Business

On that Amazon union election thing

Workers at a warehouse in Bessemer, Alabama, chose to take on one of the biggest companies in the world and form a union. If they were successful, they would be the first in the company’s history. The potential for similar efforts in thousands of warehouses across the country would have risen dramatically. Amazon, America’s second-largest employer, would have been forced to contemplate an entirely new relationship with its gigantic workforce.

When the results were in, however, the analogy broke down. Goliath had won.

So, why would a company be against the formation of a union? Because of what is said here, of course. The understanding is that the creation of a union would shift power from company to workforce. So, to avoid losing that power, be against the creation of a union.

Seems simple enough, no?

From the centre of the tech trade comes this:

So inevitably the union is going to be dragging your company’s managerial layers into prolonged wage and conditions negotiations, pursuing pet causes, trying to eject people that they regard as “undesirable” – e.g. anti-union, pro-business – while trying to retain people that management regards as “undesirable” – e.g. ineffective, spending too much time on pet causes. They’re going to seek “equity” of salaries – looking for differentials by gender, race and age and poking at anomalies. Their executive is looking for a steady income stream and an increasing amount of power, and they’re not going to take “no” for an answer.

The unionization struggle, I think, is going to be over approximately 1-2 years after a union gains a significant foothold in a major tech company. The highly productive people are going to see the brake on company productivity in general, and their salaries in particular, and go looking for employment somewhere they don’t have to carry as many passengers. In the mean time, the company is going to burn.

If you don’t believe me, look at the car manufacturers in Detroit.

Crass idiocy is still crass idiocy, ya kno?

For some time, it has been government policy to privilege the interests of private landlords over other homeowners. This process began in the mid-1990s when banks introduced buy-to-let mortgages, which assessed buyers’ creditworthiness on the rental yield from the property, rather than their existing income. Easy finance gave landlords an advantage over first-time buyers.

Banks were not directed to do this. They found out that it made sense to do this. This is a market, not government, response.

Buy-to-let landlords have also enjoyed tax relief: mortgage interest relief, and a wear-and-tear allowance.

Just like every other business in the country – the cost of providing the good or service is deducted from the revenues from doing so before tax on the profits is applied.

David Renton is a campaigner and barrister.

We must therefore conclude that David Renton is an idiot.

There are solutions. Take the idea of long-term renters in the private market establishing a right to buy the home in which they live. How is the policy likely to look to older homeowners? If it was directed at the single homeowner who split a two-storey house in half and rented out one floor of it, many other homeowners would find the idea objectionable.

But imagine if it was targeted at landlords owning a minimum of five properties (there are enough landlords in that position for it to make a difference). When someone is hoarding five homes, why shouldn’t they be forced to allow others to have a chance of owning their own homes, not to seek profit but to simply live there?

Politicians need to be brave enough to explain to voters that the hoarding of properties by commercial landlords doesn’t just hurt young renters but many homeowners too. A Labour party that forges a cross-generational alliance on this basis could reap serious rewards.

Yep, a mindgarglingly stupid man.

Because you’ve just banned pensions and insurance companies from providing developments of rental homes – even, rentals at affordable rents, as quite a number of them are doing.

In fact, taken as it is, this proposal bans housing associations……

The louder he talked of his honour

A car leasing firm is being investigated by fraud officers after it went bust owing £26m to hundreds of savers lured in with the offer of returns as high as 11pc.

Raedex Consortium – whose boss Reginald Larry-Cole has written a book on ethical capitalism – is facing inquiries from the Serious Fraud Office (SFO) following its collapse last month.

The faster we counted the spoons.

Now here’s an entrepreneur

The family’s only concession to entrepreneurialism was opening a kiosk on the promenade each summer to sell the lozenges to holidaymakers from Lancastrian mill towns who were staying in the boarding houses of nearby Blackpool and made a day trip on the tram to Fleetwood. Many suffered from respiratory problems as a result of unhealthy working conditions in the mills. On their return they would write to Lofthouse of Fleetwood to ask where they could buy the lozenges locally.

One day in 1963 Doreen picked up a pile of these letters and suggested to no little bemusement that she make a tour of Lancashire’s mill towns in her battered MG and visit every local chemist to show them the letters as proof that the product would soon disappear from their shelves. “They thought I was a little crazy,” she recalled.

The family gave her permission but no money for petrol. Diminutive, neat and attractive, the fiercely determined Mrs Lofthouse set off on her expedition, depending on a sale to buy the petrol to drive to the next town. She returned with dozens of orders.

That is, to a large extent, she did build that……

The product’s retro packaging also proved a hit overseas. The distinctive black and red lettering had first come about because Doreen’s mother-in-law, Frances Lofthouse, had originally typed the words “Extra Strong” in red, underneath Fisherman’s Friend in black, because she did not want to waste the red ink on the typewriter.

Canny folk up there, eh?

The local criminals

Victims who lost their life savings when a currency exchange firm collapsed have waited nearly 1,000 days to find out whether they will ever see their money again.

Premier FX, an exchange firm, was placed into administration in August 2018, despite being given a clean bill of health by the City watchdog, the Financial Conduct Authority, just months previously. The firm collapsed following the death of Peter Rexstrew, 55, the sole director and shareholder of the firm.

Classic Ponzi scheme stuff. Run a foreign exchange service for expats. Lift chunks of the money, finance through delays on FX transfers for new customers. It all keeps working until there’s no more new money coming in. Which the death of the principal might well cause:

The firm encouraged British customers both in the UK and expats living in Portugal and Spain to leave large amounts of cash with it in the hope that they would benefit from exchange rates, helping them buy holiday homes. But Premier FX did not have the right regulatory licences to hold customer money beyond remittance.

That’s how to increase the amount supposedly within the company and thus cover the money that’s been appropriated.

The Financial Conduct Authority asked the UK courts in August last year to declare Premier FX insolvent because after the death of the sole director and shareholder, the firm was unable to pay its debts.

No, didn’t know him but I’m sure I know people who did.

Well, no, not really

OK, so we’d not expect the folks at The Guardian/The Observer to grasp basic business and tax things in general but we might at least hope for it in the business leaders:

While businesses might bleat about the extra burden on them, the White House can point out that only profitable firms will pay a higher levy and debt repayments can, as always, be written off against revenues.

Debt repayments aren’t written off against revenues. Debt financing costs are but not repayments of principal…..

As I was saying about Scotland and renewables

Jahama Highland Estates, formerly known as the Alcan Estate after its previous owner Rio Tinto’s aluminium business, boasts “the finest deer stalking ground in Great Britain” alongside hunting for grouse and ducks.

Claiming to have “some of the toughest terrain in the UK”, including the north face of Ben Nevis, the estate was used for special forces training during the Second World War.

GFG acquired the estate in 2016 as part of a taxpayer-guaranteed deal to buy a smelter and associated hydropower plant for £330m from Rio Tinto.

Yep, people do place aluminium smelters where there’s cheap ‘leccie. But it’s hydro plants, not windmills.

The estate itself here, well, perhaps we could call it an estate. But it’s really the land around the reservoirs that feed the hydro plant. Like buying a water company and boasting of the yachting possibilities……

Be lucky to get £530k for it too

Ralph & Russo collapsed with £53m of unsold stock, the administrators of the celebrity fashion label have revealed as they court new owners.

The assets offer “an immediate commercialisation opportunity” for a buyer, according to marketing documents issued by administrators to potential bidders ahead of a deadline next week.

The difference between such high end clothes and the stuff pumped out by Primark isn’t as all that great as you might think. By far that largest part of that “value” of the stock is the branding costs that get people to pay high prices for it. The actual cloth and stitching and all is better, yes, but not all that much.

And if the brand is gone, along with all that spending upon making people think it’s high value, then the clothes are worth…..

Let us interpret this from Gupta

Liberty Steel owner Sanjeev Gupta said his business owed “many billions” of pounds to failed lender Greensill Capital but he expected other financiers to back him.

Yep, it is.

The background – Greensill used to pay Gupta’s suppliers then wait for Gupta to get paid. Reverse invoice financing, nowt wrong with that. However, Gupta’s customers used to pay Gupta, who would then pay Greensill. Greensill is now bust and Gupta isn’t passing the money along as he gets it. Logical thing to do really – the administrators can wait after all.

He said his GFG Alliance business was using “self-help” measures to shore up its balance sheet while attempting to secure longer-term refinancing.

That’s what the self-help is. Collecting on sales and not passing along the amount that Greensill financed. This frees up cash to be paid on the more direct purchase of supplies to make the next lot of steel.

Essentially, Gupta was financing working capital through Greensill. Again, nowt wrong with that. Now that Greensill isn’t being paid Gupta has a bolus of working capital. Perhaps a little sharp there but understandable.

Mr Gupta’s first public comments since the collapse of his key funder came as his sprawling steel empire teeters on the brink after creditors sought a court application to wind up one of his businesses.

Bankers acting for Credit Suisse filed papers in the insolvency court to shut down Mr Gupta’s trading arm Liberty Commodities following the collapse of Greensill earlier this month.

And then there’s the problem. That bolus of working capital does actually belong to other folks and they’d rather like to have it. They’ll get it too – or Gupta will be bust.

Effectively Gupta has to refinance his working capital before the courts catch up.

Note that this is all assuming that there is a real and viable business in here. Even if all is entirely and wholly ticketty boo he’s still got this problem.

Sweet Jesu Almighty

Yes, OK, we know he’s a bottom feeder but still, this is a hell of a price being asked:

The only major player seeking big stores is Frasers Group billionaire Mike Ashley, who is offering 15-year leases on the condition he pays no rent, business rates or service charges for the first six years.

That’s for department store buildings.

Blimey.

uBiome- stool testing and a marriage

We’ve another one of those fun scams out of California:

Apte and Richman’s initial plan was to sell a direct-to-consumer test kit for less than $100 that would analyse stools for the gut microbiome, the community of micro-organisms that influences health in a bewildering number of ways.

A perfectly sensible, even respectable, idea. But it wasn’t bringing in the revenue, so, a swivel:

However, Apte, as chief scientific officer, and Richman, chief executive, quickly realised the test “would not generate the significant revenue [they] needed to attract large-scale venture capital investment”, the indictment said. Their solution? Create a more robust “clinical” test that, crucially, insurance companies would pay for. Such tests require official accreditation, which uBiome received in late 2014.

Armed with their new test, Richman and Apte changed their model. Rather than charging upfront for their “SmartGut” tests, uBiome began offering them for free. All users had to do was hand over health insurance information so that uBiome could bill the companies directly.

At which point they’re charging $2,600 a test which is much more fun. But to get the insurance company to pay the test has to be ordered by a doctor, they had a fleet of, umm, interestingly unconnected, doctors to provide such orders and the insurance companies rebelled. Collapse of idea.

Oh well. At which point we get the clincher:

Apte and Richman, who married in 2019, were indicted this month

What can’t married couples be forced to do? Testify against each other…..

The First Thing We Do We Kill The Power Skirts In HR

How naive I was. Since I applied for my first graduate job nearly seven years ago, the recruitment process for white collar jobs seems to have become twenty times more complicated.

First, it now seems to be passé to send anything as simple as a CV and cover letter. Applications fall into two camps, the “case studies”, designed to identify who can write the best 500 words about a time they managed to meet a deadline, or, even more baffling “managed a quality service”. The prospective employers helpfully provide endless documents designed to explain what on earth “a quality service” might be, but if my experience is anything to go by, these tend to leave the applicant even more confused than when she started.

Second, there are the ads designed to hire someone who meets a ludicrously prescriptive “person specification”. I read one of these recently, for an innocuous job in arts administration which listed an eye-watering 22 qualities and skills – in the most forbidding corporate jargon imaginable. No fewer than three years’ experience managing the budgets of publications schedules, and so on and so forth.

In an absolute worst-case scenario, you’ll be required to complete something like the “work-style questionnaire” prescribed by the Civil Service Fast Stream: I like to work as part of a team, please choose a response on a scale between strongly agree to strongly disagree. My application ended with an email informing me that although my aptitude tests were perfectly satisfactory, I just wasn’t the right sort of person for the Civil Service way of working.

We need to update Dick the Butcher’s advice, obviously.

As Robert Townsend pointed out in Up The Organisation – one of the only three management books that are required reading, all others being contra-indicated – hiring should be done by the bloke, or assistant, personnel being there to fill out the forms afterwards.

This has macroeconomic implications as well. Today’s level of frictional unemployment – that amount that we’re going to have whatever because it takes time to get hired – is higher than what used to be thought of as a disastrous level of total unemployment.

Hire someone who looks vaguely right, observe and train them for a bit, if it doesn’t work, Oh Well, start again. Shorter and cheaper in the end…..

How we know about Gupta

Gupta bought a bank in 2016 from Tungsten, founded by entrepreneur Edi Truell, and renamed it Wyelands after his £3 million mansion in south Wales.

Some along now, seriously. What serious man, let alone serious plutocrat, would have a mansion in sodding Wales?

This is an interesting business plan

Bentley Global, which used the money from selling mini-bonds to make bets on football games, has raised almost £10m from investors since February 2018. It had paid out interest of between 12pc and 20pc per year, but has not made a payment since March 2020 when sporting events were either halted or played without spectators.

It’s even possible that it would work too. There are distortions in sports books because they’re based upon the weight of money not any objective factors. Thus, just for example, the odds on the All Blacks winning on a NZ sports book are different from those of their doing so on an English book when playing England. There’s an arbitrage possible between the two books.

Not that I think that these folks were doing this, not in the slightest. But it is, in theory at least, vaguely possible.

I have significant suspicion that there was joyous punting going on, not careful arbitrage of sports books, and thus that it will have slipped into Ponzi territory. But that is, of course, only opinion….

Not really about covid

Chocolate seller Thorntons is the latest retailer to disappear from the high street, more than a century after it started life, putting 600 jobs at risk.

The firm’s retreat could lead to all 61 UK stores being closed permanently after sales were hammered by the pandemic.

Sorta, sorta,

Thornton made sales of £122m and a loss of £35m in the UK for the year to the end of August in 2019.

Ah.

On the subject of brothel owners

There was a short selling report on a clutch of mining companies just recently. One of the killer facts attested as to why this was all a scam was that one of the directors involved in a couple was also a brothel owner. Not entirely sure why this was considered to be such a demerit – it was in Nevada, where such can be legal. And, well, having someone who knows how to run a profitable business is an interesting innovation for a junior mining company. Perhaps that’s what was being complained about?

Too big to fail?

The Gupta tactic:

Greensill Capital, the finance firm underpinning a swathe of Britain’s steel industry, has collapsed into insolvency after telling the High Court it had “no conceivable way” of meeting a $140m repayment demand from its Swiss bank backer.

The company, which promoted its supply chain lending as “democratising capital” and counted David Cameron as an adviser, revealed it could not afford to repay Credit Suisse.

Greensill, named after its Australian founder Lex Greensill, formally applied for administration after days teetering on the brink.

The move intensified concern over Sanjeev Gupta’s metals empire GFG Alliance, which was Greensill’s biggest client and has borrowed billions of pounds from the firm.

Mr Gupta’s UK business, Liberty Steel, employs about 5,000 workers at plants including Rotherham and Hartlepool. Greensill told the High Court that GFG “has started to default” on its debts.

If you’re big enough then you’re too big to be allowed to fail.

I don’t think he is but we’ll see.

And?

Pontins has admitted operating a blacklist of Irish surnames to exclude Gypsy and Traveller families from its holiday parks.

Families with surnames such as Boyle, Connors, Delaney, Dogherty, Murphy and O’Reilly were told by staff there were no slots available if they tried to book.

The blacklist of mainly Irish surnames, drawn up under the heading “Undesirable Guests”, was placed on the company’s intranet and distributed to staff with the instructions “we do not want these guests in our parks”.

Pontins staff really shouldn’t have to put up with someone insisting that if Hitler came to power then this is the sort of camp he would be put into.

This is easy to explain

The company said it supported the decisions made by the Japanese and US air safety bodies to “suspend operations of 777 aircraft powered by Pratt & Whitney 4000-112 engine”, while UK Transport Secretary Grant Shapps has said he is banning 777s with the affected engine from British skies.

Boeing’s response contrasts with its efforts after the Lion Air crash in Indonesia to keep the bestselling 737 Max in the air.

One is about something Boeing made. The other isn’t.