The year ahead will be one of rebuilding household and corporate balance sheets after a historic run-up in interest rates. The good news is that we are winning the fight on inflation, which will enable the Bank of Canada to end its rate-hiking campaign and start cutting borrowing costs next year.
The economic leaders highlighted here have set ambitious goals for their organizations in 2024. The success they achieve across a wide variety of sectors will reflect on conditions in the wider economy.
Next year will be a critical one for Indigo as company founder Heather Reisman attempts a turnaround of her $1-billion company (fiscal 2023 revenues). On returning as CEO in September after a brief retirement, Reisman launched a turnaround plan, dubbed “Indigo 4.0,” that calls for boosting book sales to as much as 70 per cent of total revenues, up from about 52 per cent in Indigo’s most recent fiscal year. That marks a return to Indigo’s earlier success in focusing on books. So does the plan’s restoration of autonomy for store managers to tailor their offerings to their markets. Reisman has told book publishers that “each (Indigo) store should feel like an independent in its own market.” And with her avowed greater emphasis on cost control, it’s likely that Reisman will trim Indigo’s store count from a current 170 superstores and small-format outlets under the Indigo, Chapters, Coles and Indigospirit brands. Indigo has lost money in recent years, but it shouldn’t require a reinvention of Indigo to nudge it back to profitability. The losses have been modest relative to Indigo’s enormous sales volume and are largely attributable to the pandemic and a costly cyberattack in February. It might be that Reisman’s toughest challenge will be striking the right balance between books and the non-book “lifestyle” merchandise — home furnishings, casual clothing and fashion accessories, for instance — that is the chief attraction for many of Indigo’s customers.
A Porter Airlines already set to expand next year will grow faster than expected due to a marketing alliance it struck in November with Montreal’s Transat A.T. Porter will feed its domestic passengers, in Canada and the U.S., to Transat’s routes to Europe and to North American sunspot destinations. And Porter gives Transat access to a long-coveted domestic Canadian and U.S. market. Porter CEO Michael Deluce promises “seamless” connections between the two airlines, which he expects will give each carrier better performance in on-time arrivals than Air Canada and WestJet. In recent years, Deluce has transformed Porter from a short-haul carrier into a continental airline. A rapidly growing Porter has recently added routes to Western Canada’s biggest cities and to Florida. Early next year, Porter will add routes in the U.S. Southwest, expanding to Las Vegas, Los Angeles and San Francisco. In competition with upstart “ultra low-cost airlines,” Deluce created a competitive edge for Porter with the only semi-luxury service in the low-price sector. But the examples of WestJet and Southwest Airlines show that passenger experience can suffer as airlines expand. Next year will be a test of whether Deluce can maintain his “Actually Enjoy Economy” standard of passenger service as Porter expands its own route network and fleet size and takes on Transat’s trans-Atlantic and sunspot travellers. If Porter succeeds, the end game could see Porter buy Transat, whose planned 2021 merger with Air Canada was scuppered by European Union anti-trust authorities.
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Suyi Kim, Global Head of Private Equity, CPP Investment Board.
Sanjit Das / Bloomberg file photo
Suyi Kim
Global Head of Private Equity, CPP Investment Board
Suyi Kim runs one of the world’s largest private equity (PE) funds, with about $146 billion in assets, at the Canada Pension Plan Investment Board (CPPIB). The CPPIB invests on behalf of 21 million Canadians. The performance pressure for Toronto-based Kim is considerable. Her PE portfolio accounts for about one-quarter of the CPPIB’s total assets. And it has produced the CPPIB’s highest returns, at 15.5 per cent over five years. Kim, a native Korean, was promoted to her current post in 2021 after 16 years running the CPPIB’s Asia Pacific PE portfolio, which had her based mostly in Hong Kong. Kim maintains her extensive network of contacts in the Asia-Pacific region, which boasts some of the world’s fastest-growing economies. Kim’s investing rules are well-suited to all astute investors. For instance, don’t rush to sell a faltering financial asset that has fallen victim to only short-term adversity. And don’t overbid for assets. Kim and her team of 190 PE analysts worldwide have stayed clear of bidding wars. Deal-making will be tough in 2024. Borrowing costs are steeply higher, playing havoc with asset valuations. Geopolitical uncertainty is another risk factor, though Kim has kept about nine per cent of her portfolio invested in China due to its enormous consumer economy. And in PE, decisions take longer than in buying or selling stakes in publicly traded companies, where there is more transparency and less due diligence is required. “We are a battleship,” Kim says of her shop, “not a speedboat compared to other (CPPIB) programs.”
Lana Payne, national president, Unifor.
Jessica Lee / The Canadian Press file photo
Lana Payne
National President, Unifor
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Payne heads Unifor, Canada’s biggest private sector union, with about 315,000 members. During her first 16 months as Unifor’s national president, Payne and her bargaining teams have secured landmark contracts with the Detroit Three automakers and with major employers in the grocery, aviation, manufacturing and other sectors. “This year we have been confronting some of the largest corporations on the planet, and we are winning,” Payne said in a December speech at the annual convention of Unifor’s Ontario members. Yet Payne is fired up about next year. “Get ready for 2024 because it’s on — it’s on,” Payne said. That was a shot across the bow for employers with Unifor contracts up for renewal next year in the hospital, auto-parts, telecom, and energy sectors. It comes from a labour leader who has taken her members off the job in 21 strikes this year, including the first walkout to shut down the St. Lawrence Seaway in 55 years. Payne will also be among the most forceful opponents of Bank of Canada Governor Tiff Macklem’s high interest rate policies, which she describes as an attack on working class Canadians. As for federal Tory leader Pierre Poilievre, whom Payne regards as irredeemably anti-union, “We’re going to bring him down,” Payne vowed in her December speech. That might be an overreach. But after emerging this year as the country’s most powerful labour leader, Payne can be certain of a national audience for her economic imperatives.
Bharat Masrani faces a tough 2024, as he tries to streamline a TD that is underperforming some of its Canadian peers while he also upgrades the anti-money-laundering practices at TD’s extensive U.S. operations. TD has acknowledged discovering deficiencies in those practices in its own investigation of its U.S. business, which it reported in its fourth-quarter financial results. That issue caused U.S. authorities to hold up approval of TD’s proposed takeover of First Horizon Corp. long enough for TD to call off the acquisition of that Tennessee-based regional bank this year. TD expects that after U.S. authorities complete their investigation of TD’s U.S. operations, TD will be subjected to U.S. monetary and non-monetary penalties. Banking analysts estimate that the U.S. government could fine TD as much as $1 billion (U.S.). Closer to home, TD is coping with the same adverse industry conditions as its peers. High interest rates have slowed loan growth and swollen loan-loss provisions across the banking sector. But TD’s weaknesses are especially glaring, evident from its miserable results in the fourth quarter ending Oct. 31. Profits dropped by 57 per cent in the quarter, due to cost escalation as well as external factors. So, next year Masrani will preside over workforce reductions and will shrink TD’s real estate footprint by closing some corporate offices and bank branches. Heading into 2023, Masrani could boast an impressive track record during a lengthy CEO tenure at TD. Masrani will spend next year trying to restore above-average performance at TD after his 2023 annus horribilis.
Correction - Dec. 27, 2023
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The story has been updated to remove incorrect details of Bharat Masrani's background.
David Olive
is a Toronto-based business columnist for the Star.
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