The people’s favourites, the New Orleans Saints, may have won the Super Bowl in Miami last night but for many the real action doesn’t take place on the pitch but during the ad breaks. (more…)
This week we take the retail pulse on Grafton St, hear about Greece’s economic troubles, discuss Apple’s success with apps, and find out how Irish business is helping re-build Haiti.
So it’s one down, 11 to go, quicker than you can say “detoxing is stupid”. But what the hell was January all about? Current Account will kick off the first of its monthly reviews in what seems like appropriate fashion: with some ever-so-slightly-dodgy statistics. And no, I’m not talking about Ireland’s GDP.
The year began with almost as many guesstimates about how much the snow was costing the economy as there were news articles about whether or not Brian Lenihan was doing the right thing staying on as Minister for Finance. The Dublin Chamber of Commerce reckoned the mini ice-age was costing €40 million for each hour of lost productivity in the capital, which seemed like a lot when the UK’s business sector reckoned the standstill there cost its entire economy £600 million for a full day. Manufacturing slumped, but plumbing became a hot business to be in: Minister for Snow John Gormley couldn’t unfreeze all those pipes single-handedly.
When is insider trading not insider trading? When it’s an honest mistake. Story of the month in the Irish business world was the publication of the final report of High Court Inspector Bill Shipsey SC into contentious share dealings by DCC and its erstwhile chief executive Jim Flavin - a story now so old that it predates not only the banking crisis but the bursting of the dotcom bubble too. Flavin’s sale of shares in Fyffes worth €106 million in February 2000 was an “error in judgment“, Shipsey said, because Flavin “genuinely believed he was not in possession of price-sensitive information” when he dealt the shares - a defence that will no doubt be very popular in the years ahead.
The prescience of Flavin’s assessment of Fyffes’ doomed involvement in a venture known as worldoffruit.com - not a domain name that has rocked the world - suggests he should really be sitting on one if not all of the Government’s many technology and innovation boards. I’m sure they could squeeze him in if a few people just shift up a bit.
“Once City boys make up their mind there’s not a lot you can do,” was how Unite officer Jennie Formby summed up the sale of Cadbury to the American cheesemaker Kraft, a transaction that seemed to offer many short-term cash benefits for the bankers, solicitors and executives involved, but very few for Cadbury’s workers, consumers and the long-term health of the British economy, which eventually emerged from recession. The most common what-if (or counterfactual as what-ifs are known in jargonland) was what if, you know, the government had legislation to prevent such potentially damaging international takeovers - such as France’s “Danone Law”?
And, so, to personal finance. Want to SELL YOUR UNWANTED GOLD by sticking it in an envelope and posting it off to CASH-4-GOLD et al? Good luck with that - the UK’s Office of Fair Trading, headed by the Ryanair-baiting John Fingleton - began an investigation into whether such services are as consumer-friendly that they claim to be, or simply a spur for more home burglaries.
And finally… what a turnaround for the global motor industry. It began last year by gifting the world with seas of unnecessarily wheeled metal cuboids, which fanned out from the globe’s seaports in colourful testament to the tragic fluctuations of supply and demand. The last thing anybody wanted was a new car. This year, however, the industry has made a delightful U-turn from over-producing unwanted vehicles to recalling wanted ones. Toyota led the charge by recalling almost 8 million cars due to faulty accelerator pedals and ill-fitting floor mats, Honda chipped in by asking for more than half a million cars back due to a fire risk and Peugeot completed the trinity by recalling around 100,000 vehicles made in a plant co-owned by Toyota.
Ireland is, of course, technically out of recession - although for some reason I can’t quite put my finger on, I keep forgetting that. In any case, I doubt I’m alone in wanting to step on 2010’s faulty accelerator pedal and speed headlong into less perilous times. Until next month…
Now that the dust has settled a little on Steve Jobs’ launch of Apple’s “magical and revolutionary” new device, the iPad, it’s interesting to see how the market has treated the stocks of various companies who will be impacted by its introduction. I’ve looked at their prices on Wednesday morning versus what they are at the time of writing (lunch time Friday in New York trading).
This is of course is a totally unscientific exercise and is not intended as investment advice. It is interesting though.
This week’s episode features the World Economic Forum in Davos, Greece’s bond raising, changes at Aer Lingus and the resumption of crystal production in Waterford. Click below to listen or subscribe for free in iTunes.
As part of our new business podcasts we’ll be publishing occasional extended interviews with select business people. This week we feature Matt Murphy, vice president of worldwide sales, with Maxim Integrated Products, the Silicon Valley firm which plans to create 100 jobs at its new international business centre in Dublin.Murphy discusses Maxim’s business, its plans for Dublin and the state of the global technology market.
Apple hosts its press event in San Francisco on Wednesday at 6pm Irish time to show off its “latest creation“. Of course it’s being reported as fact now that this will be a new class of device - a touchscreen slate computer, a large iPhone if you will with a 10-11″ screen, which will primarily be a gaming and entertainment device. (more…)
We’re moving into the world of audio with the introduction of our new weekly Business Podcast which will be published every Thursday. Presented by me, John Collins, it’s your chance to hear from some of the people behind the week’s business stories and get the views of our team of business reporters on the big issues.In this week’s episode Irish Times Public Affairs Correspondent, Colm Keena, discusses the High Court inspectors report into DCC’s disposal of its stake in fruit importer Fyffes, which was published earlier this week. Pat Burke, a partner in accounting firm Grant Thornton, on new research from his firm which suggests that private sector firms have been cutting wages more heavily than previously thought. Matt Murphy, a senior executive with Maxim Integrated Products, the Silicon Valley chip manufacturer which recently announced plans to create 100 jobs in Dublin, talks about why his firm was attracted to Ireland and what it will be doing here.We’d love to hear any thoughts, feedback or suggestions you might have in the comments.
It’s a tricky question, the answer to which may only become apparent decades down the line, but is the response of the US government, its recruited army of investors and private sector interests to the Haiti earthquake appropriately supportive or worryingly exploitative or indeed both? It seems immediately clear that money, vast sums of it, is badly needed to pay for aid supplies and establish a basic infrastructure in the country and that the US business interests would have to be entirely stonefacedly, coldheartedly amoral not to respond in the affirmative when Bill Clinton and George W Bush came calling. And yet I do generally find it difficult to believe in corporate altruism for altruism’s sake. Is Haiti any different?
I’m not talking about charity donations here, as by definition they should not involve any motivation other than a desire to help, and perhaps a need to ease a sudden dose of Western guilt. There is also probably a case for distinguishing between companies such as Digicel, who were already in Haiti before the earthquake, and the US-based private capital houses now rapidly signing up to “invest” in Haiti because the ex-Presidents have assured them that it’s a good opportunity for a “greenfield” investment.
Many of the investors and financial institutions piling in behind Clinton and Bush are rather more disconnected from the fate of its citizens than Digicel (which has lost some of its staff and made a donation of $5 million for immediate relief work). Who are these investors and what are their ultimate aims? They’re the kind of questions that the commentator Naomi Klein, author of The Shock Doctrine and a prominent opponent of what she terms “disaster capitalism”, believes people should be asking now and in the aftermath of any major crisis. Otherwise the kind of community impoverishing “land grabs” that took place in Thailand after the 2004 tsunami or something similar to the pro-corporate redrawing of New Orleans post-Katrina could take place amid the chaos in Haiti.
Klein’s website highlights this quote from the right-wing Heritage Federation, issued just the day after the earthquake, then withdrawn: “In addition to providing immediate humanitarian assistance, the US response to the tragic earthquake in Haiti earthquake offers opportunities to re-shape Haiti’s long-dysfunctional government and economy as well as to improve the public image of the United States in the region.”
Critics of such “disaster capitalism” tactics want any intervention by the Obama administration, the IMF, the World Bank and anyone else trying to reconstruct Haiti to be mindful of the country’s economic sovereignty and, most importantly, not to trap it with debt. On this front, public pressure has yielded some positive results, with the IMF assuring that its financial assistance to Haiti will be interest-free and free of conditionality. Indeed, the IMF is now calling for a Marshall Plan for the shattered country, urging debt relief and promising to delete the loan it’s just issued. This, according to Klein, is unprecedented.
Last night, O’Brien was namechecked by Clinton at a UN press conference as being the man leading the private sector effort to provide assistance to Haiti. “Anybody thinking about setting up manufacturing facilities or any business in Haiti, I will give a very strong recommendation they go ahead and do it,” said O’Brien.
Unpalatable as it may seem, many of the companies that answer O’Brien’s call will view Haiti’s trauma as a commercial advantage rather than a tragic state of affairs, as its 10 million population is too busy fighting for basic survival to consider the pros and cons of an economic remodelling. The arrival of such companies will be framed as a force for good in terms of job creation, spurring “economic revival”. But history has taught us that it’s often a little more complex than that.
Bournville was christened “Mournville” yesterday as the board of Cadbury capitulated to a hostile takeover from Kraft - the US food conglomerate disparagingly dubbed a “plastic cheese company” by Felicity Loudon, great-great-grandaughter of the original Mr Cadbury, John.
“I just don’t understand it,” Loudon despaired on the radio yesterday, before making a half-hearted appeal for Britain’s political parties to intervene. Loudon knows that little such help will be forthcoming, as Guardian journalist Fiona Walsh discusses in her London Briefing in today’s Irish Times. So what if Gordon Brown says he is “determined that levels of UK investment in Cadbury are maintained and jobs secured”. Cadbury’s British workers, having seen what Kraft did to Terry’s (of chocolate orange fame) in its home town of York (clue: it’s no longer there), expect job losses and are understandably livid about what’s happened.
The deal, which unites the much-loved Cadbury brand, responsible for milking many an Irish cow, and Green & Black’s (which sold out to Cadbury a few years back) with such duty-free heavy hitters as Toblerone and Milka, has prompted much cod-alarm about what might happen to the goods themselves. Could low-sellers but resonant classics such as the Curly Wurly be axed by Kraft’s accountants, none of whom would have ever had the joy of receiving a Cadbury’s Selection Box at Christmas? Would Cadbury’s Dairy Milk now taste the same way it does in America ? (Not good.) Was this the fate of the Cadbury’s Creme Egg?
That’s all a distraction, however, from the real tragedy of the Kraft-Cadbury takeover: that it’s another victory for the global, expansionary market logic that gives big paydays to a small executive cohort while in the long-term stripping value away from both companies and depriving workers of their jobs.
The headlines in the British press may be negative today, and the BBC’s Robert Peston was on top form last night, juxtaposing the payouts for Kraft executives with a rather ecstatic shot from a Flake ad. But over the last couple of months, the financial press there has rather dispiritingly treated Cadbury’s succumbing as an inevitablity. From the very moment that Kraft’s chief executive Irene Rosenfeld first said she fancied it, “resistance was futile”, the “clock was ticking for Cadbury”, how could it expect to “remain independent” (as if Cadbury was some minnow). Meanwhile, it seemed, despite Cadbury’s protestations, all they were doing was haggling over the price.
In the end, it was Cadbury’s institutional shareholders that had the final say on whether Kraft would get the goods. Such is the nature of the stock market. Critics of the Cadbury deal, such as economist and Birmingham Post blogger David Bailey, point out that without rules in place to prevent such corporate takeovers, we will continue to see a further concentration in wealth in the global economy, while manufacturing bases such as Bournville and its many equivalents see their prosperity melt away.
