September 2009 Archives
The scrappage scheme, which was introduced back in May, has done much to restore confidence in the battered new car market after the biggest drop in sales and output ever recorded.
Under the scheme, people trading in a banger at least ten years old get ÃÂ£2000 off the price of a new car, with ÃÂ£1000 coming from the government and ÃÂ£1000 from the industry.
The ÃÂ£300 million - which was enough for 300,000 cars under the scheme - has been used up so quickly that it will run out next month, at around the time that the VAT rate rises again.
Car manufacturers face a double whammy of end-of-scrappage and a VAT rise.
So, it was very good news that Lord Mandelson today announced that the scheme will be extended with another ÃÂ£100 million. This helps a fragile industry avoid a hard landing. This has already been done in France and Germany, where scrappage schemes have been extended.
The takeover vultures are circling. One of Birmingham's finest manufacturing firms is in play and is likely to be the target of a hostile takeover fuelled by a resurgent City eager to gorge itself on fat takeover fees.
Never mind the potential wider economic and social damage. If you want to see a vivid example of the City's 'socially useless' activity Lord Turner highlighted in the summer, this is it. For takeovers nearly always don't work, yet firms waste billions on them, urged on by City bankers who make a killing in fees.
Despite being weighed down by some $18 billion of debt, Kraft has lined up Citigroup, Deutsche and Lazard to help them finance a takeover. Never mind that Kraft, the second biggest food and drink firm in the world, risks losing its investment grade credit rating if it over-borrows to get its hands on Cadbury.
City rumours suggest that Kraft is set to launch a hostile bid for the Bournville-based confectionery firm, valuing it at around ÃÂ£11bn. The City's takeover panel is likely this week to give the Illinois-based group a deadline to put up or shut up. Game on.
Another one bites the dust. After Browns Lane, MG Rover, Peugeot and LDV, another Midlands' car plant gets the chop.
It makes sense of course for JLR to concentrate production at one site in Birmingham thereby saving money and offering greater flexibility.
As I've been saying for several years now, JLR simply can't keep open 3 plants in the UK on current volumes or even if output gets back to its peak of around 300,000 a year.
And despite much speculation over Halewood's future since the announcement that the X type was being dropped (again no surprise despite being a good car), new LRX 'baby Range Rover' production guarantees Halewood's medium term survival. In essence, Halewood carries on because of its size; at full capacity it is a very efficient plant.
My initial reading of the JLR announcement yesterday was that overall employment levels would be maintained with jobs shifting to Halewood but being lost here in Birmingham. To be fair to JLR management, that isn't the intention.
As part of a wide and eagerly awaited forward business plan the announcement yesterday from Jaguar Land Rover management that by 2014 one of either Castle Bromwich or Solihull-based plants will close as part of the overall production integration process should not really have surprised.
News today that JLR will close a plant in the West Midlands came as no surprise. Auto analysts have been predicting this for several years as there is simply no way that it can keep open 3 plants on current volumes or even if output gets back to its peak of around 300,000 a year.
The double whammy of recession and credit has also exposed the firm, with sales down by 25-30%. It is operating well below capacity and is losing money. Put simply, it needs a new plan.
Halewood was ultimately saved because of its size; at full capacity it is a hugely efficient plant. Despite speculation over its future since the announcement that the X type was being chopped (again no surprise), the announcement of LRX production there guarantees its medium term future.
The story is very different here in Birmingham, with either Castle Bromwich or Solihull facing the chop. The decision on which to close will be made by the middle of next year. Either way, another iconic plant will go.
By Mark Howells, Pebu.
When looking at the figurehead question of the Big Debate - "Can the Midlands' creative industries revolutionise the UK economy ?", I immediately ask myself why the question is not "Why the Midlands creative industries should drive the re-ignition of the UK economy".
As a partner in a business that works within the digital community of the Greater Birmingham Region, it is quite clear that the creative talent within the City matches, if not exceeds the aims and objectives of the City of Birmingham to become the "Digital Capital of Europe". Therefore, my thoughts on the debate are not so much "Can we do it?" than "We should be doing it already." before the opportunity to make a real impact becomes another "If only we had.........."
By Kevin Johnson, Urban Communications Limited.
As Joanna Birch's launch article highlighted, there are several excellent examples of interagency and intercompany collaboration. There is a great sense of community among 'creatives' and in particular among Birmingham's legion of digital experts and enthusiasts. Whilst there are 'mash ups' around ever corner in the sector I believe we need more intrasector collaboration and understanding.
Blogged by Professor David Bailey and John Clancy
We know from last week's hard-hitting Department of Business report that the Phoenix fat cats gave themselves "unreasonably large" payouts. To be precise, the pay and pensions of five directors added up to some ÃÂ£42m despite them having taken 'relatively unsubstantial' risks.
The defence of the Phoenix Four (who by the way didn't have the bottle to be interviewed but who rather sent out their spokesperson to face the barrage of hostile questions), was that such payouts were already known about and that the money the directors awarded themselves didn't bring down the firm.
Well, we're not so sure - the Four point the finger at the government for not coughing up ÃÂ£100 million at the end for a deal with Shanghai. Yet in reality by then there was no deal to be had as Shanghai had already walked away.
But more importantly perhaps if so much money hadn't been stripped out already then either there would have been a few more months to find a deal or the firm would have been a more attractive proposition for SAIC.
By Lee Kemp, Managing Director at Fullrange
Hatch Communications in Leeds was recently appointed by Marketing Birmingham to carry out a sponsorship maximisation campaign for visitbirmingham.com. I'm sure it's a lucrative contract and as it's the first time rival football clubs have engaged in a joint pitch initiative it also marks an historic first. It's a big deal so congratulations to Hatch. The interesting thing about Hatch is that they're based in Leeds. A fact that hasn't gone unnoticed locally.
Should regional projects be reserved for regional companies? Or at the very least loaded in their favour?
What's clear from detailed reading of the MG Rover report is the complexity of the corporate structures established by the Phoenix 4 for Phoenix and MGR's 'operations'. I recommend a quick glance at three diagrams in Chapters II and VII of the report (pages 27, 249,250) which show the evolution from a relatively simple and at least comprehensible structure in 2000 to one in 2004 which resembles corporate spaghetti. One of the last entities described in one part of the final complex structure is engagingly labelled "Win Win". How true. How very true.
The Phoenix 4 and the chief executive did extract over ÃÂ£40million from MGR through what I would call complex corporate structure engineering. It was designed to obfuscate and to hide what they were doing. Ring a bell? Yes, it's just like the banks did with Collateralised Debt Obligations and Credit Default swaps which led to the collapse of the banking system and also led to the coining of the phrase 'financial engineering'. Ironic isn't it, that financial engineering was at the forefront of this exercise, not motor engineering?
The engineering, though perfectly legal (more's the pity), was perfectly immoral. It produced a corporate system so complex that only the rarest of experts could appreciate and understand its workings. I have some sympathy with the reasoning that the reason it took 4 years to complete the report resulted from the fact that it took 4 years to create the structure which the report reported on.