Winnipeg Free Press

Winnipeg Free Press (Newspaper) - June 24, 1981, Winnipeg, Manitoba 18 Winnipeg free press wednesday june 24, 1981 by Ingeborg Boyens Roy Peabody is philosophical about the loss of his business to the ravages of rising interest rates. It s not Only he says. If we were the Only ones we would wonder what we did wrong. But the Economy went right Down the Peabody is one of 359 people who filed for bankruptcy with the Federal government s regional bankruptcy office in the first four months of 1981. In the same period last year 294 businesses and individuals called it quits. Last year when Bank rates started to Rise about 140 Manitoba businesses went bankrupt. Only 90 filed their papers in 1979. Small businesses such As Peabody s Tiffany s shoe Ltd., ire particularly vulnerable to Bank rates that levelled off two weeks ago at 19.07 per cent. Interest rates charged of Small just Nesses Consumers and Farmers stood Between 21 and 23 per cent. Customers stopped buying Peabody said things started to sour for Tiffany s shoe As soon As the interest rates went up. The shoe store s own borrowing costs Rose along with the Bank s floating rate. Customers stopped buying. Charge card companies in creased their fees to the business. And just months after the firm opened its second store borrowing charges Rose from 14 to 17 per cent said Peabody. There was a reaction right Down the he said. Peabody said he did t take Home any pay from the store during its last year of operation. Finally creditors forced the closure of the four year old operation and the Lay off of its five employees. Yet Peabody maintains the store could have worked. In 1977, the company s first year Gross retail sales brought in during the Best year total sales earned said Peabody. I Don t know How people Are staying he mused. A local uniform maker the Model manufacturing company also was t Able to withstand the pressures. The company closed its doors May 1, putting 20 out of work after two Loans were called. Enzo Lisi director of the now defunct company said there was too much we closed Down because we said the unemployed pattern designer. Interest rates push firms Over the Brink Gordon Cairns official receiver for the Federal bankruptcy office said Small or marginal businesses often blame High interest rates for their demise. Jack Mcdonald chairman of the Manitoba committee of the Canadian Bankers association and vice president of the Royal Bank agreed that High interest rates often push a business Over the Brink. Alex Milton manager of the Manitoba chamber of com Merce said businessmen Are caught in the Middle of the interest rate squeeze. Before suppliers would Grant retailers 30 to 40 Days Grace on payment of Bills. Now pressure for payment is applied almost immediately. Gerry Faintuch manager of credited of Canada Ltd. Confirmed that wholesalers and suppliers Are no longer willing to wait for their Money. They Are More or less collecting he said. Faintuch said Many Small businesses men had been accustomed to using their suppliers As Bankers. Broadcasting licence applicants get Extension Ottawa up potential applicants for a licence to broadcast a new satellite package to Remote and under served communities have until june 30 to apply an Extension to the original deadline of june 17. In announcing the Extension today the Canadian radio television and telecommunications commission was responding to a request last week from communications minister Francis Fox. Fox said last week he had asked the crts to extend the deadline so that Northern and Remote communities would have More time to consider applying for the licences. Cies jump with High interest rates a m soil services in Parman in non of Montr Matt non a Inlo Intel chains delicately fashioned in Birks Loki. Yellow Gold our jewel a Lucios have set perfectly matched cultured pearls. I he charming result is a Trio of Beautiful jewellery pieces 16-Inch necklace a Bracelet and a pair of pretty earrings. Then we priced their very reasonably making them even More desirable necklace Bracelet earrings Birks mail j e w t i i i r interest rates Are record High with no Relief in sight. Reporter Ingeborg Boyens talked to the victims of High interest As Well As those learning to Cope with it. Second in a series. Now it is difficult for those same businessmen to get Stock. Any business that is dealing in High Cost goods such As cars stereos and appliances is Likely to be in trouble said Milton because of excessive carrying costs. But Milton said he did t expect businesses to declare bankruptcy in wholesale numbers. There Are always people going agreed Bill Draper manager of the Winnipeg chamber of com Merce. You Are forced to look for better ways to build a you try lock your inventory too in in fact rising interest rates May Force efficiencies in business and customer Goodwill he said business said Draper. Ran t no a in Finocc most businesses Are coping by carrying the least Stock possible said Milton. And some Are cutting Back in staff in an attempt to offset the rising interest costs prices charged of Consumers Are inevitably higher As businesses try to retain their profits. A spokesman for the retail merchants association of Canada said some local merchants Are trying to form a new purchasing group so they can buy in bulk and Benefit from reduced prices. A m soil services in Carman is one of Many Manitoba businesses that have Cut Back on inventory and capital Pur chases in an attempt to counter the High rates. We try to firm up sales before we said part owner Bud Mcknight. While the company had wanted to add on More storage space expansion plans were necessarily delayed said Mcknight. A comptroller was hired to Monitor spending. Some of the 25 staff members May find themselves without jobs this summer while the company tries to Cope said Mcknight. Suppliers have been More fussy about terms of payment and credit limits for the 13-year-old company. In turn a m does the same to its customers said Mcknight. We ask the Farmer for payment right prices Haven t risen simply because sales Are off said Mcknight. There is a fear that higher prices will discourage buying altogether. Norm Coghlan of Coghlan s Ltd said it is very difficult for a businessman to Cut his inventors without affecting his Trade. If you try to Cut your inventory too much you can lose siness and customer Enn will Cash you can t run a business from an empty the 22-y ear old company that imports and markets Camp ing gear has been Able to Cut this year s interest expenses to less than what it was charged last year. We have obviously attempted to watch our inventory mor6 closely than in the ast said the interest rates have made it almost impossible for Small businesses to expand or Start up. Rose and Oscar Peterson built the Portage Avenue Ama Zon Motel nearly 30 years ago. Although business has decreased the Petersons can t afford to remodel the aging 53-unit Motel. They Are con Vinced a Pool restaurant convention facilities and a few More units would make the operation viable again we Are very disenchanted with the Way things said the 66-year-old Rose. The Petersons Are thinking of Selling their second Motel in Tucson Arizona to finance the planned renovations to the Amazon. We can t borrow the she said. We would be working for the Banks not Rose said they Are still paying a month towards a Bank loan they took out five years ago to finance a renova Tion. Government considered real villain we just have to maintain our status she said. You can t stand according to a Survey of members of the Manitoba chamber of Commerce most businessmen feel the real villain in the inflation spiral is lavish government spend ing. Most respondents Felt the use of High interest rates was not an effective Means of keeping inflation Down. About one third of the businessmen said wage and Price controls would be a better strategy. Almost All of the businessmen who took the time to fill out the forms said they knew someone who had been directly affected by staggering interest rates almost Aii of the respondents said the government is spending too much time on matters like the Constitution and too Little on the Canadian Economy. Nern firer Towl while Humph Nero fiddled while Rome burned wryly. 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