January 2010 Archives
The Conservatives are now undertaking a last-minute rethink on its plans to scrap Regional Development Agencies (labelled a "complete waste" by David Cameron last year) after a fierce backlash from regional and national business groups.
As noted in earlier blogs, Tory shadow minister Geoffrey Clifton-Brown sparked much incredulity in Birmingham last December when he said the Tories would scrap RDAs except in London; "by and large they are going to be abolished... it is quite unnecessary to have an RDA structure. It is a tier of government which is not needed."
And in the North West business groups have reacted angrily to Tory plans, as recently highlighted in the local press. More generally, the CBI and British Chambers of Commerce have pointed out that scrapping RDAs would fail to deliver the "strategic infrastructure which business thinks is so important".
With perhaps just 11 or 12 weeks before a General Election, Ken Clarke, Tory Shadow Business Secretary, has ordered a review of policy on the issue after admitting Tory current policy was "not clear".
There is considerable confusion over what Tory Party policy now is on RDAs. Different statements by different Shadow Ministers have given either the impression of no joined up thinking on the matter, or alternatively the impression of an underlying desire to scrap RDAs outside London, without actually wanting to be seen to say this publically.
I suggested a number of regional economic needs and why the regional scale is important in delivering them, in my blog yesterday. It also needs to be recognised that the current situation with RDAs is actually the accumulation of over twenty years of experience, experiment and change, many initiated originally by one of favourite 'interventionist' Tories, Michael Heseltine.
It seems rather perverse to just discard all that knowledge and infrastructure without very serious examination. So, before the Tories rush into scrap them, let's highlight the some of the arguments and what's at stake. Why even think of scrapping RDAs anyway? Various arguments have been put forward on this front:
Last week Lord Bhattacharyya suggested that the Tories may keep RDAs after all. The well-connected peer said that the Conservative Party has not yet decided on the fate of RDAs (including Advantage West Midlands) should they win the next General Election.
He suggested that despite the Tories making it clear that they are not convinced by RDAs, their abolition under a Conservative government is not a done deal; "that's not what they are telling me," he said.
"There might be change, but this is a party that wants a small central government so the regions will have more power. I have not heard them articulate that will get rid of the RDAs".
So it seems that the strategy director of US conglomerate giant Kraft Foods vowed yesterday to invest in chocolate maker Cadbury and create more jobs in the business in the UK.
Michael Osanloo was quoted in the Sunday Telegraph saying that the US firm would respect the "history of Cadbury and the integrity of the brands" after its ÃÂ£11.5 billion bid for the chocolate maker was agreed.
Osanloo stated that "as far as Cadbury in the UK goes it is our hope, desire and our plan to invest in Cadbury... I would fully expect that once we can actually look at what is going on and have a more informed perspective that this should, down the road, increase manufacturing jobs in the UK".
OK, I was a bit premature in writing last August that 'GM finally offloads Saab'. The deal with Koenigsegg then fell apart and Saab faced closure.
But after a plea by the Swedish government, GM restarted talks with other bidders and is now set to reach an agreement at last with Dutch sports car manufacturer Spyker (which is planning to shift sports car production to Coventry).
"Spyker confirms that talks are ongoing, the outcome of which is still uncertain. As Saab is currently in liquidation, talks must end soon," Spyker was quoted as saying.
GM has of late been in discussions with Spyker and private equity firm Genii Capital (backed by F1 supremo Bernie Ecclestone) but Spyker had a head start and seems close to a deal.
After intensive negotiations, JLR management and trade unions have failed to agree on a package of measures to cut costs.
Negotiations have been conducted, it appears, with considerable goodwill on both sides, and given the lack of public comment there seems to be genuine sadness that an agreement could not be reached. Indeed, neither side has spoken in public, and there seems no desire (so far) for industrial action from the unions.
Management had proposed back in September reductions in wages for new staff and an end to the defined pension scheme for new entrants, along with a lump sum payment to staff to postpone November 2010 pay talks to April 2011.
In return, workers were being offered an employment and volume guarantee, with the firm committing to grow UK production to 300,000 units a year by 2015, and to maintain 8,000 JLR hourly-paid, permanent employees until 2015.
In my last post, I talked about the ambition of the announced new offshore windfarm schemes and the optimism they offer, optimism that has attracted a lot of attention; now here's a good dose of British pessimism.
Warren Buffet, the Sage of Omaha, has slammed Kraft's takeover of Cadbury. Kraft's leading shareholder, who owns just under 10% of the firm, stated that if he had the chance to vote against the deal he would. His comments sent Kraft's shares down 68 cents to $28.73.
In an interview with CNBC, Mr Buffett also laid into Kraft's chairman and chief executive Irene Rosenfeld over her decision to sell the company's US frozen pizza business on the cheap to Nestle (to in effect buy its silence in the takeover drama).
The Emperor Nero fiddling and Pontius Pilate washing his hands - only Peter Mandelson could bring both these images to mind at yesterday's Business select committee appearance, commenting on yesterday's industrial coup d'etat at Cadbury's.
He was sawing out the same old tune on the importance of globalised trade with one hand, whilst washing and wiping away any responsibility to act with the other: quite a feat.
The hedge funds (without which the raid could not have happened) and, as importantly, the shareholders who recently sold their shares to them, acted out of a destructive short-termism which is hard-wired into the whole economic and industrial system of the UK.
There is no industrial policy or strategy in existence, or even in sight. The reason is that to have a strategy means intervention. It means government guiding and investing directly. It means creating pathways of industrial activity. It means laying out long-term seed beds for industrial growth. The present financial, banking and private sector structures will not and probably cannot do these things.
Cadbury today put up the white flag in its six month effort to defend its independence. The board will recommend an ÃÂ£11.7 billion takeover from the US firm Kraft after one of the most bitter takeover duels in recent corporate history.
The takeover also threatens to re-start the debate over the vulnerability of British industry to foreign takeovers.
Cadbury, the iconic choccy firm started in Birmingham some 186 years ago, apparently threw in the towel after Franklin Templeton, the US mutual fund with a 7% stake, joined hedge funds in revealing that it would accept the higher Kraft offer equivalent to 850p a share.