When moving up means moving out

Even record debt levels — household debt-to-income ratio in Canada is now at 152% — seem to have done little to get Canadians to move for a chance to get ahead
Just pick up and move. Who wouldn’t, if it meant making more money or even just living in a city where the cost of living is lower or the tax burden smaller?
The answer is most Canadians.
Even though it’s probably one of the biggest personal financial decisions you can make — and often a sure-fire way to increase your net worth — we seem to have a degree of inertia other countries don’t share.
You can’t discount the personal attachment people have to their existing addresses tied up in connections to family and friends and familiarity.

Americans consider mobility an essential ingredient to a better life

But none of this seems to stop Americans from moving around their country to look for a better paying job or for a better tax rate. A study from the World Bank found a little over 3% of workers move annually within the 50 states, which compares with just under 1% of Canadian workers moving within the 10 provinces.
“This higher level of mobility partly reflects the culture of a country built through immigration,” said the report. “Americans consider mobility an essential ingredient to a better life.”
Craig Alexander, chief economist with Toronto-Dominion Bank, said labour mobility has always been higher in the U.S.
“The U.S. is an exception because it has the highest labour mobility rate of any country in the world,” he says. “Look at Europe — and they have an economic union — and you don’t get nearly as much labour mobility as the U.S.”
He said the trend of workers to move from the northeast to warmer climates is also hard to replicate in Canada.
“Our north-south is a little different.”
Even record debt levels — household debt-to-income ratio in Canada is now at 152% — seem to have done little to get Canadians to move for a chance to get ahead.
A new government in Quebec — even one that supports separatism and potentially raising taxes in what is already the highest taxed jurisdiction in the country for most income classes — is unlikely to have a major impact on interprovincial migration.
A study released in February by Montreal’s HEC business school suggested the province was already on the way to becoming the country’s poorest province. Quebec’s cheaper cost of living is eroding while the gap in income levels between it and other provinces is widening.
But is personal wealth or lack of it enough to convince people in Quebec — or any province for that matter — to move. “It will be a factor but it’s hard to quantify,” says Martin Coiteux, an economist who wrote the study for the HEC’s Centre for Productivity and Prosperity.
Alberta may have the jobs and the lowest unemployment rate in the country, not to mention no sales tax, but it did little to encourage Quebecers to move there. Statistics Canada says between July 1, 2009 and June 30, 2010 slightly less than 4,000 of them made that move. Much smaller Nova Scotia had 4,233 people make the decision to pack and go West.
Mr. Alexander points out that governments in Canada sometimes make it difficult to move because professional designations are not always recognized in other locales. “Some of the provinces are getting better at recognizing professional accreditation but it’s still not seamless across the country,” he says. “That’s one the biggest barriers [to moving].”

At what point does it make sense to move? That decision depends on the cost of living, which includes such things as the tax rate and housing, but also how much more income you can pull in by pulling up stakes.
“It’s complicated during your working life because the cost of living can be offset by higher wages and salaries,” says Mr. Alexander, adding that moving back home to the East Coast on retirement with its cheaper cost of living has created a windfall for some Atlantic Canadians.
Housing is more expensive in Alberta, for instance, but income levels are higher too. Consider median income for all families in Nova Scotia was $64,100 in 2010, according to Statistics Canada. The figure jumps to $85,380 for the same period in Alberta. Head out to British Columbia, where detached homes in Vancouver average out to nearly $1-million, and you’ve got median family income of $66,970.
You can get some tax savings moving around the country and that will drove your costs down. Punch $60,000 in to Ernst and Young’s online tax calculator for 2012 and you find a B.C. resident would be left with $48,345 in after tax income — the highest among the provinces at that tax level. At $44,619, Quebec would leave you with the lowest after tax income.

I think we are more focused and grounded here on what is important and that’s family and friends

Jamie Golombek, managing director of tax & estate planning with CIBC Private Wealth Management, says Canadians don’t usually move for tax reasons alone but he wonders whether Ontario’s new surtax on people making more than $500,000 will have a direct impact.
“Ontario will ultimately have the highest rate,” says Mr. Golombek. “You have to have a very dramatic tax difference [to move]. I don’t think people will move from Quebec to Ontario for 2%.”
Mr. Golombek’s own theory on why people are unwilling move is more related to tradition than taxes. He says Americans are used to moving out of their home and leaving town for school.
“Once you are away for school it becomes easier to take a job anywhere in the U.S. In Canada, for the most part, people go to school closer to where they live,” he says.
Financial education Talbot Stevens says lifestyle seems as important to Canadians as their personal income statement.
“I think we are more focused and grounded here on what is important and that’s family and friends,” says Mr. Stevens. “The American dream is to get rich and have all the money you need even though it might cost you two or three marriages. You can see that attitude right across the country.”
But there is a point where people will move for the money and it usually starts with the fact you can’t get a job where you live.
“People leave the East Coast because they have to,” says Mr. Stevens. “Income opportunities dominate the discussion more than the tax environment. The lifestyle argument doesn’t work if you don’t have a job.
“Inertia will keep you where you live unless there is an external force that causes you to move.”

Soaring food prices 2012

Soaring food prices

September 04, 2012

RECORDER REPORT

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Soaring food prices in the international markets have been a major cause of concern for policymakers all over the world in recent months. Obviously, multilateral financial institutions cannot remain indifferent to such a negative development and have to lead the way for redefining policy priorities. Expressing alarm over the situation, the World Bank said on 30th August that drought in the US and European crop centres had sent global food prices soaring by 10 percent last month, raising a food security threat to the world's poorest people.

The surge in prices due mainly to the devastating heatwave across the central US, which produces the largest crops of corn (maize) and soybeans, places in danger millions around the world, especially in countries greatly dependent on imported grains. From June to July 2012 (in just one month), the prices of both corn and wheat jumped by 25 percent while those of soybeans soared by 17 percent, topping their previous record highs in June, 2008. The price of other key global staple, rice, was four percent lower, however. The World Bank's food price index was six percent higher than a year earlier and one percent higher than the February 2011 peak.

Region-wise, Africa and the Middle East, according to World Bank President Jim Yong Kim, were particularly vulnerable together with people in certain other countries where prices had gone up abruptly. These countries generally have large food import bills; food consumption constitutes a large share of their average household spending, and they have limited fiscal space and comparatively weaker protective mechanisms. Domestic prices in these regions had already experienced sharp increases even before the global shock due to seasonal trends, poor harvests and conflicts in certain areas. It was also observed that the diversion of corn to produce ethanol bio-fuel - which takes upto 40 percent of US corn production - was also a key factor behind a sharp rise in corn prices which had also indirectly tightened the market of its substitute, wheat, and raised its price.

As highlighted by the World Bank, there is no denying the fact that dangerously soaring food prices are threatening the well-being of millions of people around the globe, particularly in those countries which are already poor and have weak protective mechanisms to face such kinds of sudden shocks. In certain cases, the crisis could even become a matter of life and death and lead to social and political chaos. The average or poor households in the developed countries could also face problems but they can be shielded by certain adjustments in fiscal policies by the respective governments, and volunteer groups which usually become quite active in such situations. A very sad aspect of the crisis is that there are no initiatives at international levels to help reduce the severity of its impact and alleviate the sufferings of those who have been badly hit by soaring grain prices. The G20 has decided to wait for September's US crop report before deciding whether to take action on food prices or think about some other measures. The lack of any initiative from the Group of 20 leading economies to address the soaring food prices on an urgent basis is really depressing, to say the least. They should have given proper attention to the matter before food prices threatened to spiral out of control and push more people into hunger. The multilateral financial institutions would obviously not take any concrete measures and extend credit facilities in suitable cases unless the G20 calls upon them to do so. The UN Food and Agricultural Organisation's Chief has, however, asked Washington to rescind its mandate for fuel producers to use ethanol in gasoline and other fuel products to ease pressure on corn prices but it seems to have no effect on US policymakers. In the meantime, millions of people continue to slip into starvation bed, perhaps hoping that the world leaders would realise the gravity of the situation and come to their rescue. We could only hope and pray that their expectations are fulfilled and their agony alleviated, sooner rather than later. Experience suggests that humankind is normally not devoid of compassion, especially at such critical junctures. Fortunately, Pakistan is not very much affected by this crisis due mainly to self-sufficiency in food crops. Occasional exports of wheat could fetch higher level of foreign exchange in a soaring global market.

Rainfall Down, Steak Prices Up

Prices on steakhouse menus are higher than they were three years ago, and the drought that’s devastated corn crops in the Midwest will only push them higher. “We think the price rise is yet to come,” says Amy Rubenstein, an owner at Peter Luger in Brooklyn, who’s seen the cost of the prime New York strip steak she buys rise 11 percent this year and 45 percent since 2010.

Photographs by (clockwise from top) Stephen St. John/National Geographic/Getty Images; Thom Desanto/Stockfood; Philip Webb/BBC Food/ZUMA Press; David Murray/Dorling Kindersley; Keller&Keller/Stockfood; Schieren/Stockfood; Tom Grundy/Alamy; UIG/Getty Images

Data: USDA; Livestock Marketing Information Center; Urner Barry, Inc.

Innovation heads west: Oil sands pick up Canada’s tech slack

Half a century of fighting over every speck of Alberta’s oil sands now behind them, Canada’s largest heavy-oil producers are now embroiled in another decades-long battle.
Not with each other, but with the technological and environmental realities of their industry. To maintain their social licence to operate in the face of mounting criticism from at home and from abroad over their carbon-intensive production processes, innovation has become their new prime directive.
It might run completely counter to the multibillion-dollar patent lawsuits and top-secret research projects that spring to mind when Canadians think about an ‘innovative’ industry, though it is also built to last longer and aim higher.

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“There is an unprecedented amount of R&D dollars flowing into the oil sands ranging from evolutionary to revolutionary,” CIBC World Markets declared in a recent report. “Importantly, we are just starting to see the impact of technology which could still make the oil sands more competitive.”
That report, at least the section buried in the middle of its 200 pages that dealt with innovation, was largely ignored when it was published in mid-August. Such is the reality of an industry where insiders and investors alike focus on production volumes instead of the technological processes that made them possible.
Although it remains largely dispersed and undiscussed, Canadian energy innovation is accelerating to the point where within a single generation, the oil sands could go from being among the world’s most widely criticized resource plays to being among the most admired.

Postmedia NewsEddy Isaacs is to the oil industry what RIM's Mike Lazaridis was to the smartphone industry.

The process began in the 1960s, when the original oil sands producers were landing their first leases and Eddy Isaacs was still at the University of Alberta working on his doctorate in organometallic chemistry.
“At the time, although it was a lot of fun to do the work I was doing, we had no concept that the industry would grow as fast as it did,” he recalled during an interview in his office on the 25th floor of a downtown Calgary skyscraper.
Now the chief executive of the Energy and Environmental Solutions division of the government-supported Alberta Innovates organization, Mr. Isaacs is the closest approximation to a Mike Lazaridis-type figure the energy industry has to offer.
His inventions — six patents bear his name — never made any headlines or spawned any companies. Instead, he has spent his career holding positions similar to the one he holds today, straddling the public and private sectors to build an innovation support network that need not rely on a single ‘champion’ player.
He calls it “The Alberta advantage.”
“There is an attitude here of wanting to have partnerships and to get these things to work well together,” he said.
It contrasts directly with the “go-it-alone” mentality of Waterloo or Silicon Valley, where openness and collaboration are four-letter words, but it has a history of producing results. So as national innovation champions continue to rise and Canadians continue to grow disillusioned each time they fall, the country can look west and take solace.
Having large companies willing to put up big money for expensive pilot projects is one element, Mr. Isaacs argues, “but it is also all the companies that provided service, that can read thermal couples way down a hole to drill certain types of wells so a lot of the ingenuity and innovation happened around the industry itself,” he said.
An example: an Imperial Oil Ltd. scientist developed the SAG-D (Steam-Assisted Gravity Drainage) process, which became a common methods of oil sands extraction. But it was the digital reservoir models developed in the early 1980s by far lesser-known CMG Ltd. that helped make its commercial application a reality.
“In the end it is about a cluster,” Mr. Isaacs said. “Those support systems, if they are not available, makes your innovation unsustainable.”
Industry-wide innovation is the only reason why oil sands development is a profitable business today. It was the result of what Philip Cross, former chief economic analyst for Statistics Canada, likes to call “constant, relentless innovation,” the sort that is “always going on in the background.”
Yet because energy sector innovation has been more of a marathon than a sprint, the process can be nearly impossible to see from the outside. At least, it used to be.

Postmedia NewsA worker at Cenovus' Christina Lake SAGD operation shows what bitumen looks like after extraction. Emissions here are already comparable to the mid-range of conventional oil production.

Mark Bilozir, director of technology development for Cenovus Energy Inc. says the company “is calling itself, rightly so, a technology company.”
His department has a $200-million annual budget to fund more than 140 ongoing projects. One is a new type of well that has successfully been increasing oil recovery rates by more than 10% since it entered testing in 2004, another aims to replace air in the fuel-burning process with pure oxygen; this “oxy-fuel” would create emissions of “almost pure CO2“, up to 99%” of which could be captured in a way that would “significantly reduce the cost of capture, compression and transport to long-term geological storage,” the company said.
The 8-figure research budget is enough to rank Cenovus among Canada’s top 10 R&D spenders, though it still represents a fraction of the $1.4-billion R&D budget RIM had in 2010 or the $2.2-billion Nortel spent on R&D in 2007.
Most of those billions of tech R&D dollars go towards just keeping up — or falling behind less quickly — in most cutthroat technology industries, but energy research tends to be for more productive long-term planning. As well, the numbers only tell one side of the story.
“There is a heavy over-reliance on the spending numbers when people talk about the country’s performance on research,” said Ron Freedman, chief executive of Research Infosource Inc., the Toronto-based firm that annually ranks Canada’s top R&D spenders. “If you’re only looking at the total amount of spending going on, you’re missing half the point. The other half of the equation is the number of companies involved in research.”
There were 116 Canadian companies doing R&D related to oil and gas extraction as of 2010, Research Infosource data shows, compared with just a few smartphone-focused firms.
Employment data represents another misleading metric. Western Canada has historically been home to only a small fraction of the R&D professionals in the country as a whole, yet according to the Innovation Atlas of Canada, the western region has been gaining ground.
Between 2001 and 2007, the number of R&D workers in Canada grew 28% from 115,000 to 147,000. During the same time, the number of those workers living in the west increased by 43%.
Because there is no single ‘champion’ Canadians can idolize, these facts often go unnoticed partially because the energy industry has been famously poor at telling their own story.
“When it comes to this Canadian industry we do lots of good, innovative work but somehow we are not good at messaging,” notes Soheil Asgarpour, president of the Petroleum Technology Alliance of Canada.
Part of the problem is determining who should be doing the messaging. PTAC has conducted more than 350 R&D projects with nearly 60 still ongoing.
In each of them, the goal has been to include as many different industry players as possible — sometimes hundreds — in order to diversify both the cost and the overall risk of failure. While it is clearly an efficient model, the constant flux of sources for financial and human resources can make it difficult to see how quickly progress is accelerating.

Jason Franson for National PostScientists at Syncrude Research and Development Centre in Edmonton have quadrupled the number of patentable ideas over the past 15 years.

Shelley Lynes can clarify matters. When she started working at Syncrude Ltd.’s Edmonton-based R&D complex in 2008, dealing with intellectual property took up about half of her time. Today, her title is intellectual property specialist.
Scientists working with the consortium behind Canada’s largest oil sands mining operation have quadrupled the number of patentable ideas (what Syncrude calls “invention disclosures”) they produce since she arrived. Syncrude also receives at least one unsolicited idea from a third party — which can range from academics to “guys in their garages” — every day.
“In the past, in 2008, we might, for the full year, have reviewed 35 [invention disclosures] to consider a patent filing,” Ms. Lynes said.
“Now we’re reviewing 35 to 40 at every [quarterly] meeting. So there is a lot more activity [and] there are a lot more players in the industry as well.”
The collective goal of Canada’s energy innovators — to maximize production and minimize environmental harm — will not be achieved by next quarter or even next year. It will take 15 to 20 years by Mr. Isaacs’ calculations, or an entire generation.
When it is achieved, however, it could forever alter the global balance of energy power.
“The reason we are number three in the world [in terms of the size of our oil and gas reserves] is because our level of recovery is not as high as in other countries,” explained Mr. Asgarpour.
“But if we can get 30% recovery from our bitumen, and current rates are only 10%, based on future and emerging technologies which in my opinion are doable, then Canada alone will have more reserves than the entire Middle East region.”
Can Alberta muster its own innovation army? More on the West’s burgeoning energy technology sector every Tuesday this month as part of FP Executive’s Productive Conversations series all this month

If only geniuses knew how to run a business

One might be forgiven for thinking that Canadians are more interested in studying innovation than actually doing it.
Over the past several decades, we have been bombarded with studies from both government and non-governmental organizations on the importance of innovation to our productivity performance and how we need to improve our capabilities in this area. However, real progress on the innovation front over this period has been elusive and our productivity performance has actually worsened.
A decade ago, a parliamentary standing committee on industry, science and technology noted the Canadian innovation system at the turn of the 21st century was very much the same as it was at the end of the 1980s. Most would agree that little has changed in the past decade to change this observation.

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Nevertheless, we continue to generate reports and studies. In the past two years, we have seen a new report on Canada’s innovation performance by the federal government’s Science, Technology and Innovation Council (STIC), as well as one from an expert panel chaired by Open Text chief executive Tom Jenkins.
How much each new study adds to our existing body of knowledge is debatable.

The studies are remiss in that they fail to acknowledge that one of the key factors in the lack of success among Canadian startups is a dearth of business acumen.

Most cover much of the same ground and provide very similar recommendations focused on increasing private-sector investments in R&D, providing support for venture capital, enhancing commercialization, creating a more supportive tax and regulatory environment, investing in science and technology talent, etc.
Yet, the studies are remiss in that they fail to acknowledge that one of the key factors in the lack of success among Canadian startups is a dearth of business acumen.
As far back as 1997, Statistics Canada pointed out that the main reason for the failure of small business was inexperienced management and that 71% of firms fail due to poor financial planning. There has been an average of 11,000 bankruptcies each year in Canada over the last 20 years, many of which could have been avoided had the leaders of these enterprises been better equipped with the managerial skills required to turn a great product or service idea into a profitable business. While many studies recommend better entrepreneurship training for engineers and scientists, other important business skills appear to merit little attention.

A prime example is the above-mentioned STIC report. Two-thirds of the way through the 76-page report, it states, without elaboration, that “management skills are a key complement to science and technology skills in a knowledge-based economy.” Nowhere else is there another reference to management skills. Similarly, while the Jenkins report talks about the importance of both “technical and professional soft skills,” its proposed innovation talent strategy clearly emphasizes the former.
Continually overlooked is a body of evidence suggesting that without equal attention to and investments in management skills and knowledge, we will not be able to realize the full benefits of the significant investments already being made in science and technology research and education.
A number of studies have highlighted that technology startups in Canada suffer from deficient business and management skills particularly compared to U.S. companies. A 2009 report titled Understanding the Disappearance of Early-stage and Start-up R&D Performing Firms focused specifically on the high failure rate of startup and early-stage R&D firms in Canada and attributed this to a lack of commerce skills.
Similarly, studies have found that one of the most significant challenges facing innovative firms in this country was access to managerial, as opposed to technical, talent.
Moreover, a key objective of a successful innovation policy is the growth of Canada’s technology-based firms into global competitors. Indeed, our relative failure to do this is seen as a key factor in our poor R&D and productivity performance. Many of the previous reports on innovation state this as a policy objective but don’t seem to recognize the skills needed to make this happen.
Achieving this goal will require the availability of a broad range of management skills and knowledge. Companies will need access to talent that can establish, grow and manage international operations and all their related activities, including outsourcing, production, supply chains, alliances, currencies, etc. In particular, the federal government’s focus on increasing Canadian trade with emerging markets will further increase the need for state-of-the-art management talent and knowledge to support these efforts.
Despite these needs, the Canadian education system continues to underperform in the production of business, as opposed to science and engineering, graduates. An  OECD report said that Canada does well in producing advanced degrees in science and technology but not quite as well in the development of business and entrepreneurial skills. Unless we redress this situation we will continue to have the same conversation on innovation that we have been having for the past three decades.
Micheál Kelly is the Dean of the School of Business and Economics at Wilfrid Laurier University and a former president of the Canadian Federation of Business School Deans.

Three crucial questions smart people ask

Have a tough decision to make? Maybe the problem isn’t as hard to figure out as you thought.
Mike Maddock is the founder and CEO of Chicago-based innovation consultants Maddock Douglas, and a self-described “idea monkey.” He specializes in helping people see the solutions that are sometimes so close that you can’t see them yourself.
In a recent article for Forbes.com, Maddock offers three questions to ask yourself when you’re struggling with a tough decision. Whenever he has asked other business leaders for advice, he says, he’s been amazed how simple their solutions were. So now he’s sharing that lesson with the rest of us.
Here are three questions to ask yourself the next time you feel stuck. “Whether you are trying to change your industry, your company or your personal life,” he says, “I promise you it will work.”
Question Number 1: What’s the outcome I want?
Fussing over any problem can be frustrating – especially when the problem starts to consume you. Reverse the situation, Maddock suggests: Focus on your objective instead of letting the problem direct your thinking. “Being energized by problems is a recipe for inaction.”
“Asking the question ‘what is the outcome I want?’ forces the mind to focus on the final destination, not the current bumps in the road,” says Maddock. Once you place yourself firmly back in the “creator” mindset, you’ll see your way clearly to the next big question.
Question Number 2: What stands in my way?

“The best leaders are masters at identifying and prioritizing obstacles that are between them and the outcome they want,” says Maddock. “Then they brainstorm ways to eliminate, avoid or neutralize the obstacles.”
Question Number 3: Who has figured it out already?
Once you’ve prioritized a list of obstacles and identified ways to overcome each one, you have a choice: you can spring into action, or you can pause and steal ideas that have already been proven to work. (If you don’t like the phrase “steal,” Maddock suggests you call it “parallel engineering.”)
He offers an example from his own career. In the mid ’90s, Maddock Douglas had grown to about 25 people, and had dozens of projects happening at once. Needing a more efficient way to manage this complexity, Maddock decided to build a software system to track and manage each account. “After spending roughly $185,000 and hundreds of hours in time, we scrapped the project,” says Maddock. “Three phone calls later we bought an off-the-shelf system that did 90% of the things we were trying to build into our own custom solution.”
He quotes the aphorism, “Intelligence is learning from your mistakes; wisdom is learning from the mistakes of others.” Pausing to learning from people who have faced similar roadblocks is not just wiser, but usually a lot cheaper.
You can read Maddock’s original column at http://www.forbes.com/sites/mikemaddock/2012/08/21/three-incredibly-simple-questions-the-most-successful-people-use-to-change-the-world/

Unilever Wants to Be America's Ice Cream King

Unilever Wants to Be America's Ice Cream King: The global ice cream leader uses its Magnum bar to spur U.S. sales