FIN Review review on pause

The FIN Review Review is on pause for the moment as I focus on other areas.  It may be a long moment.  

Thanks for reading!  

Chad

28 September 2012: Government car maker subsidies and Dick Smith plan

AU government paid subsidies of $3 billion over the past decade to car makers Toyota, Ford Australia, and GM Holden. Manufacturing impacted by high dollar, expensive raw materials, and global competition. Government's $5.4 billion New Car Plan will run from 2011 to 2020. Other assistance to the car industry, such as tariffs, estimated at around $670 million a year.   Manufacturing industry overall has shed 125,000 jobs over the past four years. [CR: From my seven years in manufacturing, I get this. Technology changes in digital requires learning new languages and updating hardware. By comparison, staying on top of technology in manufacturing requires millions in capital investment. It is easy to get left behind, and nearly impossible to remain competitive without assistance.]

Dick Smith plan: Sold by Woolworths to Anchorage Capital Partners for $20 million. Earnings before interest and tax last year was $24.6 million. Anchorage Capital Partners believes private equity is the way to turn around a business, "do it outside the day-to-day ASX-listed conventional board room environment and below the radar." Plan is to fix the business, make it perform better, then let the "exit [sale] take care of itself." CEO Nick Abboud's plan is to restock the "bibs and bobs" of electronics accessories. Says that is where the margins are and it will drive foot traffic, then get cross-selling across computers and televisions. Will maintain current store network, introduce more private label products (currently 14 percent of sales), improve markdown management, merchandise mix, online sales, marketing and store layouts. Before the sale, Woolworths "cleared the decks" with 44 store closures. Currently 325 stores achieving EBIDTA profit, no debt, and net assets of $290 million. [CR: I always like a clear strategy on the part of the equity firm and the CEO. "This is what we are going to do" and then they do it. Will be interesting to look back in 12 months and see how effective this was.]

27 September 2012: BYO device discussion and Westpac mobile banking stats

Technology rating on BRW Young Rich list: Atlassian founders now number 1, combined wealth of $480 million up from $360 million, company believed to have turned over $100 million in revenue last year, US venture capital fund Accel Partners paid $60 million for a minority stake in 2010. Young Rich List is the top 100 wealthiest self-made Australians aged 40 and under. Total combined wealth of $5.1 billion, down from $7.3 billion last year. Four of last year's top six members turned 41 and are ineligible for the list. 48 percent of returning members maintained or increased wealth over the past 12 months. Online retailer Ruslan Kogan increased wealth to $145 million from $62 million, up from 34th position to 8th, says biggest challenge is scaling, outgrowing capabilities of service providers they use. Number of women fell from 8 to 6, lowest in the list's ten years. [CR: It would be interesting to see differences in how the under 40s spend their wealth compared to the over 40s.]

Apple co-founder Steve Wozniak moving to Australia within two years, not planning on joining a company or board, will be available for speaking engagements, moving to Sydney but may make home in Melbourne or Hobart. [CR: I admit the man is incredible. I also ask to what extent genius and success is a combination of talent, perseverance, and opportunity.]

Sharp to cut more than 10,000 jobs, 18 percent of its workforce, in plan presented to lenders on Monday. Selling TV factories in Mexico, China and Malasia and US solar developer Recurrent Energy.

Barnes & Nobel introducing new video stream into Nook. Service will allow customers to stream and download movies and television shows for a fee onto televisions and mobile devices, while storing cpontent in the Nook cloud. Microsoft invested hundreds of millions in April in Barnes & Nobel's digital division.  Service will be similar to Apple's iTunes functionality. Walmart entered the streaming space in 2010 with the $US100 million acquisition of Vudu. Verizon and Redbox recently partnered to introduce their own streaming service.  [CR: The future is paved with media from the past. It will be interesting to see to what extent older content can be monotised through new services.]

Outdoor clothing company Kathmandu update: Company listed three years ago, sales rose more than 60 percent ($NZ347 million) since 2009, profit grew 130 percent to $NZ34.9 million. Has delivered 20 percent growth in like sales. Biggest hurdles include delivering further same-store sales growth, avoiding cannibalising sales at existing stores from new stores, and growing market share from competitors Anaconda, BCF, and Mountain Designs. Australian sales penetration is one-third that of NZ, Australian sales generate 61 percent of group revenues. Plans to open more small-format stores in shopping malls rather than "destination locations" to capture bigger share of consumer spending on leisure apparel and footwear. Also boosting online sales, relaunching webstores in Australia and in the UK to boost global presence, investing in new online channels such as Amazon, TradeMe, and eBay. Online sales less than 5 percent of total sales, believes they can reach 30 percent. [CR: I keep seeing that 30 percent number quoted as the future benchmark for retail digital sales, repeated by the likes of Myer and David Jones who are hanging around 1 percent. Is the gap due to a lack of consumer awareness and trust, because of existing poor ecommerce offerings, or a lack of adequate distribution?]

BYO device discussion: Melbourne-based law firm Cornwall Stodart, reduced per user costs from over $2,000 per year to under $1,500 per year when it introduced its 130 staff to use their own devices. Gartner estimates 59 percent of companies allow staff to bring their own smartphones, 52 percent laptops, 42 percent tablets. Consumer purchases of mobile devices outnumber corporate purchases by 10:1, but corporations expected to purchase over a third of all mobile devices by 2015. Laptops expected to last three to five years, tables expected to last 15 to 18 months due to "product envy" as product is perceived to be obsolete. Mobile device network management revenue expected to exceed $US500 million in 2012. Opens issues with security, DSD says 65 percent of cyber attacks on Australian targets have an economic focus. 85 percent of "cyber intrusions" could have been prevented by patching software, restricting administrative privileges, and using application whitelisting.  [CR: Security policies need to be reviewed pretty frequently these days.]

Mobile banking stats: Deliverables from first nine months of Westpac CIO's role: release of the bank's first iPad application, a trial to turn Android smartphones into contact-less payment devices, introduction of an iPad app to replace printed board papers, a 1000 iPad pilot for bank executives, and St George innovation that allows payments from mobile numbers. Edgar Dunn & Co predicts 250 million mobile banking transactions per year in Australia by 2015. Gartner predicts global value of mobile payments will increase 62 percent to $US171.5 billion in 2012. It took 80 months for online banking to reach 1 million customers, only 30 months for mobile to reach 1 million customers. In two months, Westpac iPad app downloaded onto 58,000 devices, used in 137,000 transactions worth $125 million. By comparison, there are 1.5 million users of Westpac smartphone apps. In August, 17 million of the 48 million online sessions (35 percent) across Westpac group came from mobile, 166 percent more from the year prior. One focus of the bank's $2 billion five-year strategic investment priorities program is to web-enable much of its back-end systems while boosting reliability, robsutness, and resilience of core infrastructure. Acknowledges a three to five year addressing of the "long tail of legacy".

18 September 2012: QR National name change and CEOs bonus reduction

QR National to change name to Aurizon: Name combines “Australia” and “horizon”. Also the name of a Canadian goldminer who owns aurizon.com and a UK-based brand of ear drops for dogs. People still confuse QR National, which provides freight rail services, with government-owned Queensland Rail group, which provides passenger rail services. Groups separated in 2010 when QR National listed. Railroad group is 147 years old, floated last year for $6.2 billion. Over 70 companies on the ASX have changed their name since the start of the year, including OneSteel which is now “Arrium”. QR National’s main competitor, Asciano, is also considering a name change. [CR: I catch the train every day, and I know I was not clear on the distinction. Do you wish at times that you could change your name to reinvent your brand? Would you become a brand of ear drops for dogs?]

Bonus reduction for top CEOs: Top 100 CEOs dropped 20.8 percent to $1.255 million, levels not seen since 2003. Reported pay fell an average of $4.724 million last year. Energy retailer AGL CEO pay increased 83 percent to $6.3 million to reflect improved financial results. Around 90 percent of CEOs received a bonus. Executives on pay freezes and bonus cuts (Qantas, BHP Billiton, Rio Tinto, BlueScope Steel, ANZ, Commonwealth Bank) could be headhunted by Asian companies. One-third of CEOs are being paid more than companies tell investors. BHP Billiton CEO reported pay of $11.8 million, received $17.34 million. [CR: Quantum physics and CEO salaries. Both have been explained to me in detail, and both I have yet to fully understand.]

China targeting offshore IT work to take contracts from India: Driven by vast labour pool, government subsidies, and low price of services. Concerns include relatively immature services on offer, poor quality of spoken English, and grave concerns about the security of intellectual property and data privacy. China’s largest outsourcing company is HiSoft, employing 23,000 people, expected to generate $US670 million in 2012. [CR: The game will change over the next few years as China overcomes these barriers.  That said, local work typically sees 20 percent project management, double or triple that for remote work. To make it work, the hourly rate needs to be low enough to offset the increased communication. The rapid rate of change in both technology and requirements means local responsive providers still have a strong market.]

Hewlett-Packard looking at its own smartphone and tablet: HP previously attempted to enter the space with 2010 $1.2 billion acquisition of Palm running on WebOS. Did not catch on, HP eventually offered WebOS as open-source. CEO Meg Whitman did not say which OS the eventual smartphone would use. HP world's leading seller of PCs, focuses on enterprise services to maintain profitability. HP moving ahead with biggest round of employee buyouts and layoffs in the company history, announced this month an additional 2,000 workers will be leaving the company, increasing cutbacks to 29,000 through October 31, 2014, shares trading at an eight-year low. [CR: Do we need another smartphone in the market? I believe that's around 8 percent of their total workforce they are letting go.]

17 September 2012: iSelect IPO and Body scanners for clothes shopping

Rip Curl for sale: Founded in 1969, two founders own 72 percent of the company, could make more than $100 million each if the brand fetches $400 million, but $300 million could be more realistic. Rip Curl operates corporate stores in Australia, New Zealand, Europe, USA, Canada, England, Israel, South America, and South Africa. About half of sales come from Australia. Company booked $7.9 million profit year to June 30 2011, down from $15.5 million in FY2010. Sales fell 8 percent to $362.4 million. During 2012, acquired 24 Rip Curl branded stores in Australia and South Africa. While Billabong and Quicksilver have opted for stockmarket listings to fuel expansion, Rip Curl remains private. [CR: Two guys and a sewing machine 60 years ago, now looking to clear $100 million. Would you stick with what you are doing now for that long for a chance at those returns?]

iSelect seeking IPO: Originally founded as comparison shopping site for the health insurance market, has expanded into life insurance, general insurance, home loans, energy, and broadband. Recorded $112 million revenue FY2012, of which 81 percent came from health insurance arm. EBIDTA worth $24.1 million, up 38 percent came from traditional health insurance arm. If EBIDTA  targets of $30.9 million in FY2013 and $41.8 million are hit, it could mean a $600 million IPO next year. Expected revenue growth of 10 percent per year. NineMSN owns 33 percent of iSelect. Around 500,000 new policies are written annually, of which 215,000 are sales to new market entrants and 285,000 result from switching funds. [CR: Comparison sites are the big winners in a tightly competitive market.  The more the big companies fight, the more the comparison tools win.]

Myer’s online plans: Online sales account for 1 percent of sales, expected to generate 10 percent to 15 percent within a few years. Building core competency rather than acquiring. Myer has spent $600 million on transforming itself into an “omni-retailer”, combining online offer with traditional brick and mortar stores. Company is 75 percent of the way there, with about $30 million still to be spent. Company is likely to shit more stores as online retailing grew. [CR: Online replacing brick and mortar, but creating jobs elsewhere.]

Online banking and debit card stats: PwC research – the websites of the big four banks rank among the top 25 percent most visited sites of the nation. About 75 percent of banking customers use digital banking. Bankwest research - Debit cards are the fastest growing payments category, with 2.6 billion transactions over the year to November 2011. Debit cards account for 37 percent of all non-cash retail transactions in 12  months to November, grew 95 percent over five years.

Body scanners used for clothes shopping: Trials in US using body scanner technology to help with fitting clothes.  Around 89 percent of US clothes shopping happens in bricks-and-mortar stores. UK-based Bodymetrics and LA based Styku both have scanners based on infrared motion sensors found in the Mocrosoft Kinect. Berlin’s Upcload offers home scans using webcams and image-processing technology. Unique Solutions Design has been licensed with similar to airport xray scanners, but not the same that have sparked concerns over x-ray radiation. Americans spent $25 billion on clothes and accessories online  in 12 months to June, out of a total of $173 billion spent online. [CR: We are afraid of the technology in airports, but as soon as it can help us find the right shirt size we think it’s OK.]

Green Building Council of Australia issued its 500^th Green star sustainability rating. There are 8 million square metres of Green Star certified space around Australia. 40,000 people have been trained on sustainability practices.  The rating system is nine years old. Green-star assets deliver a 5 percent value premium and a 12 percent rent premium. The change has been achieved with little government intervention, apart from the move by governments to higher-rated tenancies and rules on advertising ratings.  [CR: Good to see the tipping point.]

14 September 2012: Myer strategy and iPhone NFC discussion

Health industry largest employer in the country: 440,000 jobs in Health created since May 2003, almost 12 percent of the workforce. One-fifth of the 2.3 million jobs created in the last decade have been in health care. Greater shift towards services sector, common across developed world as countries become more service-sector oriented as they become richer. Retail slowed, from 75,000 new jobs between 2003 to 2007, to 5,300 jobs from 2007 as households become more cautious about spending, offshore competition increases, and technology places pressure on the sector.  Mining added 181,000 jobs but only accounts for 2.3 percent of all Australian jobs. Manufacturing hit the hardest but still fourth largest employer at 8.4 percent of all Australian jobs. [CR: Interesting that retail job slowdown attributed to technology, I wonder if this is reflected in an increase in tech-related jobs.]

Myer investment in staff paying off but not in share price: Investment of $17 million in extra staff, contributed to 14.3 percent decline in net profit to $139.3 million for 12 months ending July. Bottom line profit fell 12.7 percent due to higher wages, occupancy costs, and utility bills. Sales slipped 1.3 percent to $3.12 billion due in part to existing catacgories such as white goods and gaming consoles. Five-point strategy: 1) improve customer service; 2) grow exclusive brands; 3) close marginal stores; 4) strengthen customer loyalty; and 5) build a fully integrated ecommerce business. Online sales doubled in 2012 but still represent less than 1 percent of total revenue, target to increase to 10 percent in five years. CEO Bernie Brooks: "If we hadn't invested in customer service, we would have lost our customer franchise and exposed ourselves even more to the world wide web. We had to take our medicine and balance that against the long term view." Result: customer complaints are down, conversion rates improved, average spend rose for the first time in five halves, and sales growth higher for stores that hired extra staff. [CR: Related to observations made on David Jones "style advisers" back in July.]

iPhone NFC discussion: Apple  not including NFC chip in iPhone 5.0 could be seen as as controlling the market, given its 80 percent market share. Global standard for NFC has been in place since 2004, chip included in Samsung Galaxy phones for more than a year. Commonwealth Bank of Australia shows exponential growth since introduction of NFC in 2011, its Kaching application required iPhones to have an iCarte sleeve. Westpac is trialing NFC solution Tap and Pay, roll out date is undecided. Of Westapc's 8 million customers, 3.4 million are actively using online channels, 1.5 million using mobile banking channels. One reason for the expected delay is that Apple is determining how to lock payments up in the Apple ecosystem. [CR: As soon as the technology is there, the applications will proliferate across the market.]

13 September 2012: Japan to abandon nuclear power and Google shares

Difference between Woolworth’s Masters Home Improvement and Bunnings: Article title “A bit pristine for ‘dirty’ tradies. Quotes include: “It’s a little too feminine” and “range adequate for the average DIYer but the [Masters] did not cater for trade”.  Home improvement is a $42 billion industry. Bunnings accounts for 16 percent of the industry. Article states Woolworth’s has made the stores more “female friendly”, with higher levels of customer service, brighter lighting, polished floors, better finishings and fittings and a wide range of decor items such as mirrors and wall art. Woolworths accusing some suppliers of not dealing with Masters due to supplier relationship with Bunnings. [CR: So is customer service now considered “feminine”?]

Cigarettes going clean-skin: From October 1, cigarette manufacturers in Australia will be prohibited from producing branded cigarettes. Retailers will have until December 1 to get rid of stock. Leftover stock will be destroyed. After 1 December, cigarettes will appear in plain olive green packaging. Estimated 80 sites to destroy 540 million cigarettes. [CR: Be interesting to see if there will be an emergence of a temporary black market.]

Domestic tourism up: Spending on overnight stays up 9 percent to $50.8 billion in FY2012 compared to FY2011. Australians made 4.2 million more overnight trips. Qld, QA and NT strongest increase at more than 15 percent. Spending on day trips increased 15.9 percent. Domestic tourism accounts for 75 percent of the $35 billion contribution of tourism to Australia’s GDP. [CR: How does this compare to the overseas spend? Is this just an indicator of a cautious consumer spending dollars closer to home?]

Japan to abandon nuclear power by 2030s. Joins Germany, which has said it will wean itself off nuclear by 2022. [CR: An entire technology platform where people look at it and say “oops, that was a mistake”.]

Vodafone switching on 3G to compete with Telstra’s 4G: Vodafone number three player behind Optus and Telstra, turned on $1.7 billion 3G network upgrade, 4G rollout planned for Q1 2013. Telstra announced in August a $400 million expansion of its 4G network, Optus extended 4G network to retail customers last week. Australia has largest per capita iPhone penetration (around 48%), second only to Switzerland.  As many as 1.7 million customers are expected to upgrade handsets over the next few months. [CR: almost every other person has an iPhone? That’s big numbers, winner takes all.]

Google shares: passed $US700 last week for the first time since last-2007. Shares returned 6 percent for the past five years. Increased free cash flow an average of nearly 50 percent a year between 2007 and 2011. Has $43 billion in cash, earns 20 percent cash return on invested capital. Google added eight times more advertising revenue in the latest quarter than Facebook. Shares trade at 14 times next year’s estimated earnings. [CR: I have $43 in cash. What’s a few zeros?]

10 September 2012: Brisbane-based 3D manufacturing and expected iPhone 5.0 margins

Brisbane firm first to use 3D manufacturing in commercial mass production. Ferra Engineering with $200 million agreement with Lockheed Martin to make titanium parts for the F-35 joint strike fighter (JSF). Additive manufacturing being hailed as the third industrial revolution, uses lasers or ion beams to deposit plastic or metal in layers to build a completed part. [CR: Very cool, this is getting very Star Trek.]

Impact of China’s one-child policy, 30-years on: Fertility rates in 2010 calculated at 1.4 (number of times women give birth), placing China among the countries with the lowest fertility. Resulted in reduction of those in prime working age between 15 and 59, labour shortage  combined with increased demand led to rapid wage inflation. Potential annual GDP fell from 9.8 percent in 1995-2009 to 7.2 percent in 2011-2015 and is expected to be 6.1 percent in 2016-2020. Calls to avoid immediate visible policy changes aimed at affecting short term actual growth (industrial policies, regional development strategies, macro-economic stimulus plans). Address instead with impacts on long-term potential growth rate (education deepening, reform to accept migrant workers, eliminate barriers to moving product between regions). [CR: One challenge leads to another. Will be interesting to see if China will have an internal “globalisation” trend.]

New iPhone 5.0 expected to wipe 3-4 percent off Telstra’s margins due to increased handset subsidy costs. iPhone 4S in October 2011 resulted in a 15 percentage drop in US AT&T margins. Telstra margins reached a new high of 39 percent in year half to June. Mobile revenues grew 8.5 percent to $8.7 billion in 2011-2012, offsetting sharp decline in Sensis and fixed phone lines. iPhone 5.0 will be the launch of the Telstra 4G network. Telstra faces competition from Optus and Vodaphone, with unusually large number of customers rolling off contracts, at risk of any one player deciding to sacrifice margins to buy market share. Increased popularity of Android also raises potential for less of an impact on customer growth than previous periods. [CR: The market balances itself out to try and prevent any one player becoming dominant.  Would love to go forward in five years to see which player we are dismissing now or does not exist at all comes to the forefront.]

Over three-year delays in IT backoffice superannuation management system. IT firm Superpartners, owned by five industry funds – AustralianSuper, Hostplus, HESTA, MTAA, and Cbus. Originaly scheduled for 2010, now slated for release 2013-2014. Original price tag of $70 million, current estimates as high as $260 million. Reasons for delays: the need to cater for the scale and complexity fo several major superannuation funds, the need to “get it right”, and the fact that it is a series of projects. [CR: Using “it’s just really complex” works as a reason? Will need to try that sometime...]

Lululemon doing well: Canadian yoga company selling $1.4 billion this year at 25 percent margins, expect to add another $1 billion by 2015. Revenue growth has been at 30 percent per annum for three straight years. [That’s a lot of rich yoga people. Great market.]

MGM Holdings, Hollywood studio behind James Bond, seeking initial stock sale before October release of latest Bond flick. MGM exited bankruptcy in 2010. [CR: Always good to hear when they make a comeback.]

7 September 2012: August employment numbers and finance sector employment assessment

August employment by the numbers: Hours worked fell for third consecutive month, first such run since 2009, as companies scale back production rather than slash jobs, waiting for a rebound. Participation rates are at 65 percent, a six-year low and one percent lower than last year. Jobless rate dropped slightly to 5.1 percent. Average monthly drop in jobs three months to August is just under 9000, compared to first five months of 2012 when an average 22,000 jobs per month were created. [CR: The worst-case prophet in me sees a gradual softening, employers hoping it will rebound, extending payrolls as far as they can, then everything snaps at once and numbers spike. Given that prophets who were wrong were stoned a few centuries ago, I might keep that to myself.]

Improved Asian literacy could bring from $150 billion in economic growth over ten years, per report by AsiaLink Taskforce for an Asia Capable Workforce. By 2020, Asia will have more middle-class consumers than the rest of the world, by 2030 the Asian economy will exceed the combined US and European economies. Growth is in non-resources exports, including services. Recommends working with education providers on internships and work experiences in Asian businesses. [CR: Not only for businesses, but your personal career. What are you doing to prepare your career and that of your staff for the inevitable?]

Costs of changing GST import tax for online systems: Cost to overhaul border processing systems estimated at $40 million, findings from the parcel processing task force. If all online purchases entering the country were subject to GST, it would cost another $450 million in collection costs by 2014. Imposing GST on imports over $500  instead of the existing $1000 tax-free threshold would cost about $11 million in handling costs. Australians spent about $11.7 billion on internet purchases, 25 percent more than a year ago. [CR: Disappointed the article only focused on the cost, without explicitly stating the potential revenue number and who that revenue would go to. What is the ROI?]

Around $28 million of race wear is sold to Victorian racegoers in the month before the Melbourne Cup. [CR: I wonder how much race wear is purchased online?  I wonder how much greater the number would be if online imports had GST applied?]

Finance sector employment reductions: Bank of Queensland to boost employee efficiency by reducing staff by 50 to 100 (around 7 percent of its workforce), reported a loss of $91 milluion for six months to Febrary to cover bad debts of over $200 million. Australia experiencing the slowest level of annual housing credit growth since the levels started recording in 1977. Westpac "on the front foot" with staff reductions and ANZ also reduced staff counts in past 12 to 18 months. Bendigo and Adelaide Bank added almost 100 staff to a full-time staff count of 4189 year ending June, includes acquisition of Bank of Cyprus Australia. Bendigo operating expenses $752 million, compared to Bank of Queensland operating costs of $395 million. [CR: PR is involved in reductions in staff just as much as selling product.  Westpac is seen as being on the front foot and responding to market pressures, but the same situation could be painted differently.]

6 September 2012: Economy growth halved last quarter and Cigarette record revenue

Economy growth halved last quarter: due to contraction in the mining industry triggered by lower commodity prices, and tighter household spending. Economy expanded by 0.6 percent in three months ending June and 3.7 percent from a year earlier. Net disposable income grew at weakest rate since 2001, excluding the period after the 2008 GFC. Consumer spending low despite June $2.8 billion carbon tax compensation. [CR: You mean a few hundred dollars in handouts did not stimulate the economy. Let’s try that again, it’s sure to work the next time around.]

Commsec report on household spending: Spending from last year on power bills up 12.7 percent, water bills up 10.1 percent, housing up 7.1 percent, operation of vehicles up 8.3 percent, transport services up 9.9 percent. Household spending grew 5.9 percent. [CR: Household spending up 5.9 percent, but consumer spending up 0.6 percent... More spending on necessary means less spending on discretionary.]

Percentage change in ABS Chain volume measures by industry from March Quarter: Wholesale trade +3.0, Transport & post +2.6, Rental & real estate +2.0, Professional services +1.9, Health care +1.6, Retail trade +1.5, Construction +1.1, Finance & insurance +1.0, Education & training +0.7, Ownership of dwellings +0.7, Hotels & food +0.6, Utilities +0.5, Agriculture +0.2, IT, Media, telcos -0.1, Administrative services -1.1, Mining -1.2, Manufacturing -1.4, Arts & recreation -1.4, Public administration -2.5, Other services -3.5 [CR: Where are you, and where are your clients?]

Revenue from cigarettes in Australia topped $10 billion for the first time last year. $7 billion was duties paid to the government. Anti-smoking push has led to above-inflation increases in duties. Phillip Morris spokesman said there was no health benefit in a policy that encouraged adult smokers to switch to cheaper or illicit black market products. Collective net profits of British American Tobacco Australasia, Phillip Morris (Australia), and Imperial Tobacco Australia topped $1 billion in 2011, up from $937.6 million in 2010, despite a decline in number of packs sold. Totoal industry volumes fell 5.4% in 2011. The three tobacco companies paid over $1.26 billion in dividends, royalties and interest to related companies overseas in 2011. 39 percent of revenue excluding duties was sent overseas. [CR: If you smoke, do you think there might be something else you can do with your money? (said as a previous pack-and-a-half smoker in my early 20s)]

 Aldi stats and moving headquarters to Victoria: New Victorian planning regulations make it easier to open supermarkets due to “as of right” land zoning. Aldi has opened an average of 25 stores per year since 2001, accounts for 7 percent of national grocery market, 10 percent in eastern states, recently opened its 288^th store, increasing product range from 900 products to 1250, sales have doubled in last four years and expected to reach $4 billion this year making it as large as Kmart or Big W. [CR: Competition for the big two, but what does this mean for the supply chain?]

Longevity tsunami: Actuaries Institute recommends government encourage people to retire later, turn superannuation savings into long-term income streams, and delay access to super. By 2050, cost of aged pension estimated to rise by 3.9 percent of GDP, up 1.2 percentage points. Austrlians tend to underestimate how long they will live. Australia is fourth ranked country for life expectancy at age 81.4, after Japan (82.7), Switzerland (81.8), and China (81.6). [CR: At what age are you supposed to start thinking about when you will die?]

Two-thirds of YouTube ads are skippable after 5 seconds, viewing rate for TrueView ads are 15 to 45 percent, advertisers pay after viewer wayches advertisement for 30 seconds. YouTube has 800 million viewers and 4 billion hours of video uploaded every month, has 75,000 chanels and has invested capital in 100 of its own channels. [CR: Will this encourage better ads, or getting your information in the first 5 seconds?]

Obesity measure in New York to ban “supersized” sweetened drinks in restaurants, cinemas, and stadiums. Proposed by mayor Bloomberg, backed by Weight Watchers and Jenny Craig, opposed by Coca-Cola, Pepsi Group, and lobby group American Beverage Association. Coke: “New Yorkers expect and deserve better than this. They can make their own choices about the beverages they purchase.” Pepsi signs: “Don’t let the bureaucrats tell you what size beverage you can buy.” New Yorkers for Beverage Choices Group: “These diet companies often emphasise choice and options in their own plans, allowing their customers a wide variety of food and drink. We want the same thing. Restrictions and bans will do nothing to address the very complex issue of obesity.” [CR: Fascination sound bites catering to the pride of humanity: “Don’t let anyone tell you what to do”. The lobby group comparison is like saying “If you can have any brand of apple, than we should be able to sell any brand of heroin.” Their statement that it is a complex issue is the same as the climate change critics, that it is too complex to address.]

Hackers post sensitive information from 1 million Apple devices, from of a 12 million sample. Said they obtained from an FBI agent’s laptop. Leak data centres around the UDID used to track users, which is being phased out [CR: Security is about the weakest link.]

CatchOfTheDay preparing for IPO in 12 to 24 months, could value at $600 million. Australia’s leading online shopping group, operates five sites: CatchOfTheDay, Scoopon, GroceryRun, Vinomofo, and Mumgo. Sales have doubled to $250 million over past 15 months, 2.5 million members, registers 20,000 new customers each week. Online retail industry growth reached 26 percent in 12 months to July. [CR: Will be interesting to see the sustainability of the business model.]

5 September 2012: ACP Magazine purchase and Qantas passenger count decrease

Fortescue Metals Group (AU's third-largest iron ore miner) sacks 1000 employees and contractors in Pilbara expansion delay to save $1.6 billion after snap meeting in Perth Sunday, shelving 40 percent of new production planned to start June 2013. Cites short term loss of confidence in China, a need to be flexible and adaptable, and iron ore price fall.  Iron ore price has fallen 33% since start of July to lowest level since November 2009. Rio Tinto and BHP Billiton are going ahead with current expansions, reluctant to approve new developments. [CR: Is this a trend, or a self-fulfilling prophesy of market hesitation?]

Germany's Bauer Publishing Group to purchase Nine Entertainment's ACP Magazines (Women's Weekly, Women's Day, Ticketek, 50% share of NineMSN, east coast radio stations) for $500 million. ACP contributed $100 million of Nine's $360 million in 2011-12 earnings (EBITDA), forecast to fall to $80 million in 2012-13.  Bauer founded in 1875, based in Hamburg, owns 400 magazines, over 100 websites, around 50 radio and TV programs across 15 countries, run by 35-year old billionaire 5th generation heiress Yvonne Bauer. ACP CEO and director not expected to lose their jobs. Sale expected to make Nine more attractive to sale. [CR: Is rationalisation and centralisation of industry an inevitable trend only held in check by innovation? If there was no innovation and new industry, would we eventually end up with one or two entities loosely held in check by regulation?]

Qantas and Jetstar July decreased revenue seat factor compared to 2011: Qantas domestic passengers down 2.6%, revenue seat factor down 4.3%. Jetstar domestic passengers up 1.6%, revenue seat factor down 2.1%. Qantas increased seats by 5.8%. Quantas and Virgin July 2011 numbers higher due to Tiger Airways grounding on safety concerns. Singapore-based Jetsar Asia increased passengers 21.2% without increase in seats. Qantas shares down 2.6%. Qantas and Jetstar have 65% of Australian market share. [CR: Last year was an anomaly, airlines are pouring on capacity, and they get penalized for a decrease compared to last year and show a decrease in revenue per seat? Question for you if you are a frequent flyer who owns Qantas stocks: Will the continued discount war offset your drop in stock value?]

Financial sector job loss statistics since the GFC: UNI Finance Global report. At least 300,369 banking and insurance jobs slashed worldwide since 2007. 4,054 Australian finance sector positions made redundant or sent offshore in 2012. Westpac 1133 jobs, ANZ 1095 jobs, NAB 1046 jobs (but created 608 new positions). Bank of America in the US cut 30,000 jobs in 2011 and 2012. [CR: You can probably ignore this for what it is worth.  These are sensationalist statistics. The Westpac number represents only 3% of their workforce, the Bank of America is 10% and reflective of the poor conditions in the US.]

Draft proposal to have Europe's listed companies to reserve 40% non-executive board seats for women or face fines under European Commission proposal. In January, only 13.7% of board positions were held by women. [CR: Women are more educated and score higher on most competency tests.  Australia's ASX 200 boards have 8.4 percent female board directors. If the only way to address the inequality is through legislation, then so be it.]

4 September 2012: Average CEO tenure and Comparing digital device growth rates

Darrell Lea sold to VIP Petfoods.  Darrell Lea went into administration on July 10, closed 32 company-owned stores on August 2, remaining 27 stores to close September 9.  Sales had fallen by 20 percent over the past five years to about $80 million. 246 permanent and 172 casual staff to be made redundant, remaining 83 staff to be employed in manufacturing, marketing and distribution roles. Soft licorice and Rocklea Road products will remain. VIP Petfoods run by husband and wife Tony and Christina Quinn, estimated wealth of $350 million, have four factories around Australia, employ about 600 staff, said to be biggest  manufacturer of chilled petfood globally, 20 percent of revenue comes from exports. [CR: It’s all manufacturing food, does it really matter what species it is for?]

Queensland may remove water tank requirement on new homes. No final decision made, would save home buyers $6000. Since 2007, 130,000 rainwater tanks have been installed in homes, 20,000 for commercial premises, said to have 20 billion litres of water and reduced infrastructure costs by up to $1.4 billion. [CR: The pendulum swings between housing affordability and environmental savings. Water scarcity versus housing, until there is a common denominator of true environmental cost policy will continue to swing.]

Brisbane’s Airport Link tunnel falls short, but traffic up?  Road cost $4.1 billion, target of 135,000 per day, attracted 81,470 per day in its first month of operation despite being toll free. Discounted tolls to follow for 15 months. [CR: “If you build it, they will come” (be advised, the size and shape of “they” may be less than expected).]

Average CEO tenure: From article talking about CEOs moving on from companies including Transfield services, Mirvac Group, Pacific brands, Stockland, and FKP Property Group, after yesterday’s article on big wave of write-downs. Goldman Sachs research says average CEO tenure is 5.8 years (down by 11 months in past five years). Exclude eight companies with CEOs who have been in place 15 years and the average tenure drops to 3.9 years. Reasons for shorter tenure said to be based on increased short-termism, globalisation driving increased competition, structural changes, and greater shareholder focus on governance. US CEOs have longer stints (average 8.4 years) said t be due to less focus on governance. [CR: That said, I wonder what the average tenure is in other c-suite positions or even management roles such as General Manager. I would expect it to be decreasing across the board?]

Tablet vs. Smartphone vs. Laptop vs. Desktop growth rates: Australians to buy 2.4 million tablets in 2012, 70 percent higher than 1.4 million in 2011. 15 percent of Australians will own tablets by end of 2012, expected to be 30% by end of 2013, fuelled by cheaper tablets.  Local smartphone sales slowing to a growth of 11 percent, laptop sales fell 10 percent, desktop sales dropped 7.5 percent. Hybrid devices expected to be expensive and take a few years to reach mainstream, tablets to bridge the gap. [CR: The opportunity is to ensure today’s digital solutions are architected to be adaptable for future interfaces.]

Part-time SME owners increasing. Number of people in Australia running their own business part-time is at its highest level in a decade. Of the 1.2 billion people that run SMEs, about 442,000 do so on a part time basis. [CR: I wonder how many of those run more than one business, and what the profitability difference is between focusing on your business or being distracted with a “day job”.]

3 September 2012: Aged worker report and Online group buying stats

Slight break in August as I finished my Masters.  Did you miss me? Welcome back to the FIN Review review...

Aged worker reports and incentives: Deloitte Access Economics report: if participation among workers aged 55 and over boosted by 5 percentage points, GDP would increase by $48 billion (2.4 percent of national income) over the next 12 years. Government to support participation rates through $100 million spending program over next four years. Government announced earlier 2012 a $1000 bonus for hiring long-term unemployed older people. Pension age to raise to 67 by 2023. Report authors state prosperity in 1990s driven by productivity gains, in 2000s by China prices paid for exports, both drivers running on empty. Three out of 10 older workers experience discrimination, Australian Human Rights Commission has seen a 44 percent increase in age-related complaints in the past year. [CR: That means in 15 years, 55 will be the new 40, which means I won't age a day!]

Write-downs at top 50 share-market companies tripled, topped $27 million. Driving factors are global volatility, currency movements, commodity prices.  Seen as a positive based on alignment of what business is presenting and shareholder expectations, but stills aid to end careers and will create uncertainty based on questions around who is valuing the business. [CR: Always the balance between telling bad news early versus the charismatic optimistic leader. It is not that we want bad news early... we just don't want bad news.]

China manufacturing falls to lowest level in nine months. Economic growth slowed for sixth straight quarter in June to 7.6 percent. Property prices fell for eight consecutive months.  [CR: When China sneezes, Australia...]

Online group buying sector posts third consecutive quarter of decline (Telsyte report). Sector dropped 5 percent to $117 million, follows a 14 percent fall in March quarter, 10 percent fall in December quarter.  Sector consumer spending expected to top a record $600 million for 2012, growth will come from second half. First wave of group buying peaked, second wave to come from leveraging technology like mobile deals, customer data segmentation, and real-time push deals through location based services. Declines in revenue said to be from smaller players quitting. 90 percent of the market is controlled by 8 sites, in order of size: Groupon, Scoopon, LivingSocial, Cudo. Spreets, deals.com.au, OurDeal, and Ouffer. Over half of industry sales comes from product, like watches, technology, and travel. [CR: Fascinating to watch a whole industry follow the path from crude customer acquisition to then capitalise on that customer data through segmentation for the next growth cycle.]

Lego building growth: Family-owned company Lego, earnings in first half of 2012 33 percent higher than a year ago, sales were $1.5 billion, equivalent to 12 billion Lego bricks, six for every child on he planet. Performance boosted by sales for girl's toys (Hasbro by example sells four times as many toys for girls as it does toys for boys). Sold twice as many as expected of Lego "Friends" - girls dressed in pink and purple who go riding and shopping, but also are good at map-reading and want to grow up to be engineers. Sales in Asia up more than a quarter. Undertakes constant innovation - 60 percent of products each year are new launches. Sales have grown over 25 percent per annum for the past five years, compared to 1 percent at Mattel, 3 percent at Hasbro. Operating margins consistently 30 percent, double those of its largest peers. [CR: Focus on what you do, and do it well, while expanding to new expressions such as its success in videogame tie-ins. Well done, Lego.]

Yahoo!7 CEO says key areas for revenue growth are mobile devices, video, and social networking. Stu Sayers, 41, holds an MBA from Wharton school of business in the US, worked as consultant at McKinsey, in brand management at Procter and Gamble. [CR: You think? Not much of a story, that.]

31 July 2012: Apple fingerprinting and Zynga stocks drop

Australian Insurers IT investments: Australian insurance companies expected to spend around $5.2 billion on IT this calendar year, up 2.8% from 2011.  [CR: How does this compare to other industries? I would imagine the technology spend will continue to increase, offset by efficiencies gained from the investment for a neutral to positive profit impact.]

Apple acquires fingerprint scan company: Apple acquires AuthenTec for $US350 million to gain fingerprint authentication and encryption security technology. Future potential is to act as an alternative or replace four-digit pin login or digital signatures. Last week Samsung said it would use AuthenTec in new devices, a relationship now not expected to go ahead. [CR: Shows how fragile the technology infrastructure is.  A single decision by Apple can wipe out or create whole industry segments. Also speaks to the elephant in the room of security of devices that can be easily left on trains, stolen, or lost.]

Toll Holdings to build 3000 online shopping pick up points. To offer package recipients a choice of delivery times, weekend deliveries, and alternative weekend location parcel pickup.  Seen as one of the company’s key growth areas. PwC report shows online spending to double by 2016 to $27 billion. Annual spend on logistics portion of e-tail in Australia is just over $50 million, toll holdings has 5 to 6 percent of that market, looking to double market share. To partner with the Victorian Newsagents Association, which will offer e-tail product called Nagent and a product called Nparcel. [CR: question for your business – what areas of the economy are growing, what assets do you have internally to capitalise, and what external partnerships do you need to make it happen?]

Parliamentary inquiry into IT pricing: Politicians and consumer advocates publically slam tech vendors foe charging more in Australia than overseas. Vendors avoided Monday’s inquiry, spoke through the Australian Information Industry Association, which cites local taxes, warranty conditions, and the need to recoup research and development costs. [CR: I attended a business session this morning that noted Australia is the third-most expensive country in the world to live in and Sydney is the most expensive city in the world.  Perhaps looking at software and music cost discrepancies is like staring at the fly splattered on the grill of the car getting ready to run you over.]

Telsyte survey of businesses allowing personal devices: Does your organisation allow staff to use their own personal devices and public apps? Smartphones 54%, Notebooks 43%, Media tablets 40%, Applications 28%.

Zynga stocks drop 40% last week: On back of report that revenue was up 19.1% year on year but company reported a net loss of $US22.8 million compared to net profit of $US1.4 million in Q2 2011. Three reasons given: 1) changes to Facebook algorithms that benefited new games but penalised older titles; 2) delayed launch of Zynga’s newest game The Ville; and 3) under performance of “Draw Something” game. Next step is mobile: On Facebook, four of the top five games are Zynga’s, on iPhone only one is.  [CR: Zynga was first in, but the market is getting saturated and getting harder to stand out.  I hear in the three reasons for the $22.8 million loss (let that number sink in)... that they no longer have the unfair advantage and the market is saturated in their segments. How to differentiate is the question, and doing more of the same is not the way.]

30 July 2012: Difference between a degree and dropping out and The end to poverty predicted

Apple and Adobe not participating in public Australian parliamentary inquiry into international and domestic IT price differences. In last week’s private hearings, FIN Review understands Apple blames layers of AU taxes, warranties, and copyright holders. iTunes songs set at a flat fee, and up to copyright holders to charge differently in each country, leaving it with music publishers such as Sony Music, Universal Music, and EMI.  Adobe also did not make a submission, claims prices due to taxes, charges, and strict warranty rules. [CR: Rather than making a deal about the software companies not participating in a public and therefore politically dangerous questioning, how about responding to what they are saying are the issues with the system? Not as fun as demonising big corporate, but may prove effective.]

Difference between a degree and dropping out: Mike Dockery of Curtin University study found getting a job before you have the average schooling of employees in that field outweigh the downsides.  While more schooling increased wages, the effect fell once passing the average level of qualification for people in the profession, and the penalty for being underqualified was small, very likely less than the extra years of education. Argues against assuming that extra schooling increased earnings just because people who finished school tended to earn more: “classic evaluation fallacy; people do better because they are different, not necessarily because of the level of school.” Article expressing sentiment from the likes of Clive Palmer, university and billionaire, and web company Atlassian co-founder and drop-out Scott Farquhar, who say education is as much about on-the-job as from university. But for every Clive Palmer or Steve Jobs, there is a Marius Klopper, CEO of BHP who has a bacherlor of engineering, an MBA, and a PhD in materials science. [CR: Agree, it is based on the individual and their ability to capitalise on the education.]

Olympics – Chanel Nine opening ceremony traffic: 1.72 million people watched the early morning start, compared to the 2.9 million viewers for afternoon opening of the 2008 Beijing games.

Environmental protestors halt China paper mill: Demonstrators entered a government office in the port city of Qidong near Shanghai and smashed computers and destroyed furniture to protest against a waste-discharge plant they said would pollute the local water supply. Company website followed by saying the mill project had been abandoned [CR: The people rise up. Wonder if it is setting precedence.]

End to poverty: Christopher Kojm, head of National Intelligence Council in the US, says worldwide poverty will be virtually eliminated by 2030, and a middle class of some 2 billion people will push for more rights and resources. The 1 billion people who live on less than $US1 per day will drop to roughly half that amount in two decades. [CR: Optimistic, must look him up. Poverty gone in our generation? It is a dream I am willing to share and be a part of.]

India accounted for 56% of the world’s new leprosy infections in 2010 (126,800 of a total of 228,474 cases.) [CR: following the previous story, access to medical aid a big part of ending poverty.]

Australian advertising market to grow 2.8% a year over the next four years to $14 billion, 2% in 2012 to $12.5 billion (PwC report). Entertainment and media market to grow 4.1% over four years to $38 billion. Internet advertising expected to grow from $3 billion to $4.7 billion over four years. Media companies face two scenarios: a “dystopia” where consumers continue to expect digital content to be free; or “the more likely outcome” whereby media companies provided a collection of niche, customised content for which consumers were willing to pay. [CR: Digital is significantly cheaper and more engaging through interaction than TV, but that does not mean you do not have to work for your spend.  I have blogged in the past about the lack of accountability using marketing spends as an example. We are seeing the invisible hand of the market correct itself, as competition in the digital space raises the quality of engagement.]

Losses of Facebook and other internet companies: Facebook initially valued at $US100 billion on eve of May debut now at $US65 billion. Social gaming Zynga stocks at 25% of peak from last year. Groupon and Netflix also under pressure. Old line tech companies like Apple, Google and Amazon are doing fine. CEOs and early investors might have been a little too eager to cash in. Companies can grow their markets faster than ever – but that means they can also reach saturation faster than ever. [CR: Is it a common failure as the banking system – greed and pride? The promise of celebrity status overriding solid business models and traditional academic business rigour?]

PWC Australian Entertainment and Media Outlook 2012-2016: Australian free to air (FTA) ad revenue expected to drop 4.5% next year. Digital channels accounted for 25% of total FTA viewing last year, helped boost overall FTA audience by 5%, but FTA will need to continue to evolve to accommodate technology advances and continuing fragmentation across platforms. Personal video recorders (PVRs) are now in at least 44% of homes, threat to effectiveness of TV advertising, 45% of viewers disengage or are not viewing ads at all. Newspaper advertising expected to fall at a compound annual growth rate (CAGR) of 5.1% over the next four years. Digital newspaper advertising expected to grow at a CAGR of 8.3% until 2016, but represents only 8% of the total annual newspaper advertising revenue. Magazine advertising expected to fall ata CAGR of 8.5%, magazine digital expected to increase 20.6%, represents 5% of total magazine advertising. Internet advertising will sustain 12% CAGR until 2016. Search and directories to grow at a CAGR of 13.2%, online display advertising to grow at a CAGR of 8.3%, Mobile advertising to grow CAGR 46% over the next four years. Mobile banners at 0.61% click through rates compared to 0.07% for browser-based banners. Australia has the world’s second-highest smartphone penetration rate behind Singapore. Global m-commerce expected to increase at a rate of 39% over the next four years.  

27 July 2012: Eatability.com sells for $6 million and 40 percent of homes worth twice as much as original price

Caltex closing Sydney refinery, shedding 630 jobs. Only way to end losses which reached $200 million last year. Carbon tax did no come into the decision. Caltex is Australia’s biggest refiner and marketer. Value of its two refineries already written down by $1.5 billion. Second Brisbane plant will remain open for now. Shares rose 1.4% on the news. Competition faced from weak margins, small and outdated plants, tougher competition from mega-refineries in China and India, and the robust Aussie dollar. Caltex will take a $430 million charge to cove the closure costs, and a further $250 million will be invested in the conversion of the plant to an import terminal. [CR: Same thing seen in any manufacturing, converting local producers into an import service.]

Eatability.com sold to Sing Tel-Optus for $6 million. Launched in 2003 as a way to find good restaurants in Sydney, 12-employees, has millions of monthly visitors, over 235,000 user-generated reviews on 37,000 restaurants nation-wide. The purchase is part of the telco’s drive to get local content to get customers onto its smartphone apps and mobile network. Optus recently started  $2 million seed funding program for start-ups and bought a Singaporean food site HungryGoWhere. [CR: I wonder how much longer stories like these will continue to pop up, or if this is the new paradigm.]

Olympics - BBC lack of ad breaks and sponsorship value: Games broadcast on the BBC changes traditional value of increased brand recognition and revenue. Companies leveraging sponsorship for internal employee motivation and performance. Example: instances of 8% increase in phone complaints being resolved for the first time. [CR: I can attest to this, building internal company pride for the work that is recognised in the market.]

Qantas-related manufacturing job losses in Victoria: LTQ Engineering, where engines used in some Qantas aircraft are refurbished, to lose 164 engineering jobs in September. LTQ forecast to lose $37 million over next six years, made a loss of $18 million over last four. Due to reduced regional demand, tough international competition, and more reliable new-generation engines. [CR: Such a familiar story, off shore competition and inability to keep up with technology.]

Home values: RPData March 2012 Value Accumulation Report: Over 40% of Australian homes are worth at least twice what their owners paid for them, 5.4% are worth less than what their owners paid for them. [CR: I am unsure the value in such broad numbers, as it is so localised and dependent on how long the owner has had the home.]

Coles beats Woolies for 12th quarter: Sales for Westfarmers rose 4.7% ($2.25 billion) to $50.1 billion. Solid growth in Coles and Bunnings, flat sales at Kmart, 1.8% sales decline at Target. Coles outperformed Woolies for 12th consecutive quarter, posted 16th consecutive quarter of positive same store sales growth, lifting same store sales by 3%, total sales by 4.6%, sales at stores open for at least a year rose more than twice the rate of Woolies. Coles opened 8 new supermarkets in the year, Woolies opened 32. Bunnings same store sales increased 2.9% in June quarter (reinvestment in prices as part of its “range reset” dempended the impact of strong transaction growth). Officeworks sales dropped 1.1% in June quarter (technology and office furniture price slump).

Europe’s car industry over-capacity: Ford and Peugeot both on track to lose $US1 billion in Europe this year. Estimates say the European industry operates around 65% capacity, whereas 75% is needed to be profitable. Closing plants a challenge in Europe, which has more legal rights than in the US. Even after four years of catastrophic sales, only a few of Europe’s 100 or so car plants have shut down. Car sales rose slightly in Germany first six months of the year, dropped 14% in France, almost 20% in Italy, and in June fell over 40% in Portugal and Greece. [CR: At what point should a company do what needs to be done to manage its finances?]

Skype open to police, expanding its cooperation to law enforcement authorities to make online chats and other user information available to police. [CR: On the one hand, I share concerns over privacy, while frustrated at evil people using technology to hide.]

26 July 2012: House prices rising slowly and Olympics cost comparison

National Disability Insurance Scheme uptake: Council of Australian Governments met to review the NDIS which would invest $1 billion in a trial to replace the current disability insurance scheme with a single system to improve care and lift average funding to $35,000 per person. Support split along party lines, with Labour SA, Tasmania, and ACT agreeing to fund the trials and Liberal WA, Qld, NSW and Victoria not reaching a deal.  Deal would cost NSW an extra $70 million, Victoria an extra $40 million, could support an additional 15,000 people in the two states, deal is worth $300 million in federal funds to NSW and $100 million to Victoria. Gillard: “If you value a national disability scheme, you will find the money.” NSW premier says too much of the program is allocated to administrative projects, Victoria says needs more time to consider, “I think we owe it to the disability sector to get this right and that’s what I intend to do.” Trials in SA. Tasmania, and ACT will cover up to 10,000 disabled people from mid-2013. Queensland premier says state is unable to fund the program, will consider in 2014. [CR: It is interesting to watch the politics. If you don’t agree with the program structure, you are painted as hating people with disabilities, and politics get in the way of addressing the core issues.]

House prices rising slowly: Australian Property Monitors data: House prices rose nationally by 0.4% in June quarter from previous quarter, second quarter rise in a row, prices up 0.9% since start of the year. Impact by NSW and Victoria government incentives to purchase property ending in June, leading to potential future downward trends in coming months. Brisbane is the most affordable of all mainland capitals (30% cheaper than Sydney), has recorded eight consecutive falls in median house prices.   Boom conditions expected to drive prices higher in Perth and Darwin. [CR: While uncomfortable, would we not want a continued slow decrease to re-balance?]

Price decreases and deflation: Vegetables up 5.2%, furniture up 4.5%, bread down 3.1% (impact from $1 supermarket loaves), domestic holiday travel and accommodation down 4% (impact from strong AU dollar for international travel, competition between airlines), audio, video, and computing equipment down 3.8% (impact from discounting in past 6 months, price deflation from manufactures competing for market share). [CR: Increasing competition resulting in price decrease will drive innovations in efficiencies, but will it be at a cost of innovations in R&D?]

Victorian car parts manufacturing CMI Industrial closure: Two plants in Melbourne, 67 employees in Campbellfield, 52 at West Footscray will wind down in October. In April, CMI issues caused a temporary stand down of 1800 workers at Ford Australia. [CR: A smaller company impacts on the whole supply chain.  Ongoing manufacturing challenges.]

Billabong considering shutting stores and buyout: CEO Laura Inman took the helm in May, releasing turn-around strategy end of the month, “In order to make sure that we absolutely do the right things at the right time.” Earmarked 150 stores for closure, identified 85 more stores that are marginal and may go if sales cannot be improved. Billabong has 12 brands in over 100 countries doing wholesale and retail.  Shareholders believe Billabong’s turnaround as a public company may take too long and may be better off in private hands, considering a $695 million takeover bid from private equity firm TPG.

Apple sales up but shares fall: Apple sold 28% more iPhones in the last quarter than same time last year but growth did not meet expectations as shares fell 5% in after hours trading. Apple suffers from likelihood of new device release announcement causing delays in consumer purchases.  Analyst John Jackson of CSS Insight: “Apple is in that rarest of all positions where the Street will punish them  for anything less than an excess of success.” For quarter ending June 30, Apple sold 17 million iPads at $US9.17 billion revenue, compared to 9 million iPads and $6.05 billion revenue the year prior. Apple reported net income of $US8.82 billion, up from $US7.31 billion last year. Revenue was $US35.02 billion compared to $US28.57 billion last year. Figures were above Apple’s predictions but fell well short of Wall Street analysts estimates, who take Apple forecasts with a grain of salt due to the company’s long history of underpromising and overdelivering on its financial performance. [CR: Apple can’t win. It sells more than they said, but they get punished for not selling what analysts think they should have done. They also get slammed for people wanting their next product.]

Olympics – Australian dominate contracts and budget comparison: Forty Australian companies have picked up 46 contract deals in London. When London won the 2012 Olympics in 2005, the government predicted a budget of $3.8 billion – that has now soared to $17.7 billion, but remains far less than the $44 billion cost of the Beijing Games. [CR: Can’t help but soar.  Once secured, there is no competition to ensure there is accountability for original promises. What are they going to do, move the Olympics or say they can’t hold them again next time?]

Olympics – Consumption impacts from technology changes in the last four years: Monthly video viewership up 330%, Facebook has 900 million accounts compared to 90 million four years ago, Twitter carries over 140 million tweets per day compared to 1.1 million, there are over 50 million tablets in the market that did not previously exist. [CR: It will be interesting to see who the technology “winners” will be this year.]

Olympics – cost stats for hosting countries from 1976: Montreal (1976) – Cost $US1.5bn, three decades to repay debt; Los Angeles (1984) – Cost $US546m, first Olympics to make a profit since 1932; Seoul (1988) – Cost $US4.0bn, Elevates the nation’s role in the region; Barcelona (1992) – Cost $US9.4bn, Games generate profit of $US5 million; Atlanta (1996) – Cost $US1.8bn, Cost recouped through commercial partnership; Sydney (2000) – Cost $US3.8bn, Best games ever, but loses $US2.1bn, tourism falls from 3.4% to 2.6% of GDP by 2008; Athens (2004) – Cost $US12.8bn, Costs exceeded budget by $US8.2 billion; Beijing (2008) – Cost $US44bn, Most expensive games on record leaves legacy of infrastructure.

25 July 2012: Retail percentage of online sales stats and Coke and McDonald's slipping

Challenge for carbon tax Productivity Commission in assessing business compensation aid for carbon tax.  Says it will be difficult to separate carbon tax impacts from other factors such as currency fluctuations, unrelated changes in costs and the normal ebb and flow of business. [CR: Speaks to chaos theory as applied to business. Take all of the “normal” interconnected economic complexities affecting organisations. Now exponentially increase those interconnections by adding a variable of the carbon tax.]

Opera Australia model for exclusive tickets to Ring Cycle: As part of a “Ring Leader” program, Opera Australia offering buyers to donate $3,000 to $12,000 to get priority access to tickets before they go on sale. Tickets are additional at $600 to $2000 for a full four-opera cycle of the Wagner opus. The scheme was successful, with only C and D reserve tickets available when single-ticket sales opened. Over 50% of Ring Leaders had not previously donated. The scheme raised most of the $19 million budget. When asked if the Ring Leaders program unfairly quarantines tickets for the richest segment of the population, CEO Adrian Collette said “it should be seen in the context of everything else the company did to ensure broad access to opera. “It is the biggest artistic challenge the company could undertake, and this was the only way of getting it on. The choice was this or nothing.” [CR: Reads like the ends justify the means. Will be interesting to see if the model is an ongoing trend, and if so the extent that concession will be made to “lottery” in those to the inner circle who may not otherwise have the opportunity.]

Disability plan debate numbers: Meeting today to review proposed National Disability Insurance Scheme planned for next July. Proposed to cost NSW an extra $250 million and Queensland an extra $360 million to offer same services available to Victorians. Fedral government committed $1 billion to initial trials, full scheme needs an additional $6 billion. Queensland Premier Campell Newman said his government would not pay extra to be a part of the scheme and Canberra would have to cover the cost of the Queensland trial. Queensland spends the lowest on disability services based on its population. Other states have committed millions to be a part of the trial. [CR: Frustrating that the political debate is about whether they will spend the money, rather than leaders getting personal with the problem and focusing on a resolution.]

Facebook founder and PayPal co-founder Peter Thiel buys into Sydney start-up ScriptRock, Theil’s Valar Ventures joined other investors in contributing $1.2 million. Three ScriptRock co-founders to move to the US and expand AU operations. ScriptRock sells tools that cut down on IT expenses by automating work that traditionally needs a lot of manual input. [CR: By that definition, it sounds like it will build my applications for me... Good on ‘em. I do wonder how long this start-up cycle will continue, or if this is the new paradigm.]

Europe’s debt crisis update: Spain: fears that spiralling debt will force it to seek a $353 billion bail out from the EU and IMF. Interest rates on Spain’s 10-year borrowing rose to 7.59%, the highest since the euro was created. The stock market in Madrid fell by 5%. Greece: hints from politicians that Germany preparing grounds for Greece to leave the euro. Europe already spent 270 billion trying to rescue Greece. Germany largest economy, followed by France, Italy, then Spain. Italy: Ten cities risk bankruptcy, schools may not be able to open. Cities in southern Italy plagued by mis-management, corruption, wasteful use of EU funds, and infiltration of the Mafia. Plans to dissolve 64 of Italy’s 107 proveniences. [CR: Puts things in perspective from a macro-national level and a micro-project level. AU’s problems are minor by comparison, and any project challenges you are managing are a hiccup when placed next to whole cities going bankrupt. Now would be a good time to say your three points of gratitude.]

Virgin Australia to slow capacity expansion: In 11 months to May, domestic capacity rose 9% and peaked at 15% year on year increase for some months.  Capacity growth in 2011-12 was about 5% to 6%. Qantas maintains about 65% domestic market share, including Jetstar and QantasLink, and has also increased capacity, leading to lower fares potentially impacting industry profitability. An all-out price-war has not happened as yet, COO Sean Donohue states Virgin has a lower cost base and working on greater efficiencies. [CR: Here’s a question: If the airlines have a price war, what does that do to their capacity to fund R&D into alternate sustainable fuels? If we then encourage a price war with our travel dollars, are we then not telling subsequent generations we gladly trade their environment for our trip to Bali? Just sayin’.]

Retail percentage of online sales stats: store name (% online sales of total sales, Growth in 2011): John Lewis (16.7%, 37%), Nelman Marcus (16.3%, 14%), Saks (9.2%, 28%), Nordstrom (9.1%, 35%), JC Penney (8.7%, 2%), Debenhams (8.2%, 73%), Macy’s (7.4%, 40%), Marks & Spencer (5.6%, 31%), Kohls (5.4%, 37%), House of Fraser (4.5%, 130%), David Jones (<1%, n/a)

Supplier management perspective from David Jones group executive, merchandise, Donna Player: The current difference between overseas and AU prices from international suppliers is 30% to 50%, aiming for 10% to 20%. Player led price harmonization at Big W to price reductions between 15% to 20%. Led Big W’s omni-channel business, which is leading in the AU retail market. David Jones CEO Paul Zahara said in March net profit for the year would fall 35% to 40% and David Jones faced years of lacklustre earnings as it reinvested heavily to transform into a fully integrated omni-channel retailer.Player: “There’s an opportunity for us as a business to engage without customers more so than any other time in my career. I want to give them more reasons to love the David Jones brand.” [CR: Two take-aways: 1) Player on board for 12-days, important to champion the vision of the CEO; and 2) I love the term “omni-channel”, reminds me of when I started in “multi-media”.]

Coca-Cola and McDonalds slipping: Coca-Cola Enterprises reports net income fell 17%in Q2 2012, Chairman and CEO John Brock said it faced a “unique combination of unfavourable weather and ongoing marketplace challenges”. Western Europe’s main Coke bottler earned $US205 million in April-June quarter compared to $US246 million the year prior, volumes fell 6%. McDonalds income fell 4% in Q2 2012, same store sales increased 3.7%, compared to same store sales increase same period last year of 5.6% and increase in Q1 2012 of 7.3%. [CR: I always have struggled with the noton of perpetual increases in same store sales.]

Stats on Australia’s richest individuals from financial services research group: There were about 340,000 high-net-worth individuals in 2011. The number increased to 410,000 in 2012, with net wealth climbing from $645 billion to $825 billion. By 2017, expectations are that Australia’s wealthiest will be more than 600,000 and collectively be worth more than $1.2 trillion. 33% of the wealthy have a private banker. Interesting part of client profiling at Macquarie is to look at where they spent their formative years of 18 to 25, as these circumstances affect the way the bulk of ptoeple make decisions and risk appetite for life. [CR: Yes, that is interesting. Look at how you spent your formative years. Can you see how that affects you now?]

Stats on employee-owned companies performance: UK Employee Ownership Index published by law firm Field Fisher Waterhouse says companies owned by more than 10% of their employees outperform All Share companies each year by 10% on average. Over successive five-year periods, they outperform by 79%; over three years by 41%. US General Accounting Office study of 110 firms found that participatively managed, employee owned companies increased their productivity growth rate by an average of 52% per year. [CR: Give them autonomy, mastery, purpose. You won't lose.]

24 July 2012: Samsung sues Apple and NAB mobile stats

Goodman Fielder losses. Australia’s largest baker, accounts for more than 33% of packaged bread sold in Australia, almost 50% of packaged bread sold in New Zealand, facing the second consecutive bottom line loss in 2012, as written down value in AU and NZ by almost $400 million in two years. Aiming to cut costs by $100 million by 2015.  Helgas, Lawsons and Buttercup brands are losing market share to $1 Woolworths and Coles private-label bread and premium priced loaves by artisan bakers such as Sonoma and Bourke St Bakery. Company has cut prices, and is culling varieties and closing plants to reduce costs. Major rival is George Weston Foods (Tip Top and Burgen bread). Analysts say break makers need to raise prices to lift margins. Woolworths CEO: We are constantly reviewing trading terms with suppliers... it only works if there’s something in it for the retailer and something in it for the manufacturer, but ultimately it’s the customer that drives the decisions we make” [CR: See story below. Not sure how it works with private labels competing for profit share, then saying something needs to be in it for both parties.  Only way customer will decide is if they refuse to shop if item is not stocked, which is unlikely when private labels diversify into broader choice ranges.]

Woolworth sales up. Woolworths is Australia’s largest retail, shares reached a 12-month high. Company set a strategic plan in November aimed at restoring “aspirational” earnings growth to 10% over the next few years. Group sales for three months ending June 24 rose by 5.1%, full year sales up 4.7% to $56.7 billion. Australian food and liquor same store sales up 1.3%, total sales up 3.8% to $8.55 billion. Woolworths opened nine new supermarket and liquor stores and refurbished 11 others in the quarter. This despite the 4.3% food price deflation. With the new stores, sales per square metre fell from $16,424 to $16,194, suggesting weaker productivity.  Big W same store sales up 1.6% in June quarter following seven consecutive quarters of flat or weaker sales, growth attributed to government May and June handouts. Dick Smith same store sales up 15.4% in AU, 9.9% in NZ due to reduced prices in preparation for divestment, sale expected to be complete next month. [CR: I would be surprised if productivity did not decrease during expansion.  Not sure on the ration a to what to expect in that industry, but how long does a store take to be operating at optimum? Or any change initiative for that matter?]

Samsung sues Apple, says Apples two iPhone 4 models and the iPad 2 infringe on 3G patents. [CR: Because it worked so well last time.]

Online spending expected to double to $27 billion by 2016. Food has been the biggest boost, up from 17% in 2011 to 23% current.  (Frost & Sullivan and PwC survey). Over 50% of 1000 respondents driven online by lower prices, 26% made using mobile devices, 62% purchased electronics.  Spending last year was $13.6 billion, expected to hit $13.6 billion this year. [CR: Exciting to see the innovation in how to engage online, unfortunate it is driven by the commercial mandate, will be good to see benefits to social good that come out of the activity.]

NAB mobile stats: Over 33% of internet banking log-in are from mobile devices. Use of digital channels has increased by about 270% over the past 12 months. Strategy: NAB will try to exploit any technology edge to boost cross-sell, particularly of wealth management products, and leverage competitive advantage in its wide ranging third-party distribution networks. [CR: I am seeing “33% through mobile” as a current benchmark.]

Westpac launches iPad and says bank branches will halve in size over next few years. iPad app allows transfer of funds, make payments by drag and drop, check balances. Plans Facebook payments by the end of the year. Customers who were active users of mobile services stayed with the bank longer and were more likely to buy other products (Harry Wendt, GM of online and mobile). App has been downloaded 14,000 times in past two weeks. Developed iPad first due to “proliferation of devices and screen resolutions” on Android.” Says apps more secure than web browser since the concept is new and had not attracted attention of organised crime gangs. Over 1.4 million customers use Westpac’s mobile banking services (over 33% of online transactions). It took two and a half years to reach 1 million mobile customers, then six months to reach the next million.  Westpac recorded 42.4 million logins to its website in year to May 2012, an increase of 17% from previous year. Of these, 12.6 million were on mobile devices, up 195% from last year. Customers made 41.2 million online payments worth $251 billion, mobile accounted for $580 million. Value of transactions going through branches has decreased an average of 5% per year for past 5 years.

AU and NZ online travel industry to grow by 11% in 2012 to $US13.5 billion. Linely Planet and trip Advisor are successful because they sell inspiration. Almost 75% of Facebook users boast about trips, 20% say they have booked trips after seeing friend’s posts.  Wotif.com booked $595.6 million through the site during six months ending December 2011, posted a net profit of $28.8 million, up 14%, revenue up 4% at $74 million.  Webjet booked $369 million during first half of financial year, up 29.5% from previous corresponding period. Net profits up 17% to $5.9 million, revenue up 37% to $28.2 million. Sydney-based Hotels Combined  deals aggregator, 24 languages, 120 different currencies, rooms in 220 countries, founded in 2005, has 200 staff, 95% of revenue from overseas, generated bookings worth $478 million for year ending June 2012, double previous year, visitors up from 79 million to 132 million.

23 July 2012: Reduced consumption impacts on clean coal projects and Qantas launches "social commerce" Hooroo

Electricity Gas Australia 2012 report on the state of the energy sector by the Energy Supply Association of Australia, figures for year ending June 2011: There are more than 250 new power projects or expansions planned , mainly lower emission generation. 38% of the new capacity installed was gas, 35% wind, driven by the 2020 Renewable Energy Target.  Annual growth in generation capacity slowest since 2005-06, energy consumption fell by 0.6%. South Australia has highest ratio of wind power (17%), Queensland highest solar. New capacity mainly displaced cleaner black-coal generators rather than more emission intensive brown-coal plants due to provision of financial assistance to brown-coal plants plants. Black-coal generation fell from 57% in 2009 to 51% in 2011. Emission generation fell in most states, but increased in Victoria where large brown-coal generators are situated. Federal government’s draft energy white paper estimates that up to $240 billion of new investment in electricity and gas infrastructure will be needed by 2030. [CR: Finding the balance of new projects and new capacity. The headline of the story was “Clean coal projects suffer”. I wonder what another headline would look like of “Success in reducing energy consumption”.]

US Presidential candidates silent on gun control after Auroro shootings that killed 12 and injured 59. Obama called for a moment of silence and ordered flags at half mast, Romney called the killings a “hateful act”. Gun control blamed in part for Al Gore’s 2000 defeat. [CR: Americans like their right to bear arms. Taking a step back, only reason to have guns apart from hunting is to mitigate a future fear of having to use them on other human beings. How much of our laws are defined by distrust and fear.]

Analysts expectations say Coles to outperform Woolworths. Woolworths expected to grow by 3% to $8.5 billion, Coles expected to grow by 6% to $6.55 billion. Both companies rejigged customer loyalty programs, launched new advertising campaigns, and cut prices. Coles revamped FlyBuys in April, increasing reward points and offering 10% discounts on five favourite items. Woolworths offered loyalty card members discounts between 20 to 40% on over 1000 products in an “extra special extra simple” campaign, and rolled out heritage and fresh food credentials campaign and flagged new store formats offering freshly cut meat and vegetables and freshly baked bread. Analysts say that Woolworths initiatives will take more time to result in revenue. [CR: The reporting year is like a political election, where everyone tries to get their initiatives returning results to be the “winner”.]

Theil Fellowship in the US offers a two-year US$100,000 in the “20 under 20” grant, encouraging students to drop out of college. Two sides of the debate. One side involves skills to write software or build a robot, plus an outsize does of ambition and a youthful belief in one’s ability to change the world produce fame and fortune as college graduates have to move back home due to not being able to get a job. On the other side, if the start-up fails, unemployment for those with only a high school diploma is 21%. [CR: Everyone wants to be Jobs or Zuckerberg.]

Gruen Transfer to be shelved this year, internal goal was to “entertain, yet leave the viewers feeling smarter”. [CR: Always like a brand that makes me feel better as a result of my engagement with the brand. I wonder if they will come back the year after and analyse themselves?]

Qantas launches “social commerce” travel booking site Hooroo to compete with Wotif and tripadvisor in $2 billion agency booking sector. 45,000 people signed up before official launch. Idea is to blend travel booking with content and user conversations and ratings. First phase of Qantas brand overhauls started three weeks ago, asking Australians to upload photos of themselves for a chance to feature on Qantas planes, 300,000 people viewed the pre-TV launch video, 64,000 people uploaded photos. Hooroo is spending $3 million to $5 million in coming months on online advertising and word of mouth seeding.Initial seeding program for bloggers reached 250,000 people, who were not paid but given domestic trips to create content and “talkability” about Hooroo.

Mobile device stats: Yahoo! Research indicates 39% of Australians intend to buy a tablet in the next 12 months. 4.3 million unique monthly visitors to Yahoo!7 out of 8.8 million total access the site through a mobile device. 30% of realestate.com.au, about 25% on Seek.

20 July 2012: AU broadband penetration and ebook stats

In 2011, Australia fell three places to 21^st out of 34 developed nations for fixed line broadband penetration.  24.6 subscriptions per 100 citizens, below the OECD average of 25.6, and Switzerland in first place with 39.9. Australian in eighth place for wireless broadband access with 56.2 subscriptions per 100 compared to OECD average of 54.3, South Korea in first place at above 100.  NBN plans to have work completed or underway for 750,000 premises by the end of the year. [CR:I would be interested in numbers comparing growth in wireless and mobility, will we look back in ten years and see the investment in fixed broadband as a stop-gap?]

Australia shareholder returns at 2.5% over the past two years, compared with 8% in the UK and 15% in the US. [CR: I acknowledge the drive for profits, but I also look at the overall economies of those countries. Is greater shareholder returns always the best solution? I also wonder what the breakdown is between industry segments in our two-speed economy.]

Solicitor census shows there is one lawyer for every 400 people in Australia. That is 7000 more than GPs, four times as many dentists. NSW has 41% of the total lawyer pool. In  most large law firms, over half of senior associates are female, less than 20% of partners are female.

First State Super Fund gets out of tobacco. ($33 billion fund), caters mainly to public sector employees, has sold more than $150 million of shares in manufacturing of cigarettes and other tobacco products.  40% of fund members work in the health sector. [CR: Good to see member influence on fund investments.]

US BookStats survey of 2000 publishers shows ebook net revenue in the US doubled in 2011, reaching $US2.07 billion from $US 869 million in 2010. eBooks accounted for 15.5% of publisher’s revenue. Print sales dropped from $US12.1 billion in 2010 to $US11.1 billion in 2011. Total net revenue remained flat, increasing 0.5% from $US13.9 billion to $US13.97 billion. Children’s books grew 12% from $US2.48 billion  to $US2.78 billion. Bricks and mortar stores remained largest sales channels, but online sales increased from $US 3.72 billion to $US 5.04 billion. [CR: I will need to dig it up, but interested in comparison of growth of book digital sales to other industries.]

19 July 2012: ATO audits and private-label grocery stats

Australian Taxation Office fewer but tougher audits: Collectable debt has increased 16% to $16.4 billion as cash-strapped businesses file late. Most of the debt is in the “micro” area – 3 million businesses that earn less than $2 million per year. Budget cuts reduced ATO staff by 1000, more than government agency.ATO computer systems more sophisticated, now check 600 million pieces of third party information, up from 409 million pieces four years ago. ATO to reduce checks on “highly wealthy individuals” by more than 66%, to do 200 reviews and 50 audits compared to 657 and 93 in 2011.  ATO plans to audit 190,000 micro businesses, down from 244,000 in 2011, and 530,000 individuals, down from 684,000 in 2011.  Where the ATO found money in 2011: Audit of microbusinesses ($4.3bn), Audit of small-medium businesses ($2.2bn), Audits of large groups ($2.1bn), Audits of individuals ($2.0bn), overclaimed GST refunds ($567m), Overclaimed income tax refunds ($200m), Excess superannuation contributions ($178m). [CR: Reducing government staff, with the largest unclaimed debt in the most challenging space of millions of micro-businesses. It is easy to see how things would shift to stricter “police-state” like controls.]

Gender stats: A couple of articles in response to Yahoo CEO 37-year old and pregnant Marissa Mayer. 3% (6 women) of ASX 200 companies in Australia have female executives. Companies with female CEOs with children: Westpac, GrainCorp, Oroton Group, MacDonal Australia, Noble and Sussan Group, Kraft Food. The Human Rights and Equal Opporutnity Commission received 165 cmoplaints abiout pregnancy discrimination in 2010-2011. There are 20 women CEOs of Fortune 500 companies.  [CR: As I mentioned in a recent blog, I acknowledge this needs to be highlighted to change the perceptions, but it will be good when it is no longer notable similar to ethnicity or similar factors.]

Federal economic modelling for unskilled workers: High school graduates and people with low-level education (hairdressers, fitness instructors, massage therapists, baristas) could be forced back to school or out of work within 13 years. Highly qualified workers in healthcare, the professions, education, and mining will have their pick of jobs in 2025. National Workforce Development Agency launched today to aim to provide taxpayer subsidised education to generate the skills demanded by industry instead of those deemed important by education providers. Demand for high skilled workers to grow by 65% and 75% of the workforce, compared to the current 60%. Growth in high-skilled jobs to grow at 160% of the rate of low skilled jobs. [CR: Wonder what this means for the gap between rich and poor and providing access to education as well as communicating the value of that education. Also wonder how pop-culture college drop out stories of the likes of Steve Jobs impact a propensity of people to pursue education.]

Supply chain impact of Ford layoffs: Local production fell an average of 336,000 vehicles to 221,000 last year. Supplier base has reduced from 200 companies to 150 over the past decade. Supply chains forced to diversify into other industries and markets, which can then prompt merger and acquisition activity. Components exports worth $1.2 billion in 2010. [CR: Fascinating to watch the organism that is the market evolve and adapt to internal and external influences. I keep in mind that my use of the term “fascinating” from an external academic perspective is also “painful and catastrophic” from those going through it.]

Proposed National Disability Insurance Scheme (NDIS) to help 200,000 people who are on disability support pension find work. 45,000 new workers will be able to find work.   Employment rates for the disabled is around 40%, below OECD average. Moving 35,000 people from disability support pension to jobs would deliver a $9.6 billion gain. Disability support pension will draw $14.8 billion in 2012-2013, expected to rise to $17 billion by 2015-2016 and is almost twice the cost of jobseeker income support. NDIS expected to start from July 2013 with a $1 billion pledge in the July 2013 budget. Productivity commission recommended funding of $3.9 billion. [CR: Good to see this rising on the agenda.]

Medical journal The Lancelot: 66% of adults in Britain fail to take enough exercise to remain healthy. [CR: I wonder what the numbers are in AU and US. Would you be in that 66%?]

Spaniards leaving recession-wracked country increased 44% in first six months of 2012. [CR: Interesting to see how economies drive global populations and the long-term impact that has on retaining and cross-pollinating local cultures.]

Private-label groceries to increase to 33% of grocery sales in next five years (currently 23.5%).  Driven by consumers seeking greater value and rapid expansion of ranges by retailers.  Dry, chilled and packaged groceries have highest growth: Butter 68% by 2013, sugar 67% by 2013 compared to 56% in 2003, bread 56% in 2013 compared to 18% in 2003, milk 55% in 2013 compared to 51% in 2003. Private label beer, wine and spirits grown from 2% in 2003 to 8% in 2013. Eggs to slip from 61% in 2003 to 53% in 2013 as consumers opt for free-range. Own-brand groceries represent 40% of grocery bill for lower-income families compared to 15% for higher income families. Retailers targeting higher income with premium, organic, and fair trade lines. Branded suppliers forced to reduce prices, have lost shelf space tpo private label brands which are expected to generate double the gross margin of branded product. In April, Woolworths estimated at drawing 18% of revenue from private labels, Coles 23%. [CR: Retailers say branded options will give “more choice”, but it will result in increasingly smaller supply chain, which may then prompt an increase in local options.]

Deloitte Access Economics released study findings that globally 2.5 billion consumers will purchase $170 billion worth of goods using mobile commerce technology.

18 July 2012: Carbon tax spent on pokies and New Yahoo! CEO

Carbon tax compensation goes to poker machines, Queensland poker machine revenue increased more than 7% in May when first Clean Energy payments went out and rose almost 12% in June compared to last year. Electronic gaming revenue in lower socio-economic areas of Victoria, such as Bendigo and Ballarat, grew by more than double the state average. [CR: Frustrating fact of reality.]

Ford Australia planning to cut 440 jobs in Victoria and reduce production by about a third from November to a new annual output of 33,000 cars. Has seen a sharp drop in sales of its Falcon down 36% as consumers switch to SUVs and compacts. President and CEO said committed to produce vehicles in Australia until at least 2016. Investment at start of the year of $103 million for locally made Fords to be more fuel efficient, included $34 million federal funding and undisclosed amount from Victoria.  Ford Australia posted a loss of $290 million last year, sales down 25% year to date. History of job losses: 2006 – 640 jobs; 2008 – 450 jobs; 2010 – 240 jobs. Gillard on 17 Jan 2012 “As a result of us making $34 million available to join with Ford in new investment to keep car manufacturing here, we’ll actually see the number of jobs grow. There will be an additional 300 jobs as a result.” [CR: History has a way of making bold declarations seem silly in hindsight.]

Australian Communications and Media Authority approved the use of 05 prefix once the 04 numbers are used up. [CR: Glad someone’s thinking about what’s next.]

New Yahoo! CEO announced, 37 year-old Marissa Mayer, ex-Google vice-president of location and local services. [CR: Refer to past article on revolving door of CEOs over the past five years and the prospect of laying off thousands. Will be interesting to see what she does.]