Why we need British Steel

British-Steel-logo
British Steel logo

British Steel first appeared in 1967 which was formed out of the nationalised British Steel Corporation (BSC). It went on to be privatised and launched as British Steel plc in 1988. It was even big enough to be part of the FTSE 100 Index. In 1999 the company merged with Koninklijke Hoogovens to form Corus Group  and even then, many of us thought it was a mistake and would start the end of the steel industry in Britain. It’s easy with hindsight, but it looks like that was right.

Corus-logo
Corus logo

And it’s why we need British Steel again. Quality, traceable, home manufactured fabulous, british steel.  It may not have been a glamorous brand, but it was one we knew and understood.

I shared a tweet the other day by a man called Dick who pointed out the following “The argument for Trident is that it costs £120bn and saves 600 jobs. The argument against Steel is that it costs £1.5bn and saves 15,000 jobs”

There is a new standard in Europe called BS/EN 1090 and what it says is that EVERYTHING, right down to welding rods has to be traceable back to source. No traceability, no CE Mark. This is currently impossible with imported steel as there is no way of knowing where it came from. If you don’t know how it was made, where it was made or what it was made with, then how can you guarantee it is safe? For an insurer, how can they assess that risk?

So for me, bringing back British Steel would be a huge step forward.

So maybe this is just too obvious to be useful but if we are about to lose our steel industry and 15,000 jobs anyway, then surely it must be worth investing in this industry again.

We poured billions into our banks to save face more than to save jobs and now it must be time for this support to turn to one of our core industries. Steel.

Even taking the finances alone. 15,000 families will be immediately having to draw benefits for some considerable time. Let’s say an average of three years. Then by my maths that’s at least £1bn million over this period and ongoing devastation to communities that just don’t need more bad news.

If you take Port Talbot as a case, then maybe energy is the issue? This can be solved with the Severn Barrage. Every aluminium producer in the world seems to use Hydro Power to smelt  aluminium, so why not clean steel up at the same time and make it go green. That’s a bargain at between £10-34bn – which makes the saving of steel look positively cheap.

Severn-Barrages-map
Severn Barrages map

British Steel is Britain through and through. It’s literally what our country was built with and by my very simple way of thinking, something our government should not just support but make it a model of how decent targeted intervention can help rebuild Britain from our proud industrial heritage outwards.

 

What next for Alton Towers, Merlin and The Smiler?

What next for Alton Towers, Merlin and The Smiler
What next for Alton Towers, Merlin and The Smiler
What happened in the accident was nothing short of horrific and has wrecked young lives forever.  I can’t imagine how frightening that must have been and it must never happen again, anywhere in the world.

But for a moment, I would like to take a slightly dispassionate look at what I believe will happen to the brands of Alton Towers, Merlin and The Smiler.

Firstly I think the brand of Alton Towers will be fine, it will be damaged for a while, numbers will be down, but in reality, there is never a safer time to visit any attraction than just after an accident. Every early warning system will be on super high alert and the HSE will be crawling all over their every move. Alton Towers is a British superbrand and the way that Merlin CEO Nick Varney has handled himself in the press has been, in my opinion, nothing short of excellent, open and honest. He has allowed all of the bad news to come out, offered refunds to anyone who wants them and generally sounded very distressed by the incident. He has displayed good human values that people will relate to. He has four kids himself and I’m sure they use the park themselves, so of course he would want it to be world class safe – what parent wouldn’t?

Merlin are a world class brand. I saw a presentation from their Head of HR at Blooloop live a few weeks ago and they are delivering standards worldwide. I think this means you can rest assured that they will be running the most stringent safety checks on every one of their rides in every country they operate (which is a lot). Merlin will now get better because of this – everywhere.

But for Smiler, the future is less certain. There is an awful argument that this only adds a new element of danger to the ride for the real risk takers, but I hate this argument. For me, risk in an attraction MUST only ever be perceived. Real risk is just not appropriate in a fun environment.

So I think Smiler is on its way out. I would suggest that it will be removed as quietly as possible (press coverage allowing), maybe with the costs covered by the German manufacturers and it will turn up with totally new branding and maybe a new track layout in another market (The Far East or possibly Eastern Europe). The Smiler brand is busted and if I was in charge, I would bite the financial bullet and get rid of the bad name it could yet deliver.

In the meantime, I can only wish for a speedy recovery for those who have been injured both physically and mentally. And thanks to the London Evening Standard for their image. Here’s the link to their article.

The real health of the Tesco brand

Dave Lewis, Tesco chief executive

 

We saw recently that Tesco announced a quite staggering £6.4bn loss on trading. A huge headline figure, but in reality a total myth to allow the business the time and money to restructure.

The loss was caused by £7bn of one off write downs including a property write down of £4.7bn. Now, I’m no accountant, but if my maths are anywhere near right, this will meant they can reclaim at least £1.4bn in tax on their profits they paid last year and maybe claw some back from previous years too. So rather than lose £6.4bn, they have actually made £2bn in actual cash profit in the last 12 months. With me so far?

On the day that Tesco made the announcement, their share price fell by 5% to 223p. But in reality it had been at a low of only 150p during that same year and it is a huge growth in actual value over the same period. It’s at around 216p today. Hardly the sign of a business in crisis in the eyes of the market.

The disparity in their profit is far stranger when you consider how they got away with such a HUGE property write down when Helical Bar, the (mainly) London based Property Developer announced yesterday that their portfolio had increased in value by 27% in the previous 12 months?

Each of the other supermarkets seems to have followed suit with huge portfolio write downs, which only goes to confirm that it is another corrupt accounting practice each of them is employing to claw back tax.

Jack Welch, the former GE CEO said in a famous interview that with bad news, you have to get it all out fast, as it’s going to come out anyway. This feels to me what Tesco have done. They have painted a picture that is even worse than reality to shock the expectations lower.

This will give them the time, money and opportunity to take stock and rebuild the brand by putting in front line staff. They need to rebuild relationships with suppliers and build trust with customers. They need to listen, adapt and listen some more. And then they need to action their ideas fast, before the market moves again.

The Tesco brand is not dead, it’s just sleeping. It’ll be back and hopefully with a little more grace and a desire to please customers rather than only focus on the profit.

Offsetting formal education for young people – Why rushing to university may not be the only answer

Why rushing to University may not be the right answer
Why rushing to University may not be the right answer

In the old days (of not many years ago), if you did okay in your A Levels you went to university. Better grades meant a better university and a better university meant a better job for life. Right?

With successive governments targeting more and more young people going to university there is a danger of doing more harm than good. You create half a generation who feel like they have failed – even if they were never destined to be academic – and you create a false hope in those that do complete degrees that they should automatically have a right to a graduate level job which pays more than the equivalent job with no degree entry qualification.

I think this has all changed. With the introduction of paid tertiary education for all, graduation taxation and prospective debts which will last a lifetime, it begins to offer more exciting alternatives to the conventional red brick university route. A ski season or two seems remarkably cheap by comparison. You earn, whilst you learn to live away from home and render yourself far more employable and have an amazing experience at the same time.

Travelling the world alone or in groups, will undoubtedly broaden your mind, enhance your experience and make you far more employable than a peer who has just done a degree whilst living at home. In my design agency days we were far more interested in whether someone as interesting than if they were qualified. Expedia’s ‘Travel yourself interesting’ campaign was brilliant (and won lots of awards)

This generation of young people will work longer, be healthier, live longer and see more of the world than we ever will. They’ll see medical changes that hadn’t even been dreamt of in science fiction, so why does forcing them into a school grading and exam system from year six onwards make sense? Why not encourage offsetting tertiary education for a few years to see the world and experience a bit of life before they have to decide what they want to do for the rest of it.

At eleven, I still wanted to be an astronaut or a train driver and yet this is when the average student has to begin to decide what their future holds. I’m not sure your average 18 year old facing a 60 year working career can know, or should be forced to decide what shape their life will take. So, why not let them take a few years?

A 25 year old that’s seen the world, seen poverty in a third world country first hand, slept on a beach,  skied for a year and maybe had to work some terrible jobs to make ends meet and has a far better chance of being driven to succeed and really KNOWING what they want to do than an eleven year old who’s only been to Disneyland.

Rocket fuel for advertising – the future is Artificial Intellgence

wargames - AI in action and a little less powerfu than Rocket Fuel
wargames – AI in action and a little less powerfu than Rocket Fuel

Advertising was never a very exact science, we all knew that 50% of our spend was wasted (but famously didn’t know which 50%), but that’s all changed now and changed forever.

I was lucky enough to be in a presentation from Lucy Arkwright of Rocket Fuel, who’s strapline is a rather cool ‘Artificial intelligence. Real results’. I haven’t seen a more amazing presentation in some time.

In short, what Rocket Fuel do is use single pixels on page to track a users real traffic. Then, using Artificial Intelligence (ie learned behaviour) they build up a picture of your real internet usage and shopping habits. It’s far more than just clicking likes, it’s about behaviours and real moves to action. So, less of what you say you’ll do and all about what you actually do.

As an example, with a traditional ad for a dishwasher, the agency buyer would just buy space in a magazine and hope enough people looking to buy their dishwasher wandered past and happened to want one at that point in time.

This was largely replaced by behavioural retargeting of ads (those ones that follow you around on the internet) which repeatedly show you dishwasher ads if you have ever clicked through to a site selling dishwashers or large kitchen appliances.

What the Rocket fuel system does is understand your specific behaviour. It begins to learn what brands you are most likely to buy and when you are really in the market to buy them. It knows to stop serving you ads when you have seen it more than a given number of times (your personal preferred number and not the rest of the worlds) and then stop serving you ads if you have actually bought a dishwasher from anywhere online. It’s like the Perfect Market, but all the sellers now have all the information. It’s a perfect, perfect market.

The AI bit is the really clever technology. This learned behaviour is done through a billion decisions per second that the system makes about how you like to think, shop and browse online. And this doesn’t just change the game a bit, it changes it completely.

I’ll leave you with a stat to prove the point.

The average click through rate (CTR) on a conventional online display ad is 0.03%, so all in all, pretty wasteful. and clicks aren’t anywhere near as good as actual conversions.

In one of the Rocket fuel examples, they showed that 40 percent of purchases of new BMWs in North America in the second quarter of 2012 were influenced by Rocket Fuel advertisements.

None of us had actually noticed that it wasn’t 50% of our ad spend being wasted, it was 99.97% being wasted. And it’s now with this system it’s back to being closer to 50% again.

When this technology rolls down to smaller users, it will change the way advertising is bought and sold completely. And forever.

Wow, just wow.

What Chance do Comet and any other electrical retailer have?

What chance Comet and any other underfunded high street retailer?
What chance Comet and any other underfunded high street retailer?

Sadly, on November 2nd Comet slipped into administration. It was probably inevitable, even though it was only purchased by private equity firm OpCapita last year for £2. I guess they overpaid for the 236 stores.

Maybe i’m an idealist, but I do think these stores have a place in the market and this is where I see it.

1. They are brand showrooms. They price match any price anywhere on the Internet. It means they will lose out on some margin on sales to those who are price sensitive, but reward the ones who make all the effort to search for the best online price (like I do). There is no substitute for seeing the product and pressing the buttons and you just can’t get this from a photo online.

2. They then charge for delivery or installation as no Internet retailers seem to offer this.

So, is this possible?

Amazon seem to be able to match any online price pretty closely and whilst they don’t have 236 stores, they still have lots of warehouse space and staff. My suspicion is that the rent and rates on the stores are simply too high to make these spaces pay. I hope Comet survive. Not because I am a fan per-se, but because I believe in choice. I don’t want to just buy from Amazon and John Lewis, but I do want to be rewarded with a better price for my research and for making the effort to drive out to see them in their store.

PS

I just went down to Comet in Nottingham Castle Marina. The only sign of any change at all is an A4 sheet in the window. It isn’t a bad looking store really and the staff I spoke to were all friendly and helpful. The staff have said that anything can be sold at face value only, no gift cards and no discounts. It did look a little like it had been robbed as there were lots of gaps in the stock (particularly in the upstairs bit!). Expect a fire sale soon.

PPS

Interestingly, when they bought the cahain, they said they would focus on low prices http://www.opcapita.com/news/OpCapita-puts-focus-on-value-at-Comet What i’m suggesting is just that.

Solar panels installed for £500 – rent your roof

Solar panels on a domestic roof - hardly gorgeous are they?
Solar panels on a domestic roof - hardly gorgeous are they?

I have just been leafletted with a flyer promising the installation of 25m2 of solar panels on my roof for £500 against a normal price of £14,149.

It sounds to good to be true. Because I think it actually is.

With this deal, you don’t benefit from the feed in tariffs that could be as high as £1,100 per year, but you do get some amount of free electricity. The installers claim this will be about £175 per year – so a payback on your investment in under three years and then lower electricity bills for the next 22 after that.

You actually rent your roof out to the investor who takes all of the tariff and lets you keep the free electricity as your contribution.

Maybe it’s win, win and maybe I’m being cynical, but the Daily Mail ran an article last year about them being installed free. The £500 is obviously to pay commission to the ‘Surveyors‘ (or door to door sales people as they are really).

Anyone got any experience of this?

The other big concern is what happens at the end of the life of the solar panels?

Are they really that green? can something that has taken that much energy to manufacture and distribute ever be really green?. This little article says not, but maybe they can be in the future. Maybe our green superhero Simon Spuddey Dare can shed some light?

Thanks to Integr8x for the image

Quango redundancies – A kick start to the economy?

quango_staff_strike_for_fair_pay
Quango staff strike for fair pay (off)

This is not meant as any form of political comment, just an observation. I don’t believe any of the parties would have acted any differently, all would have made savage cuts to the government run/funded quango staffing levels.

There are a huge number of people who were given notice soon after the election. Their quango was closing or they were just put on notice to reduce headcounts. An awful lot of them have reached the end of their consultation period and will be out of work by the end of February.

This is NOT the case with most everyday public sector employees and and I have been told in no uncertain circumstances by a friend that most local government employees will only receive the standard 1.5 weeks per year if they are over 40, but with a max of £380 per week,

The quango redundancies do create a few interesting economic scenarios.

1. Some of them will be getting thumping big pay off’s

Government Quango redundancy doesn’t seem to work quite the same as private sector or local government sector. Over here, if we are between 21 and 40 years old, we get a week per year served. Some may choose to enhance it a little. At 40+ years old, this is ramped up to 1.5 weeks per year. Ten years gets you 10 weeks pay. 22 years, may get you 30 weeks. This may be subject to that limit of £380 per week, so hardly get rich quick stuff.

In the Quangos, the person I know will get a cumulative redundancy allowance. So for ten years service they get 1+2+3+4+5+6+7+8+9+10 = 58 weeks. Wow! The first £30k is tax free too. This will be a big outgoing for the public purse in one single month.

I’d love to know how many people get this deal and how many get the normal one like the rest of us.

2. The respend may be the kick the economy needs to get it going

With that much money swilling about in the economy, a huge amount will be respent.

Mortgages will be paid off, freeing bank cash to lend again – maybe to first time buyers?

Building work will be done, helping boost the skilled trades economy

Lots of cars, and gadgets will be bought – most of which is exported cash, but at least a boost for UK retailers after a dodgy Christmas.

3. Tough to cope with

The biggest concern has to be that many of these services that are being removed will just be subcontracted to the private sector and some of the people made redundant taken on to do the actual work. Audit work is likely to be taken over by the accountancy firms and I can’t believe they will be able to deliver the same level of independent scrutiny for less money. Can they be truly independent if they are in danger of losing their contract renewal?

Thanks to elhamalawy for the cool image