fallout - The Globe and Mail

Transcription

11 big thinkers on how to get cities moving | The most powerful man
in rock ’n’ roll | Vancouver’s high-tech makeover | 9,000 bidders,
$144 million, 10,500 pieces of heavy metal | Family dynasty or debacle?
fallout
Central bankers and the great panic of 2015
april 2015
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contents
04/15
23
COVER illustrated exclusively for report on business
magazine by mark summers, photograph by jimmy jeong/cp;
(above) tom griggs
Colombia’s
moving solution
to poverty
and crime
11 big thinkers on how to get cities moving | The mosT powerful man
in rock ’n’ roll | VancouVer’s high-tech makeoVer | 9,000 bidders,
$144 million, 10,500 pieces of heavy metal | family dynasTy or debacle?
Features
23 Get a move on
Ever-more people crowding into
ever-bigger cities adds up to one big global
traffic jam. Time for some brainstorming.
/By Alex Bozikovic, Dawn Calleja,
Omar El Akkad, Jeff Gray, Iain Marlow,
Oliver Moore, Patrick White
fallout
Central bankers and the great paniC of 2015
april 2015
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38 The great central bank
freak-out of 2015
Central bankers like Canada’s Stephen Poloz
are slashing interest rates—even though
there’s no economic crisis. What gives?
44 Can’t see the forest
for the techies
Vancouver owes it all to a resource sector
whose heyday is over. Good thing someone
started a tech boom. /By Richard Littlemore
50 Peak boutique
Marriott, Sheraton…and Germain?
How a Montreal family aims to
outsmart the giants in the hip-hotel
niche. /By Grant Robertson
/By Kevin Carmichael
APRIL 2015 / REPORT ON BUSINESS 1
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04/15 CONTENTS
DEPARTMENTS
4 Feedback
7 The Interview
How is it possible to run four
of the five biggest concert tours
of all time and stay low-profile?
Because you can’t take the
Canadian out of Arthur Fogel
10 Graphic Details
The scion also rises—or wrecks
the company. A comparative
look, from brilliant (the
Southerns) to embarrassing
(the Bronfmans)
12 Venture
She started as a junior employee
at Whitehorse’s Alkan Air,
working on the books. Now
she’s president and owner. A
quick study, that Wendy Tayler
14 Heavy metal
Excavators by the hundred,
dozers by the dozen—welcome
to the world’s largest auction
of industrial gear
When to bring up the money
question during the jobinterview process, and the
importance of the right kind
of pushy
18 Investing
The 2010s are replaying the
history of the 1970s in reverse
(except for disco, that is). What
this means for investors in
stocks is this: Cool it, baby
20 Reguly
All is not well under the golden
arches. McDonald’s didn’t see
the fast-casual trend coming,
and now a company long famous
for cachet is playing catch-up
56 Exit Interview
Calgary Stampede CEO
Vern Kimball literally hangs
up his hat (and sits down
at the piano)
7
Have you rocked
out with the
Stones, U2,
AC/DC? Thank
Arthur Fogel
14
Need gear—big
gear? Check out a
Ritchie Bros. auction
PHoTOGRAPH (top) kourosh keshiri; (bottom) eve edelheit
16 Corporate Governess
2 APRIL 2015 / REPORT ON BUSINESS
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VEN
RESULTS.
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04/15
Feedback
April 2015, Volume 31, No.8
THE NUCLEAR DEBATE
In addition to a wave of highly charged web comments,
Charles Wilkins’s March cover story about nuclearwaste disposal—and, by extension, the very future of
the nuclear industry—inspired more letters to the editor
than we have seen in many years.
Since space considerations preclude publishing all
the letters here, we have posted them at tgam.ca/r.
BRAND SKEPTICS
Our third annual Top 100 Brands ranking (March) did not get much love
from commenters. Several wrote that dominant companies like Rogers
(No. 6) and Air Canada (No. 56) didn’t deserve their spots on the list.
As one skeptic put it, What you call loyalty I call not having a choice. Another
subject of scorn was the inclusion of Onex, which is not a consumer brand
but a leveraged-buyout specialist. Onex? It’s some kind of stone, isn’t it?
LOTS OF BLAME in the caribbean
Tim Kiladze’s examination of Canadian banks’ woes in their Caribbean
operations (March) might have mentioned more factors contributing
to the region’s economic malaise, according to commenters. The failure and
corruption of local leadership in many of the small island nations has a great
deal to do with the severity of the current situation, said one. According to
another, it’s also pertinent that island elites imitated social-welfare programs
that they had learned about as students in North America and the U.K.;
that some states suffered for their innocent purchase of bogus U.S. investments
stamped AAA; and that the big banks infected the islands with the absurd
idea of house-equity economics.
it doesn’t stop with the self-driving car
Re: Ivor Tossell’s forecast on the demise of the private auto (Disuption,
March), what will automation do to all the surrounding activities? No more
traffic reports—the cars will follow computer instructions. What about the
auto insurance industry? Who is liable when two computer-guided vehicles
collide? No need for large police traffic divisions—no roadblocks, unless
the computer has been imbibing. And what about the hundreds of auto
publications that cater to all our fantasies about the driving experience?
If we are not driving the thing, who really cares how it
handles or accelerates or takes the curves?
—Michael Clague, Vancouver
What you were
reading on the Web
this month
Why do central banks keep making the rich richer?
18%
20%
27%
24%
11%
Inside the race for Canada’s nuclear waste
Trouble in paradise:
Inside Canadian
banks’ billion-dollar
Caribbean struggle
Canada’s Top 100 brands
FreshCo, Old Navy,
Rexall: Joe Jackman
helps retailers get their mojo back
Clarification
Our March story
on the travails of
Canadian banks
in the Caribbean
said Barbados
was working on
a restructuring
plan with the
International
Monetary Fund. In fact, it is simply
in talks with the
IMF, which is
recommending
sweeping changes.
Editorial
Editor gary salewicz
Managing Editor Judith PereirA
Senior Editors dawn calleja, john Daly, Ted mumford
Copy Editor jeanette king
Research catherine dowling, dawn promislow,
charles rowland, anna-kaisa walker
Art
Art Director domenic macri
Associate Art Director Emily vezÉr
Director of Photography Clare vander meersch
Contributors
jennifer alexander, david berman, Steve Brearton,
antony hare, Diane jermyn, joel kimmel, iain marlow,
ian McGugan, brian milner, david morris,
gordon pitts, eric Reguly, grant robertson, sean silcoff, sean stanleigh, Doug Steiner, ivor tossell, patrick white, shirley won
Advertising
Chief Revenue Officer ANDREW SAUNDERS
Business Manager, Magazines rolfe jones
Advertising Co-ordinator,
Marketing Solutions Group sonja tasovska Production
Director, Ad Production Services
and Magazine Production sally pirri
Production Co-ordinator isabelle cabral
Publisher phillip crawley
Editor-in-Chief, The Globe and Mail david walmsley
Report on Business magazine is published 10 times
a year by The Globe and Mail Inc., 444 Front St. W., Toronto
M5V 2S9. Telephone 416-585-5000. Letters to the Editor:
[email protected]. The next issue will be on
April 24. Copyright 2015, The Globe and Mail. Indexed in the
Canadian Periodical Index.
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Publications mail registration No. 7418. The publisher accepts
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Inc. Prepress by DM Digital+1. Report on Business magazine
is electronically available through subscription to Factiva.com
from Factiva, at factiva.com/factiva or 416-306-2003.
tgam.ca/r
4 april 2015 / REPORT ON BUSINESS
15-03-06 10:52 AM
15-03-06 12:52 PM
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15-03-06 12:57 PM
04/15
Auction action
Do I hear $75,000 for
this gorgeous Caterpillar
wheel loader? page 14
Business Intelligence
Family dynasty or debacle? • The real Arctic Air • Governess on interview etiquette
• Why McDonald’s is starved for customers
King Arthur
at his office in
Beverly Hills
The Interview
photograph kourosh keshiri
The king of rock
L
Arthur Fogel rules the world of live tours—which,
in the post-Napster era, is where the dollars are
ady Gaga calls
him her Oz—the
man who saw
enough potential
in this modernday Dorothy to save her
from bankruptcy. Bono
says he’s George Clooney’s
character in ER: “The
operating room’s about to
explode, and he keeps calm,
doing open-heart surgery
with a Swiss Army Knife.”
The man they’re praising
so extravagantly is probably
the most powerful behindthe-scenes figure in modern
music: Arthur Fogel, the head
of Live Nation’s global touring
division. To date, the Ottawa
native has helped run four of
the five highest-grossing tours
of all time. He has the clout
to—as he did for Gaga—cut
a performer a $40-million
cheque and send her touring
to the world’s biggest venues
(all currency in U.S. dollars).
In the post-Napster era, live
shows have become the rock
star’s sole source of reliable
income (music and licensing
sales went from $14.6 billion
to $6.3 billion from 1999 to
2009). As Fogel’s friend Guy
Oseary, Madonna’s manager,
has said: “You once toured
to promote albums, now you
release albums to promote
tours.” This has multiplied
Fogel’s importance in a
beleaguered industry.
Interviewed in his L.A.
office—hung with photos
of himself with Madonna,
U2, and his wife and five
kids—Fogel is understated,
his clothing dark and plain.
But under that, he burns with
what critic Walter Pater once
called a hard, gemlike flame.
This is a man who once
told legendary promoter
Bill Graham—the guy who
brought Jimi Hendrix and
Janis Joplin to the masses—
to go f--- himself, who
recently enjoyed showing
off to a small-time Canadian
promoter because the man
long ago refused to help Fogel
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1
2
3
4
5
$736
$558
$459
$441
$408
Top 1000
Check-in
Of the 38* ROB
1000 companies
whose names
include one of the
cardinal compass
points—firms like
Great-West Lifeco
[10], Northland
Power [112]
and SouthGobi
Resources
[976]—only 10
increased their
share value over
the past year**.
While the average
company stock
price dropped by
26%, the S&P/
TSX Composite
Index rose nearly
7%. The best
performer was
Westaim Corp.
[634], with a 39%
increase. East
Asia Minerals
[729] was the
worst, with a
94% drop. Those
featuring west
in their name
performed best,
while those
with a southern
exposure didn’t
fare as well.
/Steve Bearton
EAST IS LEAST,
WEST IS BEST
W
N
S
E
NORTH -29%
EAST -66%
SOUTH -36%
WEST -21%
* Five companies
excluded, including
George Weston
**Feb. 21, 2014, to
Feb. 20, 2015
photograph Kevin Mazur/wireimage
Paul Simon. His staff
will often hire over
1,000 people in each
city and book out
200 hotel rooms.
When Bono had to
get emergency back
surgery midway
through U2’s last tour,
Fogel had to postpone
all North American
dates for a year, and
place what one insider
calls the highest
insurance claim ever
in this sphere.
Most of the acts
history’s top five tours
Fogel represents are
heading into that good
night (though Mick
Jagger et al. are hardly
U2
Rolling
Roger
AC/DC
Madonna
going gently). What
Stones
Waters
Sticky &
does he see after they
360°*
A BiggerBang* The Wall Live
Black Ice*
Sweet*
(finally) retire? “People
(2009-2011)
(2005-2007)
(2010-2013)
(2008-2010)
(2008-2009)
have been moaning for
a while that no artists
million
million
million
million
million
who came up in the
digital era will be able
* A Fogel-orchestrated Live Nation tour
to fill the stadiums,”
get his foot in the door.
via local promoters in each
he says. “It’s such shit.” He
And why not? Fogel’s rise
city. But CPI began booking
name-checks Gaga, Ed Sheeran,
looks inexorable only in
venues for the Rolling Stones’
Adele and Rihanna. “There’s an
retrospect. The headmaster
international tours
explosion of talent.”
of his private high school,
directly—giving rise to 2 The film Who
Floor tickets near the
the F*** Is Arthur
Ashbury College, predicted
Fogel’s confrontation
stage for U2’s summer
Fogel? efficiently
that Fogel would never amount with Graham, who ran recounts the
shows are posted at
major changes
to much, and for a while, that
the San Francisco
nearly $10,000. Aren’t
swirling around
prediction looked likely to
concert scene.
such prices exorbitant
Fogel, from
come true. After graduating
The Edge’s former
for one night out?
the ’80s to the
from McMaster in Hamilton,
owner, Ron Chapman, present.
“You have to look at
his career as a drummer
recently made a documentary
the expenses that go into the
faltered. He took a job as a night on Fogel (2), and comments:
show, the number of people
manager at Egerton’s—later
“Until Arthur came along, the
employed, the stages,” says
the Edge—a club at the centre
industry was full of promoters
Fogel. “We don’t pull the prices
of Toronto’s vibrant new wave
who championed their own
from the air.”
scene. (“What didn’t I see there? brand more than the artists
Fogel claims people are
I had to learn how to fight—
they booked—they were
willing to pay more if the shows
literally and figuratively.”) He
large, public personalities like
are high-octane. In short: Spend
managed small bands on crossGraham. Fogel, meanwhile, is
more, make more. (3) Not every
tour goes as planned—to wit,
continent tours, then worked
the biggest in the industry, has
Guns N’ Roses’ 2002 tour, where
as an assistant for one of the
been for some time, and until
Axl Rose often no-showed and
principals of CPI, the firm led
recently he didn’t even have a
fans rioted. “With
by Michael Cohl that booked
Wikipedia page.”
3 Live Nation
the expenses
acts into Canada for a time. (1)
Fogel’s claim to posterity
invested $3
of touring, the
Fogel had become part
will be that he helped some
million to build
of CPI’s leadership team by
album-era artists lengthen their stakes are so much the stage for
U2’s 360° tour,
the time it
careers. When we talk, higher. I can’t say
which allowed
1 Live Nation and Cohl, its
I’ve found myself
revolutionized former chairman, parted
he’s firming up tours
the band to
perform in
ways in 2008 and recently
in that situation
the concertfor U2, Madonna and
settled significant outstanding Rush, and overseeing
since then, but you the round in
tour industry.
stadiums—
litigation. “Michael is amazing
never want to get
Acts used to
Australian shows
only possible in
with numbers, with deals,”
arenas before.
cocky.” /Alec Scott
have to work
featuring Sting and
Fogel says carefully.
U2’s 360° tour
stops at the
Rose Bowl
in Pasadena,
California
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THE
®
leaders green index
15-03-09 2:40 PM
04/15
Graphic Details
Does Junior measure up?
In a boardroom shakeup at Bombardier Inc. in February, Pierre Beaudoin stepped down as CEO, and his father,
Laurent, retired as chairman. Though there have been some spectacular crack-ups among Canada’s richest families,
a 2012 University of Toronto study of 23 large family-controlled public companies found that many outperformed
the S&P/TSX Composite Index. What separates dynasties from debacles? Here are a dozen snapshots. /John Daly
Paul Desmarais Jr.
and André Desmarais
Co-CEOs
may
1996
today
Shaw
Communications
Empire Co. Ltd.,
Sobeys
Jim Shaw
CEO
Paul D. Sobey
CEO
DEC
1998
NOV
2010
jul
1998
Na
DEC
2013
Jan
200
800
700
founder
Quebecor Inc.
CanWest
Global
Pierre Péladeau
Israel (Izzy) Asper
600
500
JR Shaw
Paul Desmarais Sr.
Frank H. Sobey
John W. Sobey
Donald R. Sobey
and David F. Sobey
400
Share price
% change
under heirs'
leadership
300
Dec
1997
S&P/TSX
Composite
% change
over same
period
Leonard Asper
CEO
Pierre Karl Péladeau
Vice-chairman
May
2013
jun
1999
Mar
2010
200
0
100
200
Paul Sr. sent his sons
to good schools,
mentored them on
the job for years and
then stepped aside
to concentrate on
the big picture. This
is how you build
a family business.
Pierre Karl took the
reins after his father
died of a heart attack.
Often impulsive—like
his dad—he bought
the Sun newspaper
chain and Vidéotron,
but oversaw the
bankruptcy of
Quebecor World, the
printing business, in
2008. He plunged
into provincial politics
in 2014, and is now
the front-runner for
the Parti Québécois
leadership.
As a corporate
strategist, Jim had a
good run. As a front
guy, he could be,
uh, disruptive—he
resigned after a tirade
at a shareholder
lunch. Brother Brad
became CEO. Jim
lives on a $16,000a-day pension. Lucky
for him that profits
in the cable and
broadcast business
in Canada are so fat.
Paul D. Sobey
transformed his
family’s Nova Scotiabased chain into
Canada’s secondlargest supermarket
retailer by acquiring
the Oshawa Group
in 1999, and 213
Safeway stores in
2013. He then handed
the CEO job to Marc
Poulin, a company
veteran. Sobey and
six other family
members still sit
on the board.
Izzy built the Global
Television Network,
and, in 1999, he
named 35-year-old
Leonard as CEO. But
Dad then agreed to
buy Conrad Black’s
Hollinger newspaper
chain for $3.2 billion.
Izzy died in 2003.
CanWest Global sank
under a $4-billion
debt load in 2009. TV
is profitable; papers
are not. Dad should
have known that.
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(hasenfratz) mike cassese/reuters; (weston) Aaron Vincent Elkaim/cp; (bombardier) cp; paul chiasson/cp;
(rogers) jack dobson/the globe and mail; chris young/the globe and mail; (bronfman) cp; eric thayer/reuters
900
Power Corp.
photographs (desmarais) paul chiasson/cp; Graham Hughes/cp; (péladeau) cliff bower/the globe and mail; Adrian Wyld/cp;
(shaw) jeff m c intosh/cp; tibor kolley/the globe and mail (sobey) Wamboldt-Waterfield/the globe and mail; (asper) Tibor Kolley/The Globe and Mail
1,000
Ro
Dad
an oi
busin
globa
cong
has g
out a
cont
the b
t
r
n.
nk
TV
a
m
e
sh
o
f
all
h
Atco Ltd.
Linamar
Loblaw Cos.
Nancy Southern
CEO
Linda Hasenfratz
CEO
Galen Weston Jr.
Executive chairman
aug
2002
sep
2006
Jan
2000
today
today
Bombardier
Inc.
Joseph Armand
Bombardier
Laurent Beaudoin
Roy Thomson
Kenneth Thomson
Ronald Southern
Frank Hasenfratz
Dad transformed
an oil-field trailer
business into a
global infrastructure
conglomerate. He
has gradually eased
out and Nancy
continues to expand
the business.
Pierre Beaudoin
CEO
today
Kenneth inherited his
father’s newspaper
and broadcast
empire. He steered
the family into
specialty publishing
and data. David has
attempted a great
transformation of his
own, buying Reuters
in 2008. The share
price, down 25% by
late 2012, has soared
in the past two
years. (The Thomson
family's holding
company owns a
majority stake in
The Globe and Mail.)
Jun
2008
Frank, a machinist
who fled Hungary in
1957, began making
auto parts on a lathe
in his basement near
Guelph, Ontario. He
was ambitious, and
Linamar grew into
a $1.2-billion-a-year
company. Daughter
Linda is even more
ambitious. She’s
tripled revenues and,
by expanding globally,
plans to get to
$10 billion by 2020.
Rogers
Communications
Edward S. Rogers Sr.
Ted Rogers
George Weston
Garfield Weston
Galen Weston
David Thomson
Chairman
Jun
2002
Piano-tinkling Edgar Jr.
acquired movie studios and
record labels, then merged
the family booze business
with ill-fated French
conglomerate Vivendi in
2000. In 2004, he bought
Warner Music, just as free
downloading was strangling
the industry. The whole
experience “was a disaster,”
said Uncle Charles.
today
Thomson
Reuters
(hasenfratz) mike cassese/reuters; (weston) Aaron Vincent Elkaim/cp; (bombardier) cp; paul chiasson/cp;
(rogers) jack dobson/the globe and mail; chris young/the globe and mail; (bronfman) cp; eric thayer/reuters
ar
10
Edgar Bronfman Jr. (CEO, June, 1994. Stepped
down as CEO of Warner
Music in August, 2011)
Samuel Bronfman
Charles Bronfman
and Edgar Bronfman
photographs (desmarais) paul chiasson/cp; Graham Hughes/cp; (péladeau) cliff bower/the globe and mail; Adrian Wyld/cp;
(shaw) jeff m c intosh/cp; tibor kolley/the globe and mail (sobey) Wamboldt-Waterfield/the globe and mail; (asper) Tibor Kolley/The Globe and Mail
er
Seagram Co.
G2 stumbled after
being put in charge of
Loblaws. But results
have improved, and
he won kudos for
the $12.4-billion
acquisition of
Shoppers Drug Mart
last year. He also
assumed the role
of president in 2014,
a job his father let
others do for him.
FEB
2015
Laurent expanded
the snowmobile
company his fatherin-law founded into
the world’s biggest
train manufacturer
and the third-largest
civil aircraft maker. In
2004, he announced
a new series of
passenger jets, to be
ready by 2010. Oops.
Reeling from delays
and debt, the board
convinced Beaudoin
the elder and son to
step down this winter.
Edward Rogers III
Chairman,
Rogers Control Trust
DEC
2008
today
Ted let his son run
the cable side of
the company in
the early 2000s,
but picked Nadir
Mohamed to run
wireless. Wireless did
much better. When
Ted died in 2008,
Rogers' board chose
Mohamed as CEO.
Edward shouldn't feel
bad—the Rogers'
family trust holdings
are now worth about
$5.2 billion.
april 2015 / REPORT ON BUSINESS 11
DM151408_Pg10-11_ROB_APR_2015.indd 11
15-03-06 10:45 AM
04/15
re
Wendy Tayler
at an airstrip
outside Whitehorse (that’s a
Twin Otter in the
background)
w
To
m
bo
bu
ne
in
an
its
ex
in
sa
ch
of
Solutions, at -40
To understand Alkan Air better, Wendy Tayler learned to fly herself.
That devotion just might explain why the onetime accounts clerk now heads the Yukon’s premier charter airline
T
he planes never stop coming and going outside Wendy Tayler’s
window. Spend an hour in her office at Whitehorse’s Erik Nielsen
International Airport, and you’ll see everything from a Cessna
two-seater to a Boeing 737 rolling by en route to takeoff or shedding speed after landing. And no, says Tayler, it doesn’t matter
how long you stay in that office: She’s never stopped being transfixed by the planes.
Tayler is the 41-year-old president and majority owner of Whitehorse-based Alkan
Air, a 12-plane operation that has become the Yukon’s pre-eminent charter service.
She’s worked in plenty of industries besides aviation: She’s run a cable company and
a radio station, owned a hotel, and worked in real estate and retail. She owns the local
Ford dealership. But aviation, Tayler says, is “by far my first love.…It really does get in
your blood, and without a blood transfusion you can’t get rid of it.”
She got her first taste of the industry in 1994, arriving at Alkan as a young mother
schooled in accounting. The company was founded by a trio of Yukoners with a few
planes in 1977—“the three of them sat around with the phone in the middle of the
desk and waited for it to ring,” Tayler says, citing company lore—and grew through
the late 1980s, expanding from charters
to medevac contracts and scheduled
passenger flights from Whitehorse to the
Yukon’s far-flung smaller communities.
By the time Tayler signed on, the
scheduled service was fading out—mine
closures and reduced traffic meant that
regular flights to villages like Faro or
Mayo made less and less sense. That’s
when Alkan Air took on its current, specialized form, as an air charter service
devoted to serving the mining and exploration industries, and government.
After starting out in accounts receivable, Tayler spent seven years working
her way through the company, making
herself useful and learning about all
aspects of the business. “I built our first
website, I worked in operations, I did all
of the accounting,” she says. “When a
company’s that small, you get an opportunity to do a little bit of everything.”
In 2001, she moved on to the Hougen
Group of Companies, a family-owned
hydra of Yukon businesses whose roots
reach back to the 1940s. It was at Hougen
that she learned the ropes of radio, cable,
tr
th
19
am
photograph Chris MacArthur
Venture
de
fa
w
tr
fe
to
be
se
ar
go
is,
lio
ge
ge
he
yo
Yo
ca
fo
Start
CPA 23302
DM151408_Pg12-13_ROB_APR_2015.indd 12
15-03-10 9:49 AM
retail, real estate and automotive sales.
By 2007, one of Alkan’s original owners
was looking to sell his shares and retire.
Together with long-time Alkan pilot and
minority partner Hugh Kitchen, Tayler
bought in. She was back in the flying
business.
Tayler returned to the charter business at a wild time. Gold prices spiked
in the wake of the 2008 economic crash,
and from 2009 to 2011 the Yukon found
itself in the grip of a massive mining
exploration boom. Alkan’s flight hours
increased 40% in 2011 alone, Tayler
says—“which you can appreciate is a
challenge when you’ve got a set number
of aircraft to work with.”
That challenge—matching aircraft to
demand—remains the biggest one Tayler
faces each year. “At the start of the year,
we need to look in our crystal ball and
try to predict how much flying all the different exploration properties are going
to do, what the price of gold is going to
be, and how much traffic we’re likely to
see—and then we have to plan our fleet
around that,” she says. “So if we think it’s
going to be busier than our current fleet
is, we have to go out and invest in a million, million-and-a-half-dollar aircraft,
get the aircrew for it, get them trained,
get everybody online. Then everybody’s
here and the aircraft’s parked here and
you’re waiting to see if you were right. …
You are forced to make decisions that are
capital-intensive well before you know
for sure what the market will do.”
Alkan’s long-standing medevac contract makes it easier for Tayler to make
those million-dollar gambles. Since
1986, the company has provided air
ambulance services to Yukoners, flying
rs
ed
he
s.
he
ne
at
or
t’s
ece
o-
190 Reasons
Membership with the Canadian Payroll Association is essential. Canada’s 1.5 million employers count on
payroll professionals to annually pay $865 billion in wages and taxable benefits, $290 billion in statutory
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photograph Chris MacArthur
vng
ng
all
st
all
a
org.”
en
ed
ts
en
le,
them from the territory’s remote communities into Whitehorse
General Hospital—and, when necessary, from the hospital south
to Vancouver, Calgary or Edmonton. The contract forms between
40% and 50% of Alkan’s business. The company has three planes
and dedicated aircrew on standby 24 hours a day; Tayler estimates
that they fly 40 to 45 medevacs each month.
On both sides of the business, Tayler focuses on providing
seamless, trouble-free service to the client. For instance, the company installed several large freezers and fridges alongside its hangars, so that groceries won’t spoil
before they’re flown out to crews in the field. And on the medevac side, Alkan is
having a “bariatric door” installed in one of its air ambulance planes, at its own
expense—as Tayler explains delicately, an increasing number of North American
patients don’t easily fit through the standard door of a small aircraft.
Not long after she returned to Alkan, Tayler got her private pilot’s licence. She did
it, she says, both for personal and professional reasons. Flying had its hooks in her,
but also, she wanted to understand what her employees were up against. (“Fuelling
an airplane at minus 40? It’s awful,” she says, laughing.)
That obsessive attention to detail is something Hugh Kitchen has been marvelling
at ever since Tayler’s earliest days in accounts receivable. “She’s a quick study,” he
says. “Give her a few days, and she’ll have it figured out.”
/Eva Holland
Two Alkan Air
pilots load a
plane bound for
Kaminak Gold
Corp.’s Coffee
project, south
of Dawson
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15-03-05 10:30 AM
04/15
Heavy Metal
Going,
going...
Nine thousand people from 81
countries bidding on 10,500
pieces of equipment equals the
world’s largest auction
photograph eve edelheit
T
The excavators look like they are bowing in
prayer. Four hundred and fifty-five of them,
organized by model, are frozen in the same
position—hydraulic arms arch out from
the cabs and bend down to buckets resting
on the ground. There are also dump trucks,
packers, dozers and their heavy equipment
brethren, all resting on this 200-acre site in
Orlando. Ritchie Bros.—the Canadian company that first started auctioning furniture
some six decades ago before graduating
to industrial auctions—will unload 10,578
pieces of equipment at the sale, making this
the largest auction of its kind in the world.
Auctioneers in orange shirts rat-a-tat-tat
prices higher. “Don’t let him beat you out
on $1,000, neighbour,” one says, nudging a
bidder going after a Caterpillar 980G wheel
loader. Buyer No. 1074 snatches the 1998
edition of this machine for $76,000 (all currency in U.S. dollars). In some cases, successful bidders pick up multiple pieces of
equipment in one go by paying the winning
price for however many similar machines
they want. Over 9,300 bidders from 81
countries are either here in person or playing along online.
Orlando may seem like an odd place to
sell 496 compactors, 48 directional drills and
26 vacuum trucks, but the city has access to
ports—a necessary feature for global sales.
Buyers outside Florida will spend $144 million, with $48 million of that coming from
beyond U.S. borders. Buyer No. 32530, the
one nudged by the auctioneer to pony up
another $1,000, secures the 1995 version of a
Caterpillar 980G wheel loader. It has a new
coat of yellow paint. “Sold it—$41,000,” the
auctioneer says. “Headed to the Kingdom of
Saudi Arabia.” /Carrie Tait
DM151408_Pg14-15_ROB_APR_2015.indd 14
15-03-06 10:36 AM
photograph eve edelheit
Buyers size
up rows of
excavators
on day 2
of the fiveday auction
in Orlando
DM151408_Pg14-15_ROB_APR_2015.indd 15
15-03-06 10:36 AM
04/15
140-character
reviews
Forgot there’s a
world underneath
the ice and snow?
Science and nature
books explain
all this and more
Corporate Governess
The Narrow Edge
By Deborah Cramer
Crabs lay eggs,
birds eat them in
mid-migration.
Crabs’ blood used
to make medicine.
#Nature is amazing.
(Spoiler: Humans
ruin everything.)
Pay it forward
—Kelly N., Toronto
Dear Kelly
In a 2014 survey of over 300 senior managers by
California-based staffing agency Robert Half,
about 38% thought it was okay for candidates to
ask about money during the first two interviews.
But while a lot of companies might find this
acceptable—since it immediately allows them
to tell whether a candidate is affordable—is it
really the best thing for you to do? After all, you
could easily blow your chances by coming off as
rude rather than confident.
“It’s like walking into someone’s house
and saying, ‘What’s for dinner?’ ” says Gary P.
Latham, a professor at University of Toronto’s
Rotman School of Management. Instead, he says
you should build the love: The more time and
effort employers put in looking over the applicant, the more committed they are about hiring.
So go ahead and let them put in the effort.
When the employer is ready to talk about salary, be prepared. Do some research on sites such
as Glassdoor Canada to get an idea on ranges, but
always let the other side make the first offer. “If
you say it first, you’ll never know if they would
have offered something higher. Once the offer is
on the table, it’s okay to up it by another 5% to
7%. And, at that point, you’re likely to get it.”
Dear Corporate Governess
I’m a recent immigrant, and my culture considers
it rude to be pushy. But I’m frustrated that my ideas
aren’t being heard. How do I learn to speak up?
—Miko T., Toronto
Dear Miko
As a third-generation Canadian, I thought it better to ask someone who’s been there and succeeded. Ratna Omidvar, a professor at Ryerson’s
Ted Rogers School of Management, has not only
lived your experience, she’s shy as well. While she
encourages you to stay true to yourself, she also
believes it’s important to find your voice. “Start
by asking questions. When a shy person asks a
question, people take it seriously. Because we’re
such polite Canadians, the team will respond.
And so you bring yourself to their attention, not
as someone who has lots to say, but as someone
who has intelligent questions,” she says.
To improve your grammatical and idiomatic
English, Omidvar recommends listening to the
radio—particularly CBC Radio One, which has
more conversation than music. It will also ground
you in local issues. Then take some public speaking courses, as Omidvar did: “I was petrified but
after a few times, it was easier. There’s nothing
like sitting with others who share the same shyness but all want to come out of their shell.”
You could try to find a mentor in your organization or take a colleague out for a coffee.
There’s nothing quite like finding a friend, and
that can work for anyone.
The Road to
Relativity
By Hanoch
Gutfreund &
Jürgen Renn
100 years on,
big smartypants’
discovery explained
via annotations,
historical context.
Display on coffee
table next to
@sportsillustrated.
The Wandering
Mind
By Michael Corballis
Kiwi psychologist’s
light, droll take on
how and why we’re
easily distracted,
even in mid-senten…
hey, is that a cat
riding a Segway?
/Dave Morris
illustration antony hare
Dear Corporate Governess
I’m going through a bunch of interviews for a
contract job and am wondering when to discuss
salary. Is it okay on the second round?
15-03-05 9:57 AM
Thank You
for all the
dirty dishes...
and for making all of this possible:
Addressing
Child Hunger
Advocating for
long term change
Community Gardens
Community Kitchen
& Cooking Programs
LEADERSHIP PARTNERS
Foundation
KEY PARTNERS
™
Foundation
PARTNERS
KEY FOOD SUPPORTERS
Almost 850,000 people
including families with children, turn
to food banks for support each month.
foodbankscanada.ca
Food Banks Canada is efficient with donor’s gifts
– only 3% goes toward administration.*
*Includes the value of donated food.
Charitable number: 13064 3737 RR0001
All marks and designs are trademarked and/or copyrights and used under license.
15-03-09 10:21 AM
04/15
Smart Money
Investing
Cecilia Mo
Stairway to stagnation
We may be living the 1970s in reverse, yet markets may be just as miserable
There is also a growing wariness among
professional investors. Capital Economics, a
respected research firm, thinks the Standard
& Poor’s 500 Index will finish this year at
2,100—pretty much where it stands now—and
only inch ahead in 2016. GMO LLC, a muchfollowed investment manager in Boston, sees
both U.S. and international stocks as a fine way
to lose money over the next seven years.
The pros are fond of observing that this bull
market has been the most hated rally in history. It’s been fuelled by the low, low interest
rates engineered by central banks in the wake
of the 2008-09 financial crisis. The capacity
S&P 500 INDEX FOR THE 1970s
1972
1974
1976
1978
1980
for further monetary stimulus is limited.
If rates stay low, it would be because the
economy is sputtering, which is not good for
stock prices. But if interest rates and bond
yields move up because of an improving economy, bonds will offer more competition for
investors’ dollars. That should limit further
stock gains.
One lesson from history is that sometimes
investors get paid well to take risks, and sometimes—like now—they don’t. That’s not to say
a crash is imminent. However, remember that
stocks have climbed in recent years despite a
lacklustre economy. It would be no big surprise if the situation flips over the next few
years, and the market stagnates as the economy improves. /Ian McGugan
sound investing advice
Carl Icahn, hard-boiled corporate raider
“One of the hidden ‘assets’ in many companies is top
management: Get rid of them, and the value goes up.”
Yield-hungry baby
boomers are still looking
for dividend plays. We
asked value investor
Cecilia Mo, who oversees
the $1-billion Dynamic
Dividend Advantage Fund,
how she finds promising
stocks with payouts.
Why don’t you own lots
of Canadian bank, utility
and telecom stocks?
Most are fairly expensive,
given their muted top-line
and bottom-line growth. I
look for reasonably valued
companies that can grow
dividends in excess of the
market [4% to 5% annually
over the past two years], and
have strong balance sheets
and management that I can
trust. I own defensive and
cyclical names.
What sectors look the
most interesting now?
In Canada, I like non-bank
financials such as CI
Financial, which has strong
organic growth, and insurer
Manulife Financial, which
is shifting to rely more on
fee-based income from
wealth management. In the
United States, the health
care sector is attractive.
Obamacare has changed
the landscape, and it has
accelerated consolidation in
the insurance and hospital
industry. I own medical
device makers like Medronic,
insurers such as Anthem and
pharmaceuticals like Pfizer.
What are some of your
other dividend plays?
Cineplex, a big holding, will
benefit from a strong boxoffice slate this year, and
growth drivers like its preshow advertising business
and Scene loyalty card.
Others include K-Bro Linen
and Whitecap Resources,
which is likely to make
accretive acquisitions in
the energy downturn. /Shirley Won
photograph Brendan McDermid/reuters; illustration joel kimmel
A
s I recall the 1970s, there were
many reasons to think that
society was falling apart. The
decade burst into being with an
outbreak of violence in Quebec,
blasted complacency with Richard Nixon’s
resignation and then smacked us with runaway inflation. Mix in disco and you have an
era many of us wince to remember.
So maybe I should be grateful we are now in
the anti-’70s, a period when the dominant economic and political themes of my teenage years
are reversed. Somehow, though, I suspect the
2010s won’t shine in memory either—at least,
not from an investor’s perspective.
One of the biggest challenges for
both decades has been the impact
120
of baby boomers. During the 1970s,
boomers poured into the labour
force, helping to create stagflation.
100
Fast-forward 40 years and those
same workers are starting to flood
out, helping pull down the poten80
tial growth rate of the economy.
Perhaps as a result, prices are
now headed in the opposite direc60
1970
tion. Inflation was the bogeyman
of the 1970s; deflation is the villain of the 2010s. The 1970s were the decade of
soaring energy prices and all-powerful OPEC.
The 2010s have been marked by OPEC’s fading
power and by the recent crash in oil prices.
For investors, these developments raise
fundamental questions. The 1970s were a generally miserable time for stock markets, but
set the stage for big gains in the 1980s. Are the
2010s—wonderful so far—setting us up for a
big letdown in the years ahead?
One reason to think so is valuation. Stocks
are trading at lush multiples of their long-term
earnings, as measured by the so-called cyclically adjusted price-to-earnings ratio (CAPE).
This ratio has been a decent predictor of future
returns, and right now it’s suggesting that gains
over the next few years will likely be paltry.
15-03-06 10:49 AM
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15-03-06 1:00 PM
Eric Reguly
Where’s the organic beef?
McDonald’s needs a new game plan to compete with rapidly growing fast-casual chains—and better-tasting fries with that
photograph GREG FUNNELL
W
hen my sisters and I were kids, our rency in U.S. dollars). In the United States, guest counts—the
parents never took us to McDonald’s number of customers—fell by 4.1%. The company’s shares
just because it was fast and cheap, have been flabby underperformers, despite a recent uptick on
though that helped. They took us the arrival of new CEO and touted turnaround man Stephen
because McDonald’s was a treat. Easterbrook. Over the past year, in a raging bull market, they
The burgers, shakes and fries— were up 6% by early March, only about half as much as the
especially the fries—were tasty and the restaurants them- Standard and Poor’s 500.
selves had a cheery, all-American feel. Going to McDonald’s in
Fixing McDonald’s won’t be easy. If it goes upmarket through
our Ford Falcon station wagon was like taking a mini-holiday.
the use of higher-quality ingredients, it will have to raise prices
But that was more than 40 years ago, and McDonald’s and the and risk losing the mass market. If it cuts costs and prices to try
fast-food market it still dominates have changed. In early March, to rebuild market share, it risks relegation to the bottom rank
I went to a McDonald’s for the first time in almost a decade. of ultracheap joints milling out bland factory burgers.
The rather gloomy outlet was on a busy high street in North
Already, McDonald’s cool factor is a thing of the past. The
London. It was late afternoon and the place was almost empty, bulk of the growth in the industry is in the fast-casual market,
save for a few teenagers in plaid school uniforms. I stared at the where the emphasis is on fresh, high-quality, locally sourced
menu for two or three minutes before I could decipher all the ingredients. You still line up to place your order, but most fastoptions—too much choice—and ordered a
casual chains offer some service, making
regular hamburger with small fries.
them a hybrid between a classic stuff-yourThe meal was not particularly fast or
face-and-run franchise and a proper sitYou still line up
cheap, but that wasn’t the point. The point
down restaurant.
to place your order,
was the burger tasted like cardboard and
McDonald’s didn’t anticipate the shift in
but most fast-casual
the fries had almost no taste at all, despite
customer demand in recent years. As society
chains offer some
the salt, sugar, fat and other ingredients
in general became more affluent, consumlarded into them (the fries have 19 ingrediers became more willing to spend money in
service, making
ents including an anti-foaming agent called
restaurants. But they also wanted food with
them a hybrid
dimethylpolysiloxane, should you be keen
flavour that was healthier. North American
between a classic
to spice up your next barbecue).
families became foodies, and learned to
The next day, I went to two of the new
buy organic beef, free-range chicken and
stuff-your-face-andbreed of American “fast casual” burger
growth-hormone-free milk. Supermarkets
run franchise and
joints, Shake Shack and Five Guys Burgers
like Whole Foods—stock market value $20
a proper sit-down
and Fries, in London’s buzzy Covent Garbillion—are spreading across the land.
den area. They were definitely slower than
As fast-food consumers went upmarrestaurant
McDonald’s, though not by much, and cerket, they were eagerly followed by the
tainly not cheap by McDonald’s standards.
fast-casual restaurants and mysteriously
But that wasn’t the point either. Compared with McDonald’s, ignored by McDonald’s. It responded by tweaking its menu (not
the meals were delicious, and because they use high-quality always for the better, like getting rid of the yummy beef tallow
ingredients, such as Shake Shack’s hormone-free beef, I felt used for the fries), its decor and not much else. Along came
pretty sure it was healthier, if equally fattening. And the decor Five Guys, Shake Shack, Habit Burger Grill, Panera, Chipotle
was definitely more pleasing.
and others. Some became stock market sensations. ChipoIn the United States, Elevation Burger says it uses “100-per- tle, with 1,780 restaurants—just 5% of McDonald’s total—has
cent USDA -certified organic, grass-fed, free-range beef.” a market value of $21 billion, about 21% of McDonald’s total.
McDonald’s signature gut filler, the Big Mac, offers 100% pure, Shares in Shake Shack’s IPO in January doubled on their first
USDA-inspected beef: “no fillers, extenders or preservatives.” day of trading.
I’ll take an upscale burger, please, even at twice the price, and
McDonald’s isn’t going to disappear any time soon, if ever.
I don’t want to know what extenders are. But millions of other The question is how to make its meals tasty and healthy while
people don’t share my reservations. McDonald’s—born in Cal- keeping them cheap and fast. It might be impossible to satisfy
ifornia, then launched as a franchise by Ray Kroc in Illinois, in all those goals.
1955—now has more than 36,000 outlets in 119 countries.
Yet all is not well under the golden arches. In 2014, McDon- Eric Reguly is an award-winning columnist with The Globe and Mail.
ald’s global revenue was down 2.4% to $27.4 billion (all cur- He is now based in Rome and can be reached at [email protected]
15-03-06 10:56 AM
Congratulations to
these recent appointees
Phillip Crawley, Publisher & CEO of The Globe and Mail, extends best wishes to the
following individuals who were recently featured in the Report on Business Section of
The Globe and Mail newspaper. Congratulations on your new appointments.
Ian J. Boyd, P.Eng.
to President and
CEO
Bird Construction
Inc.
Greg Dowdall, CFA
to Head of the
Private Client Group
Burgundy Asset
Management Ltd.
Joe Rooney, CFA
to Head of the U.S.
Client Group
Burgundy Asset
Management Ltd.
Dr. Sherry Cooper
to Chief Economist
Dominion Lending
Centres
Thomas Haig
to President and
COO
Giant Tiger Stores
Limited
Joel Feldberg
to President and
CEO
The Global Group
Jim Bertram
to Executive Chair
Keyera Corp.
Douglas Haughey
to Independent
Lead Director
Keyera Corp.
David G. Smith
to President
and CEO
Keyera Corp.
Antoine Chagnon
to President
and CEO
Lallemand Inc.
William (Bill)
Nankervis
to Executive VP
and COO
Lallemand Inc.
Angela Austman
to Partner,
Vancouver Office
Lawson Lundell LLP
Vincent Bérubé
to Principal,
Worldwide
Partnership
McKinsey &
Company
Erez Eizenman
to Principal,
Worldwide
Partnership
McKinsey &
Company
Maryse Bertrand
to Board of Directors
Metro Inc.
Stephanie Coyles
to Board of Directors
Metro Inc.
Réal Raymond
to Chair,
Board of Directors
Metro Inc.
Stuart Hay
to Partner, Odgers
Interim, Calgary
Odgers Berndtson
Stephen Solursh
to VP and Associate
General Counsel
Ontario Teachers’
Pension Plan
Dr. Kevin Imrie
to President
The Royal College
of Physicians and
Surgeons of Canada
Neil Ross
to VP, National Sales
Sentry Investments
APRIL 2015
To make arrangements for an Appointment Notice,
please call 1-800-387-9012 or email [email protected]
View all appointment notices online at www.globeandmail.com/appointments
15-03-05 2:18 PM
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transportation
get a
move on
by
Alex Bozikovic
Dawn Calleja
More than half of the world’s seven billion inhabitants live in cities—a figure
that is projected to grow to 66% by 2050. And as our urban centres grow, so
too does the demand for more efficient means of moving the people who live
in them. We talked to 11 urban planners, economists, business leaders and
big thinkers for their vision on creating the cities of the future.
2050
2045
Omar el Akkad
Jeff Gray
Iain Marlow
Oliver Moore
Patrick White
Total urban
population
worldwide,
1950-2050
6,338,611
6,030,924
2040
(000s)
5,715,413
1950
2035
746,481
5,394,235
1955
872,134
1960
1,019,495
2030
5,058,158
1965
1,183,910
1970
2025
1,350,281
4,705,774
1975
1,534,721
2020
4,338,015
source un world urbanization prospects 2014 study
1980
1,749,539
2015
1985
3,957,285
2,003,050
2010
1990
3,571,272
2005
3,199,013
2000
2,856,131
1995
2,285,031
2,568,063
DM151408_Pg23-37_ROB_APR_2015.indd 23
15-03-09 11:50 AM
toronto
chicago
new york
los angeles
miami
mexico city
bogotÁ
lima
rio de janeiro
buenos aires
—Gil Penalosa is chair of the non-profit group
8-80 Cities and former commissioner of Parks,
Sport and Recreation for Bogotá, Colombia
Average
number
of hours
commuters
spend
stuck in
traffic
annually
m
London commute zone
Brussels
Antwerp
Los Angeles
Rotterdam
Honolulu
Milan
San Francisco
Paris
New York
Greater Manchester
Washington D.C.
Toronto
3
montreal
3
U.S. average
38
Vancouver
Calgary
29.5
16.4
20
DM151408_Pg23-37_ROB_APR_2015.indd 24
sources inrix traffic scorecard, world bank, world health organization,census canada
t r a n sp o rtat i o n
“There’s no major city
in the world that has
solved the issue of
mobility through the
private car. None. And
the only way to move
people is through public
transportation. For that,
we need to improve
buses. Wherever you
see a traffic jam, that’s
where you should have
dedicated bus lanes.
And people need to
be able to walk to the
station. We’re not going
to be able to get people
out of their cars unless
transit is cheaper,
faster, more convenient
or all of the above.”
City population growth
15-03-09 11:50 AM
(000s)
1950
2015
2050
moscow
neiro
sources inrix traffic scorecard, world bank, world health organization,census canada
london
paris
beijing
madrid
Tokyo
Shanghai
cairo
riyadh
mumbai
lagos
kuala lumpur
kinshasha
Los Angeles
10,883
12,308
13,257
Mexico City
15,642
20,843
23,865
Chicago
7,374
8,739
9,493
Miami
3,969
5,771
6,554
Toronto
3,807
5,901
6,957
New York
16,086
18,591
19,885
Bogotá
4,740
9,558
11,915
Lima
5,837
9,722
12,221
Buenos Aires
10,513
15,024
16,956
Rio de Janeiro 9,697
12,825
14,174
JOhannesburg
82.9
78.1
64.3
62.6
60.8
57
56.5
ROAD RAGE
The term originated in 1987–
1988 when a rash of freeway
shootings took place on L.A.’s
405, 110 and 10 freeways
54.8
54.2
46.9
$121 billion (U.S.)
40.5
Annual cost of all
wasted time and fuel from
being stuck in traffic in the U.S.
38.5
38.1
11 billion litres
38
29.5
40
60
That’s how much extra fuel
Americans consume due to all
that traffic—adding up to
25.4 billion kilograms of carbon
dioxide released into the
atmosphere by idling cars
4,414
6,133
6,707
London
8,054
10,189
11,467
Paris
9,330
10,764
11,803
Lagos
4,764
12,614
24,239
Kinshasa
3,683
11,116
19,996
Johannesburg 3,709
9,176
11,573
83.4
Madrid
Moscow
8,987
12,063
12,200
Cairo
9,892
18,419
24,502
Riyadh
2,325
6,195
7,940
Mumbai
12,436
20,741
27,797
Kuala Lumpur 2,098
6,629
9,423
Beijing
6,788
19,520
27,706
Shanghai
7,823
22,991
30,751
Tokyo
32,530
37,833
37,190
80
DM151408_Pg23-37_ROB_APR_2015.indd 25
15-03-09 11:50 AM
Janette
Sadik-Khan
Transit guru
New York isn’t known for its friendly streets, but as
transportation commissioner under ex-mayor Michael
Bloomberg, Janette Sadik-Khan made them a lot more
welcoming. Many of the changes were controversial at first,
but public support grew. The shift showed that, to the surprise of some, removing space for vehicles needn’t worsen
congestion. And making life easier for cyclists can help local
businesses. Now a principal at the former mayor’s consultancy, Bloomberg Associates, Sadik-Khan tells us how she
brings the lessons of New York to the world.
Over seven years, we added
almost 400 miles of bike lanes to
New York City streets to create
a true cycling network. On top
of that, we launched CitiBike,
the largest and most popular
bike-share system in the United
States. It was really the first new
transportation system in New
York in 60 years, and it’s already
become a permanent part of
the city fabric. We also built 60
pedestrian plazas across all five
boroughs and reworked hundreds
of corridors and intersections.
Our streets are safer than they’ve
ever been.
The health of the city’s economy
is linked to the health of a city’s
streets—we saw proof in numbers.
We saw really impressive
growth in retail sales by localrun businesses, up 172% in the
more walkable parts of Brooklyn.
Commercial vacancies near Union
Square dropped 49% when public
space was added. And closing part
of Times Square to cars boosted
safety while increasing overall
vehicle travel speeds in the area.
In the global race to build
safer and more sustainable
communities, cities that don’t
innovate and give people choices
will be left at the starting line.
No two cities are exactly alike,
but we now have the opportunity
to show what worked in New
York. You know, tailor it to meet
the needs of a particular city. If
we can introduce world-class
streets to New York, Toronto and
Calgary and Ottawa can too.
It takes new thinking to change
streets, though. And in a lot of
places, streets have been the
same for so long that people
have forgotten what’s possible.
The attraction to the status
quo is incredibly powerful and
you really need to show people
something even stronger to break
that bond.
DM151408_Pg23-37_ROB_APR_2015.indd 26
15-03-09 11:51 AM
i
t
k
b
m
th
u
photograph (left) andrew eccles; source statistics canada
t r a n s p o rtat i o n
New York takes
the mean out
of mean streets
1
s m a rt i dea
THE
ZIPPER
MERGE
o
Go ahead—butt
in. Polite merging,
in which drivers
dutifully move
over as soon as
they’re aware the
road will narrow,
can send a ripple
effect back 30
kilometres as cars
brake to let others
in. That’s why
more jurisdictions
are encouraging
the zipper merge—
vehicles stay in
both lanes as
long as possible,
and then one car
merges and one
car advances.
Maximizing the
use of road space
can cut backups
by 40%.
ds
e
my
s.
n
c
rt
s
e
k
photograph (left) andrew eccles; source statistics canada
d
—Jan Gehl is a Danish architect and public space guru whose firm
has worked on projects in cities around the world
15.4 million
Number of Canadians who commute to work, according to the 2011 National
Household Survey—and about 80% of them drove in a private vehicle
drove 74%
transit 12%
walked 5.7%
passenger in vehicle 5.6%
biked 1.3%
other 1.4%
63.5% bus
25% subway or
elevated rail
of that
12%
11.2% light rail,
streetcar or
commuter rail
0.3% ferry
Partner up
Jascha Franklin-Hodge Chief information officer of Boston
,
y
t
“Canadian cities have been too influenced by
American city planning, which until recently was
nothing to brag about. There has been too much
focus on the automobile. In Copenhagen, the
strategy is to be a good city for people. It has to do
with the physical design of the streets. People
are amazed at what they see here: Things have
been getting better for 50 years, and that is a feat.
You Canadians can do it, for God’s sake.”
In a previous life, Jascha Franklin-Hodge worked on the
digital strategy for Barack Obama’s two presidential
runs. Today, he’s trying to breathe new life into the way
Boston deals with an age-old annoyance—traffic management. In January, the city teamed up with Uber to try
and use the data the company collects to solve some of
its traffic woes. The following month, Boston partnered
with Waze, a Google-owned traffic app that collects congestion data from its millions of users.
We took the Waze feed
and integrated it with our
Geographic Information
Systems platform to create a
map that can be viewed inside
the city’s traffic management
centre.
It allows the people who
control the signal system to see
where there are incidents that
they may need to respond to.
For example, Waze may notify
them that there’s a brokendown truck blocking a lane on
a particular street. If they have
a camera in the area that they
can access, they can say, Okay,
I see what’s going on, I’m going
to extend the green cycle on
the light ahead of this truck.
Roadways are used by buses,
cyclists, private vehicles. And
now there are things like Uber
and Lyft, and while they’re not
public transportation in the
traditional sense, they are part
of the transportation network.
In some ways we’re catching
up on the data front for more
traditional road users, because
the public transit system has
been providing detailed route
and service data for years.
DM151408_Pg23-37_ROB_APR_2015.indd 27
15-03-10 2:04 PM
photograph tom griggs
DM151408_Pg23-37_ROB_APR_2015.indd 28
15-03-09 11:51 AM
HOW TO TRANSFORM A C ITY: PART 1
Medellin, Colombia | $7 million
photograph tom griggs
For generations, the city of Medellin, Colombia, was
known for its drug violence and intractable poverty.
Home to Pablo Escobar, it was the murder capital of
the world in the 1980s and ’90s. Steep hills and clogged
streets stifled the city’s social and economic mobility; those who grew up in the slums rarely escaped.
But a decade of unorthodox transit planning is changing all that. In 2004, the city launched its Metrocable
system of soaring gondolas that usher 40,000 people
a day between hillside slums and the rest of the city.
In 2013, the city finished its latest quirky effort to integrate the once-divided city: a 384-metre escalator that
cuts a half-hour hike up to the impoverished Comuna
13 district down to five minutes. Free to use, the $7-million escalator is believed to be unique in the world. The
city’s campaign to fight crime through transit seems to
be working. A Columbia University study found that
murders declined by 66% in areas where Metrocable
stations were built. Dubbed “the cable car of the poor,”
the Metrocable system is now being replicated by other
South American cities that are embracing the notion
that mobility equals prosperity.
DM151408_Pg23-37_ROB_APR_2015.indd 29
15-03-09 11:51 AM
2
sma rt i d e a
Give traffic
signals
a brain
Anders
Kofod-Petersen
Scientist
Researchers around the globe are in a race to develop
intelligent traffic signals to manage traffic woes. Norwegian artificial intelligence expert Anders KofodPetersen is one of them: He built a prototype using the camera
from an Xbox lying around his lab in Trondheim and says the
device will ease traffic congestion, helping to reduce pollution
from idling engines, and discourage jaywalking.
I get annoyed when I drive to an
intersection and I get a red and
there’s no pedestrian for miles. Why
do I have to sit here, waiting for this
invisible pedestrian?
Our signal looks at the body
language of people near the traffic
light. We look at certain points on
a pedestrian—their hips, shoulders
and gaze direction—and calculate a
predicted path. If this path indicates
that the pedestrian wants to cross
the street, we know that.
We track these people moving
about and do calculations that
inform the system that here are, let’s
say, seven pedestrians who have
the intention of crossing the road.
And that will go into the scheduling
system, which will also know
something about how many cars
are about. And then the decision
is made to give the green to the
pedestrians or to the cars.
We are also interested in knowing
how long we should keep the green
light for the pedestrians. If it is some
young sporty guy who runs, he
needs the green for five seconds, but
if old Mrs. Johnson is arriving with
her wheeled walker, she probably
needs slightly more time. So we
are also trying to classify these
pedestrians—are they children or
old?—so we can adjust the length
of the green-red cycle.
There’s no way we can actually solve
traffic. But we can make it better.
Before the Transitmix
app, transit planners
sketched out bus
routes on pieces of
paper, plugged them
into Google Earth and
then put the mileage
into Excel to tally the
cost. But that didn’t
take into account
population density and
demand. Transitmix—
created by former
NASA developer Sam
Hashemi—does. When
he put a beta version
online, 50,000 maps
were created in the
first month. “It’s not
sexy to start a company
focusing on tools for
government agencies,”
says Hashemi, “but
the impact you can
have is incredible.”
80,832
Number of licensed
rickshaws in Delhi
500,000
Estimated number of total
rickshaws in Delhi
13,437
Number of yellow-taxi
medallions in New York City
13,700
Cars affiliated with Uber
DM151408_Pg23-37_ROB_APR_2015.indd 30
15-03-10 2:06 PM
Fa
Ge
photograph (left) kai t. dragland (ntnu); sources new York
city transit, fastesttrains.org, the telegraph, discovery news
transportation
THE
PLANNING
GUIDE
L
Je
ci
th
us
It pays to
go private
In the 1980s, state-owned Japan Railways was wheezing under mounting debt and ridership was stagnating.
In a bold experiment, the Japanese government spun
off the railway assets into several private companies,
the biggest of which was East Japan Railway, known as
JR East. Freed of the state’s shackles, JR East became
a lean, hyper-competitive transit corporation—it
launched new routes, slashed travel times and made
transit hubs ultra-efficient. Before “there was no competition or competitors, so there was no competitive
spirit,” says Takao Nishiyama, the company’s executive
director of overseas affairs. The company now moves
an astounding 17 million passengers per day through
Tokyo’s spotless subway network and aboard the
Shinkansen bullet trains—although they travel at 320
kilometres per hour, not one has recorded an accident
since operations began more than four decades ago.
G
ix
rs
f
m
nd
ge
he
t
nd
—
tal
7
i
City
0
er
Belgium HSL
186 mph
Italy ETR 500
photograph (left) kai t. dragland (ntnu); sources new York
city transit, fastesttrains.org, the telegraph, discovery news
0
—Joe Starkman, president of condo developer Knightsbridge
Homes, is proposing to build a pair of condo buildings in
Calgary with no resident parking. This would be the first such
development in Alberta and is politically sensitive enough that
city council would have to approve it this spring. Opponents
are calling the plan unrealistic, but Starkman counters that
he’s tapping into a worldwide trend—and he’s able to
offer a cheaper product since underground parking stalls in
downtown Calgary cost about $60,000 to build.
Fastest trains in the world
m
en
n
s
e
ot
any
or
s,”
t
n
”
2
“We’re looking at the
Y generation—the first in
decades where a car
is not their first priority.
It doesn’t even rank
in the top five.”
190 mph
Eurostar
Spain AVE Taglo 250
Taiwan THSR 700T
South Korea KTX
France TGV RÉseau
Shanghai maglev
japan Shinkansen
Germany Transrapid TR-09
China CRH380A
199 mph
205 mph
208 mph
219 mph
236 mph
270 mph
275 mph
279 mph
302 mph
Let the data guide you
Jean-François Barsoum Senior managing consultant, Smarter Cities, Water and Transportation at IBM
Jean-François Barsoum
helps cities co-ordinate
the flow of information
from traff ic cameras,
road sensors and public
transit networks. Lyon
and some other French
cities are adopting the system that helps crunch
the data and beam real-time information to
users on their smartphones.
You could take the subway
to the end of the line and
then you could take a
cab. Or you could take a
bike to the train station
and then you could take
the train. And because
of the access to all the
information—including
how many parking spots
there are for electric
vehicles, if the trains are
running late and if there is
a road blockage—people
can actually take all of this
into account. If there’s a
delay, the system will alert
you and say the mode you
thought you were going to
take to the airport won’t
work for you any more. It
will also do predictions.
There’s historical data
which says that at 4
o’clock it usually looks like
this, but it will also take
in existing conditions and
say, based on what it looks
like now, here’s what we
think it is going to look
like. It will actually think
ahead: Every time there is
an incident or a change in
what’s happening on the
highways, the system will
let you know.
DM151408_Pg23-37_ROB_APR_2015.indd 31
15-03-09 11:51 AM
HOW TO TRANSFORM A C IT Y: PART 2
Even on a bitterly cold winter evening in Seoul, South Korea, couples are
strolling leisurely along the Cheonggyecheon, laughing and holding hands
as they follow one of the paths that flank the stream. The waterway burbles
along, in a sunken concrete thoroughfare, for nearly 11 kilometres, in the
heart of this megacity of 10 million people. It’s hard to imagine that, a decade
ago, roughly 168,000 cars a day travelled over an enormous raised highway
that towered over the Cheonggyecheon. Then, in 2000, urban planner Kee
Yeon Hwang and his team convinced then-mayoral candidate Lee Myungbak of the merits of replacing the freeway with a recreational corridor.
Together, they calmed a skeptical (and furious) public, and got the elongated
park built in about 2 1/2 years. At the same time, the city added two roads and
a 14.5-kilometre bus-only line beside the previous route of the freeway. It also
built dozens of bridges to connect the two sides of the stream. The project is
credited with increasing bus ridership by 15%, and subway ridership by 3.3%
between 2003 and 2008; downtown traffic has also decreased by 2.3%. As for
Lee, he became Korea’s 10th president.
DM151408_Pg23-37_ROB_APR_2015.indd 32
photograph seil sung
Seoul | $367 million (U.S.)
15-03-09 11:52 AM
photograph seil sung
DM151408_Pg23-37_ROB_APR_2015.indd 33
15-03-09 11:52 AM
t r a n s p o rtat i o n
No free
parking
3
sma rt i d e a
Donald
Shoup
Urban planner and
economist
BUILD A
TEST CITY
How do you claim
the title of selfdriving-car capital
of the world? Build
a $6.5-million (U.S.),
32-acre facility for
autonomous vehicles.
The University of
Michigan in Ann
Arbor’s M City will
simulate driving in
a real urban centre,
including a four-lane
highway, streetlights,
roundabouts and
a variety of road
surfaces. The project
is backed by the
major automakers,
along with tech
companies like
Verizon and
Qualcomm. Tell me about your study of the Los
Angeles neighbourhood of Westwood,
where you found an astronomical amount
of cruising for parking.
It’s a 15-block area and, over a year,
we estimated that it amounted to
about 915,000 vehicle miles travelled.
That’s equivalent to four trips to the
moon, or 36 trips around the Earth.
It was 50 cents an hour at the meters,
but the cheapest off-street parking
was about $2—and often you get a
similar ratio in other cities. If you look
at the garage, it might be $10 for the
first hour, $2 on the street. So the city
is telling you to cruise. They did the
same study in New York and found
similar results. In San Francisco,
they’ve tried out variable pricing in a
big way over the last three years—the
cost changes depending on location,
time of day and day of the week—and
it cut the time of cruising in half.
This makes me think of the Seinfeld
episode where George wants a free spot.
Why does parking make us crazy?
Just what George said: “I never pay
for parking. Paying for parking is like
going to a prostitute. Why should
I pay, if when I apply myself, maybe
I can get it for free?” Well, of course
that’s what people are doing.
18.3
million
Number of bicycles
in the Netherlands
vs.
16.5
million
the country’s total population
Republic of
San Marino
1,139
cars
per
1,000
people
15-03-10 2:12 PM
An
(P
C
V
O
photograph (left) naomi harris; Sources world health organization
Donald Shoup is a rock star—probably the only rock
star—in the world of parking policy. The radically
commonsensical ideas in his 2005 book The High
Cost of Free Parking have inspired a cadre of self-declared
Shoupistas in cities around the world who want to apply the
laws of supply and demand to on-street parking.
t
p
W
su
Fir
ec
be
is
vis
in
ab
roa
th
ev
ab
“There are health studies that show around 4,000 people die prematurely
every year from poor air quality in London. And if that’s the case in London,
I can tell you now that in Beijing and Moscow, it’s going to be a lot higher
than that. If you are only going to punish the big dirty wagons initially and
disincentivize those, then politically you are not going to upset too many
people. Then, year on year, you can tighten up the standard, bit by bit. ”
—Martin Powell is a former environmental adviser to London Mayor Boris Johnson and is now head of urban development
at Siemens AG, whose technology is used to ding drivers £11.50 ($22) for motoring into the city centre.
A new proposal would see central London become an ultralow-emissions zone by 2020. Large older trucks would face
a £100 ($190) daily charge, and cars more than 13 years old would be fined £12.50 ($24) daily.
d
),
es.
top 10 pollution
producing cities
l
n
,
ne
s,
iran
Delhi
gwalior
Canada
4
Vancouver
8
Toronto
11
Montreal
12
Sarnia
lucknow
karachi
14
Red Deer
5
Sydney
14
New York
patna
ahmedabad
raipur
Other cities
photograph (left) naomi harris; Sources world health organization
0
Health authorities
say 25 is the safe
level for PM2.5
rawalpindi
pakistan
,
le
khorRamabad
Annual mean PM2.5, µg/m3
(PM = particulate matter)
ct
on
peshawar
16
London
17
Paris
20
Los Angeles
36
Shanghai
56
Beijing
Just do it
Jonas Eliasson Professor, Stockholm’s Centre for Transport Studies
On Jan. 2, 2006—the morning before Stockholm introduced a €2
congestion charge—the bridges leading into the city centre were
jammed with cars. On Jan. 3, however, traffic flowed freely, thanks
to the 20% of drivers who kept their cars off the road. Eliasson
helped launch the program.
Why was the charge so
successful?
First, we already knew that
economic policies affect
behaviour, and that the effect
is bigger if the prices are really
visible. One of the things we did
in Stockholm was that we had
a big electronic sign over the
road reminding people that
they really were paying a charge,
even though they didn’t get
a bill until the end of the month.
And people had more
alternatives than we
appreciated—not only public
transportation, but also in
terms of departure times, other
destinations, carpooling. Each
of these effects were relatively
small—the number of drivers
going to public transportation
was less than 10%, but when
you added up 5% going to other
departure times, 3% going to
carpooling and so on, you reach
this almost magical figure of
more than 20%.
How did drivers feel about it?
The benefits were so large that
people started to like it—which
I don’t think many people had
counted on. Before, just 20%
or 25% of voters were in favour.
After a year, 70% or 75% of
voters were in favour.
So, why are politicians
so afraid of these kinds
of charges?
I think many politicians
underestimate that people will
get used to almost any kind of
India
change rather quickly. Once the
charge was in place, we asked
people in Stockholm if they had
changed their behaviour—and it
turned out most of them weren’t
even aware they had changed.
How do you translate
Stockholm’s experience into
advice for others?
It depends on what your
particular congestion problems
look like. When I ask that
question, the response I get most
often is, “We have congestion
everywhere and all the time.”
But most cities have worse
congestion around the city centre
and on a couple of highways, and
typically during rush hours. And
so what you do is to put a price
on the most severe bottlenecks—
the junctions or ramps that cause
these queues, which build up
and lock other junctions. Just
putting a price on these places
can help quite a lot.
DM151408_Pg23-37_ROB_APR_2015.indd 35
15-03-09 11:52 AM
photograph robby whitfield/crossrail.co.uk
DM151408_Pg23-37_ROB_APR_2015.indd 36
15-03-09 11:52 AM
HOW TO TRANSFORM A C ITY: PART 3
London | $25 billion
photograph robby whitfield/crossrail.co.uk
In a 2007 episode of the enormously popular U.K. motoring program
Top Gear, the show’s four hosts race one another across London, each
using a different mode of transportation: car, bicycle, public transit
or motorboat. In the end, the bike wins, a result that prompts host
Jeremy Clarkson to disavow the entire segment for fear of alienating
his car-mad fans. The real point was not to prove that two wheels
are better than four, but to highlight the absolute madness of navigating one’s way across the congested city. For Clarkson, relief is on
the way in the form of Europe’s largest construction project. Upon
completion in 2018, the $25-billion Crossrail will span 118 kilometres from Heathrow Airport to Shenfield in Essex, about 50 kilometres away from the city’s centre, and will move 200 million people a
year. The new line, which will run both above and underground, will
increase London’s rail capacity by a whopping 10%. (The tunnelling
is expected to be completed this spring. In the photo, Elizabeth, a
tunnel machine named after the Queen, breaks through to Liverpool
station in January, 2015.) At times, the project has seemed more like
a massive archeological dig. In boring 42 kilometres of new tunnels,
workers have discovered mammoth bones, Roman horseshoes and
3,000 skeletons dating back to the 16th century.
DM151408_Pg23-37_ROB_APR_2015.indd 37
15-03-09 11:53 AM
the great
central bank
freak-out
of 2015
By Kevin Carmichael
photograph (left) danish siddiqui/reuters; (right) ruben sprich/reuters
aghuram Rajan got it started. On Jan. 15, the governor of the Reserve
Bank of India jolted traders on Mumbai’s Dalal Street by cutting interest rates. The surprise was the timing of
the announcement: Rajan wasn’t supposed to deliver a policy statement for another 19 days.
The weirdness continued that same day—in Switzerland, of all places. For three years, the Swiss National
Bank had steadily bought euros on currency markets to keep the country’s franc from surging in value relative
to the euro, and thereby choking off growth. Unorthodox, yes; but global financial markets had grown accustomed to the regular renewal of the bank’s stance. Without warning, however, the Swiss cut the franc’s tether.
Swiss National Bank chairman Thomas Jordan also set the benchmark Swiss lending rate at negative 0.75%. In
theory, a lower rate should put downward pressure on the franc; not enough in this case, as the franc’s value
shot up by 18% in the days that followed. Many hedge funds bled red.
And on it went. The Danes cut interest rates four times in the span of a few weeks. As this issue of the magazine neared deadline, China’s central bank cut rates by a quarter of a percentage point and Poland slashed
them by a half point. In the first 60 days of 2015, some 20 central banks had executed stimulus measures.
Let’s call it
DM151408_Pg38-43_ROB_APR_2015.indd 38
15-03-13 12:24 PM
is
m
ci
is
bo
no
in
ga
ba
th
na
Eu
as
Th
de
sc
India’s Raghuram Rajan
(opposite) kicked off a
global deluge of interest
rate cuts in January.
Thomas Jordan of
Switzerland (below)
set his benchmark rate
at less than zero
ve
of
t
aed
t
k
t
5
photograph (left) danish siddiqui/reuters; (right) ruben sprich/reuters
al
ve
ser.
In
ue
The scale and breadth of intervention
is reminiscent of the central bankers’
manoeuvres during the 2008-09 financial crisis, with one big difference: There
is no obvious emergency this time.
The central bankers who acted so
boldly in the Great Recession say they are
now responding to the startling collapse
in oil prices. But since when was cheaper
gasoline such a bad thing? The central
bankers reply that, when you combine
the plunging cost of energy with stagnant growth in major economies such as
Europe and Japan, deflation has emerged
as the clear and present danger.
Into this frenzy stepped Stephen Poloz.
The Bank of Canada governor had the
decency, at least, to wait until his regularly
scheduled interest rate policy announce-
ment on Jan. 21. The bank’s benchmark
rate had been set at 1% for more than four
years, put in place by Poloz’s predecessor, Mark Carney. Everyone assumed
it would stay there. But Poloz shocked
Canadian markets with a quarter-point
cut. He called it “insurance” against the
economic blowback from the fall in oil
prices. The deterioration of wealth, he
said, would be “unambiguously negative
for the Canadian economy.”
Poloz’s counterparts all have similar
explanations: Central banks are hardwired to fight inflation or deflation, so
what else are they supposed to do? But
what if the world’s central banks have
developed a hero complex? Cheaper
money works by tickling our greed. It
tempts us to borrow, spend and invest.
Th at i s wh at m a ke s e co n o m i e s go
around. The thing is, there is an emotion
that trumps greed: fear.
The Bank of Canada was by no means
enthusiastic about the Canadian economy’s prospects at the end of 2014.
Poloz made a point of underlining his
dissatisfaction with the high number
of Canadians who were either looking
for work or in need of more hours. Still,
things seemed to be crawling in the right
direction. A weaker loonie and stronger
economic growth in the United States
looked likely to give exporters a lift. Statistics Canada confirmed in March that
real gross domestic product grew at
an annual rate of 2.4% in the last quarter of 2014, faster than the central bank
reckons the economy can grow without
eventually stoking inflation.
The bet on Bay Street at the end of
last year was that Poloz would leave the
benchmark rate unchanged for most of
2015 before starting a gradual trek back
to higher rates. Growth conditions aside,
the Bank of Canada was also clearly worried that Canadians were borrowing their
way to a new financial crisis. In its policy announcement last Dec. 3, the bank
noted that “household imbalances”—
which is how it describes the country’s
record debt load—“present a significant
risk to financial stability.” The implication: Higher interest rates eventually
would be needed to wean Canadians off
their credit habit.
Seven weeks later, Poloz decided
there was a more significant risk facing
the Canadian economy than mass foreclosures. At a news conference on Jan.
21, Poloz explained that the sharp drop in
DM151408_Pg38-43_ROB_APR_2015.indd 39
15-03-13 12:24 PM
I
dence of entrepreneurs like Mark Hanna,
a partner at Montreal-based Leeza Surfaces Inc., which supplies stylish, highend countertops. The company is headquartered just north of Pierre Elliott
Trudeau International Airport, and has
warehouses in Toronto, Vancouver and
Connecticut. I first met Hanna at a forum
for entrepreneurs in Ottawa in August,
2009, near the end of the Great Recession. He was weathering the crisis well,
and he was optimistic.
But when I contacted Hanna this past
February, after Poloz’s surprise rate
reduction, he was spooked. “The cut in
rates, to me, suggests desperation,” he
said. “This does not instill confidence
when I think about our economy.” The
trouble for central bankers is that there
are lots of Mark Hannas out there—in
every industrialized country. He is an
honest-to-goodness economic actor: a
hirer of people, a customer for loans. He
is the kind of person the central banks
are trying to help, yet they’ve shaken his
desire to expand his business. So why
the Great Freak-Out?
In the old days, central bankers tried to
avoid volatility—or creating excitement
of any kind, really. They were the stoic
guardians of our economies, detached
from the fickle political calculations of
governments and immune from the base
profit motives that drive corporate leaders. Alan Greenspan, who was chairman of the U.S. Federal Reserve from
1987 to 2006, was the archetype of the
abstruse central banker. His long, elliptical responses to questions from U.S. legislators, delivered in a monotone, were
DM151408_Pg38-43_ROB_APR_2015.indd 40
15-03-13 12:24 PM
Ba
Go
sa
ou
wi
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lik
po
qu
w
to
m
w
ab
ra
m
in
w
to
photograph adrian wyld/cp; chart source thomson reuters datastream
oil prices at the end of 2014 was proving
to be far worse than expected. By convention, the bank bases its forecasts on
the current price of oil. In October, the
cost of Western Canada Select was about
$70 (U.S.) a barrel. When policy makers
gathered to rethink policy in January,
WCS had been stuck below $40 (U.S.) a
barrel for weeks, which is nowhere near
enough to cover the cost of extracting
oil from sand in Northern Alberta. The
bank has seen oil shocks before. Their
statistical models gave them a good idea
of where things were headed. Thousands
of Canadians were facing certain unemployment. Oil companies already were
scrapping plans to expand production,
triggering a broader decline that would
rob factories of orders and consultants of
service contracts. There would be pain.
The bank focuses on something called the “output gap” to tell it how close or far
it is from hitting its inflation target. The gap is the difference between actual GDP
and the level of production the bank thinks the economy can manage before inflation
accelerates too quickly. The goal is to get as close to the red line as possible. Last fall,
the gap was narrowing. In January, it was getting wider.
Hence the rate cut, according to Carolyn Wilkins, senior deputy governor of the
Bank of Canada. “That’s why we decided to take out the insurance that we did, by cutting the rate, so that we could increase the chances that our projection, which is that
we’ll close the output gap by the end of 2016, will actually occur,” Wilkins told me in
late February, just before she and the other members of the bank’s Governing Council went into a customary week-long blackout period ahead of the March 4 policy
announcement. (In that announcement, Poloz left the overnight target unchanged.
More on that later.) “Certainly from our point of view, doing the right thing with
respect to monetary policy is the best way to maintain our credibility, because we’ll
be more likely to achieve our inflation target, but also that credibility should be
something that underpins confidence.”
Plenty of other experts disagree. Paul Masson, an adjunct professor at the University of Toronto’s Rotman School of Management and a former adviser at Canada’s
central bank, says Poloz’s notion of insurance was akin to unloading the cannons at
the first sight of the enemy’s flag. “ ‘Taking out insurance’ can take many forms, such
as keeping your powder dry until it is needed,” he says.
The chief executive of a Canadian company, who requested anonymity in order to
speak freely, says he thought Canada’s economic leaders were asleep at the switch.
“My impression was that the Bank of Canada and the government were totally unprepared for a major correction in oil prices,” the executive says. “They have been fixated on Canada as a petro-country and nothing more. Their reaction didn’t seem to
appreciate how volatile the Canadian dollar was and the violent correction will also
have negative ripple effects.”
The little-talked-about problem inherent in this rush to the barricades by
central bankers is that it sent a massive
signal that we have reason to be fearful. “Who then would be bold enough
to make a long-term commitment in
such an environment?” wonders Stephen
Lewis, an economist with ADM Investor
Services International Ltd. in London.
Central bankers don’t necessarily care
about what the Lewises of the world have
to say. The City of London and Wall Street
types have been hurling those sorts of
barbs for years. But what if the people
who run millions of businesses—large
and small, global and local—are rattled?
The bank needs to keep the confi-
m
cr
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of
ba
sla
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Ca
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sh
20
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fo
The Group of 20 got out
the fire hose when
the world was on fire,
but they didn’t stick
around for the rebuild
Bank of Canada
Governor Stephen Poloz
said he was just taking
out a little “insurance”
with his quarter-point
cut. To traders, it looked
like panic, and they
pounded the loonie
st
te
in
he
ce
he
re
in
an
a
He
ks
his
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photograph adrian wyld/cp; chart source thomson reuters datastream
na,
rhdott
as
nd
m
st,
sll,
quite deliberately opaque. “I should
warn you,” he once joked, “if I turn out
to be particularly clear, you’ve probably
misunderstood what I’ve said.”
Yet Greenspan, oddly, was easy to read
when it came to what the markets cared
about most. He liked to adjust interest
rates in predictable, quarter-point increments, so when he started down a path,
investors and traders knew where they
were headed. The Greenspan years came
to be known as the Great Moderation.
There was nothing moderate about
monetary policy during the financial
crisis and its aftermath. Ben Bernanke,
Greenspan’s successor, and the heads
of the rest of the world’s major central
banks, acted boldly and massively. They
slashed interest rates—to 1% in the euro
zone, and near 0% in the United States
and Japan. The Fed, the Bank of England
and the Bank of Japan also launched
huge quantitative easing programs that
lasted for years—essentially creating
hundreds of billions of dollars worth of
currency to buy government bonds and
other debt securities, thereby injecting
cash into banks that could be loaned to
businesses and consumers.
The politicians did their part, too—at
first. They ran massive budget deficits to
stave off another Great Depression. Even
Canada’s resolutely tight-fisted Conservatives cranked up infrastructure spending and racked up a $56-billion deficit in
the 2009-2010 fiscal year, and a $33-billion shortfall in 2010-2011. But since then,
to varying degrees, governments have
shifted back to austerity. The Group of
20 got out the fire hose when the world
was on fire, but they didn’t stick around
for the rebuild.
DM151408_Pg38-43_ROB_APR_2015.indd 41
That austerity is now an anchor on growth. The U.S. recovery has picked up
momentum over the past year—in part because state and local governments are
spending again—but the American economy is the exception. Even growth in China
is slowing. Japan remains mired in a slump that, in many respects, has lasted since
the 1990s. Much of Europe is flirting with deflation and a triple-dip recession.
In contrast to governments, the central bankers have kept stimulating since the
financial crisis. Denmark pioneered the use of negative interest rates in July, 2012,
when its central bank lowered the deposit rate on funds it holds for commercial banks
to -0.2%, to encourage those banks to loan the money instead of hanging onto it.
All along, of course, many analysts have questioned how effective the low, low
rates and all that E-Z money have been. Some argue that the central bankers have
done little more than fuel asset price bubbles, lining the pockets of the well-to-do,
but few others. The U.S. stock market has almost tripled since the bottom in 2009.
Apartments in New York have cracked the $100-million barrier, and in London,
they’ve soared beyond $200 million—asking prices, at least.
Closer to home, average prices for a detached house in Vancouver or Toronto have
soared above $1 million. The University of Toronto’s Masson wrote a paper in 2013
that pleaded with Carney to raise interest rates. He says that Canada’s lacklustre
economic growth since then hasn’t caused him to change his mind. A massive run-up
of debt caused the financial crisis. History could be repeating itself.
Central banks understand the risks. They simply are unwilling to put theoretical
easing by printing money
Total central bank assets (in trillions of U.S. dollars)
4.0
Euro Zone
3.0
United States
2.0
1.0
2008
Japan
2009
2010
2011
2012
2013
2014
15-03-13 12:24 PM
After Europe’s Mario
Draghi (below) dropped
the big one—¤1.1 trillion
of quantitative easing—
U.S. Fed Chair Janet Yellen
wouldn’t tip her hand
concerns ahead of a threat that is staring them in the face. Deflationary pressures last
fall pulled the big central banks in various directions. After injecting more than $3.5
trillion (U.S.) into the U.S. economy following the financial crisis, the Fed ended its
regular monthly purchases of bonds and mortgage-based securities in October. That
was the Fed’s nod to those who accuse it of sowing the seeds of the next crisis. But
Janet Yellen, who replaced Bernanke in February, refused to signal when she might
raise the official rate from zero. In September, Mario Draghi, president of the European Central Bank, lowered the ECB’s benchmark rate by 10 basis points to 0.05%,
and its deposit rate to -0.2%. He also promised that the ECB would soon unveil a
massive QE program of its own.
Then, another wild card began creating more headaches for central bankers.
A week before Poloz’s dramatic interest rate announcement, Timothy Lane, one
In some ways, Poloz’s job is much
trickier than Carney’s was during the
financial crisis. Carney had the aid of
Jim Flaherty’s expansionary fiscal policy, but now the Harper government is
determined to balance the books before
the election this fall. On the day that
Poloz cut interest rates, Finance Minister Joe Oliver said there was no need
for a matching response from him. “We
think it’s wrong to burden our children,
our grandchildren with expenditures
that we’re incurring today, so we think a
balanced budget is important and we’re
going to achieve it,” he said in a broadcast interview with CNBC at the World
Economic Forum in Davos.
Oliver would be correct if it still was
the 1990s, when Canada was facing a
debt crisis. Now, Canada is one of the
few countries with a triple-A credit rating. The federal deficit is so narrow—
less than 0.5% of GDP—that it hardly
matters whether the government balances it or not.
The provincial premiers aren’t helping Poloz much, either. Bank of Canada
economists estimate that the total portion of GDP growth this year attributable
to
ce
0.
if
ha
m
Sh
po
photograph (left) kevin lamarque /reuters; (right) kostas tsironis/ap
of four deputy governors of the Bank of Canada who sit with Poloz and Wilkins on
its Governing Council, gave a speech at the University of Wisconsin in Madison.
The title was clear enough: “Drilling Down—Understanding Oil Prices and Their
Economic Impact.” The text was released online and, toward the end, Lane declared
that lower oil prices would be “bad for Canada.”
If that was meant as a warning, most analysts and commentators missed it. The
bank rarely sent messages via its deputies, so few—if any—market participants
would have been giving Lane their full attention.
Besides, there were no other reasons to expect any surprises.
After Poloz succeeded Mark Carney in June, 2013, he made a point of easing his
way into his new role at the centre of the Canadian economy. He kept the bank’s
benchmark rate at the 1% set in September, 2010, allowing the memory of Carney’s
dramatic moves during the financial crisis to fade away. No more adventures in
monetary policy—Poloz was fond of telling audiences that the time had come to let
“Mother Nature” do her work.
No wonder Poloz sounded almost apologetic when he met with reporters after
his rate cut. “We generally prefer that markets not be surprised by what we do,” he
said. “We took comfort from the observation that the consequences of the drop in oil
prices appear to be well understood, and that the possibility of a rate cut had begun
to enter markets in the last couple of weeks.” Or maybe it didn’t. The Canadian dollar
plunged by more than 1.5 cents (U.S.) that day, closing at 81.07 cents, its lowest level
since April, 2009.
The Bank of Canada’s leaders are clearly sensitive to the possibility that monetary
policy could actually undermine confidence, rather than bolster it. But in January,
they decided to risk it. Wilkins insists that they knew what they were doing. A quarter-point interest rate adjustment is the type of fine-tuning that the bank used to do all
the time. “It’s a bit of a stretch to say that a 25-basis-point cut in a policy rate is a panic
reaction to a 57% decline in oil prices since last June,” she said.
That oil price collapse is more of a problem for Poloz than it is for central bankers
in Europe and Asia. All of the bankers are worried about the deflationary impact on
consumer prices. Poloz also has to contend with the impact on output and employment in the Alberta oil patch, and on the companies that supply and finance it.
DM151408_Pg38-43_ROB_APR_2015.indd 42
15-03-13 12:25 PM
Co
an
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am
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Br
as
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at—
ly
al-
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rle
to all levels of government will be 0.2 percentage points. In 2006, that figure was
0.8 percentage points. I asked Wilkins
if the January interest-rate cut would
have been necessary if current government spending was at pre-crisis levels.
She dodged the question. “We take fiscal
policy as a given,” Wilkins said.
photograph (left) kevin lamarque /reuters; (right) kostas tsironis/ap
ch
he
of
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Compared to what the ECB’s Draghi
announced on Jan. 22, Poloz’s rate cut
looked like a blip. Draghi unveiled a
¤1.1-trillion quantitative easing plan that
would have the ECB co-ordinate purchases of ¤60-billion worth of securities
a month until September, 2016. Investors
were ready for QE, but not on that scale.
Britain’s Guardian newspaper described
I
it as “shock and awe.” The plan kicked the Great Freak-Out into the stratosphere.
In many countries, official interest rates are now lower than they were during the
financial crisis. The Danes, the Swiss, the ECB and the Swedes all are experimenting
with negative interest rates. In effect, they are challenging hedge funds and banks to
find more productive uses for their money than financial speculation.
At least some investors are encouraged. U.S. and Indian equity markets have
scaled new heights this winter. “The accommodation should result in a positive
wealth effect via higher equities and bonds,” Ankur Patel, chief investment officer
at R-Squared Macro, an investment firm based in Birmingham, Alabama, told me.
“These co-ordinated global rate cuts, zero-interest-rate policy, and QE may be what
ultimately provides a net positive boost to confidence.”
Yet the usual doomsayers and conspiracy theorists—and the Internet is full of
them—are predicting disaster: We are headed for a devastating global currency war,
reminiscent of the 1930s, when central banks slashed exchange rates in an attempt to
ignite their countries’ exports. But when
those competitive devaluations were
combined with beggar-thy-neighbour
trade restrictions, they only aggravated
the Great Depression by reducing global
demand for goods and services.
The suggestion that central banks are
trying to beggar one another like they did
in the Great Depression is highly debatable. Yes, the exchange rate is one of the
channels through which a central bank
influences inflation. And when interest
rates shift, capital diverts to countries
that offer the highest return. With so
little demand in many countries to offset
the upward pressure on exchange rates,
they have little choice but to keep lowering rates in order to hit their inflation targets. The adjustment is more mechanical
than predatory. “It is not so much a currency war, or anything malicious, but the mere
fact of lack of co-ordination,” says Vivek Dehejia, an economics professor at Carleton
University who currently is working on a research project in Mumbai.
Dehejia has a point. The world’s central bankers this winter looked like soldiers
awakened in the middle of the night to fight an unknown enemy. If there was no grave
emergency, then surely someone should have said so. But who? That was part of the
problem. There is no one.
The most powerful central banker in the world is Janet Yellen. She has a reputation
as a communicator. Yet the Fed’s messages have been anything but clear.
This past February, Yellen tried to cool speculation that the Fed’s policy committee would raise the target range of its benchmark rate—now between zero and
0.25%—any time soon, or even hint that it would. “If economic conditions continue
to improve, as the committee anticipates, the committee will at some point begin
considering an increase in the target range for the federal funds rate on a meeting-bymeeting basis,” she said. “Before then, the committee will change its forward guidance. However, it is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase
the target range in a couple of meetings.”
She sounded like Alan Greenspan.
In theory, negative interest rates and years and years of ultralow interest rates should
work just fine. Unless, of course, executives and investors look at a negative interest
rate and decide nothing good can come of a policy that appears to defy reason.
Ben Bernanke always warned that monetary policy wasn’t a panacea. We finally
may be witnessing what he meant. After the scramble of January and February, the
weeks and months ahead will determine whether monetary policy still has any pop.
Which brings us to the Bank of Canada’s most recent interest rate announcement.
On March 4, Poloz performed another stunner—this time by doing nothing. Financial markets had priced in another rate reduction. There was grumbling about Poloz
sending mixed signals. There is a real risk that central bankers could be losing the
public trust. And if that is true, they just made things worse.
DM151408_Pg38-43_ROB_APR_2015.indd 43
15-03-13 12:54 PM
for
can’t
see
th
the
forest
With the heyday of B.C. resources over, it’s a good thing Vancouver has universities
that could seed a tech sector—and the scenery that can keep it here
by Richard Littlemore photographs by Kamil Bialous
DM151408_Pg44-49_ROB_APR_2015.indd 44
15-03-10 9:57 AM
or
thetechies
es
Winter scenes from
Canada’s new tech
town, from far left:
the new Telus Garden
building; a nearby art
installation and, below
it, a typical Yaletown
block of offices, condos
and restaurants;
chilling on the seawall;
chilling again, this time
at SAP; condos on the
park—and the water;
an Aquabus ferry below
the Cambie Bridge
When the guides of the future plan the itinerary for the walking tour dubbed
“Vancouver: Tech City,” they’ll start in Railtown. After all, this is where the
social media company Hootsuite emerged in 2008, amid the cheap, converted
warehouses between the Downtown Eastside and the docks on Burrard Inlet.
Back then, you called the neighbourhood “sketchy,” but that got you the stink
eye from Bill Tam, president and CEO of the BC Technology Industry Association: “It’s edgy!”
The next stop on the tour will be Gastown, another old neighbourhood of
small-footprint buildings full of walk-up offices, but one that was more gentrified in the early days—not “edgy” but “funky.” In 2015, this was the home of
entrepreneurial hothouses like Launch Academy, where hopeful youngsters
learned how to innovate—or how to fail quickly and start again before they
dragged their friends and family members into an expensive mistake.
Following a semi-circle, the tour will run through downtown, where the
high-tech industry suddenly became so dominant around 2015 that it outbid
law firms and government ministries for the city’s most prestigious office
space. And then it’s on to Yaletown, another converted warehouse district
that, in the dawning era, bristled with clubs, cafés, spas and fitness emporiums—and high-tech offices brimming with thousands of hipster techies who
could afford that kind of thing.
DM151408_Pg44-49_ROB_APR_2015.indd 45
15-03-10 9:57 AM
Then, down past the Telus World of Science,
tourists on this outing will come to Mount Pleasant, where Hootsuite took over a snazzy space in
a move facilitated by the always-accommodating
Vancouver Economic Commission.
Finally, saving the best for last, it will be on
to the SkyTrain for a quick trip to Burnaby and
the 10-minute walk to The Company That Saved
the World.
Every great tech scene has an origin story,
complete with a ground zero, like the Palo Alto
garage where Bill Hewlett and Dave Packard,
late of Stanford, seeded Silicon Valley. In British
Columbia, the point of genesis is in the Vancouver suburb of Richmond, in an old shed long since
lost in the fog along the Fraser River delta. That’s
where Professor John MacDonald and physics grad Vern Dettwiler headed on Feb. 3, 1969,
after they walked out of the University of British
Columbia to set up a little remote-sensing company. They thought that they had an interesting
technology, and they were disappointed that the
brilliant young scientists and engineers they’d
seen go through UBC all seemed to be leaving town. The
two men hoped they might be able to keep some of the more
promising students employed. Now, 46 years later, MacDonald Dettwiler and Associates Ltd.—better known as MDA—
is a communications and information company with more
than 4,800 employees arrayed in plants and offices around
the world, including 600 in its head office and still-leading
research-and-development centre in Richmond. They build
everything from black-box military communications systems
to radar satellites. And in their benign shadow, the high-technology sector in B.C. now employs 84,000 people, more than
the forestry, mining and oil and gas industries combined.
According to a recent KPMG report commissioned by the
BC Technology Industry Association, B.C. boasts 9,000 hightech companies that together generate more than $15 billion
in direct economic impact—that’s 7.6% of provincial GDP.
That sudden growth, in a province that still can’t shake the
resource-industry self-image, has produced a buzz, and the
buzz has turned to giddiness with the arrival and/or expansion in Vancouver of some major international players. Microsoft and Sony Pictures Imageworks have staked out huge
footprints in what is arguably the highest-profile commercial
space in downtown Vancouver—the redeveloped former
Eaton’s (later Sears) department store that anchors Pacific
Centre at 725 Granville St. Barely a block away, Amazon is
installing 1,000 high-tech employees in the Telus Garden, a
new head office for a telco that is, itself, a tech giant, with
7,000 employees in Metro Vancouver, including 1,200 in the
downtown core; 700 of them will work at this new location.
The attendant pressure has changed the face of commercial real estate in Vancouver’s suddenly crowded downtown.
Norm Taylor of commercial real estate firm CBRE says the
market is set to absorb more than two million square feet of
new office space in the next two years, the largest growth
spurt in Vancouver’s history. As of
late February, that space was more
than 60% pre-leased. And in a central business district once reserved
for head offices (or what small share
Vancouver has of them), high-end
law and accounting firms and government, high tech—growing at
twice the speed of the rest of the B.C. economy—is generating
more than 40% of the demand for office space.
It’s true, of course, that B.C.’s $15 billion in tech salaries, services, sales and exports pales next to California’s $275 billion.
But it’s early days. “B.C. is in that adolescent growth stage
when parts of you grow faster than others. It’s an awkward
passage,” says Bill Tam.
The gawky phase has demonstrated three things, each of
which bodes well for the future. First, tech is all about people, and every person interviewed for this story made some
reference to B.C.’s research universities as a source of both
tech geniuses and bold entrepreneurs. (Full disclosure: I have
written for the presidents of UBC, Simon Fraser University
and the University of Victoria.)
Second, tech is sticky. Sure, it’s not physically stuck to a
resource like mining or forestry. But it’s surprisingly difficult
to pick up and move an established tech company—especially
the creative part.
Third, tech is all about critical mass. Once you have the
above-mentioned talent pool, you get networking and creative cross-pollination. And you get spinoffs minted by people with serious industry experience. While no one is bold
enough to say Vancouver has reached critical mass, the success of homegrown heavyweights like Hootsuite, and the
arrival or expanding presence of international anchors, indicates a sector heading toward maturity.
Hootsuite employees
work at communal
tables. The office
boasts tent-style
meeting rooms, local
art and beer on Fridays.
At right, Hamilton
Street as work gets out
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es
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Actually, “sector” isn’t the right word
to describe this phenomenon any more. In
a time and place where a surprising number
of people subscribe to both Greenpeace
and Harvard Business Review, we talk about
the tech “ecosystem” and its “biodiversity.”
Tech is no longer as sterile as a lab. It’s a forest of interaction where little things feed big things and big
things, in turn, seed new little things.
The best illustration of this is the BC Techmap, an interactive visual history compiled by PricewaterhouseCoopers
over the last 18 years. The map shows thick bundles of connections emanating from the research universities. In a 2013
report on some 220 UBC spinoffs and affiliated companies,
Colliers International calculated total market capitalization
of $2.5 billion and total annual revenue of $400 million. SFU
says that it has “spun out, mentored, incubated and assisted
over 200 companies, adding more than 2,400 jobs to our economy and contributing an estimated $186 million in annual tax
revenues.” That’s just direct economic activity driven from
university labs—everything from biotech contenders like
QLT Inc. to cleaner-energy industries like Westport Innovations. The universities, with help from institutions such as
the British Columbia Institute of Technology and Emily Carr
University of Art + Design, also spawn the engineers, scientists and technicians in clean tech, the health professionals
and researchers in biotech, the computer and electrical engineers in web tech, and the designers, artists and storyboard
writers in gaming and computer animation. Oh yes, and the
business people.
Once in the tech sector, few of those people sit still. One of
the next biggest tentacle bundles on the Techmap runs from
MDA to the many dozens of other companies that have benefited over the years from lessons learned at the knee of MDA’s
masters. Another bundle emanates from Ballard Power Systems, the once-ballyhooed fuel-cell innovator whose biggest
actual output to date may be counted in talent that it has
trained and sent on to other enterprises.
Consider Mossadiq Umedaly, who was Ballard’s chief
financial officer in its mid-’90s heyday when Ballard, Daimler-Benz and Ford together looked like they might seize the
whole burgeoning market for no-emission vehicles (said market imploded when regulatory leader California decided that
hybrids were a more practical alternative). Umedaly says that
Ballard’s chairman at the time, the late Fraser Mustard, used
to divide the tech world into “doers” and “thinkers,” and then,
à la Rumsfeld, into “doers who think” and “thinkers who do.”
Umedaly, a doer who thinks, left Ballard before its slide and,
in 1999, assumed the presidency (and later the chair) of Xantrex, a power electronics company that had been working on
unsexy but practical power inverters since 1983. Umedaly saw
the potential to scale up the Xantrex operation, especially in
an age when inverters were becoming essential to managing
intermittent power from renewable sources like wind and
solar. He found a first round of financing and then floated
an IPO in 2004, and by the time he sold the company in two
pieces to Ametek and Schneider Electric, Xantrex was “the
biggest clean-tech company in B.C.,” with annual revenues of
$250 million.
Schneider is huge; “it’s the French Siemens,” says Schneider’s
VP operations and CFO for solar, Jill Tipping. With 150,000
employees around the world and 3,000 in Canada, the company
had the capacity to relocate its 200 new Burnaby employees,
specialists in solar power, pretty much anywhere—a thought
that Tipping says never came up. Instead, the company’s global
solar business unit is headquartered in Burnaby.
Although Xantrex had no manufacturing here, almost no
sales and—given the low cost of B.C.’s hydroelectric power—
no market, “this is the brain trust; it’s the gold mine. The risk
of moving it and disrupting it accidentally is too high,” Tipping says. In the tech world, “you do the things that are smart
to do in the places that are smart to do them,” she adds, pointing to Apple, which designs in California and manufactures in
China. Tipping’s only reservation about Metro Vancouver is
that question of critical mass. There is great local talent, but
Schneider still has to recruit mid-career managers and senior
engineers from elsewhere. So, Tipping says, Schneider is
delighted to see companies like Microsoft upping their Vancouver presence. “Even if they’re not directly in our space, it
still creates a cluster effect that’s good for us.”
The story is similar at the Vancouver operations of what
is now SAP, the world leader in enterprise software and software-related services, with 130 offices around the world and
74,000 employees. The 1,200-person Vancouver operation
began in the 1980s as a local start-up called Crystal Services.
Owing to a succession of takeovers, it was later known as Seagate Software, Crystal Decisions and Business Objects before
being acquired by SAP in 2008. Again, SAP has the global
capacity to shift or absorb smaller operations, but in Vancouver, it chose to consolidate and expand. Kirsten Sutton,
managing director for SAP Labs Canada, says this location is
now the SAP Canadian Centre of Excellence for Analytics—
the largest software development employer in B.C., it’s SAP’s
locus for innovation in some of its most important product
lines. As with Schneider and Xantrex, Sutton says, moving
was never an option. “The DNA is what SAP needed,” and
that DNA is peculiar to Vancouver. “It’s the culture, the worklife balance. People who work here love it here and it comes
through in their work.”
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Michel Laberge’s
In any story of Vancouver, it
company, General
is, of course, inevitable that
Fusion, foresees a new
the work-life thing would
form of clean energy.
“The sphere,” centre, is
come up. The city is so often
filled with molten leaddismissed as being full of peolithium that is pumped
ple who spend too much time
to form a vortex hiking and skiing and standing
in the path of pipelines. Sitting
in the spectacular downtown wedged between False
Creek and Burrard Inlet in the lee of the North Shore
Mountains, it’s easy to understand how people in the
rest of the country would find Vancouverites smug
(even if self-deluding about whether it’s worth the cost
of living). But nearly everyone interviewed for this
story had recently travelled to Eastern Canada, and
they all felt compelled to give a weather report. In a
February phone conversation, Don Osborne, president
of the MDA Information Systems Group, mentioned
that he was looking out across a busy, balmy Richmond
golf course—and that, in Ottawa and Montreal, which
he had visited the previous week, the temperature had
been minus 35. SAP’s Kirsten Sutton phoned from the
airport in Toronto. Minus 25. Dennis Lopes, head of
legal and corporate affairs for Microsoft Canada, called
from the Vancouver airport, taking his last whiff of air
redolent of early cherry blossoms. He was flying home
to Microsoft’s Canadian head office, also in the Toronto
area, and he was dreading the change.
Microsoft is busily recruiting for its newest international development centre in the spanking new Pacific Centre
space. (It has similar centres around the world from China to
Finland, but no others in Canada or the U.S.) To this end, Lopes
says, “We’re recruiting from around the world and, from a candidate perspective, Vancouver is very desirable, despite the
high cost of living.” He went on to deliver an analysis straight
out of Richard Florida. In addition to being warm and beautiful and conducive to an outdoor lifestyle, Vancouver is richly
multicultural and highly diverse, all aspects that are attractive
to people from the creative sector. It’s also close to Microsoft’s
international headquarters in Seattle, although what really
matters, for people collaborating on projects, is that it’s in the
same time zone. Asked, though, if this is a recruiting centre
whose real purpose is to consolidate staff, the best of whom
would then be cherry-picked to go south of the border, Lopes
dismisses the suggestion out of hand. Microsoft already had a
Vancouver development staff of about 300. Rather than sending those folks south, it’s more than doubling their numbers.
The staff in the new 143,000-square-foot Pacific Centre office
will number 700, and there is a rumour (which Lopes declined
to confirm) that Microsoft has told its broker that it may hang
on to 75,000 square feet in an existing office in tony Yaletown. Microsoft is digging in—and in a way that contributes
to a growing Canadian myth: head office, sales and marketing
types go to Toronto; techies, creative and other hipsters to
the Left Coast.
Mind you, it’s not all about the mountains, the oceans and
the choice of three cappuccino purveyors on every block.
Randy Lake, executive vice-president and general manager of
the animation and visual-effects leader Sony
Pictures Imageworks, brings a hard, cold, cashbased reality back into play when he says, “I
love Vancouver.” Having moved the Imageworks head office from Culver City, California, to Pacific Centre as of April 1, “I would not want to pick up and leave. But
if the [tax] incentives were gone tomorrow—well, that’s my
nightmare scenario.” The sweetest of those incentives, for
Sony, is the DAVE—the Digital Animation or Visual Effects—
tax credit, which lately means that a credit of “17.5% can be
applied against any qualified B.C. labour expenditures that
are incurred while performing eligible post-production activities in B.C.” Lake says this break, more than any other factor,
drove the relocation from Culver City.
Still, even Lake returns to the metaphor of the high-tech
ecosystem. His 750 animators and visual-effects specialists will be in the same building as Microsoft’s development
staff, and they all will be mere blocks away from colleagues in
Gastown and Yaletown, where Sony had maintained a smaller
production studio for the last five years. Lake said the firm
was originally attracted by the talent in homegrown firms like
Distinctive Software (now part of Electronic Arts) and Image
Engine. Here again, there is strength in numbers. The visualeffects community is highly nomadic, jumping from one film
production to another and—when necessary—from one production company to another. So, again, it’s easier to recruit if
prospective employees know that a subsequent shift would
take them to, say, the sizable Industrial Light & Magic facility
down the street and not all the way down the I5 to California.
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There are two other broad aspects to the B.C. tech story—
and two other places in the ecosystem. At one extreme is the
bold entrepreneurial start-up—the 5,000 one-person operations that don’t even get included in the count of 9,000 existing
high-tech companies. At the other are the Hail Mary candidates, like General Fusion. This is The Company That Saved
the World (or at least Would Save): a $50-million gamble to
produce an energy source that founder Michel Laberge insists
would render fossil fuels redundant for everyone on Earth.
Laberge personifies the surprisingly short distance
between those extremes. First, he is, himself, an indirect
product of MDA. Following the BC Techmap, MDA begat
Creo, the laser-imaging company that was acquired by Kodak
in 2005. Laberge worked at Creo for nine years after receiving
a PhD in physics from UBC. At Creo, he says, he learned there
was more to business than “solving a triple integral equation.”
But he got bored with Creo’s lasers, took his savings and set
to work, in an abandoned gas station on Bowen Island, on a
simple fusion power plant.
In other words, a decade ago, he was one of those start-up
companies with no employees. But, by his efforts, he generated both heat and light. In fact, he generated enough energy to
convince Mike Volker, director of SFU’s Innovation Office and
co-founder of the Vancouver Angel Technology Network,
to raise a total of $420,000 from 60 investors. Then Laberge
recruited Creo colleague Doug Richardson (“for no salary!”)
as CEO, and, between them, they made enough progress to
attract another $50 million in financing, including contributions from everyone from Chrysalix Global Network and the
oil sands company Cenovus to Jeff Bezos. They’re now working on the components of a fusion-energy reactor that will
have no long-lived radioactive waste and a nearly inexhaustible fuel supply from sources such as heavy hydrogen atoms
from seawater. “We’re trying to convince ourselves that it
will work,” Laberge says. “Then we will need a big pile of
cash.” He thinks their design could result in a plant that costs
only $200 million, compared to the nearly $20-billion (U.S.)
bill for the latest experimental fusion reactor in France.
This gets to one of the last, limiting factors affecting Vancouver’s reach for tech greatness: big piles of cash. While
these seem to be available in the trunk of every Silicon Valley Jaguar, everyone complains that they are in short supply
north of the border.
Haig Farris, the famed West Coast angel investor who cofounded and ran Ventures West, and who helped raise the $200
million that put the Burnaby quantum computing company
D-Wave on the map, sniffs at the suggestion. “I’ve been in this
business since 1973 and it hasn’t changed one little bit: I go to
Silicon Valley and all I hear is, ‘It’s so hard to raise money.’”
But then he acknowledges that, in some ways, things have
changed. “Now physics and math are driving everything and
people in the venture capital community don’t get it. Neither
the media nor the investors understand. So, there’s lots of
angel money. But it’s hard to get people to commit for longterm, complicated things: for artificial intelligence, learning
computers and materials science. The best deals are still the
hardest to sell.”
And yet, Mossadiq Umedaly, who has also spent much of
the past decade managing or facilitating tech investments,
says: “For a good idea, there’s always money.”
Which bit of optimism leads to a last word from Laberge,
who is Québécois, funny and self-deprecating in a completely
unconvincing way, and who, if he succeeds, could generate a
dividend that will make the combined job-creating tech fortunes of Jeff Bezos, Mark Zuckerberg and Elon Musk seem
modest. Laberge offers both a complaint, and a solution: “It’s
as hard to find the money as it is to find the fusion. I walked
a lot to find the money. So, I’d say, you need a good idea and
long legs.”
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photograph XXX
photograph XXX
Christiane Germain
surveys downtown
Winnipeg from her
soon-to-be-opened
Alt Hotel in the
city’s downtown
p e a k
B O U T I Q U E
Nearly every major chain—
Marriott, Westin, Sheraton—has
launched a line of smaller,
hipper hotels. So how can
the Germain family, who first
brought the concept to Canada
in the 1980s, compete?
photograph XXX
photograph XXX
By Grant Robertson
Photographs by Carey Shaw
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I N
beneath Montreal’s new Alt Hotel sits a gleaming Tesla, the
super-sleek electric car that starts at $70,000. The vehicle
belongs to a guest, but the specialized wall charger through
which the car gets its juice was installed by Alt to attract
clients—particularly the hip and monied.
Alt’s parent company, Group Germain Hospitalité, is the
first Canadian hotelier to cut a deal with Elon Musk’s automaker, and the fact that Tesla drivers—who are about as
niche as any market can be—have sought out the hotel is
a good sign. But there’s a much larger strategy at work for
Germain. In the cutthroat hotel market, anything Alt can do
to stand out as a distinct brand is worth pursuing.
The Germain family opened Canada’s first boutique hotel
in Quebec City in 1988, back when the term “boutique” had
barely entered the traveller’s lexicon. With just 126 rooms—
about one-fifth as many as the nearby Château Frontenac—
Hôtel Le Germain-des-Prés was wildly different from the
larger chains it competed against. Its focus was on style and
design, rather than scale, from the stand-up showers and
modern furniture to the soft lighting, unique artwork and
bowls of fruit in the lobby. It was luxury without the price
tag, and the concept was a hit.
In fact, Le Germain did so well that it wasn’t long before
other hoteliers began to mimic it. Today, industry giants like
Westin, Sheraton and Marriott all have boutique subsidiaries of their own, while independents have popped up across
the country to capitalize on travellers looking for an alternative to the impersonal, cookie-cutter chains.
All of which raises the question: Has the hotel market hit
Peak Boutique?
“It’s overused,” admits co-president Christiane Germain—who runs Germain with her younger brother, JeanYves—of the boutique moniker. But there’s good reason for
that. Christiane says simply: “It sells.”
Christiane and Jean-Yves still remember the
first time they walked into a boutique hotel: the Morgans,
New York City, 1985. The two had grown up in Quebec City,
where their parents, Victor and Huguette, had bought a
convenience store in 1957, which they parlayed into a lunch
counter and, eventually, a successful steakhouse. By the time
Christiane and Jean-Yves were old enough to join the family
business, it included a property management company and a
portfolio of residential and commercial buildings.
On a business trip to Manhattan, they checked into the
recently renovated Morgans Hotel on Madison Avenue,
which was getting a lot of buzz. Christiane instantly understood why—walking into the place was like witnessing a new
invention. Gone was the beige-and-white motif that characterized most hotels at the time. Instead, the decor was rich
with colour, and the bathroom walls were adorned with bold
black-and-white checkerboard tiles. In most of the rooms,
bathtubs were scrapped in favour of stand-up showers with
glass doors stretching from the poured-concrete floors to the
ceilings. That in itself was revolutionary for a North American hotel. Shiny steel airplane-style sinks replaced the traditional vanity, and the lobby looked like a living room, with
furniture sourced from Parisian flea markets.
“The design was really exceptional,” says Christiane, sitting with her brother 30 years later in a brightly lit, coloursplashed meeting room at the Alt Montreal. Both are fashionably dressed in that seemingly effortless French mode.
They look far younger than they are (she is 59, he is 58).
“You remember, Jean-Yves? The rooms were not large,
they were small. But the use of the space was really quite—it
was new.”
“Showers,” says Jean-Yves.
“Yeah, showers.”
Morgans is credited with starting the boutique phenomenon. Opened in 1984, it was the brainchild of Ian Schrager
and Steve Rubell, the promoters behind New York’s legendary Studio 54, the mecca of ’70s disco culture—until the
Internal Revenue Service ended the party by sending them
both to prison for tax evasion.
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photograph XXX
the fluorescent-lit parkade
At left, Christiane
Germain chooses
between local
artists at Winnipeg’s
Gurevich Fine Art
and tests out newly
installed energyefficient lighting.
Below, a worker lays
carpeting in a room
with Alt’s signature
concrete wall
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photograph XXX
ge,
—it
DM151408_Pg50-55_ROB_APR_2015.indd 53
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Upon their release in 1981, Schrager and Rubell turned
their attention to the hotel business. Their idea was to create
a spot so hot, people wouldn’t just want to stay there—they’d
want to be seen there. Schrager and Rubell bought a stuffy
old place called the Executive and hired French interior
designer Andrée Putman, who devised the bold colour and
decor scheme. In an interview soon after it opened, Rubell
tried to describe what set Morgans apart. “Well, if a Holiday
Inn is like Macy’s or Bloomingdale’s, we are like a boutique
on Madison Avenue,” he said, according to Alan Philips,
chief marketing officer of the Morgans Hotel Group, which
now owns 13 boutique hotels around the world. “And that’s
where it came from.”
So what is a boutique hotel, anyway? That, says Philips, is
“one to be argued for the ages.”
Originally, it meant a hotel that was smaller than 150 rooms
(though that has been stretched in recent years to 200-plus).
However, Philips says the term has more to do with qualitative measures than quantitative. “If you really want to hit
it in the best way possible, you want the hotel guest to call
their friends and say, Where are we going tonight? And they’ll
say: Your hotel—it’s the coolest place in town.”
The Germain siblings decided they wanted to create
their own “it” spot in Quebec City. Le Germain-des-Prés
opened—sans bathtubs—three years after that stay at Morgans. The Canadian boutique was born, entering an industry
dominated by huge chains like Sheraton in the mid-market,
and by Canada’s own Four Seasons brand in the luxury segment. Le Germain settled somewhere in between.
Christiane and Jean-Yves (she handles operations, he oversees the finance side) honed their model for 10 years before
opening a second hotel in Quebec City in 1997. Two years
later, they expanded to Montreal and, in 2003, to Toronto.
Today, there are five Le Germains and six Alts. The higherend Germain locations (in Quebec City, Montreal, Calgary,
and two in Toronto) are aimed at travellers who want luxury,
but in a more laid-back atmosphere. Walk into a Le Germain
and the first thing you notice is the darker tones and soft
lighting. Christiane can’t find the right word in English to
describe the vibe, so she settles on enveloppante, a word that
implies a comforting, cocooned feeling.
Alt is the younger, funkier brand, aimed at a crowd
the company describes as “trendy but unpretentious” or
“inspired and creative.” Think app developers on vacation.
There are two Alt locations in Quebec City (including the
original Le Germain-des-Prés, which was converted seven
years ago), two in Montreal, and one each at the airports in
Toronto and Halifax.
Now Groupe Germain is in expansion mode. This past
December, it raised $80 million from a consortium of Quebec
heavyweights, including the Caisse de dépôt et placement
du Québec, La Capitale Financial Group, Industrial Alliance,
Fonds de solidarité and investment bank DNA Capital. The
eventual plan is to bring the total number of Alts to 15, creating a nationwide chain of cheap-chic boutiques. An Alt is set
to open in Winnipeg in April, followed by another in Ottawa
next year. A Le Germain will also open in Ottawa in 2017.
But the Germains no longer have the boutique market
to themselves. Jean-Yves figures there are 30 such hotels
in Montreal alone, and the industry giants are aggres-
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Stacey Masson,
Groupe Germain’s
senior director of
national marketing,
checks out a room
in the new Winnipeg
Alt—including the
stand-up shower, a
chainwide feature
th
be
m
m
sa
Ro
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tr
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The economics of the business have changed
ba
ni
Bu
ho
tre
se
sively growing out their own boutique brands—Marriott is adding
60 of its AC hotels in the U.S. and
Latin America over the next three
years, and has teamed up with Ian
Schrager on another boutique offshoot called Edition Hotels.
And that presents a problem for
Groupe Germain: They want to get bigger, but they can only
hang on to their customers if they don’t deviate from the original, intimate concept. “Our challenge,” says Christiane, “is to
grow and be able to remain small.”
a lot since the Germains came on the scene. Stand-alone
hotels in the downtown core are unusual now, replaced by
mixed-use developments. The new 550-room Delta is the
first dedicated hotel to be built in Toronto in two decades.
Groupe Germain first partnered with a developer five
years ago to gain access to precious downtown land it otherwise never could have afforded. Its Calgary Le Germain
location, which opened in 2010, is across the street from
the Calgary Tower, and includes office space (owned by the
Germains) and condos. “It’s a prime piece of real estate, and
just doing a hotel on it would not have worked at all,” says
Hugo Germain, Jean-Yves’s son and the company’s director of development. Christiane estimates they would have
needed to open 400 to 500 rooms to justify the price of the
land. Since Calgary, all the company’s new hotels have been
housed in mixed-use buildings. The $27-million Alt in Montreal’s Griffintown shares space with condos. The soonto-be-opened Winnipeg location houses office space. The
DM151408_Pg50-55_ROB_APR_2015.indd 54
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future Le Germain in Ottawa will be part of the city’s new art
gallery and will also have residential floors.
“It’s a barrier to entry to be stand-alone,” says Jean-Yves.
The company is also targeting cities that are starved for
beds. Ottawa and Montreal, in particular, have lost several
older hotels, which have either shut down altogether or converted to residential units, rather than embarking on a costly
revamp. In the last year and a half, according to Monique
Rosszell, managing director at industry consultancy HVS
Canada, Montreal has lost roughly 1,500 rooms (including
a 700-room Delta and a 488-room Holiday Inn). Ottawa
has lost about 1,000—among them, the 328-room National
Hotel. Together, that’s the rough equivalent of 12 or 15 boutique hotels. To compound the squeeze, new rooms haven’t
kept pace with the closures—room numbers across Canada
grew by just 0.5% in 2014 and 1.5% in each of the two previous years, says industry analysis firm STR—one of the lowest increases in years. Average growth has historically been
about 2.3% a year, adds Rosszell, but the 2009 debt crisis put
many hotel projects on hold, and some were never revived.
Some of that demand has been eaten up by Airbnb and
other sites that allow travellers to rent rooms in other people’s homes. But the overall market, driven by the core business traveller, remains strong enough that many cities are
ripe for expansion, or so believes Groupe Germain.
But the boutique model depends more on filling rooms
than a big hotel does. In a smaller building, every dollar must
be wrung out of the facility because there are fewer economies of scale. “The boutique concept is not easy in terms of
managing it well, because you don’t have a large capacity,”
says Gabor Forgacs, an associate professor at Ryerson’s Ted
Rogers School of Hospitality and Tourism Management.
“It’s important when you look at a boutique hotel that you
try to sell each room each night for good dollars, because
you don’t have 1,500 rooms.”
For most hotels—big or small—that means pricing rooms
based on supply and demand. Want to stay on a Saturday
night? Be prepared to pay far more than on a sleepy Monday.
But the Germains are bucking that industry norm at their Alt
hotels, with fixed pricing—$154 a night at both their Montreal locations, for example, regardless of whether it’s high
season or low, a weekend or weeknight.
Forgacs, who was a manager at Four Seasons before joining Ryerson, is a fan of the idea. “That was bold,” he says.
“That was against everything that everybody was doing.
And so far, it’s holding up.”
But as Hugo readily admits, a lot more goes into a hotel
than just the price tag. Success and failure is often determined by other factors, especially in the boutique market.
If you want to know how old your hotel is,
take a look at the electrical sockets. If they’re conveniently
located above or beside the nightstand, you’re in a newer hotel,
or at least one that’s undergone a significant renovation.
Times change, as does technology, and the job of a hotel is
to stay on top of those trends. Before everyone started using
their phones as alarm clocks (not to mention checking their
e-mails and Twitter before turning out the light), electrical outlets were hidden behind furniture to keep unsightly
cords out of the way. Today, that’s an inconvenience.
“We need to think where the
technology is going,” says Hugo
Germain. “We always question
how much wiring to put in
a room. Is it still relevant?
Where is it going to go, with
WiFi and Bluetooth, with TVs?”
Since Groupe Germain is mostly building hotels from
scratch, it can incorporate new design details into each
room. It began installing iPod docks in its rooms back in
2003—but even those are out of date now as people increasingly use Bluetooth to sync their devices. “We need to think
where the technology is going,” says Hugo. “It might sound
obvious, but we’re always questioning how much wiring to
put in a room. Is wiring still relevant? Where is it going to go,
with WiFi and Bluetooth, with TVs?”
When it comes to furniture, however, the key is not to
chase trends. A typical hotel will go five to seven years before
updating its rooms. So even the boldest, hippest hotels must
be conservative. Alt rooms have partially exposed cement
walls, giving them a slightly artistic look. Bonus: They also
cost less, which allows designers to put more money into
statement furniture like a trendy chair that can be easily
swapped out to update the look, without a major overhaul.
Rooms are smaller, too (though with lots of height, since
the ventilation equipment is built into the walls, not the ceiling). In a bigger hotel, says Hugo, “you might have 350 square
feet of space, but there is a corner you never use. Well, in our
case, that corner will be basically removed. Or we’re going
to be enlarging the window and putting in higher ceilings.”
“Sometimes we have to, I will say, to fight with each other,”
Jean-Yves says of the battle between design and cost.
Those debates invariably include Christiane’s 33-yearold daughter, Marie Pier Germain, who has a degree in
mechanical engineering from Queen’s and serves as the
chain’s director of professional construction services. She
and Hugo, 35—who has a Queen’s MBA—represent the next
generation of Groupe Germain and are carving out roles for
themselves in the operation as it grows.
It’s not clear how big the Germains want to get. “In the
last five years, we’ve grown more than we did in the 20 years
before that,” says Christiane. And though they’re committed
to remaining a purely Canadian play for now, that’s not set in
stone. “Once we achieve our objectives here in Canada,” she
says, “then our model may change.”
That’s likely a few years off yet. For now, the focus is on
cities like Winnipeg, Ottawa and, eventually, Vancouver,
with its sky-high real estate costs. Clearly, the Germains
believe we haven’t hit Peak Boutique—not yet. But with the
Marriotts of the world flooding the market, they’ll need to
balance their own ambitions with the reality of competing
against rivals a hundred times their size.
“We’re a small player,” says Christiane.
“A very small player,” agrees Jean-Yves. “And when we do
our market research, it brings us down to earth. We’re making progress, no question, but we’re fighting against the big
guys—the big guys.”
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15-03-09 10:30 AM
Do you regret that you
couldn’t win over animal
rights people who decry
the Stampede’s treatment
of horses and cattle?
We love animals. We agree
with the humane societies
that we all have the same
care and concern for animals.
And there is a big distinction
between animal activists
and people who care about
animals. We have four studies
going on with the University
of Calgary, researching
animal behaviours and
physiology, to ensure we have
best practices, and we share
these best practices with
other associations.
Will the Stampede be affected
by the energy price collapse?
The long ride
As a preacher’s kid growing up in Ontario, Vern Kimball loved
his father’s records of Canadian country singer Wilf Carter, and he
dreamed of heading west to see the Calgary Stampede. Little did he know
that he would eventually run “the greatest outdoor show on Earth” for 11 years. In March, Kimball, 59, who holds an MBA from the University of Calgary, stepped down as Stampede CEO, still loving his job, but hoping
to do more to promote the city. And like the rootin’, tootin’ cowboys
celebrated by Carter, he went out with his boots on.
You once said you would only
go when the fire in your belly
was gone. Is the fire out?
The fire is still there, but I’d
like to go when the fire is still
burning bright.
What will you do?
Given my skill set, contacts
and experience, I’m thinking
about how best I can
contribute to make Calgary
a better place. Some folks
are interested in me, but I’m
taking a couple of months to
think about my next chapter.
What was your darkest
moment as Stampede CEO?
The worst and best moments
came close together. The
worst was standing on top
of Scotsman Hill in June,
2013, overlooking the Elbow
River rising, and seeing the
neighbourhoods and much
of the Stampede grounds
flooding. That was a horrible
thing for this community.
Two weeks later, we opened
the gates and I saw those kids
rushing in with big smiles
on their faces. I thought,
“Wow.” It was a symbol: If we
could get the Stampede up
and running, the community
would be able to get up
and running.
How long did it take for the
Stampede’s infrastructure
to recover?
When we put Stampede 2013
together, it was like a visit
from a mother-in-law—the
stuff everyone sees looks
pretty good, but you put a lot
of things in another room and
shut the door. It took us to
the end of 2014 to completely
recover and get back to preflood status. There was a
great effort by our employees
and volunteers.
But won’t visitors spend less?
The people will still attend,
but they will be more careful
this year. I think the oil patch
will bounce back—many of
my friends think it is a great
time to buy distressed assets.
Are you going to miss all this?
What other CEO gets to wear
a cowboy hat to work?
It will be bittersweet, no
question. I love my cowboy
hat. I’m going to keep
wearing it. And I love my
boots, but I probably won’t
wear them 16 hours a day,
like I did during Stampede.
I’m going to be able to read
things not related to business
and play my piano more.
But this year my vacation
is going to be the Stampede.
It’s time for me to be a
tourist again. /Gordon Pitts
This interview has been condensed
and edited.
photograph roth and ramberg
Exit Interview
I have seen this before, and
we will be prudent in what
we are doing with expenses.
Right now all our indicators
are pretty much even. [As
of early March] our reserve
ticket sales—those that are
sold in advance—are actually
higher than at the same time
last year. History shows that
fairs and exhibitions are
considered good value.
15-03-05 9:52 AM
Trim: 7.875”
Safety: 7”
The Häagen-Dazs
of gelato.
Introducing Häagen-Dazs Gelato bars,
our latest Italian inspired masterpiece.
Creamy texture, intense flavour, pure indulgence.
/haagendazscanada
/HaagenDazsCa
TRADE MARKS REPRODUCED UNDER LICENSE, Nestlé Canada Inc., North York, ON M2N 6S8.
DM151408_PgIBC_ROB_APR_2015.indd 1
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T:8”
S:7”
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DM151408_PgOBC_ROB_APR_2015.indd 1
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fallout - The Globe and Mail

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