Here is another Y2K report:
canoe.com
Millennium bug will boost economy
Capital spending soars
By DAVID THOMAS
The Financial Post
It may yet wreak havoc in 2000, but the millennium bug is expected to be a boon for the economy next year, according to a study released yesterday by Canadian Imperial Bank of Commerce.
Behind that forecast is a veritable spending frenzy, fuelled by the technological challenge of converting computer systems to accommodate the date switchover.
Canadian firms' capital spending budgets to fix the Y2K problem have soared to hundreds of millions of dollars.
Regulatory filings in the U.S. show the toll has topped $1.1-billion for a single firm, AT &T Corp.
The spending explosion -- plus some inevitable stockpiling of goods -- will boost gross domestic product by nearly a third of a percent in 1999, concludes John Clinkard, CIBC's senior economist and author of yesterday's report.
"The near-term effects of the Year 2000 phenomenon will take the form of increased spending on computer hardware, software and consulting services," he predicts.
Increased spending is already in evidence, with many firms having been at work for up to four years.
In Canada, the largest Y2K budget appears to belong to Bank of Montreal, which plans to spend $345-million. CIBC and Royal Bank of Canada expect to spend about $200-million each.
In the U.S., many major banks are expecting to spend well over $500-million (US), with Citigroup Inc. topping the list at $650-million (US).
The Y2K bug has proved to be a drag on other capital spending initiatives, as it sucks up the lion's share of the information technology budget, said Ray Thornton, vice-president of Royal Bank's year 2000 team.
Most major Canadian banks expect to be finished converting their systems within months, but trials set for next year promise to be a continuing drain on expenses.
High-technology firms are also on the hook in a big way. Northern Telecom Ltd. is budgeting about $235-million on Y2k.
Others less exposed to software will also have to cough up. Seagram Co. is spending $75-million. |
