Archive for the ‘Industrial’ Category

Removal of official retirement age

Saturday, July 31st, 2010

This week the government has announced goodbye to compulsory retirement at 65 as of next year. It’s difficult to imagine why anyone would want to carry on working other than for money reasons. Some people claim to love their jobs and others don’t know what to do when they’ve retired.

The biggest reason against carrying on is that it is keeping younger people either out of a job or blocking a rise to promotion. In many cases older people are likely to have old attitudes, some of which might be good but many are probably not the way of todays world.

The average life expectancy is rising so people are retired longer and pension schemes are struggling to cope. Also as the ‘baby boomer’ generation goes out of the workforce there will be a glut of pensioners. Simultaneously there will be a drop in the workforce unless others are brought in from outside the UK. Yet there is unemployment of over 2million so how can there be a shortage of workers and if they have the wrong skills they must be being given poor guidance on training choices.

Overall removing the compulsory retirement age appears a good thing to enable people enough time to pay for their pensions for a shortened retirement period.

Chloride and Tate & Lyle going foreign

Friday, July 2nd, 2010

More British names transferring overseas. Chloride look certain to be taken over by rival Emerson, a US company.  While Tate & Lyle are selling their sugar and syrup business to rival Domino, a US company.

Names are never lost, they can lie dormant and re-appear. The history and pedigree goes. Perhaps that gets diluted anyway as shares are often owned all over the world.

The most ominous thing that is lost is that control moves overseas, investment and closure decisions are made overseas.  The top jobs move overseas. These are worse features than losing the pedigree.

British Companies sitting in the heat

Wednesday, June 2nd, 2010

BP, BA, Prudential are three names synonymous with Britain and all three are going through strong turbulance. Prudential may have lowered the angst by backing out of their deal but they’ve still got to pay some large bills and decide what their future strategy is. BA is in a tussle with the unions trying to bring some realism into the business. BP has an un-controlled oil leak that is making all the wrong headlines yet might be fixed at any time.

Quite often these periods of bad news create quite a storm at the time but within weeks of it being resolved things seem to carry on as normal as far as the public is concerned. Of the three BA stand to gain the most by winning their battle although their pension deficit seems like it will always be a weight round the companies neck. BP can only keep its head down and hope that no major US cases are brought against it, but it seems like some upheaval in its US business is inevitable. Prudential has several options with changes to the board and breaking up being two mentioned in the press.

Of the three BP should be protected in some way by the government in a similar way that the French protect their strategic assets. BA and Prudential are renowned British names but not strategic.

New Manufacturing Jobs Announced

Thursday, March 18th, 2010

After bad news in chocolate and steel manufacturing some good news in cars and nuclear engineering. Most of it with the help of government loans.

Nissan announced that their new electrically powered car, the Nissan Leaf, will be produced in Sunderland from 2013. Up to 50,000 cars a year will be made.  Nissan stated that the UK commitment to providing the infrastructure and education to operate these cars helped the decision.  The North East has agreed to fit 13,000 charging points and London 25,000. Also a novel leasing arrangement for batteries will ease the cost of ownership and another plus the batteries will be made in Sunderland as well.  Photographs of the car look quite smart with nothing to make it look different. Ironically the ‘green’ car will be produced next to the Juke urban off-roader which doesn’t sound quite as green.

Ford announced about £1.5bn investment in new efficient engine R&D and manufacturing in the UK.  A significant portion of the money will be loans from the UK Automotive Assistance Programme and the EU. Ford will test 15 electric vehicles as well as work on low carbon engines.  Ford produce 25% of their world supply of engines in the UK.

Sheffield Forgemasters received government loan support to make a 15,000 tonne forging press, making the company one of two companies in the world capable of making specific nuclear components. The government said the UK can produce 50% of the parts for a nuclear power station and the investment will take it to 70%. The government is also to support up to 1000 apprentice places a year in the nuclear industry.

It is a curious business the offering of loans to keep manufacturing in a country. Subsidising has long been illegal in the EU. However such large scale investment is often only possible with government assistance. Vice versa governments often say that infrastructure projects, for such as energy, cannot be afforded without industrial investment.  Does one balance the other out or is it just convenient to make the best of both worlds. No doubt a company has to get the best deal it can so an existing plant must count for something and make the loan required less than it would be from a place without a plant or who didn’t have other incentives to offer such as car power point infrastructure. We can only welcome this as good news.

Bad news at Astra Zeneca, Leicester

Wednesday, March 3rd, 2010

Being interested in what some call the productive as well as high tech part of the economy it’s worrying that Astra Zeneca are cutting back on their research facilities and closing the Leicester site with the loss of 1,200 jobs.   The company state they are focussing on the Cheshire site for UK research.

I’ve read a few comments saying that a number of pharmaceutical companies are moving their facilities east, usually in smaller numbers than this.  This industry has been held as one of the UK’s torch bearers into the future but appears to be going the same way as the heavy industries.

Is Cadbury gone then?

Tuesday, January 19th, 2010

The Cadbury board announced today that they would recommend the offer from Kraft. Although theoretically it’s not over till the shareholders agree.

Yet the offer includes quite a lot of Kraft shares. It isn’t clear that I’d want them. Even if overall there’s a big offer.

A smaller company has a lot more potential than a big one with no new ideas.  You could say the price takes that into account.

Overall this is a bad day for UK Ltd.  It’s aggravated by the purchaser not being one I have any empathy with.  Although it was suggested Hershey might take over Cadbury even though it’s a lot smaller.  That would also be an irritation.

Add it to the list of ICI, P&O, British Oxygen, Rolls Royce, Jaguar, Mini, Pilkington and so on.

Pension pot poison

Thursday, December 17th, 2009

The British Airways dispute brought out more discussion on its pension deficit.  It is said to be £3.7bn and almost 100,000 staff live in expectation of some payment from it, far bigger than the company. Add to that the Royal Mail and several other large companies with big deficits and it seems to be a precarious path we are treading.

Once these schemes were beacons of comfort.  Now they seem to be a cause of concern to both worker and retired, not to mention the company. Add this to job insecurity and falling economies.  Maybe they go hand in hand and when the economy improves so will they. But it seems unreal for schemes designed to give a pension for a few years to now have to pay out to a baby-boom generation living much longer and with a bit of inflation proofing.

For years pension schemes seemed like friendly institutions offering early retirements, paying out if you left early or were sick and needed the money.  The BA scheme recently contributed a few hundred million to shore up BA even though it was massively in debt. We also felt that somehow they were guaranteed by the government and controlled by very disciplined and conservative experts.

None of that appears to have been true.  Now to add a bit more uncertainty, the opportunity is being seized by some financial companies to buy company pension schemes and treat them as stand-alone entities.   How much of a risk this is I don’t know but if it was my pension I’d be very worried.  One slip in the pot and it won’t come back so they need very careful management.

If any of these big schemes fall through how confident can we be that the Pension Protection Fund won’t collapse like a pack of  cards. What happens to the last few schemes standing?  It has already been seen that some pension trustees are trying to take advantage of the assurance scheme to their gain.

Like the economy as a whole we keep our heads down, hope the storm passes and think about what to do if it comes. Maybe if you can, make some diversified scheme.  It would be good to have the government guarantee payment but there are people without pensions and people with private pensions and it could get complicated. Those with public service pensions are the lucky ones, inflation proofed as well.

Mr Pension Regulator are you good enough. Can you control the fund managers. Are the accounting rules appropriate.  Is the actuary using decent assumptions. Is anyone taking excessive fees. Is regulation allowing some risk but keeping a sound foundation. Any buried mines out there.  You’re the expert, we all expect…………

British Airways cabin crew to strike at Christmas

Monday, December 14th, 2009

BA cabin crew  today voted to strike for 10 days over the Christmas holiday about changes to their working practises.  Those who have booked Christmas holidays with BA must be worrying. 

It is reported in todays Times that BA cabin crew earn twice as much Virgin cabin crew. Seems hard to believe, is there a catch?  Also BA have a policy that if you stay long enough you become the cabin boss. Sounds like the selection process from hell. Would you want to work for someone who isn’t the best?

BA have managed to hang on in the face of budget airlines but appear to be in a 1970’s timewarp where the staff still live the nationalised way. Reminds me of our old electricity company, Norweb. When they opened a store to compete with Comet they kept their stuffy old ways but didn’t last long. They once refused to sell me a Video Camera unless I produced an ID so I went into Comet, bought it and went back to show them. 

We used to fly to Australia with BA from Manchester, every couple of years, and I was proud to fly the flag at that time. But it seemed to get more and more difficult going through Heathrow.  When we missed our connection and had to queue till 1am to get a new flight allocation and in the morning no bus turned up to transfer us across terminals, and then our bags were lost, I knew it was the last time. So we now go direct from Manchester with Singapore Airlines which is quicker and  less hassle.  The service with Singapore Airlines is very good as well, I don’t know what BA offer nowadays but with SIA nothing seems too much on the flight, we choose our seat at booking and when we’ve a query they reply promptly.

I think BA management need to decide what is best practise and go for it, whatever. These annual strikes or threats of strikes are a killer to confidence.  For me to fly BA again I’ll need at least 5 years of no strike threats as it appears new topics for disputes and antiquated practises are emerging every year.

Smart Meters or not so smart

Monday, December 7th, 2009

Is the Smart Meter going to provide the benefits claimed?  They say the unreliable wind power will mean less peak capability so incentives will be given to turn off power at peak times and that home generators can sell back into the grid.

This sounds good but surely issuing these meters to people with home generators would be a first priority. Then a second priority will be those whose energy use exceeds the norm.

I’d be amazed if having one in our house saved a penny. There must be millions like me who keep an eye on their heating timer and setting. There is a compromise between the budget allowed and how warm the house is.   The opposite might be true as it could encourage energy use if it was cheaper off peak and more expensive at peak time.

Also we have just had our gas and electricity meters changed. What happens to these old meters? Who is making the new ones?  Should they be British made meters or will 26million electricity meters and 21 million gas meters be bought from China so save pounds but cost jobs, well-being and health.

What alternatives are there? If I was to ensure minimal peak power use the biggest savings in our house would be a timer on the electric water heater to ensure it is off at peak (there already is one).  The biggest user of fuel by far in our house is the central heating and that is already on only for a limited time as we’ve gone more into heating individual rooms around the time we use them.

How much incentive are we going to get to improve our energy use. The people on the trials with these units are like the well known Hawthorn experiment where people being watched worked harder and harder.  In reality the meter will soon just be a background item that no-one notices. Surely it will be preferable that  its introduction should come with some cost offsetting incentive like going to a new tariff or buying a wind generator to give you a new meter rather than a blanket change over. 

Who is paying for this?  It seems the government is announcing this when surely if it is so wonderful the utility companies would be launching it. I would imagine the utility companies see it as good business just fitting these new units.  Who wouldn’t with some 50m meters to change sounds like a good earner.

Overall without further education it appears the strategy for rolling out the new meters is flawed and that the benefits of their use are not as great as claimed.

Depression on the River Tees

Saturday, December 5th, 2009

Corus announced the probable closure or mothballing of their steel factory on the Tees employing 1700 people and local businesses.  It has contracts for 5 more years but the overseas customers are backing out of the deal as the steel price has fallen too far below their contracted level.

The recession reducing demand. The present source of minerals and destination of the steel. The ability to produce steel cheaper or more locally overseas all stood against the Teesside plant. Although it is said the plant is very efficient and a buyer might be found.

Coal, minerals and ship building all came together to make this an area of steel making and some remains.

Corby is one of the best known one-horse towns whose steel mill closed. Government support helped to ease it and some success is claimed although I’ve read accounts that it’s more a sticking plaster than a solution.

A worker on the radio spoke of the apprenticeships, skills and experience of the workforce and you can only imagine where these core skills will be found in years to come, if they are ever needed.   I was an apprentice for 5 years and although I worked in an office for most of my life the ability to do those tasks still exists and sometimes I’m amazed at the lack of basic skills and knowledge in some younger people.  But would you learn to wire and file if you could sit on a phone all day, yes I’d say.

If this is coupled with reports of the chemical industry on Teesside the future for the area doesn’t look so good. Yet this is Labour heartland and it seems improbable that the government has thrown so much cash at part of the economy where it wouldn’t expect much support and is letting its heartlands die.   Maybe they rue putting all their eggs into one basket.  I think they should, but it’s part of a greater problem to Europe and possibly the world if expansion in Asia continues at its current rate. Even the mighty industries of Germany are feeling the draught.

Overseas Trains

Thursday, December 3rd, 2009

Rail Magazine noted Britains first Class 70 freight loco’s landed in the UK from the USA. Not long ago the first Class 90’s, named Javelin for high speed lines in Kent came in from Japan. Pendolino’s from Italy.  Some Eurostars from France.

We exported some British made 30 year old Class 87’s to Bulgaria.

Seems like everyone is building loco’s except the UK. This is fairly typical of UK manufacturing yet it is said we are the 6th biggest manufacturer in the World.

The philosophy of getting the best deal and using the saving elsewhere, not spending on development that might not be recovered and spending that elsewhere sounds admirable.  Yet there is a certain shallowness about it.

It is often said that governments don’t make the best industrial investment decisions and after a number of notable bad decisions it seems the government totally handed over to the market.

Strictly speaking the government can’t be seen to be making decisions based on national criteria although it seems to be unquestioned that other countries have home made railways and their car industries miraculously continue despite products of dubious quality.

It also seems the days of militant trade unions have gone and now British workers work very hard for foreign owners.  British companies were unable to take benefit of this new reality, possibly because there was always a feeling the government would bail them out.

It wouldn’t be too difficult for the government to give a contract to a British company. The high speed train programme of £30bn, how much of this is for locomotives. How difficult would it be to establish a UK loco and engine manufacturing capability in a company such as GKN with some training thrown in via local colleges and technology demonstration. Perhaps a step in rail technology is due as the new high speed rail extension will take 15 years to bring on stream.  The government left the market to go its way and has spent unprecedented amounts that make the inputs to British Leyland look like loose change. A fraction of that spent on technology would have provided a tangible output, less imports and potential exports,  less inequality of employee salaries, and employment of a more multi-ability workforce.

Kraft Dairy Milk or a mistake?

Sunday, November 15th, 2009

Kraft the US processed food makers are making a bid for Cadbury the Quaker founded British chocolate business. Whether it will succeed isn’t clear but it’s another well known British name going under the hammer. The market has no sentiment about that and maybe rightly so from its perspective. Also from what I read a significant number of shares are already held overseas. Cadbury has recently sold off its Schweppes arm under pressure from ‘activist’ shareholders. I don’t know much about these but they seem to be smallish shareholders who have a lot of say somehow. Selling off Schweppes may not have had any effect as a good deal can break up a company and sell bits to various others.

If it was a one off then maybe it wouldn’t be a worry but it’s part of a long stream of British companies that are going into foreign ownership. Names that have existed for decades: Rowntree, ICI, P&O, Pilkington, Blue Circle, Jaguar, Scottish & Newcastle, Marconi, also water, electricity, rail, the list goes on. Sometimes companies like Pilkington are taken over by smaller competitors. Sometimes the sale has knock on effects such as the giant ICI chemical works on Teesside is now split into small companies and the difficulties and manoeuvring of a few are putting a strain on the viability of the whole site. Sometimes the company hasn’t enough money anyway and it’s a good thing.

France created a protected list and Danone a food manufacturer was surprisingly added when a possible takeover resulted. It isn’t a clear cut case that there should be protection as taking a cash payment, usually at a price well above the level the share had been trading at, provides opportunities for other investment.  Also a British financial company often handles the deal and it’s lucrative work. Against that is loss of local control, prestige, movement of future profits overseas and one less large British share to trade.

How many of these businesses are left to sell and what happens when all large companies are owned overseas? A bit like eating all your stored food. Some people believe privatising companies is selling the family silver but it seems to me that selling major companies to overseas buyers is selling the family savings and gold and retiring. At a time of difficulty work is often ‘rationalised’ and ‘re-patriated’ closing the factories and offices in subsidiaries.  You can’t bring a power station home but a chocolate factory maybe. So I’m hoping Cadbury remains independent and I’m buying chocolate bars to push the share price higher.