Monday 22/02/21

  1. In EMPLOYMENT NEWS, the US sees a boom in blue-collar jobs, UK employers seem ready to hire, “no job, no vaccine” looks like “no-go” and HSBC moves jobs east
  2. In GIG ECONOMY NEWS, Uber loses (but employees win!) and start-ups cut delivery fees
  3. In RETAIL NEWS, John Lewis aims to keep more stores closed but Go-Karting and crazy golf could be on a high street near you
  4. In ELECTRIC VEHICLE NEWS, car manufacturers hunt out supply of raw materials, Blyth moves forward on the gigafactory, Arrival tests in the UK and Elon Musk/Tesla make a massive paper profit
  5. AND FINALLY, I bring you a spinning house…

1

EMPLOYMENT NEWS

So there’s a blue-collar jobs boom in the US, UK employers are in the mood to hire, enforced vaccine-taking looks unlikely and HSBC moves jobs east…

Blue-collar jobs boom as Covid-19 boosts housing, e-commerce demand (Wall Street Journal, Sarah Chaney Cambon) shows that manual jobs are seeing an uptick in certain areas including construction (rising housing demand), anything to do with warehousing (rising e-commerce demand, so fork-lift truck drivers are raking in the overtime for instance) and delivery (same). Labor Department data shows that the number of many blue-collar jobs has actually recovered to higher-than-pre-coronavirus levels in many areas. * SO WHAT? * This adding-back of jobs lost at the beginning of the pandemic is expected by many to continue – even when this all calms down – because the main drivers of rising e-commerce and a buoyant property market show no sign of abating. Hopefully, employment in areas like retail and restaurants will also pick-up strongly, giving the economy a broader-based boost.

Businesses are ready to start hiring, survey shows (The Times, Miles Costello) cites a poll by Adecco and the Chartered Institute of Personnel and Development of 2,006 employers which showed that more were planning to hire than fire for the first time in a year. Areas that were most positive included healthcare, finance and insurance, IT and education although demand from the leisure sector appeared to be more muted. * SO WHAT? * If these findings are to be believed, then it would suggest that we have seen the peak of unemployment, which reached its highest level in over four years in the September-to-November period. Clearly, the real situation is probably masked by furlough and whether or not this really is the peak could well also hinge on what Sunak plans to do in his imminent budget. Furlough continuation could be a lifeline to many companies and mean the difference between collapse and survival. It would also mean that consumers spending trends will be smoother IMO because if furlough was suddenly cut off spending is likely to take a sudden dip (although it’s difficult to say how steep that dip would be at this stage).

Vaccines/jobs: shot down (Financial Times, Lex) is an interesting article that adds to the “no jab, no job” debate. Although common sense would suggest that it is understandable that employers would want to minimise the spreading of the virus among co-workers and with customers, it seems that the UK government is reluctant to make things easier for them by imposing some kind of ruling. * SO WHAT? * Although ten European countries, including Italy and Poland, insist on vaccines, many others do not. In addition to anti-vaxxers and those abstaining because of religious reasons, there are others – such as pregnant women – who aren’t taking the vaccine because they were not included in vaccine trials. Arguments continue to rage between those who say that companies owe a duty to their staff to provide a safe working environment – Amazon is currently embroiled in a case where it is accused of providing inadequate protection for its warehouse and delivery workers – and those who say that strict enforcement would breach human rights. The UK government is remaining silent on this one as things stand.

Then in HSBC intensifies pivot to Asia with job moves and US exit (Financial Times, Tabby Kinder, Stephen Morris and Laura Noonan) we see that HSBC is now moving top executives from London to Hong Kong in a major business pivot whilst also deciding to give up on its consumer banking business in the US after being unable to turn it around, ending a 40-year go at running a full-service bank in America. It expressed a desire to spread in other high-growth markets such as Singapore and India. * SO WHAT? * HSBC faced a lot of flak from the international community for its tacit endorsement of the controversial national security law imposed by China last year, but it also faced criticism from Beijing for giving US prosecutors information that led to the arrest of Huawei’s CFO. Given that HSBC really wants to expand in the region I don’t think it can do anything other than suck up to the Chinese regime otherwise its plans will be dead in the water. Shipping the company’s big cheeses over to Honkers to co-ordinate the businesses that account for almost all of its global revenue also sends a good sign to China that it is serious. 

2

GIG ECONOMY NEWS

Uber loses and start-ups start to disrupt the disruptors…

This news came out at the end of last week, but in case you missed it Uber loses landmark UK battle as Supreme Court rules drivers are workers (Financial Times, Jane Croft and Siddharth Venkataramakrishnan) shows that Uber lost its contractors/employees battle at the UK’s highest court, the Supreme Court. The court unanimously ruled in favour of the 35 drivers who brought the case in 2016. * SO WHAT? * The UK is one of Uber’s biggest markets and as a result of this ruling drivers will have the right to the minimum wage, holiday pay and a pension scheme. Also, it said drivers should be deemed as working for the company as long as they were logged into the app rather than by the amount of time they were on a trip. Fun fact: in the UK, there are two types of employment statuses – “employees” and “workers”. Both are entitled to the minimum wage and holiday pay but “employees” have wider rights while contractors have NONE of these rights. This is a major blow for Uber and a UK employment tribunal will be working out how much compensation should be paid to its drivers (it could be around £12,000 per driver). At least 15,000 other drivers have made claims so this could get expensive! This could have implications for

other companies with similar models (could be a blow for Deliveroo, for instance – but a boon for Just Eat Takeaway, which classifies its staff as employees) and I’m sure that London Black Cab drivers will be rejoicing as Uber fares are bound to go up to take this into account.

Then in Restaurants and startups try to outrun Uber Eats and DoorDash (Wall Street Journal, Preetika Rana and Heather Haddon) we see that takeaway delivery app companies like Uber Eats, GrubHub and DoorDash have been raking it in over the pandemic. However, given that they are charging restaurants up to 30% commission per order, other services are popping up that charge lower rates by letting restaurants do more of the deliveries themselves. Spread, for instance, charges restaurants a flat rate of $1 per order and restaurants, in turn, charge lower prices for menu items because they don’t have to take into account the higher delivery fees. * SO WHAT? * Sales on third-party delivery apps have more than doubled over the pandemic so if demand remains high, you could argue that there’s enough business to go around for all concerned. However, I think that creating driver networks etc. is an expensive business and the established giants will be able to turn the screws on the tiddlers like Spread whenever they feel like it. Spread could well also suffer from competition from the restaurants themselves if they decide to do their own deliveries via their own transport or having link-ups with the likes of Lyft etc.

3

RETAIL NEWS

John Lewis announces more stores will not reopen and more experiences could be heading to a high street near you…

More John Lewis stores are now facing closure (Daily Telegraph, Russell Lynch) shows that the department store operator is likely to keep up to eight of its 42 department stores closed permanently even after lockdown lifts, but this will depend on how landlord negotiations go. Older and bigger stores could be the ones in the crosshairs with Liverpool, Cambridge, Southampton, Norwich, Nottingham and Newcastle looking particularly vulnerable. Confirmation of which stores will be targeted is expected next month. * SO WHAT? * The race to cut costs continues but it’s actually doing pretty well with online sales – so well, in fact, that it forecasts that up to 70% of its sales could be online by 2025.

Then in Go-karts and crazy golf replace empty shops in retail reversal (Daily Telegraph, Hannah Uttley) we see that the chief exec of Gravity, an indoor trampoline park specialist, has signed a deal to take on a massive 80,000 sq ft space in a Wandsworth shopping centre that previously housed Debenhams as “experiential” leisure operators fill spaces previously occupied by retailers and restaurants. * SO WHAT? * The rise in online shopping and subsequent failure of major retailer operators such as Arcadia and Debenhams during the pandemic has led to massive gaps in the high street. Some landlords are trying to look beyond cinemas and bowling alleys for The Next Big Thing and are more likely to agree a turnover-sharing model than the traditional flat rate rent. I think that my city-centre painballing/laser-tag Dragon’s Den business idea in defunct department stores is getting ever-closer 😁…

4

ELECTRIC VEHICLE NEWS

Car manufacturers seeks out raw materials, gigafactory plans are advanced for Blyth, Arrival arrives and Musk makes a paper profit…

Car firms race to source raw materials in drive for more fully electric vehicles (Daily Telegraph, Alan Tovey) shows the next step in car manufacturers’ headlong rush to go 100% electric. You can say all you like about electrifying your fleet but if you ain’t got the raw materials, your dreams will never come true! Volvo, JLR, GM and Ford are among those to commit to consigning internal combustion engines to the dustbin, but they are now among many others scrambling to secure supplies of raw materials such as graphite, lithium and cobalt that are used in electric car batteries. Research from Benchmark Mineral Intelligence suggests that demand for power packs for cars will shoot up by 40% per annum between now and 2025 – just in Europe! * SO WHAT? * This isn’t anything new – but I guess the need to source this stuff just took on a new urgency. Big operators (don’t forget copper!) will do well, but I would argue that those who are more narrowly exposed, like Cornish Lithium, could be in for a massive lift if they manage to extract enough material that is of sufficient quality!

Welcome to Blyth, home of UK’s giga-economy (The Times, Robert Lea) heralds the imminent submission to Northumberland county council of a planning application for Britain’s first gigafactory. If it all goes through, ISG will start construction in July, for a gigafactory housing British battery manufacturing start-up Britishvolt. £700m will be spent on the factory itself, £1bn will go on production equipment and £900m will be earmarked for expansion to 2027. This could be pretty incredible if it all goes to plan!

Meanwhile, Electric busmaker Arrival schedules first UK road trial (The Guardian, Jasper Jolly) highlights the commencement of British testing of electric buses built by Arrival, which is based in the UK but has plans to list in New York. It will be working with transport company First Group and testing will begin this autumn, starting with four vehicles produced at its R&D facility in Banbury. * SO WHAT? * This is the latest step in Arrival’s expansion and it is simultaneously looking for more new sites for factories in the UK as it aims to roll out 1,000 buses in 2022 and 11,000 in 2024. Arrival currently sources its batteries from LG Chem, but it could obviously source them from a UK-based facility if that was an option (hello Blyth!). This sounds exciting, don’t you think?? Let’s hope the company has more substance than Nikola had!

Then in Musk laughing all the way to bitcoin bank (The Times, Miles Costello) we see that Bitcoin’s continued rise – despite Elon Musk tweeting that the value of bitcoin and ethereum “do seem high lol” – means that the value of all Bitcoins ever mined has reached over $1tn for the first time. This means that its value has shot up by almost 20% in the last five days alone! Incredible. What’s also incredible is that I think this means Musk made more from his Bitcoin investment a few weeks ago than Tesla made in profit for the entirety of last year in sales of its electric vehicles!

5

...AND FINALLY...

…in other news…

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Some of today’s market, commodity & currency moves (as at 0742hrs green is up, red is down). THIS IS INTENDED AS A ROUGH GUIDE ONLY!

FTSE 100 *Dow Jones *S&P 500 *Nasdaq*DAX *CAC-40 *Nikkei **Shanghai **
6,624 (+0.10%)31,494.32 (unch)3,906.71 (-0.19%)13,874.32 (+0.07%)13,993 (+0.77%)5,774 (+0.79%)30,156 (+0.46%)3,642 (-1.45%)
Oil (WTI) p/bOil (Brent) p/bGold Per t/oz£/$€/$$/¥£/€$/₿
$59.65$63.49$1,792.741.398451.21083105.751.1549456,398.70

(markets with an * are at yesterday’s close, ** are at today’s close)