Target’s Gain, Canada’s Loss


Attention Target Shoppers! Start your shopping carts as Target gets ready to liquidate stock from its 133 Canadian stores! Great news, right?

going out of bizNot quite, actually. In a continuance of mismanagement, and “whatever could go wrong, will,” Target will begin to sell off stock in early February, after receiving court approval of a liquidator. They will not, however, be advertising closing sales with “bankruptcy” or “going out of business” signs. You’ll have to pick through the goods to find the goodies.

But – what goods? Canadians have been faced with lacklustre merchandising from Target stores since they entered the market, with many stores being visibly under-stocked, and shelves either empty or with a few sad items lined up in single rows.

There’s been a problem with Target’s supply chain management since they first arrived in Canada, which resulted in Tony Fisher, the first president of its operation here, being fired in early 2014. CEO Gregg Steinhafel was asked to resign from Target Corp in Juntarget less for moree of 2014 – he’s the one that got a total severance and other benefits package worth about the same as the total amount being offered to all 17,600 of the chain’s Canadian employees.

(Steinhafel’s severance, which includes Gregg_Steinhafel_Golden_Parachuteprofit sharing and stock, will amount to $61 million USD, according to Fortune magazine, a sum greater than the severance package for all 17,600 Canadian Target employees combined ($58 million USD). Target Corp has now agreed to increase the employment trust to $90 million (CDN) to ensure the Canadian employees receive their full severance payout.)

empty-shelvesMark Schindele was parachuted in as president of Target Canada in May 2014 to try and fix the merchandise log jam, and pricing discrepancies that resulted from products arriving at warehouses with incorrect information, thus failing proper price comparison checks. In January 2015, he was quietly moved to Minneapolis to become SVP of Target Properties.

Target’s withdrawal from Canada is going to cost the corporation a bundle – they have said they estimate they’ll take a loss of $7 Billion. But what has been the cost to Canada?

<> on January 17, 2013 in New York City.The total amount of jobs gained across Canada in all industries for 2014 were 121,000 positions, down from the previous high figure of 186,000 reported in November. I’m not great at math, but the loss of 17,600 jobs at Target, spread across 133 stores, is a significant chunk of the pie. Also, our new jobs were concentrated around the oil industry, which is taking a beating as OPEC drops prices.

“The City of Edmonton’s chief economist says 80 per cent of new net jobs in Canada in the last year came from Alberta. “Over the past 12 months, Alberta has generated more new jobs than any other province in Canada and that includes Ontario, which is five times as large as we are,” said John Rose.” (Sept 11/14 http://globalnews.ca/news/1559263/40-of-all-new-jobs-in-canada-last-year-generated-in-edmonton/)

target-continues-to-failAdditionally, those 17,600 jobs were suspect to begin with. . When Target first arrived, they bought 200 Zellers stores, but did not honour the employees union in place. In fact, the first thing it did was ditch the union, eliminate seniority for long term employees, and drop all former Zellers employees to the bottom of Target’s pay scale. Because the majority of Target Canada’s workers were largely part-time, seasonal, or working irregular shifts, they will not qualify for Employment Insurance or other benefits.

The 133 stores, as well as office space leases and the three massive distribution centres in Milton, Calgary and Cornwall, will all be put up for sale at the same time, as early as March 5.

target distribution centreThe distribution centres alone represent a significant real estate investment; each warehouse covers some 1.5 million square feet, or about 26 football fields.

Target came to Canada promising jobs, new shopping opportunities, and a boost to the Canadian economy. In exchange, they received subsidies and tax breaks, along with favourable bank financing. This should have been a win/win situation.

bankruptInstead, it’s one of the biggest corporate bankruptcies in Canadian history.

Target wants to walk away from over $5 billion that is owed to creditors, big and small. They owe cities, suppliers and landlords. It’s such a long list of creditors that it took a 45-page document to list them all. They owe The Canada Revenue Agency and provincial governments millions in taxes ( $12 million to the CRA, $2.6 million to the B.C. government, and $6.5 million to the Quebec government.)

PharmacistGuest With just five stores in Manitoba, they still managed to rack up bills of $850,000 to Bison Transport, more than $450,000 to TransX, more than $200,000 to Old Dutch Foods and more than $1 million in tax owed to the Manitoba government. Beyond that, there are hundreds of thousands of dollars owed to smaller suppliers and pharmacies which operated independently within the stores.

elfe juvenileSuppliers owed hundreds of thousands of dollars are considering ways they can force Target to return their unsold goods that were shipped within 30 days of the filing – rather than have the inventory be included in the chain’s liquidation sales. Target filed under the Companies Creditor Arrangement act, which doesn’t have the 30-day goods provision. After aggressively purchasing stock for anticipated December sales, it entered the crucial holiday season with the highest levels of stock possible. Companies such as Elfe Juvenile Products of Montreal, listed as being owed $38,294, is actually out $147,758, based on stock now in Target’s possession. So is Sager Food Products Inc. in Montreal, which is owed more than $11,000 on the books, but the company estimates as closer to $16,000.

Sager Food VP Santo Fata received its last order the day before the filing. Sager had been happy to fill Target’s orders, which “were steady, regular and getting larger. We were happy.”

Sobeys vegChapman’s Ice Cream is owed $19,987. Coca-Cola Canada hopes to see some of the $339,699 it is owed. $1.7 million is owed to Hillcrest Mall Management Inc. Roots Canada Ltd is owed $433,248 in royalties. Sobeys will have to absorb over $3 million in losses.

But no worries – Canada will take up the slack, in a loss of jobs, and increased prices and taxes to cover the share that Target is walking away from. Over $5 billion.

CANADA-CORPORATE-TAX-RATEThis is not the first corporation that has been invited, even aggressively courted, to bring their business to Canada. Nor will it be the last. It’s just one more corporate experiment that failed, and is ultimately paid for by workers, taxpayers and Canadian companies.

Added March 6/15 …

The gall of these thieves!

http://www.huffingtonpost.ca/2015/03/05/suppliers-gear-up-to-chal_n_6809404.html

Greece Is The Word


The outcome of the election in Greece is sending shock waves across Europe. Syriza, the left-wing, anti-austerity party led by new Greek Prime Minister Alexis Tsipras, won 36% (149 of the Parliament’s 300 seats,) and, by forming a coalition government with the center-right Independent Greeks’ win of 13 seats, will have least 162 seats, a viable majority.

Greece new govt plansThe new government plans to raise the minimum wage, and create 300,000 new jobs, reverse the bank bailouts and stop banks from foreclosing on home owner’s principle residences, close corporate loopholes and offshore havens, and bring in a voucher system to help seniors in need receive food and healthcare.

For more than five years, the Greek citizens have been crushed under austerity policies imposed by the Economic Union’s “troika” of creditors; the European Commission, the European Central Bank, and the International Monetary Fund. Greek foreign debt currently stands at 175% of Gross Domestic Product.

Almost a third of Greece’s economy collapsed under the restrictions. Since June 5, 2011, when the “Indignant Citizens Movement” or the “Greek indignados“, held a demonstration of between 300,000 – 500,000 people protesting in front of the Greek Parliament, a change in government thinking has been pre-ordained. greek protests 2011

The Greek protest was non-violent for about a month, but on June 29, 2011, the police cracked down viciously on the protesters. Three people were killed, and accusations of police brutality, excessive use of tear gas, as well as the alleged use of other expired and carcinogenic chemical substances, led to an outcry by international media and Amnesty International.

austerity greeceWith half the population in poverty, and no end in sight to continued austerity and misery, it was inevitable that the people would rise up, and demand change.

“Both Syriza and Independent Greeks have detailed emergency economic programs that will commit their government to deal with the humanitarian catastrophe left by five years of the hated Troika policy. The damage has been unprecedented short of wartime, and has led to unemployment officially at 28%, but considered by experts to be actually as high as 45%; pensions and salaries have been slashed by 25-45%. The destruction of the health-care system has increased the child mortality rate, the suicide rate, and the death rate.” (http://www.larouchepub.com/other/2015/4205grk_elex_eup_new_deal.html)

Britain's Prime Minister David Cameron delivers a speech  at Dynamic Earth in Edinburgh, ScotlandEuropean leaders were swift to denounce Greece’s audacity. British PM David Cameron tweeted, “The Greek election will increase economic uncertainty across Europe.” (Britain’s membership in the European Union is a major issue in the campaign for the upcoming May election.)

russia-greeceGerman Bundesbank President Jens Weidmann told ARD network that he hoped “the new Greek government will not make promises it cannot keep and the country cannot afford.” But Germany’s opposition Left Party l called the Syriza victory a “sign of hope for a new start in Europe.” And today, Russian Finance Minister Anton Siluanov told CNBC that Russia would consider giving financial help to debt-ridden Greece.

The EU is shaken by the possibility that Italy, Portugal and Ireland, also horribly impacted by austerity measures, will follow Greece’s lead. Fiscal conservatives fear that Greece’s demand to write off up to half of their of €240bn debt will create a “Global Event,” on the scale of the 2008 collapse of the Lehman Brothers Holdings, who went bankrupt with $600 billion in assets.

German Economics 1953But there is precedent in countries restructuring debt. In 1953, Germany was in a similar position to Greece today. With debt from pre-and post-war, they owed nearly 30 billion Deutschmarks to around 70 countries. With no access to capital, and creditors who didn’t believe the country could turn the economy around, Germany was desperate for cash to begin the country’s reconstruction and growth.

Despite budget cuts and laborious repayments, the economic burden was crushing their population. FinanDebt-Accord-290cial negotiations were begun by banker Hermann-Josef Abs, who led a German delegation in London in 1953. He hoped to turn the creditors of today into the financiers and investors of tomorrow. But the foreign creditors felt his first offers were insulting.

The London Debt Agreement, finally signed on February 27, 1953, saw half of Germany’s debts written off, with the rest restructured for the long-term. Germany was not to be economically overburdened. Today, our view of Germany’s economy is paired with the idea that the German people are just a very hard-working people. But none of what Germany accomplished would have been possible without the Agreement.

Greek beach NaxosThose who believe that Greece’s new vision is childish and selfish stereotype Greece’s economy as being irreparably rife with corruption and greed, and fed by an indolent, Mediterranean lifestyle. Those same people once thought that all Germans were Nazis.

greek protests 2014In fact, the average Greek retirement age is nearly 65, but the pension is quite small, requiring many retirees to continue working as long as they are physically able. According to Eurostat statistics, the Greeks work 40.6 hours a week, the highest of all 27 EU member states. The ordinary Greek citizen in not lounging on the beach drinking ouzo, they have been protesting in the streets, as tax increases and social security cuts destroy the peoples’ hope, and the public sectors are privatized to serve as collateral to service the European debt.

The Eurozone finance ministers have no intention of continuing debt relief negotiations unless the new Syriza government promises to honour all existing austerity agreements. Meanwhile, the Euro is trending downward, and the Podemos in Spain, a year-old political party that has surged to the top of the polls promising to reverse austerity in Spain and impose a levy on banks, are poised to join Greece in challenging the stranglehold of the Troika. As Tsipras pointed out during his victory speech, the old ways of doing things in Europe are doomed.   debts are not destiny