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2012 & 2013 Review

Forum members have had a quiet couple of years as we waited for the rest of the world to catch up with our earlier findings – or so we’d like to think!

We only held one informal discussion each year with the first being back in July 2012 prior to the London Olympics. Read more…

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Categories: Findings, Uncategorized

Plan C – Slicing the new Gordian knot? Leave Europe behind and build HS3 instead….

December 6, 2011 Leave a comment

When Alexander the Great attempted to untie the unfathomable Gordian knot way back in 333BC, he found a simple yet radical solution by slicing it in half with his sword. Maybe the time is now right for simple radical solutions to our never ending and unfathomable economic crisis? The so called Plan C maybe?

What these radical solutions might be was the subject of the last Forum meeting, held prior to the Chancellor’s recent 2011 Autumn Statement.

Without it sounding like ‘we told you so’, it proved very difficult to actually suggest much that hadn’t been suggested by the Forum over the last three years.

Back in February 2009 we were clearly concerned that we were heading for a decade of austerity and that bold visionary political leadership would be needed to save us from the so called ‘zombie’ economy. Inflation, the Euro crisis, the necessary public sector cuts and rising unemployment would be key drains on economic growth but that there were other opportunities for growth from investing in the infrastructure, manufacturing, localisation and ‘green’ technologies – provided that essential investment financing and employment reforms were undertaken.

So why ‘Plan C’ and not a development of ‘Plan A or B’? Read more…

Initial thoughts on ‘Plan C’…..

November 28, 2011 Leave a comment

Prior to George Osborne’s Autumn Statement tomorrow – here is a summary of our findings and suggestions from last month.  I’ll comment on our suggestions against those of the coalition as soon as possible

Categories: Findings, Uncategorized

Press Release –July 2011

July 28, 2011 1 comment

This week’s disappointing 0.2% GDP figures have just confirmed a previous economic prediction by the Forum; an independent West Yorkshire focussed discussion group and think tank. It recently had its first meeting of 2011, and although its findings don’t make pleasant reading for both the short and medium term, it does believe we can achieve sustainable growth and prosperity again, but it will take some innovative approaches to do so.

Started back in 2007 by David Broadhead of Partners in Management, a management development company based at the Media Centre Huddersfield, it was a way for senior managers who’d undertaken their strategic leadership programmes to keep in touch and debate strategic issues affecting themselves and their organisations. It now has 15 members drawn from across a wide range of industry sectors and represents both enlightened managers and small business owners.

Since its formation, their observations and predictions have been incredibly accurate leading David to jokingly suggest;

“If we could only just improve our timing we would probably be the most accurate independent think tank in the UK at the moment! That’s why we haven’t met for over a year as we needed the UK and the world to catch up with our observations and anticipations of likely outcomes.”

Back in 2007 the Forum foresaw the recession and house-price collapse; in 2008 it anticipated the Eurozone crisis and the future private sector backlash against public sector conditions of employment along with public sector industrial unrest. In early 2009 it foresaw an ongoing round of business closures, mergers and acquisitions and identified the need for courageous, unpopular but respected political leaders given the likelihood that tax rises of 10% or public sector cuts of 20% would shortly be needed. However it’s most worrying prediction in Sep 2009 was regarding the economic knife edge we were balanced on

http://www.examiner.co.uk/news/business-news/2009/09/28/partners-in-management-forum-members-warn-economy-is-on-a-knife-edge-86081-24793708/

It is on that theme that the recent discussions were held. Afterwards David said:

“Back in 2009 we couldn’t see what was going to really drive the economy out of recession long-term and that all the indicators were that the situation could get much worse rather than better. Of course this was before the General Election and we had no influence over that result and subsequent actions.

The problem now is that we still can’t see what at the moment can really make a positive difference, and if anything the problems and issues that were there before are refusing to go away! If not careful, we really could be in for a decade of austerity as the ‘zombie economy’ becomes a reality.

In particular we believe our manufacturing base has eroded to below a critical mass and is struggling to exploit any opportunities provided by world economic growth and advantageous exchange rates. It can’t find either the finance to expand or the skilled workforce needed and can’t subcontract either within the UK as that capacity is taken up.

The finance sector is faced with its own restructuring and re-capitalising issues so can’t expand or innovate whilst the service sector in general is starting to struggle as a consequence of the ongoing public sector cutbacks.

The public sector, if anything, has not seen the cuts that we originally envisaged or felt necessary to balance the economy.  Over ambitious economic growth projections have reduced the government’s original cost saving targets whilst public sector spending has continued to rise. As growth, tax revenues and projected cost savings do not meet expectations we can see another round of increased cost cutting measures being undertaken soon, probably accounting for the 170,000 jobs reprieved from our original estimate and suggested too much later by the CIPD, at 500,000 public sector job losses.

Our education system, particularly higher, is about to undertake radical reform driven by cost, competition and the need for vocational employability outcomes which ultimately will lead to faster, more cost effective and appropriate high quality courses, but only following a period of turmoil, potential closures and job losses.

The construction industry is mothballed due to limited demand and again lack of finance and to add to this we face a likely second ‘dot.com’ bubble burst.

Economic growth is slowing down now in the emerging nations as they, like us, are facing increasing pressures from increasing inflation. The United States is becoming problematic too as the ‘money printing’ exercise there has failed to stimulate sustainable growth and they now face the reality of having to undertake serious deficit reduction whilst facing the stalemate situation of an election campaign.

Given as well the inevitable scenario of any one of Greece, Ireland, Portugal, Italy or Spain eventually facing reality and defaulting on their debt too, with the attendant financial crisis and confusion world-wide that will follow that, and you could begin to think that not getting out of bed in a morning was a serious option!”

So, all in all, not a healthy situation and one that will need inspired leadership, innovation and a great deal of counter-intuitive thinking to get us out of.

“Unfortunately our politicians still seem ‘content and detail free’ and driven by popularity and media response, which when coupled to a public sector that through target setting and other political fads, seems to have lost its sense of purpose and associated specialist skills, doesn’t bode well for the inspirational leadership and infrastructure support we need to initiate and support sustainable growth. If anything this is the decade when people will have to take personal responsibility and return to those positive Victorian values of aspiration and endeavour”

Not quite then the scenario we would like to anticipate, but a realistic one none the less.  However, all is not lost and the Forum did consider that there were still some positive opportunities amidst all the potential gloom and doom and had some suggestions as to how we might get to a turning point after which things will start to definitely improve. David goes on to say;

Strangely enough it may well be our construction industry that offers us though the greatest opportunity. At the moment it is the only one industry with the greatest potential for UK employment. Our manufacturing and service sectors have, or have been outsourced overseas and are struggling now with key skills shortages.  On the whole, the construction industry is still both UK labour intensive and sourced, so investment here can benefit the economy at large. Funding is of course a critical issue along with what to build?  In our opinion, government backed low cost or social housing seems the likely answer. There is a demand, the asset stays in the UK and can be sold later too if required. Given the political ideological issues associated with this we see benefits in ‘allowing’ not-for-profit social sector landlords to borrow and invest this way, ultimately backed by the Government.

Local infrastructure construction projects too are critically important. Collectively we saw no reason to invest £32 billion in HS2 the high speed rail link to the North. All this will do is transfer yet more wealth and enterprise to London and the South East with no tangible benefits to our local economy.  We much preferred investing in the local infrastructure and also encouraging enterprise directly into the area. Why not as well adopt low cost suggestions like renaming Robin Hood airport London (Don) and diverting 20% of long-haul Heathrow flights there instead – in effect becoming the third runway? With a new terminal and some relatively minor investment for easy access to the East Coast main line and motorway network, it could easily be the regional transport hub and attract the trade and investment the area desperately needs.

Finance for business remains a critical issue.  There’s a great opportunity here to side-step the banks and utilise business based credit unions as a mechanism for freeing up lending and stimulating growth but as yet the Government seems to be doing little to force the issue and assist commercially sound lending through alternative approaches. Small amounts distributed wisely can make a huge difference, especially to small local organisations whereas large vanity projects favour the larger organisations and in our opinion won’t generate the same degree of growth.

Our final positive thoughts were on employment conditions. Whilst employment legislation didn’t prevent any Forum members from taking on additional employees; it, and the inconsistency of legal interpretation, didn’t encourage further employment either. Back in Nov 2008 we discussed how we needed to create a new intermediate class of temporary, flexible ‘enterprise’ type worker where individuals, particularly professionals, would be able to work flexibly but with minimal additional benefits. They could then create their own portfolio careers, working for several employers without permanent commitment by either party.

The next meeting will be in October 2011. It will be interesting to see what responses we have had by then.

Forum Review up to the May 2010 Election

May 16, 2010 1 comment

In chronological order I’ve tried to summarise our anticipations relative to relevant current events and issues.

Oct 2007

Decentralisation an emerging issue

Recession likely plus house price reductions up to 25%

Backlash against immigration

Clean coal and nuclear power needed

Localisation wanted not more centralisation

Need to revoke licensing laws due to behaviour and health issues

Austerity shopping to come – red, white and blue car sales up!

Things we got wrong

  • Gordon Brown wouldn’t last 12 months as PM
  • Challenges to human rights act

Nov 2008

Premiership football club collapses due to debt and mismanagement

Reduction in red tape demanded

Tax revenues collapsing

VAT reduction not effective

Euro parity

Eurozone collapse and split into North v South

Inflation 3%

Private sector backlash against public sector conditions

Union support restricts public sector reforms under Labour

Major reforms needed but unlikely – industrial unrest to increase

More social responsibility needed and demanded

Green energy issues the future for the recovery for UK industry

Innovative skills not there after ‘target’ mentality

Things we got wrong

  • 4M unemployed – but we couldn’t trust the numbers!

Feb 2009

Further round of business closures from well known businesses

Mergers and consolidation to follow to regain profitability

Innovation in public sector needed

Insurance fraud will become more prominent

Rise of e-sputing

Rise of post-consumerist society and search for meaning

Small businesses offering excellent service will prosper

Need for business credit unions to support lending

Environmental support with protectionism for UK industry

May 2009

Need for honesty and transparency throughout society

Leaders with the courage to be unpopular now required

10% tax rise or 20% public sector cuts

New era of Tax and Waste

Sep 2009

Knife edge economy – could easily re-enter recession

500,000 job losses from public sector expected

Economic factors not good for a long period ahead

Categories: Findings, Uncategorized

February 2009 Onwards Scenario

There are ‘green shoots’ as ever in the economy.  However, the skill is to determine which are ‘weeds’ and which are not!  Organisations will have to re-stock at some point and there are lots of ‘bargains’ for both personal and commercial buyers with cash and security.  These will no doubt have an impact and give the impression of the recession ‘bottoming out’.  Again the challenge is to guess this correctly – many fortunes are lost on false dawns, but what we can rely on is that the strong, wealthy individuals and organisations will no doubt get stronger.

 

At the moment our views do not indicate the bottom has been reached.  We anticipate that a new wave of company closures will soon commence.  These are not the badly-managed or heavily indebted organisations – that “low hanging fruit” has already gone, or is well on its way.

 

These companies will have been traditionally profitable and well managed but will collapse due to a pure lack of cash.  The restriction on lending by the banks and the lack of easily available credit insurance will be the primary cause but then this will be accelerated by lack of payments as serial company failures occur.  Of course this will tighten lending by the banks precipitating further crises.

 

The organisations that survive this will do so through savage cost cutting and tight managerial control.  Expect to see something like a 25% cost reduction target in most private sector organisations.

 

Following this in the longer term, beyond 12 months, the organisations that survive may well struggle to return to real profitability, let alone growth. The likely scenario here is that these organisations begin to seek mergers with each other to achieve economies of scale.  Again in this situation we will see significantly more redundancies and closures.

 

The voluntary, not-for-profit sector will also feel the pressure.  We anticipate a raft of charity organisations failing over the coming months, leading to more pressure on existing public services where applicable.

 

Increasingly though the public sector will be pressurised as previously predicted.  The concept of externally auditing against ‘best practice’ will be challenged as innovation and variety in delivery is needed to drive change and deliver effective and efficient affordable solutions.

 

Politicians will also have to change and start to control less and stimulate more and let local growth and innovation take place.  There may well be the opportunity for more local mayors with greater autonomy who can react and deliver to local needs free from central control.

 

The government supported PPF, pension regime will come under considerable increasing pressure, possibly leading to its collapse or suspension.

The evidence of fraud will continue to emerge within the finance sector with the strong likelihood that ‘insurance related’ fraud will be the next to hit prominence.

 

There are lots of opportunities though for enterprising individual and organisations. Obviously, budget hotel chains like Travelodge should continue to profitably expand as demand continues but UK manufacturing, particularly automotive, should be in a healthy position given current exchange rates and reducing labour rates, but only if materials are sourced locally and not imported.

 

Connected to this though is the growing essential skills shortage.  Real reforms to the way in which apprentices are paid for and trained need to be investigated – maybe we will see a return to the old training bodies of the 60’s and 70’s?

 

The retail High Street will continue its decline, eventually leading to large ghetto like areas in town and city centres.  These will pose challenges to regeneration – maybe areas may be returned to inner-city parkland or even farmland.

 

Squatting and other forms of social unrest will become more prevalent.  We also see the rise of ‘e-sputing’ where groups of disenfranchised people join together electronically to deliver social unrest.

 

We are also intrigued to see how well devolution works in a recession.  Will there be greater pressures for more separation or will re-integration became preferable.

Socially as well the drive to self-sufficiency will increase.  This will be initially at a personal level before becoming a local and national driving force.  There is a significant challenge here to the conventional concept of increasing globalisation.

 

We are now entering a new post-consumerist society and we are intrigued to know how this will manifest itself.  Our particular views on this are that people will seek new ‘role models’ and ‘leaders’ that lead ethical lifestyles and will choose to support and emulate them.  There could well be a new genre of reality TV programmes supporting this as people look to become personally responsible for their own lives, cut debt, become self-sufficient, reduce energy consumption and seek moral comfort in things other than materialism.  The ‘baby-boomers’ could see a re-incarnation of Blue Peter designed especially for a mature audience!

 

The real challenge for us all however, is to determine what will stop the decline.

 

We see this breaking down into three main areas.  The first is how to ensure organisations retain or generate sales/income, the second is how to provide essential finance and the third is what sectors can provide sustainable growth.

 

Our view on the first is that we still see many smaller successful businesses all offering excellent service and with a clear identity, both locally and often directly to the owner.  No doubt this is why so many franchise operations are still doing well within the recession.  Whilst large organisations like Tesco and others are always going to be relatively successful, the indicators are there that other organisations need to be smaller, adaptable, flexible and focus on good quality personal service and not just price.  The day of the ‘Me2’ organisation that just copies what others do is well and truly numbered.

 

The second area is critical and revolves around how to provide finance to where it is needed at affordable rates.  What we believe is that the existing banking structure is fundamentally flawed and probably not fit for purpose.  The government is effectively lending money to the banking sector supposedly to then pass onto commerce as required.  However, this is obviously not working effectively and banks may be more inclined to use the money provided to bolster their own reserves and continue to restrict lending to those businesses they clearly don’t know, don’t understand, can’t evaluate and as such determine the element of risk.  This will only lead to more business failures as we have predicted.  Our solution would be to form local ‘business credit unions’ with the sole aim of recruiting members, knowing them and their businesses and then lending to them on attractive commercial rates and working with them to ensure they survive and prosper.  Unlike the banks, they would be limited in size and only receive a fixed commission on money lent and as such then they couldn’t develop the ‘fat-cat’ bonus culture plus would be focussed on actual lending.  Government money could be used to pump prime these new organisations before they become independent and free to raise their own money from their own member investors.

 

The third area is what should the government focus on to stimulate growth and help halt the slide into depression?  Our view is that this should be sustainable and focussed around essential needs.  Education and essential skills are vital as is the transport infrastructure. We all need food and water, clothing and housing along with power and energy.  It is in these areas that we need to invest as there will be long term demand and therefore these sectors can some support themselves economically after start-up.  As we have said before the focus has to be on significant ‘cleaner energy’ technological and infrastructure development, but using home-grown skills, equipment and expertise.  What is wrong with protectionism in essential areas?

Categories: Findings

Nov 2008 Findings

December 19, 2008 Leave a comment

Forum Nov 2008 – text as pdf

Sorry for the delay but I have been waiting for approval from group members before listing the November findings here. 

I’ll shortly be updating with a scenario designed to make interpretation easier too.

Then I’ll get around to approving all the registrations we have received for those wanting to add comments to the site!! Many thanks for your support and interest.

Categories: Findings