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  • Would-be entrepreneurs shun the great shake-out

    May 31, 2011 @ 8:00 am | by Laura Slattery

    Enter the dragons... with presenter Richard Curran. Photo: RTE

    So it turns out the Chinese word for crisis is not actually opportunity.* For some employees facing redundancy this has nevertheless happily proved to be the case. In certain sectors, at certain times, mass layoffs have historically swelled the ranks of start-up firms. Once handed their P45s, redundant workers discovered it was the perfect chance to realise long-held desires to be their own boss. They scrambled through contact lists and made now anachronistic appointments with bank managers – ideally armed with a redundancy cheque as collateral.

    It happened after the 1993 closure of the Digital Electronics Corporation in Galway, which led to the formation of a cluster of indigenous tech firms, sucking in new investment. The still-thriving, Oscar-winning creativity of Ireland’s animation sector was born from the ashes of Sullivan Bluth, the multinational animated movie producer that shut its Dublin doors in 1995. And the demise of aircraft leasing company GPA in the early 1990s is survived by a generation of aviation finance firms.

    New figures from Vision-net suggest that this phenomenon isn’t repeating itself – not yet. The number of people choosing to become a company director for the first time has fallen by more than 40 per cent, according to the business information service company. Its study of Companies Office data found that 4,883 people registered as first-time directors in the first quarter this year, down 31 per cent from 7,062 on the same period in 2010. Since then, the sharp decline – described as “telling” by Vision-net managing director Christine Cullen – has accelerated.

    Timing is everything. Redundancy is a bitter blow at the best of times, but it is during the best of times that such bitterness can be channelled into productive outlets. Digital, Sullivan Bluth and GPA all closed at a time when the only thing on Ireland’s economic horizon was a massive boom. These were skilled workers freed from their contracts during a time of rising employment and nicely surging wages. But post-bust, start-up business models that would have seemed like simply marvellous ideas in 2001 now look like naive fantasies. Where once customers would have lined up, eagerly contributing to the top line, there is only a vacuum.

    Critically, this recession has also been accompanied by a dearth of the one thing even the most innovative of entrepreneurs with the most solid of business plans requires – finance. These are the days when securing a slot on Dragon’s Den is seen not only as a valid strategy, but – for consumer-facing businesses at least – vaguely sensible. It’s a television show, an entertainment. But the banks, after all, are out.

    Starting your own business has always been a risk, but in today’s dysfunctional economy it looks suspiciously like a folly. People who do, against the odds, manage to make their debut as a company director face a business climate that is still very obviously in the throes of a vicious shake-out. In May, companies were declared insolvent at a rate of eight per working day and liquidated at a rate of six per working day. Once it was the construction sector that led the implosion, now it is retail and wholesale firms that are hitting the wall with the greatest haste.

    Vision-net’s figures show that more than one in every two companies are showing signs “consistent with business failure”, by which they mean a decline in profits, tighter cashflow and an over-reliance on bank finance. Companies failing to meet their daily trade and finance commitments are, according to Cullen, having a “real domino effect” on the cashflow and debt repayments of other companies, exacerbating the crisis. The bulk of liquidated companies’ creditors are unsecured, meaning they’re unlikely to be paid what they are owed. It’s a form of contagion that’s hardly conducive for a fledgling start-up to thrive or even survive.

    *Sadly for motivational speakers, the Chinese word for crisis isn’t quite a combination of the characters for “danger” and “opportunity” either.

  • Why are the Irish not more like Spain’s Indignados?

    May 27, 2011 @ 10:01 am | by Laura Slattery

    The “Spanish revolution” saw thousands of young Spaniards embark on a week-long series of anti-establishment demonstrations, with tactics including Twitter calls-to-action and the setting up of a “tent city” in Madrid’s central square, Puerta del Sol. Spanish protesters, dubbed “los indignados” (the indignant), want jobs (Spain’s youth unemployment rate is around 45 per cent), better living standards, fairer political processes and changes to their government’s austerity programme.

    This sounds familiar.

    And yet despite the parallels in the economic plights of both countries (overheated property market, youth-concentrated unemployment), sustained and co-ordinated protests, youth-led or otherwise, have yet to take place on the same kind of scale in Ireland. This is much to the dismay of Irish activists, who wish their compatriots were more visibly angry about the extent to which external, unelected bodies have assumed the power to dictate social and economic policy here (via the usual method of debt enslavement).

    Independent TD Richard Boyd-Barrett, doing the loudspeaker thing at a Spanish solidarity protest in Dublin last Saturday, declared that Irish activists “want to see the Spanish revolution imported into this country”. But why do we have to import it? Why can’t the Irish be more like the Spanish? Without degrees in psychology, sociology, economics and European history - and a field study in both countries – that is not a question I am going to attempt to answer in a mere blog post. Oh no. But here are some possibilities.

    1. The answer lies in the numbers: Some 27 per cent of workers aged 20-24 in Ireland are unemployed (as of the end of last year), while almost half of 18-25-year-olds in Spain can’t find work. Could it be that somewhere in between lies the tipping point between tolerable and intolerable?

    2. The Irish media are innately conservative, promoting political consensus and a heads-down attitude to life… On the other hand, there’s nothing a home news editor enjoys more than a mass protest, what with its reliable capacity for producing a bumper crop of page-filling pictures of crowds bearing strong, witty placards – some of which manage not to be Father Ted references.

    3. Irish people are lazy.

    4. Irish people are not lazy; they just don’t feel very much like marching for an hour, then waiting at the bus stop for the same length of time.

    5. Irish people are not lazy, just waiting for the summer. Boyd-Barrett has named July 16th as the date on which “the spirit of Spain” will be brought to Ireland by way of demonstration, which gives Ireland’s Indignados plenty of time to figure out how to erect their tents.

    6. Irish people are righteously indignant, but it’s much easier to RT an online petition than it is to mobilize.

    7. Irish people are more cynical than the Spanish about the effectiveness of political protest when it comes to changing law and government policy, and are less likely to value benefits such as the fuzzy feeling of solidarity, post-chanting catharsis and the opportunity to flirt self-deprecatingly with fellow protestors.

    8. The Spanish protesters were partly objecting to Spanish government austerity measures and its all-round handling of the economy, while Irish people are resigned to the idea that the Irish government has already ceded control of both of those things to the European Union and the International Monetary Fund.

    9. The Spanish political establishment isn’t as good at divide-and-conquer as its Irish counterpart.

    10. There aren’t any encampment-friendly open spaces in Dublin city centre that are equivalent to the Puerta del Sol… on the plus side, for “boutique” demonstrations, the Spire is a foolproof meeting point.

    11. Media coverage of protests focuses disproportionately on incidences of violence by protesters, putting people off attending.

    12. Media coverage of protests focuses disproportionately on incidences of violence by Gardaí, putting people off attending.

    13. Media coverage of demonstrations makes protests look boring and protesters look cold.

    14. Media coverage of demonstrations is all about logistics such as road closures that might possibly crimp the extremely important day of people who are not actually marching and have no intention of ever marching, while giving comparatively little attention to the “ishoos”.

    15. Television news coverage of protests patronises protestors by constantly congratulating them for being “peaceful”: You know, it’s almost as if they’re disappointed when there isn’t a massive rumble followed by an all-day kettling.

    16. Irish people don’t know any good protest songs. “This is what democracy sounds like”, indeed.

    17. Young Irish people would prefer to rant about the state of the nation from the comfortable distance of Scruffy Murphy’s pub. Which, last time I checked, was in Sydney.

    18. There have been plenty of decent-sized protests in Ireland, including the snowy outpouring of November 27th, 2010. Where have you been?

    19. A combination of the above.

    20. All of the above.

    21. None of the above.

    22. Other _________________

  • Analogue age set to expire amid economic gloom

    May 16, 2011 @ 6:43 pm | by Laura Slattery

    Ireland’s urban-rural screen divide has been neatly highlighted in a report by Behaviour & Attitudes on TV viewing methods in Ireland - my own preferred method being the time-honoured 4-3-3 of three cushions, three remotes and four minutes for the DVD player to reach its main menu.

    Living in set-top box land, it’s been easy to dismiss the import of Ireland’s belated switchover to digital terrestrial television (DTT) and just assume everyone in Ireland is by now familiar with such eclectic digital delights as, say, BBC Four quiz Only Connect, on which contestants regularly announce “we’ll have the Twisted Flax” in reference to Egyptian hieroglyphics, and ITV2’s The Only Way is Essex, where if a twisted flax ever did come up, it would probably mean something else entirely.

    However, the survey of 1,100 households, commissioned by the Department of Communications, extrapolates that a significant 16 per cent of “TV homes” – an estimated 254,000 households – rely solely on terrestrial television, while some 10 per cent have access to Irish terrestrial channels only. Two thirds of terrestrial TV homes are located in rural areas, with just 1 per cent of Dublin homes having access only to Irish terrestrial channels, compared to 28 per cent of “Munster Rural” homes.

    Behaviour & Attitudes also finds that heads of households relying on Irish terrestrial services are more likely than average to be in receipt of the Household Benefit Payment Scheme (which includes a free TV licence), are more likely to be working in manual occupations and are more likely to be retired.

    Given the high numbers of households involved, it’s clear that the Department and its Minister, Pat Rabbitte, still have a lot of work to do on the information side of DTT’s troubled advent. Presumably the survey result that only a third of Irish terrestrial TV homes were aware of the pending analogue switch-off is already a little out of date – it was conducted last November, while the marketing campaign for Saorview, RTÉ’s free-to-air DTT service, only began in March.

    However, the socio-economics of Ireland’s analogue demographic will be potentially costly for the Department to negotiate. Analogue-dependent viewers upgrading to Saorview will need to purchase a Saorview-compatible television or a set-top box. The latter are currently available for a not-so-free €100, according to the Department, though prices are predicted to fall by the analogue switch-off date at the end of 2012.

    One Behaviour & Attitudes survey finding that didn’t make the Department’s press release is that 77 per cent of TV homes said they would “definitely not” be buying a new television set within the next six months. “All in all, it seems likely that between no more than 3 and 5 per cent of all Irish TV households will invest in a new TV set over the next six months or so, regardless of reception type,” the research firm concludes.

    “With roughly a third of all TV householders (regardless of reception type) admitting that they are struggling from a financial perspective, it is clear from all of the survey data that many TV homes would find it difficult to invest any significant amount of money in new TV equipment as part of the analogue switch-off process,” it warns. Well, that’s the economy for you.

    The researchers go on to stress: “It is important to note that very low numbers of TV households (including analogue households) are planning to purchase a new TV set in the immediate future, suggesting that the adoption of new technology alone cannot be relied upon as a means of empowering households with new TV reception systems.” Ouch.

    Rabbitte has indicated that “practical measures to assist in the switchover” are imminent. Leaflet drops will not, by themselves, be enough. A subvention scheme for analogue households will have to be implemented in the next 19 months – otherwise the screens of thousands of older people living in sparsely populated areas will simply fade to black, while ratings for the 2013 Rose of Tralee contest and a raft of other RTÉ jewels will plunge.

  • The Kahlúa question

    May 6, 2011 @ 11:40 am | by Laura Slattery

    Coffee-flavoured liqueur in a lonely bar. Photo: Pernod Ricard.

    It’s a blend of sugar cane spirit, 100 per cent Arabica coffee and vanilla bean that’s been hand-crafted in Mexico since 1936 – though it may be better known to Irish drinkers as the non-Baileys part of a Baby Guinness. But the decade has not been kind to cocktail-friendly Kahlúa, the coffee-flavoured liqueur brand owned by Pernod Ricard, the largest distributor of spirits in the world.

    A trading update from Pernod has shown that it was the only one of its 14 “strategic” brands to show a reversal in sales in the nine month period to the end of March – while Pernod’s whiskey, whisky and cognac volumes powered ahead with double-digit growth thanks to swelling sales in emerging markets, the value and volume of the Kahlúa shifted sank back 3 per cent. Pernod’s last annual report shows that the company wrote down the value of the Kahlúa brand by some €100 million. That’s a lot of bottles of seasonal Kahlúa Peppermint Mocha left languishing at the back of the storeroom.

    In an industry that depends so much on marketing, is Pernod weaning itself off Kahlúa? It has only owned the drink since 2005, when it was one of a batch of brands it acquired in its takeover of Allied Domecq. That deal also saw Pernod inherit Tia Maria, another coffee-flavoured liqueur (and Baby Guinness ingredient substitute), but this was later sold to Illva Saronno, maker of Disaronno (amaretto), in 2009.

    Since then, drinks sales in the US and Canada (the biggest markets for Kahlúa) wilted in the recession as new orders gave way to wholesaler destocking. Pernod, reporting year-on-year growth of 5 per cent in its total underlying sales in the first quarter, indicated yesterday that the US was “gradually recovering”. Fans of Black Russians are yet to join in the party.


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