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Business and Finance
Source : (remove) : The Globe and Mail
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Business and Finance
Source : (remove) : The Globe and Mail
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Potential Air Canada flight attendants strike, Carney's lumber industry supports and Shopify is Canada's most valuable company (again): Must-read business and investing stories

Business Roundup: Air Canada Labor Tensions, Carney's Economic Insights, Lumber Market Volatility, and Shopify's Growth Trajectory

In a week marked by labor disputes, economic commentary, commodity fluctuations, and tech sector developments, several key stories dominated Canada's business landscape as of August 10. Leading the headlines is the escalating tension between Air Canada and its flight attendants, represented by the Canadian Union of Public Employees (CUPE). The union, which represents over 10,000 cabin crew members, has been in negotiations with the airline for months, seeking better wages, improved working conditions, and enhanced job security amid the post-pandemic recovery. Sources close to the talks indicate that the flight attendants are frustrated with what they perceive as inadequate compensation adjustments in the face of rising inflation and operational demands. Air Canada, Canada's largest airline, has been grappling with a surge in travel demand, but labor costs remain a significant pressure point. If a strike were to occur, it could disrupt thousands of flights, affecting not only domestic routes but also international travel, potentially costing the economy millions in lost revenue and traveler inconvenience. Analysts suggest that the airline might avert a full-blown strike through last-minute concessions, but the union's rhetoric has grown increasingly militant, with members voting overwhelmingly in favor of strike action if talks fail. This situation echoes broader labor unrest in the aviation sector globally, where workers are pushing back against cost-cutting measures implemented during the COVID-19 downturn. Air Canada's management has emphasized its commitment to fair negotiations, highlighting recent investments in fleet modernization and employee training programs. However, with summer travel peaking, the stakes are high, and any disruption could ripple through tourism-dependent regions like Vancouver and Toronto.

Shifting gears to economic policy, former Bank of Canada Governor Mark Carney made waves with his latest commentary on global financial stability and climate-related risks. Carney, who now chairs Brookfield Asset Management and serves as a United Nations special envoy on climate action and finance, addressed a virtual conference on sustainable investing. He warned that central banks must integrate climate change into their monetary policy frameworks more aggressively, arguing that unmitigated environmental risks could lead to systemic financial shocks akin to the 2008 crisis. Drawing on his experience steering the Bank of England through Brexit uncertainties, Carney advocated for "green quantitative easing," where bond purchases prioritize low-carbon assets. In the Canadian context, he pointed to the oil sands and natural resource sectors as areas needing rapid transition strategies to avoid stranded assets. His remarks come at a time when the Bank of Canada is navigating high inflation and interest rate hikes, with Governor Tiff Macklem facing scrutiny over the pace of tightening. Carney's influence remains substantial; his book "Value(s)" has shaped discussions on ethical capitalism, and his latest insights could pressure policymakers to align economic recovery with net-zero goals. Critics, however, accuse him of overemphasizing climate at the expense of immediate growth concerns, especially in energy-dependent provinces like Alberta. Nonetheless, Carney's voice adds gravitas to ongoing debates about Canada's role in the global green economy, potentially influencing upcoming federal budgets and international climate summits.

On the commodities front, the lumber market continues to exhibit volatility, with prices experiencing a notable uptick amid supply chain disruptions and renewed housing demand. As of August 10, softwood lumber futures have climbed approximately 15% from July lows, driven by a combination of factors including wildfires in British Columbia that have hampered logging operations and reduced timber supply. The ongoing U.S.-Canada softwood lumber dispute adds another layer of complexity, with American duties on Canadian imports persisting despite World Trade Organization rulings in Canada's favor. Industry experts note that while the U.S. housing boom has cooled due to higher mortgage rates, a rebound in renovation projects and infrastructure spending under the Biden administration's initiatives is bolstering demand. In Canada, major producers like West Fraser Timber and Canfor are reporting mixed results: production cuts in response to earlier price slumps have tightened inventories, but labor shortages and transportation bottlenecks—exacerbated by rail and port delays—continue to inflate costs. Economists project that lumber prices could stabilize around $500 per thousand board feet by year-end, but geopolitical tensions, such as those affecting global wood supply from Russia and Ukraine, introduce uncertainty. This volatility has broader implications for the construction sector, where builders are passing on higher material costs to homebuyers, contributing to affordability challenges in cities like Toronto and Vancouver. Environmental groups are also watching closely, advocating for sustainable forestry practices to mitigate the impact of climate-driven events like beetle infestations and droughts that have plagued Western Canada's forests.

Finally, Ottawa-based e-commerce giant Shopify Inc. reported robust quarterly earnings, underscoring its resilience in a challenging retail environment. For the second quarter ending June 30, the company posted revenue of $1.7 billion, surpassing analyst expectations by 5%, fueled by a 21% increase in merchant solutions and a surge in subscription fees from its platform. CEO Tobi Lütke attributed the growth to Shopify's expansion into enterprise-level services, including tools for large brands like Mattel and Allbirds, which are increasingly adopting its ecosystem for online sales amid the shift away from physical retail. The company has also benefited from integrations with social media giants like TikTok and Instagram, enabling seamless shoppable content that drives traffic. However, challenges loom: rising competition from Amazon and emerging platforms like Squarespace, coupled with macroeconomic headwinds such as consumer spending slowdowns, prompted Shopify to temper its full-year guidance slightly. Shares rose modestly in after-hours trading following the announcement, reflecting investor confidence in its long-term prospects. Shopify's story is emblematic of Canada's tech prowess; founded in 2006, it has grown into a $100-billion-plus market cap behemoth, employing thousands and supporting over a million businesses worldwide. Recent initiatives, such as investments in AI-driven personalization and blockchain for secure transactions, position it well for the evolving digital economy. Yet, regulatory scrutiny over data privacy and antitrust concerns in the U.S. could pose risks. Overall, Shopify's performance highlights the strength of Canada's innovation sector, even as broader market jitters from interest rate hikes test valuations.

These stories collectively paint a picture of a dynamic Canadian business environment, where labor relations, economic policy, resource markets, and technological innovation intersect amid global uncertainties. As negotiations and market trends evolve, stakeholders from unions to investors will be watching closely for developments that could shape the fall economic outlook. (Word count: 928)

Read the Full The Globe and Mail Article at:
[ https://www.theglobeandmail.com/business/article-air-canada-flight-attendants-strike-carney-lumber-shopify-august-10/ ]