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| The UK's lobbying on Bombardier has been polite – will it play tough? | The UK's lobbying on Bombardier has been polite – will it play tough? |
| (4 months later) | |
| Ministers have achieved nothing with their pleas for Boeing to back down. With 4,000 jobs at risk, they must get decisive soon | |
| Tue 10 Oct 2017 19.48 BST | |
| Last modified on Mon 27 Nov 2017 15.39 GMT | |
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| Two points are clear from business secretary Greg Clark’s statement to parliament about Bombardier. | Two points are clear from business secretary Greg Clark’s statement to parliament about Bombardier. |
| First, the government’s lobbying is concentrated on persuading Boeing to withdraw its complaint that the Canadian plane maker, with 4,000 workers in Belfast, has been illegally dumping jets in the US. | First, the government’s lobbying is concentrated on persuading Boeing to withdraw its complaint that the Canadian plane maker, with 4,000 workers in Belfast, has been illegally dumping jets in the US. |
| Ministers still think the 300% tariffs imposed by the US on imports of Bombardier’s C-series plane would be overthrown in the next stage of the process, but the primary goal is to get Boeing to back down. | Ministers still think the 300% tariffs imposed by the US on imports of Bombardier’s C-series plane would be overthrown in the next stage of the process, but the primary goal is to get Boeing to back down. |
| The second conclusion is that the government has achieved nothing so far. Even after a face-to-face meeting with Boeing’s chief executive, Clark had no progress to report. He could only offer his determination to keep pushing. | The second conclusion is that the government has achieved nothing so far. Even after a face-to-face meeting with Boeing’s chief executive, Clark had no progress to report. He could only offer his determination to keep pushing. |
| For the time being, the tactics, coordinated with the Canadian government, make sense. If Boeing can be cajoled into dropping its complaint, the dispute would disappear overnight. | For the time being, the tactics, coordinated with the Canadian government, make sense. If Boeing can be cajoled into dropping its complaint, the dispute would disappear overnight. |
| By contrast, relying on the US International Trade Commission, which has the final say on tariffs, to reject the ruling of the US Department of Commerce is a lottery. | By contrast, relying on the US International Trade Commission, which has the final say on tariffs, to reject the ruling of the US Department of Commerce is a lottery. |
| Boeing doesn’t make an aircraft that competes directly with Bombardier’s, so it ought to be hard for it to prove material injury, but you wouldn’t wish to bet 4,000 UK jobs on a US agency finding against a big American corporation in the current climate. | Boeing doesn’t make an aircraft that competes directly with Bombardier’s, so it ought to be hard for it to prove material injury, but you wouldn’t wish to bet 4,000 UK jobs on a US agency finding against a big American corporation in the current climate. |
| So what if Boeing refuses to budge? What if these appeals to Boeing’s better nature as a “partner” to the UK continue to go nowhere? In that case, Clark will have to spell out what retaliation the UK is prepared to take and what “jeopardising” the relationship means in practice. | So what if Boeing refuses to budge? What if these appeals to Boeing’s better nature as a “partner” to the UK continue to go nowhere? In that case, Clark will have to spell out what retaliation the UK is prepared to take and what “jeopardising” the relationship means in practice. |
| A specific threat to reduce spending with the company would represent a high-risk escalation of the dispute since, as Boeing constantly points out, it spent £2.1bn in its UK supply chain in 2016 and 18,700 UK jobs rely on its presence. | A specific threat to reduce spending with the company would represent a high-risk escalation of the dispute since, as Boeing constantly points out, it spent £2.1bn in its UK supply chain in 2016 and 18,700 UK jobs rely on its presence. |
| But the UK government can’t dither indefinitely. If polite lobbying doesn’t work, the UK will have to decide whether it wants to play tough or not. | But the UK government can’t dither indefinitely. If polite lobbying doesn’t work, the UK will have to decide whether it wants to play tough or not. |
| The US Trade Commission is due to rule in February. If this affair is unresolved by Christmas, the government faces an industrial crisis that will make the damage from 2,000 job losses at BAE Systems look mild. | The US Trade Commission is due to rule in February. If this affair is unresolved by Christmas, the government faces an industrial crisis that will make the damage from 2,000 job losses at BAE Systems look mild. |
| HelloFresh stretches the definition of ‘active’ | HelloFresh stretches the definition of ‘active’ |
| HelloFresh is the “leading global meal kit service,” which means it delivers ingredients to people who want to cook but can’t be bothered to shop. | HelloFresh is the “leading global meal kit service,” which means it delivers ingredients to people who want to cook but can’t be bothered to shop. |
| There is, apparently, a demand for such a service because HelloFresh says it has 1.3 million “active” customers in 10 countries, including the UK. | There is, apparently, a demand for such a service because HelloFresh says it has 1.3 million “active” customers in 10 countries, including the UK. |
| Now this German company wants to raise €250m-€300m (£225m-£270m) via a flotation “to propel HelloFresh to the next level”. | Now this German company wants to raise €250m-€300m (£225m-£270m) via a flotation “to propel HelloFresh to the next level”. |
| The chatter says owner Rocket Internet hopes to get the venture valued on the Frankfurt stock exchange at €1.5bn. | The chatter says owner Rocket Internet hopes to get the venture valued on the Frankfurt stock exchange at €1.5bn. |
| Good luck with that. Use of fashionable labels like “disruptive” and “data-driven” can’t disguise the fact that HelloFresh is heavily loss-making and has an unproven business model. | Good luck with that. Use of fashionable labels like “disruptive” and “data-driven” can’t disguise the fact that HelloFresh is heavily loss-making and has an unproven business model. |
| In 2016, the business made losses of €94m on revenues of €597m and, despite the brave talk about reaching break-even in the next 15 months, nobody really knows what will happen when the marketing costs are turned down, as they surely must be at some point. | In 2016, the business made losses of €94m on revenues of €597m and, despite the brave talk about reaching break-even in the next 15 months, nobody really knows what will happen when the marketing costs are turned down, as they surely must be at some point. |
| Last year HelloFresh spent an astonishing €157m on marketing; all those enthusiastic folk knocking on doors to drum up business need to be paid. | Last year HelloFresh spent an astonishing €157m on marketing; all those enthusiastic folk knocking on doors to drum up business need to be paid. |
| Rocket has assembled five large international banks to find buyers for the shares, which suggests it knows some heavy lifting is required, especially as US rival Blue Apron’s float was a flop. | Rocket has assembled five large international banks to find buyers for the shares, which suggests it knows some heavy lifting is required, especially as US rival Blue Apron’s float was a flop. |
| Let’s hope the banks insist on a tighter definition of an “active” customer. HelloFresh’s current version includes “customers who ordered during the relevant period but discontinued their orders and registration”. We call those ex-customers. | Let’s hope the banks insist on a tighter definition of an “active” customer. HelloFresh’s current version includes “customers who ordered during the relevant period but discontinued their orders and registration”. We call those ex-customers. |
| People’s Trust looked good – except for the fees | People’s Trust looked good – except for the fees |
| What a shame. Daniel Godfrey has failed to raise sufficient funds for his pioneering People’s Trust investment trust, which was pitched as an antidote to City short-termism and closet index-tracking. He was aiming for £125m but has fallen short. A market listing has been abandoned. | What a shame. Daniel Godfrey has failed to raise sufficient funds for his pioneering People’s Trust investment trust, which was pitched as an antidote to City short-termism and closet index-tracking. He was aiming for £125m but has fallen short. A market listing has been abandoned. |
| Some may spy the revenge of the City since it seems to have been the institutional money, not the retail, that failed to arrive. | Some may spy the revenge of the City since it seems to have been the institutional money, not the retail, that failed to arrive. |
| Godfrey, remember, was the former chief executive of the Investment Association who upset its fund management members by pointing out that some of their fees may be too high and lack transparency. | Godfrey, remember, was the former chief executive of the Investment Association who upset its fund management members by pointing out that some of their fees may be too high and lack transparency. |
| But that’s probably not the whole story. While the People’s Trust’s structure scored well on transparency and long-termism, the hard reality is that its own annual charge looked high at 1.07%. | But that’s probably not the whole story. While the People’s Trust’s structure scored well on transparency and long-termism, the hard reality is that its own annual charge looked high at 1.07%. |
| One day the industry mould will be broken, says Godfrey. Quite possibly – but the fees will have to be lower. | One day the industry mould will be broken, says Godfrey. Quite possibly – but the fees will have to be lower. |
| Bombardier | |
| Nils Pratley on finance | |
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