The salutary effects of Ontario’s minimum wage hike are becoming visible: one large company is thinking about what it’s doing and taking steps to increase productivity:
Grocery store chain Metro Inc. says it will eliminate about 280 jobs starting in 2021 as part of a $400-million overhaul of its Ontario distribution network.
The company says the move to modernize and automate its network will mean the loss of about 180 full-time and 100 part-time positions.
The announcement follows comments by Metro in August that it would study automation as it looked to cut costs in the face of the Ontario government’s plan to raise the minimum wage next year.
PerpetualDiscounts now yield 5.32%, equivalent to 6.92% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.05%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 285bp, a significant narrowing from the 295bp reported October 4.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2358 % | 2,415.9 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.2358 % | 4,433.1 |
| Floater | 3.78 % | 3.94 % | 28,764 | 17.58 | 4 | -0.2358 % | 2,554.8 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0066 % | 3,074.6 |
| SplitShare | 4.74 % | 4.66 % | 75,736 | 4.39 | 6 | 0.0066 % | 3,671.7 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.0066 % | 2,864.8 |
| Perpetual-Premium | 5.36 % | 2.99 % | 64,477 | 0.22 | 17 | 0.0417 % | 2,816.4 |
| Perpetual-Discount | 5.36 % | 5.32 % | 62,163 | 14.91 | 19 | 0.0113 % | 2,940.8 |
| FixedReset | 4.26 % | 4.31 % | 150,972 | 4.59 | 99 | 0.1883 % | 2,469.8 |
| Deemed-Retractible | 5.08 % | 5.58 % | 101,012 | 6.02 | 30 | 0.1635 % | 2,896.2 |
| FloatingReset | 2.77 % | 2.73 % | 50,891 | 4.06 | 8 | 0.1197 % | 2,676.6 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| ELF.PR.G | Perpetual-Discount | -1.79 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-11 Maturity Price : 21.75 Evaluated at bid price : 22.00 Bid-YTW : 5.41 % |
| BAM.PR.R | FixedReset | -1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-11 Maturity Price : 20.41 Evaluated at bid price : 20.41 Bid-YTW : 4.75 % |
| HSE.PR.E | FixedReset | 1.02 % | YTW SCENARIO Maturity Type : Call Maturity Date : 2020-03-31 Maturity Price : 25.00 Evaluated at bid price : 24.68 Bid-YTW : 5.15 % |
| SLF.PR.C | Deemed-Retractible | 1.03 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.52 Bid-YTW : 6.98 % |
| BAM.PR.Z | FixedReset | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-11 Maturity Price : 24.05 Evaluated at bid price : 24.87 Bid-YTW : 4.73 % |
| HSE.PR.A | FixedReset | 1.18 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-11 Maturity Price : 17.11 Evaluated at bid price : 17.11 Bid-YTW : 4.82 % |
| BMO.PR.Q | FixedReset | 1.36 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.35 Bid-YTW : 4.74 % |
| TRP.PR.F | FloatingReset | 1.46 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-11 Maturity Price : 20.09 Evaluated at bid price : 20.09 Bid-YTW : 3.55 % |
| MFC.PR.K | FixedReset | 1.53 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.50 Bid-YTW : 5.72 % |
| TRP.PR.B | FixedReset | 2.90 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-11 Maturity Price : 16.30 Evaluated at bid price : 16.30 Bid-YTW : 4.50 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TRP.PR.J | FixedReset | 242,000 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-05-31 Maturity Price : 25.00 Evaluated at bid price : 26.70 Bid-YTW : 3.69 % |
| TRP.PR.K | FixedReset | 196,554 | YTW SCENARIO Maturity Type : Call Maturity Date : 2022-05-31 Maturity Price : 25.00 Evaluated at bid price : 26.01 Bid-YTW : 4.09 % |
| RY.PR.R | FixedReset | 150,859 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-08-24 Maturity Price : 25.00 Evaluated at bid price : 26.99 Bid-YTW : 3.51 % |
| NA.PR.A | FixedReset | 110,695 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-08-15 Maturity Price : 25.00 Evaluated at bid price : 26.13 Bid-YTW : 4.01 % |
| NA.PR.S | FixedReset | 108,828 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2047-10-11 Maturity Price : 23.16 Evaluated at bid price : 23.57 Bid-YTW : 4.38 % |
| TD.PF.E | FixedReset | 106,096 | YTW SCENARIO Maturity Type : Call Maturity Date : 2020-10-31 Maturity Price : 25.00 Evaluated at bid price : 24.90 Bid-YTW : 3.78 % |
| There were 29 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| POW.PR.B | Perpetual-Discount | Quote: 24.85 – 26.66 Spot Rate : 1.8100 Average : 1.0178 YTW SCENARIO |
| BMO.PR.Q | FixedReset | Quote: 22.35 – 22.74 Spot Rate : 0.3900 Average : 0.2523 YTW SCENARIO |
| ELF.PR.G | Perpetual-Discount | Quote: 22.00 – 22.38 Spot Rate : 0.3800 Average : 0.2433 YTW SCENARIO |
| GWO.PR.N | FixedReset | Quote: 17.35 – 17.75 Spot Rate : 0.4000 Average : 0.2826 YTW SCENARIO |
| BMO.PR.S | FixedReset | Quote: 23.80 – 24.08 Spot Rate : 0.2800 Average : 0.1685 YTW SCENARIO |
| MFC.PR.L | FixedReset | Quote: 22.11 – 22.36 Spot Rate : 0.2500 Average : 0.1745 YTW SCENARIO |
as it looked to cut costs in the face of the Ontario government’s plan to raise the minimum wage next year
I think the reason (minimum wages) is a bit of a red herring. Automation and AI are inevitable. And that profit driven companies will look to squeeze as much juice whatever the fruit.
Given Amazons’ success, maybe Metro was (just) behind the curve
Perhaps in this particular instance it was. The minimum wage increase has been floated for a long time; but perhaps this automation plan has also taken a long time to come to fruition. Maybe they’ve had a plan for a long time, continually updated, and it’s only with a higher minimum wage that they can justify the capital costs.
In a perfect world, profit driven companies will look to squeeze as much juice whatever the fruit, but in this world that’s not always so clear. I’m always amused when I read about companies actually saving money when forced to think about what they’re doing (for instance, to comply with environmental regulations). There’s an awful lot of stuff that just doesn’t get thought about.
The restaurant industry will be facing a lot of pressure and rightfully so. Restaurant share of the food market has grown by leaps and bounds over the past while, aided by the cheapness of fast-food, which is accelerated by the cheapness of labour. I continue to cite the example of McDonalds, which installed thousands of ordering kiosks in their European locations, while hiring tens of thousands of order-takers in the US.
There are many, many operations out there in which a lot of labour can be replaced with a reasonable amount of capital. And I suggest that pushing Ontario’s pretend-businesses away from their reliance on cheap labour and indirect government subsidies (via various income support and substitution government programmes) is a worthy goal.