural powerhouse with a small population to export a lot of its crops. But it’s concerning that Canada then re-imports some of those commodities after they’ve been processed abroad, said Martin Scanlon, dean of agricultural and food sciences at the University of Manitoba in Winnipeg.

“The degree of reliance on imported (processed) foods has been growing steadily for the past 15 years,” he said. “When you’ve got these plants that are rusting out, if I can call it that, we’re not seeing the degree of sophisticated processing reinvestment that you would see in a plant south of the border.”

Complications in the food chain at the beginning of the pandemic last year, including outbreaks at two meat-packing plants that process the majority of Canada’s beef, have underscored the need to have more smaller plants spread out across the country, he said.

As the pandemic crawls toward a conclusion, Scanlon said it’s time to “look at our food system and say, ‘Is it what we actually want?'”

Canada’s food manufacturing sector lost roughly 40,000 jobs to plant closures in the past decade, while adding only 20 new plants with national processing capacity compared to 4,000 added in the U.S., according to a study last week by the Agri-Food Analytics Lab at Halifax’s Dalhousie University, one that was commissioned by manufacturing lobby group Food, Health and Consumer Products of Canada.

Foreign direct investment in the sector grew by 125 per cent in the past 10 years, the report said, though it also found that a lack of greenfield investments had contributed to “stunted innovation” and aging infrastructure.

“I think the sector, overall, has been undermined for several decades,” said Sylvain Charlebois, the lab’s director.

One executive at a Canadian food processor said state officials from the U.S. frequently offer tax cuts or free government land if a company relocates their operations south.

“I don’t go a week without getting an offer from somewhere in the U.S. to move our facility,” said the executive, who spoke on condition of anonymity.

Maple Leaf Foods Inc. told the parliamentary agriculture committee that “the cumulative effect of regulation” in Canada was a factor in why it chose Indiana to build a US$310-million facility for plant-based protein, according to the committee’s report last week.

The committee also noted that frozen vegetable processor Bonduelle Americas has “given up on projects in Canada” due to a lack of labour in the industry, which has a reported 28,000 vacancies.

Food processors in Canada have also spent much of the pandemic locked in an ugly and prolonged battle over the fees and fines that big grocers charge.

Last year, Walmart Inc. and Loblaw Cos. Ltd. riled food suppliers by charging new fees as a way to help cover investments in infrastructure and online grocery shopping, which has boomed during the pandemic.

 More than half of all the crops and livestock produced in Canada are now exported to another country to be ‘processed,’ according to a recent federal government report.

The retailers argued that suppliers would benefit from sales gains brought about by the e-commerce investments. But the fees marked a flashpoint for processors, who were already frustrated by the charges and fines they were obligated to pay in order to do business with the biggest grocery chains.

Some manufacturers, including Toronto-based dairy processing giant Lactalis Canada Inc., have threatened to stop shipping products if retailers continue to charge fines for short shipments despite pandemic-related hurdles in factories.

Processors have been pushing Ottawa to implement a code of conduct to curtail what they say are bully tactics and unfair fees in the grocery business. Late last year, the federal, provincial and territorial agriculture ministers group (FPT) decided to investigate the issue.

Last week, the parliamentary agriculture committee delivered another milestone in the campaign for grocery regulation when it released its report on food processing after months of studying ways to boost Canada’s ability “to process more of the food it produces domestically.”

The report endorsed a national code of conduct, calling on the federal government to work with the provinces and territories to make it happen.

“Food processors are dealing with a concentrated retail market in Canada that is dominated by a few large retailers,” the report said, adding that the top five grocery chains control 80 per cent of sales.

The office of Agriculture Minister Marie-Claude Bibeau, who is co-chairing the FPT working group on grocery fees, said her investigation will take the recommendation into account before making its own report in July.

The Retail Council of Canada, which represents the big grocers, said it is currently working with other food-sector trade associations in hopes of proposing their own set of “structured policies and principles” that would reflect the “needs and concerns of small, domestic companies in the supply chain,” spokesperson Michelle Wasylyshen said in an email.

Reining in bully tactics in the grocery business could help preserve the Canadian operations of multinational food processors, according to one executive.

The head of a Canadian division of a global food processor, who spoke on condition he not be named for fear of damaging sales relationships, said his business often underperforms those in other markets, putting Canada at a disadvantage when head office has to make budget decisions.

“They say, ‘Listen, you know what? We can’t invest as much money in Canada because your profit margins are lower. We can make more money in France, U.K., Germany, whatever,’” he said. “When a worldwide organization looks at Canada, they’re gonna say: ‘It’s a small country. Forget about the landmass; 38 million people?’”

The pandemic has proven to multinationals that their workforces can be remotely managed, which puts underperforming divisions with small populations in jeopardy, the executive said, since the company could feasibly manage the country from its head office elsewhere.

“As opposed to having all of the senior marketing managers, logistics managers, maybe even a president out of Canada, I can hire lower staff individuals and run it out of the United States,” he said. The question becomes: “Why do I need you guys?”

But the bigger question, the one now being asked in earnest, is what would it really take for Canada to be self-sufficient, to cut, crush and cook everything we eat? It’s a question that requires an answer before another crisis hits the food chain.

5/10/2021 4:52:53 AM

Housing overheating has spread from Toronto suburbs like this one to other cities across the country.

Bill Morneau had been finance minister for only 36 days when he first attempted to do something about runaway housing prices and mortgage debt. He announced in December 2015 that the minimum downpayment for an insured mortgage would in two months rise to 10 per cent from five per cent on the portion of the loan that exceeds $500,000.

It was a risky move for Morneau, a first-time member of Parliament from Toronto, since it would irritate constituents who had become wealthier by owning real estate from the beginning of the housing boom. But a response was overdue. Household debt had exploded to record levels and Canada had become vulnerable to a financial crisis.

Given what we now know about the Justin Trudeau government’s aversion to haste, the decision seems that much more significant. No advisory committees, just action.

But the announcement also exposed a fatal flaw in Canada’s approach to housing policy. Morneau had essentially pulled the new regulation off the shelf.

The deputy finance minister, Bank of Canada, federal banking regulator and Ottawa’s other financial agencies had been urging the former government to cool the fires raging in the housing market for months. Then prime minister Stephen Harper refused. It was too close to an election. Any policy that would make it more difficult to borrow to buy a home — or risked depressing prices — was off the table.

History often rhymes, but unlike the rest of Mark Twain’s famous quote, it does sometimes repeat. Trudeau’s government presents itself as less cynical than its predecessor, but don’t believe it. Confronted with an acute outbreak of housing mania this spring, Trudeau and his current finance minister, Chrystia Freeland, turned to the Harper playbook. Trudeau and Freeland could have used last month’s budget to finally overhaul a deeply flawed housing policy. Instead, with the possibility of an election this year, they did the minimum.

“Relatively modest steps were taken to cool the nation’s frothy housing markets, amid calls for significant action on this front,” Rishi Sondhi, an economist at Toronto-Dominion Bank, said in a report on May 5.

The heaviest of those steps was a one-per-cent tax on the value of vacant properties owned by non-residents, effectively a tariff on foreign speculation that would protect domestic speculators from competition. “We think it will do little to curb current housing market froth which appears to be overwhelmingly domestic-driven,” Sondhi said.

The $1.67 billion that financial institutions lent Canadians in February to buy houses was seven per cent higher than a year earlier, according to the most recent data compiled by Statistics Canada.

Back in the summer of 2015, mortgage credit was growing at an annual rate of about six per cent, compared with five per cent or so a year earlier.

The housing crisis then was really a story about massive bubbles in Vancouver and Toronto. That argued against an aggressive federal response. There’s no such thing as a national housing market, goes the cliché. It would be folly, not to mention unfair, to punish buyers in places such as Moncton, N.B., and Ottawa for the sins of the Big Smoke and Lotusland, both of which had emerged as global destinations for international high-flyers in the aftermath of the Great Recession.

The mania has now spread. In March, Canada Mortgage and Housing Corp. flagged Moncton and Ottawa as being highly vulnerable to a collapse, along with Hamilton, Toronto and Halifax. Victoria, Vancouver, Edmonton, Calgary and Montreal were described as “moderate” risks to financial stability. “There is now evidence of overheating at the national level,” CMHC said in its latest quarterly Housing Market Assessment.

The federal government dislikes risk, no matter who is in power. Its senior leaders think their caution is the reason Canada so often avoids serious trouble. But Freeland must understand that there is a price for inaction. She often cites her experience as a journalist covering the 2008-09 financial crisis as a qualification for the job she now holds. She should know what can happen when low interest rates, narratives that glorify home ownership, and the fear of missing out all combine to turn local frenzies into a national vulnerability.

The Great Recession was triggered by big banks in the United States and Europe that were blinded by greed. But the recession was as terrible as it was because the U.S. economy had become dependent on household borrowing. Demand disappeared when credit lines were cut, and the value of the collateral for all of that lending deflated.

The recovery took years. The cost was reflected in a terrible opioid crisis and the political upheaval that surrounded the rise of Donald Trump, the former Republican president. The world would be very different today if America’s leaders had seen the dangers inherent in surging household credit, rather than using the numbers to reinforce notions about the benefits of an “ ownership society .”

Does that mean Canada is destined for similar despair? Recent history suggests Canadians are good at balancing on the edge of a precipice. But that’s not a reason to keep putting off a major rethink of a housing policy that was made for a time when demand-side incentives were justified by structurally high interest rates.

Those days are gone. All or most of the sops for homebuyers should disappear with them, including the capital-gains deduction on the sale of primary residences. A good tax system rewards risky investments that increase the economy’s capacity to grow. Housing is a drag on productivity since it’s a magnet for capital that could be better used elsewhere. Canada plows significantly more money into transferring existing homes to new owners than it does on research and development each year.

Regulation also needs to change, if only to break its connection to the election cycle. The Bank of Canada takes a lot of flak for the affordability crisis, but if it actually had the authority to do something about it, the situation probably would be less dangerous. The central bank’s job is to keep the Consumer Price Index advancing at a rate of about two per cent a year. That task now appears to require extremely low interest rates. The central bank needs the ability to deflate asset-price bubbles that are the side-effects of aggressive monetary policy.

Some might say that’s too much power for an unelected body. But remember that the Bank of Canada was handed a long leash to manage inflation because it had become clear that politicians couldn’t be trusted to make the hard choices required to cool economic growth.

Canada’s real-estate bubble has now been inflating for more than a decade. That’s enough evidence to show that politicians can’t be trusted to manage housing policy, either.

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5/10/2021 4:25:44 AM

The Financial Post's Kevin Carmichael, right, talks with Paul Desmarais III, left, the next in line to lead the family behind Power Corp. of Canada.

The Financial Post’s Kevin Carmichael talks with Paul Desmarais III, the next in line to lead the family behind Power Corp. of Canada.

5/10/2021 3:27:50 AM

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