Archive for February, 2010

Don’t panic, it’s not a double dip!

Posted in economics on February 18, 2010 by Tom Leatherbarrow

Yesterday’s statistics from the Office of National Statistics which illustrate a 23,500 rise in jobseekers claimants in January will inevitably spark fears of a double dip recession.

This would be a misreading of what is going on. Our labour market is now much closer to the American rather than the European model, in other words highly flexible, which is bad in the bad times as company’s can lay people off quickly. However, the reverse is also true, in that when things start picking up company’s can quickly pick up the phone and get people in rapidly.

How flexible are we compared to others? Well, if you want to get rid of employees in Germany it takes on average nine months while you consult with the Works Councils. In France, it’s even worse. This was one of the major contributors (along with the astonishingly laid back attitude of the European Central Bank towards interest rate intervention) to sluggish European economic growth in the Noughties when the UK economy was roaring ahead.

So why the increase when we are supposed to be coming out of this downturn? Two factors immediately spring to mind. Firstly, many seasonal workers will have been taken on for Christmas and then let go again in the New Year. Secondly, I suspect the weather has had a one-off impact which has to be factored in.

Where do we go from here? Regular readers of my postings (he knows who he is!) will know that I have been cautiously optimistic about our economy even at the start of 2009 when it looked as if the entire country was about to go belly up. My belief is that from March/April unemployment will start a downward trajectory with economic growth picking up speed from the middle of the year with good strong growth from 2011 onwards.

Culture factor incubated Toyota crisis

Posted in business, PR on February 16, 2010 by Tom Leatherbarrow

The PR industry has leapt into action to tell anyone who will listen how they would have handled the Toyota recall crisis. The considered opinion of the great and the good of my profession is that Toyota has handled this badly, which may well be true, but I think there is a wider issue here which no amount of media training, Q&As, holding statements and twitter monitoring will deal with.

Many years ago I followed a Toyota procurement manager as he inspected a UK car component manufacturer, which at the time was a FTSE 100. To know power is to follow such an individual around a customer’s facility. Red carpet was rolled out, senior managers quaked in his presence, production line operatives were told in advance to be clean shaven, lunch was bused in from a Michelin star restaurant. Each operational efficiency improvement identified since his last visit was met with a terse question, “How much are you saving?” with the unvoiced question being “How much are you giving to us?”

What Toyota wants, Toyota gets. When one of the UK’s largest vehicle retailers wanted to appoint a new CEO many years ago, Toyota made it known that they would appreciate it if the outgoing CEO became Non-executive Chairman, despite this being in direct violation of the recently published Higgs Report which forbade direct moves from executive to non-executive positions on a listed company’s Board.

Time Magazine at the weekend did a very good job at explaining how Toyota’s corporate culture incubated this crisis starting around 2002 when the first problems with accelerators became apparent. Unfortunately, a culture of fear on the part of employees, who were unwilling to bring problems to the attention of senior management, allied to extreme hubris (this couldn’t possibly happen to us!) led the company to ignore all the warning signs.

Only one PR professional, that I’ve read, has spent any time analysing this aspect of the story. Well done Jonathan.

Keynsham closure was inevitable when Cadbury hiked the price

Posted in business on February 11, 2010 by Tom Leatherbarrow

The decision by Kraft to close the Cadbury factory at Keynsham has been met with moral outrage, but frankly it was inevitable at a price of 850p per share.

Admittedly, the Americans have been a little disingenuous. Keeping Keyhsham open was part of their opening part cash, part share offer designed to cosy up to the workforce, they just didn’t withdraw the idea when the price went up.

850p per share has left Kraft having to look for big synergies and a plant which had already been earmarked for closure by the Cadbury management was the obvious fall guy.

Here-in lies the problem. The Cadbury management team have a duty to act in the best interests of shareholders, which meant getting the maximum amount of cash for the company. However, maximum cash is bad news for the workforce, because the new owners have to start looking for big savings.

What happens next? Well if I was a Cadbury employee I would be hoping that Kraft put some good numbers on the board when they next report. If not, all bets and all promises are off.

Cameron is fighting yesterday’s battle

Posted in Politics on February 9, 2010 by Tom Leatherbarrow

One of the more dubious pleasures of working from home with a broken ankle is being able to watch the Leader of the Opposition speak while I’m having my lunch.

Yesterday, Dave’s lunchtime lecture from the University of East London consisted of a harangue about MP’s expenses (yes, he’s still banging on about that).

According to him, the Prime Minister has been remiss in not withdrawing the whip from his three MPs who have been charged by the Crown Prosecution Service.

Now I know this is a serious matter and people are angry, but three months before a General Election is that really what the Leader of the Opposition should be concentrating on?

Firstly, withdrawal of the whip at this stage is one of great political pointless gestures (thank you Prime Minister). All three have been de-selected by their constituencies and will be consigned to history in the next three months. Furthermore, there is no practically no legislation to vote on going through the House of Commons anyway. Finally, as the Speaker of the House pointed out yesterday, withdrawal of the whip encourages more discussion of the individual cases which prejudices any criminal trial.

My own opinion is that the debate and the public has moved on. The issue now is reform of the Electoral system which did so much to foster the Boys Club atmosphere of ‘anything goes’ at Westminster. We’ve made a start with the creation of the independent authority to oversee MP salaries, but the real issue is whether we should get rid of our First Past The Post electoral system.

Today’s opportunistic Parliamentary debate on Electoral Reform should have been Cameron’s cue for a reasoned argument yesterday pointing out the pluses and minuses of changing the system, instead we got political posturing and a personal attack on the Prime Minister.

Of course, the cynics would say that Dave is just trying to distract attention from his shrinking poll lead. More likely is that Cameron is deliberately using slight of hand to keep his options open. In other words, talk about MP’s expenses to position yourself as a reformer, in fact talk about anything as long as you don’t sign up for Electoral Reform. Then, if he does get a whopping great majority, which would effectively give him two terms, he can quietly ditch the referendum in 2011 which he never signed up for anyway.

The problem is that this sort of transparent posturing is what is shrinking his poll lead in the first place. The British public is not stupid, it wants answers to the problems we are grappling with not soundbites and righteous indignation about six month old stories. Frankly, he’s going to have to do a lot better over the next three months.

If you give it away it has no value!

Posted in Media, PR on February 4, 2010 by Tom Leatherbarrow

One of the biggest issues PR faces as an industry is credibility. In part, I suspect that comes from the fact that the most high profile characters in our industry are probably the celebrity PRs, such as Max Clifford and Phil Hall.

I have enormous respect for what both do, but because it is high profile it tends to dominate the PR landscape and people assume that this is what PR is all about. To the cynics my job is a few quick calls to the papers and then off to the wine bar.

Let me give you an example. I have a friend who is a commercial lawyer in London (his actual job title is Multi-Jurisdictional International Trade Litigator) who delights in asking me what I have done with my day and, before I can answer, usually says something like “sitting in a wine bar quaffing Chardonnay presumably.”

As it happens, I’ve probably met more CEOs than he has (when I point this out he gets huffy) but in his world he is a power player protecting the UK’s commercial interests with the simple sword of truth, whilst I am busy organising photoshoots for Katie Price.

It was with some dismay therefore that I found out yesterday that a well-known PR company has come up with the strategy of offering free PR for a 3-6 month period in order to snag new clients. Now I know times are tough but I can’t think of a quicker way to destroy credibility than to go down that route.

I remember once having a conversation with the MD of a major UK building products company. I asked him what he thought of the idea of a free environmental audit. His answer was succinct, “free equals worthless.”

As one former colleague, whom I would describe as my only mentor, once said to me, “the biggest problem with this job is that everyone thinks they can do it.”

If we give away our services free of charge that won’t change.