Auto-parts And Medical Firms Team Up To Build Ventilators - Part 1

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Saudis call for oil output cuts to stop plunging crude prices Freeland won’t commit Canada to plan: ‘Too early to say how this situation is going to develop’ JEFFREY JONES CALGARY EMMA GRANEY EDMONTON

Saudi Arabia is calling on Canada and other countries to participate in cuts to oil output to help halt the slide in global crude prices that is taking a heavy toll on energy-producing economies already struggling with the COVID-19 crisis. The official Saudi Press Agency reported that the kingdom urged members of the Organization of Petroleum Exporting Countries, Russia and other countries to

seek an agreement to “restore equilibrium” in the oil market. Crude prices shot up 25 per cent Thursday in response to that and to a comment from U.S. President Donald Trump that Saudi Arabia and Russia could be near a deal to end a price war that has flooded global markets. A source within OPEC+, which comprises the cartel's membership plus Russia, Mexico and other allied producers, said non-affiliated countries such as Canada and Brazil would need to join in any co-ordinated output cuts. Canadian officials said little about pro-

spects for participating. The country’s oil producers have cut output rather than sell it in a market that has little need for it, with aircraft and vehicles parked and refineries slowing operations. In early March, Saudi Arabia and Russia met with other OPEC nations in a bid to reach an agreement to reduce output to compensate for an expected drop in demand because of the coronavirus. OIL, B5 Inside the market In two days, $1-billion worth B6 of Suncor and CNR were bought

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EU proposes aid package to farmers, fishers Plan to shorten work-week expected to soften coronavirus impact

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Canadian banks buck worldwide trend to cut dividends JAMES BRADSHAW MARK RENDELL

Canadian bank CEOs insist they will keep paying dividends, even as banks around the world have axed payouts under pressure from regulators to preserve capital within the banking system. Concern is mounting about the sustainability of banks’ dividends after major British and European lenders suspended payouts to prepare for an unpredictable health crisis. Banks everywhere are bracing for a major shock as measures to curb the spread of the new coronavirus shut down large parts of the global economy, putting millions out of work and making a painful recession a virtual certainty. Canadian banks made it through the last financial crisis with dividends intact, and they have built generous capital reserves since then. They have also treated the payouts as more or less sacrosanct: Steady dividends serve as signals of health in a banking system and stopping the payouts can erode confidence. Dividends also provide a flow of income to a wide array of investors, including retirees, at a time when low interest rates have sapped returns on bonds. On Wednesday, the United Kingdom’s largest banks bowed to pressure from Britain’s financial regulator and suspended dividend payments. Several large European Banks, including Italy’s UniCredit and Dutch bank ING Group have done the same after a request from the European Banking Authority, and Mexico’s financial regulator followed suit on Thursday, saying that “it’s impossible to estimate how deep and how long the economic effects of the pandemic will be.” Canada’s Office of the Superintendent of Financial Institutions, has told domestic banks not to increase dividends or buy back shares, but has made no effort to reduce payouts. DIVIDENDS, B5

Auto-parts and medical firms team up to build ventilators STEVEN CHASE MATTHEW McCLEARN

Linda Hasenfratz, chief executive of auto-parts giant Linamar Corp., a company from Guelph, Ont., known the world over for building engine parts and transmissions, is now suddenly and deeply immersed in the challenge of producing hospital ventilators. It’s not a particular business line she had envisioned for her firm even a month ago. “We had identified medical devices broadly as a market that we are interested in and are looking to expand into at some point … we’re exploring the field but ventilators were not on the list.” Amid the novel coronavirus crisis, Ms. Hasenfratz and her company are engaged in what amounts to an unprecedented project. They are teaming up with other auto-parts makers to help a small Brampton, Ont.-based firm, O-Two Medical Technologies, produce 10,000 ventilators in a matter of months for the Ontario government. The Linamar CEO says, in some ways, an engine and a ventilator are not that different. “Both are complex assemblies full of very critical, precisely manufactured parts that need to be assembled in a certain way – and then the full assembly needs to be tested.”

O-Two is in charge but Linamar is spearheading the work by Magna International Inc., Martinrea International Inc. and ABC Technologies Inc., which have volunteered to bring their expertise to bear in this rapid escalation of production. Plans are still being hammered out, but Ms. Hasenfratz said the Linamar’s contributions will include parts. “We are tooling up a whole bunch of machined parts, like 40 different parts, that we can manufacture for them.” Auto-parts makers say their industry is very good at expanding production quickly, manufacturing extremely precise items, dealing with suppliers to expedite the shipping of raw materials and components as well as eliminating or reducing bottlenecks on the production line. Plus, these firms have the financial resources on hand to quickly procure items. “We’re used to highly precise manufacturing with very tight [measurement ] tolerances … and very high standards in terms of cleanliness,” Ms. Hasenfratz says. She said parts makers could also take charge of subassembly – putting together components that will then form part of the ventilators – to make it easier for OTwo to focus on final assembly and testing.

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BoC strategy correct, Dodge says, but there are risks down the road DAVID PARKINSON CHRISTOPHER KATSAROV/ THE GLOBE AND MAIL

OPINION

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avid Dodge has some candid things to say about the powerful weapons that the current leadership at the Bank of Canada has unleashed to fight the COVID-19 crisis. First, they’re doing the right thing. Second, the right thing – to “essentially print money” – could have uncomfortable consequences down the road. “They’ve done what they needed to do,” the former Bank of Canada governor says in a telephone interview. “That is to ensure liquidity – that’s the prime job of the bank at this point in time. “[But] this is not without consequences down the line.” Mr. Dodge is talking about the decision last week by Governor Stephen Poloz and his deputies to not only slash the bank’s key interest rate – its primary tool for monetary policy – to 0.25 per cent, matching its record low, but to launch a massive government-bond-buying program that will inject money directly into financial markets and dramatically expand the central bank’s balance sheet. The program, which is a form of what central banks call quantitative easing (QE), is a first for Canada, although other central banks – most famously the U.S. Federal Reserve – leaned on QE in response to the 2008-2009 financial crisis. Mr. Dodge, who headed the Bank of Canada from 2001 to 2008, is more qualified than most in this country to weigh in on such matters – and more willing than most with his qualifications to do so.

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COMPANIES CNR ........................................ B6 CORUS ................................... B7 DOLLARAMA ......................... B7 GOODFOOD MARKET ........... B7 SUNCOR ................................ B6 TECK ...................................... B7

VENTILATORS, B5

PARKINSON, B5

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