Category: Business

I’m fed up with the Coles/Woolworths bashing

Posted by Chief Blogger – 11 November, 2011

If you don’t like Coles or Woolworths then go to ALDI.

…..the Government has already launched several investigations into Coles, and enough is enough.

“We’ve had any number of fuel price inquiries, we’ve recently had a Senate inquiry into the price of milk, believe it or not, and a subsequent ACCC investigation,” Mr Goyder said.

“And fortunately they’ve come out and said that there’s an overwhelming consumer benefit in what Coles has done – and importantly we’ve done nothing illegally.”

Yes, food prices are high. But if consumers continue to go to C/W instead of exploring the alternatives what do people expect. Then one has to consider the inflexible workplace regulations these companies have to work with, along with the obscenely high wages paid to casual staff, high corporate tax rates, payroll taxes, the very high cost of land due to greedy governments, and the environmental water buy backs, etc… and it soon becomes clear why the cost of living is so high. Furthermore, C/W have customer satisfaction rates of over 80 per cent.

As for whining dairy farmers and cheap supermarket milk. There are billions of Asian crying our for good quality dairy products, so farmers might try broadening distribution network and product lines instead of making themselves beholden to C/W while also trying to use C/W as scapegoats for their own lack of innovation and entrepreneurship.

NBN propaganda via WhistleOut

Posted by Chief Blogger – 18 October, 2011

I have never heard of the comparison site WhistleOut. It is run by a bunch of blow ins from the UK – they look like LaboUr Party voters. Anyway, they have conducted an analysis about the NBN, with the results being great news for Mike Quigley’s ponzi scheme. news.com.au used the report to tell us to stop complaining about the NBN.

Anyway this looks like propaganda straight from the NBN play book. Hardly unbiased reporting above. Let’s look closer at the analysis.

My current plan with line rental is about $74 per month for an actual download speed of close to 19 MBPS for 200 GB per month. That works out to be about $0.37 per gigabyte compared to an NBN cost of $0.43. If I had naked ADSL we are talking closer to $0.3 per GB. How is any of the above better than what I currently have? The NBN figures above are also not the full and final cost per month. NBN is giving sweat heart deals to IPs to get people signed up – the NBN monthly price will go up. Despite the deal at last count the NBN had more employees than customers, so people are not exactly being won over by Mike Quigley’s generosity. Furthermore, NBN plans usually require a contract and the equipment ain’t cheap, and if the NBN had to price plans at the full cost -  without tax-payer subsidies – then prices would be even higher. Eventually they will have to go that way or taxes will have to go up to pay for the network.

The vast majority of people will also not be able to afford or willing to pay anything more than 12 MBPS, maybe 25 MBPS prices. Let’s though for the sake of an argument accept the figures as presented to us and ignore my personal circumstances. For an NBN full cost of $70 billion, a consumer can…..wait for it…..save 13 cents per GB per month. Wooot wooot wooot!!!!!!!!!!!!!!!!

I’m back

Posted by Chief Blogger – 25 September, 2011

Been off the grid for a week or two in Australia’s north. Some thoughts:

  1. Roads are second rate. This may be a function of a lack of people, but when one has to drive hundreds of kms on dirt roads being used by local businesses to sell products and provide services there is something wrong. Think of the additional fuel and maintenance costs, not too mention lost time in transit. There is also an issue of safety. I know 4WD enthusiasts lap it up, but in the year 2011 arterial roads like the Gibb Road need to be paved and made for the most part flood proof. Even the national highway funded by the Federal government is worse than state highways. Single lane bridges, lack of road shoulders and clearing to keep wondering animals away from the side of the road. There are still flood ways in place probably because the Feds are too cheap to build flood proof bridges. Try playing chicken with a road train on a single lane bridge on a bend. That’s what it is like. Thankfully the speed limit is 11o kph, but I never saw any Police so I gather anything goes within reason.
  2. Telecommunications are second rate but could be made so much better quickly. Unless you are with Telstra then forget it with a mobile. Go outside town and you get no mobile coverage, sat phone is your only option. Telstra though have a network of microwave towers built back in the 1980s and 90s. One wouldn’t think it be too hard to put m0bile tech. on them to extend coverage. Not really a critical issue though. Simply the function of long distances and not many people.
  3. There is no lack of water in the north. Lake Argyle is not small body of water so the Coalition’s recent proposal to build dams in the north may have merit, if geography permits and local councils release land to allow businesses to attract people to work. Unlike in the south, the north has great rivers like the Missouri, Colorado and Mississippi rivers. Large parts of the north-west remind me of Arizona, Utah, Nevada and California. Plenty of people live in those states, the north-west could be no different. The Kimberley seems to the geography to support well over 1 million people – land, water, natural attractions, good variable weather and close to Asia. As long as the land is private and without restrictions and not Crown or aboriginal communal land governed by a complex set of regulations, then that should attract people to the region. Unfortunately I don’t think that is the case.

Back to city life for me.

Ford Falcon FG MK II

Posted by Chief Blogger – 16 September, 2011

Disappointing there are no petrol drive train updates for the revised Falcon until the 4-cylinder turbo Ecoboost arrives early next year. LPI arrived a month ago and is only just hitting salesrooms now.

Update in styling brings the Falcon in line with Ford’s global style template. There are also safety and interior updates.

There has been ongoing speculation about the Falcon’s future in the press. The reality is that no one knows for sure what the future holds. It seems unlikely though that with Ford’s One global policy and the lack of exports, that the model can survive in its present form. The current straight six requires $70m in investment to meet Euro V and VI emissions standards by 2016, likely adoption of the ZF 8 transmission and alloy steel panels to keep the weight and fuel economy down.

The Ford Falcon is very different from the other cars Ford makes and sells around the world. It is Ford’s only rear wheel drive sedan, uses a very unusual independent rear suspension design, and is the only Ford to use ZF Friedrichshafen transmissions and the Barra engine. As a consequence the Falcon’s drive train and chassis is wholly unique in the world of motoring.

SMH Drive’s idea that Falcon will turn into a front wheel drive Taurus is ridiculous. If people want a boring large front wheel drive car they will buy a Camry or Mazda, not a Ford. Just look at Mondeo sales figures – good but not great. Not enough to sustain the brand. The last time Ford tried to sell Taurus in Australia it was a sales disaster.

Simply put, killing Falcon would kill Ford in Australia. Consider what happened to Nissan and Mitsubishi when they closed their local plants. The alternatives are not credible either. BMW and Mercedes are priced well above global prices in Australia, so people are not going to migrate to those options. Lexus is running outdated drive trains on its cheaper models. The IS250 for instance only gets marginally better fuel economy than a larger Falcon, while having none of the performance. So Lexus is not really an option. Existing Falcon customers would simply buy Commodore, as an affordable rear wheel drive replacement.

There was some speculation that Falcon would adopt the new Mustang rear wheel drive chassis. Apparently Ford Australia is currently in an internal Ford competition to win the chassis design. I don’t know if that is true or not. It seems like the most plausible direction if Ford wants Falcon to survive. It would also require exports to make the business case work and probably dropping the straight six and going for the Ecoboost V6 engine. Certainly it would be a cheaper option than bringing the straight 6 in line with government regulations. My understanding is that Ford was hoping that the now defunct Federal government car fund would pay for the $70m R&D.

Alternatively Ford could sell off its manufacturing and engineering capability to the Chinese. Seems pretty unlikely though. Not because the Chinese would not want to buy – they do – but because Ford would not want to sell to a competitor. Ford would probably just migrate its engineering expertise in Australia to other parts of the company and moth ball Broadmeadows. The Chinese would not want just the plant.

Five Point Plan to Promote the Australian Automobile Manufacturing Industry

Posted by Chief Blogger – 27 August, 2011

  1. Give owners of Australian built cars discount registration,
  2. Allow the owners of Australian, post-2008 built cars, to travel 130 km/h on dual freeways,
  3. Provide funding for an automobile R&D centre of excellence made up of local industry, local universities and the CSIRO, to focus on the engineering challenges of meeting EU environmental standards and other government regulations,
  4. Provide tax-credits for new automobile manufacturing investment, and
  5. Relax immigration restrictions for persons that have expertise in automobile R&D and manufacturing.

These simple steps would be supported by four broader reforms:

  1. Drop the corporate tax rate for local manufacturing to 10 per cent,
  2. Abolish payroll tax,
  3. Do not introduce a Co2 tax, and
  4. Abolish current IR laws, including unfair dismissal and collective bargaining and implement ‘employer at will’ arrangements.

Thoughts?

Australian economy: the ALP has failed – UPDATE

Posted by Chief Blogger – 7 August, 2011

The market is down 35 per cent since the ALP came to power in 2008; down 7 per cent just this last week.

The company tax intake in 2007-08 was $66 billion and in 2010-11 it was $58 billion.

Worst retail sales figures for 50 years.

Number of building approvals in Jan 2008 (trend) was 9147, while in June 2011 it was 7712.

Then add in accelerating inflation and a lack of productivity growth.

What is Gillard’s response? “I said this year was the year of decision and delivery – and it has been.” “The list goes on.”

Total and complete delusion.

UPDATE

Steven Kates:

The trend movement in GDP stopped dead in the December quarter of 2008 and over the year to September 2009 rose on the back of an increase in net exports with domestic activity contributing virtually nothing to recorded growth. Private sector investment, the single most indicative statistic in the national accounts fell during that 12 month period by 5.7 per cent.

But what may be the most disturbing statistic has been the structure of the recovery. The level of private sector investment in March 2011, the most recent data we have, was still 2.0 per cent below its level in September 2008 in spite of all of the activity in the mining sector. Meanwhile public sector investment over that same period has risen by 25.5 per cent. The aggregated growth in investment figure shown on the cover of the National Accounts publication hides what is actually this most astonishing compositional shift.

Public sector investment has replaced (crowded out, as we economists like to say) the private sector. In no sense should this be seen as a recovery and until these facts on the ground are reversed, any talk of Australia being on a strong upwards trend is premature to say the least.

Markets down nearly 3 per cent again today.

Who is missing from this list

Posted by Chief Blogger – 23 July, 2011

Worst Co2 ‘polluters’ here. Notice how government is missing from the list.

The markets have spoken: Gillard has failed

Posted by Chief Blogger – 20 July, 2011

Below is a plot of the Dow Jones, ASX 200, FTSE 100, NZX 50 and the S&P/TSE 60. USA, Australia, UK, NZ and Canada respectively.

Notice anything since 2009, especially over the last few months? Look at the exchange of our main competitor Canada, the TSE 60 in red, and then look at our own ASX 200 in green. Prior to 2008 all exchanges had a fairly tight fit. Post-Howard, the ASX 200 has been the worst performing index over the period.

Uh Oh, EU backs no-stun gun cattle meat

Posted by Chief Blogger – 11 July, 2011

The EU has basically endorsed the sale of no-stun gun meat.

However there’s one deeply disappointing aspect of the new European legislation: the amendment which would have introduced compulsory labelling of meat and meat products from animals slaughtered without stunning was withdrawn at the last minute. This means that the current situation will remain unchanged: meat from animals slaughtered without stunning will continue to enter the mainstream food chain without being labelled, depriving consumers of their right to make an informed choice on animal welfare grounds.

Where does that leave the ALP’s hysterical reaction to an isolated case of animal abuse in Indonesia? We don’t live in a perfect world and should strive to improve slaughter standards, but not at the expense of the welfare of our own citizens.

China buy our car industry? Yes please.

Posted by Chief Blogger – 7 July, 2011

I am vehemently opposed to Chinese direct foreign investment in Australia by Chinese government business and related enterprises, as I would for any Australian government attempting to take over private assets. It is a matter of principle – free markets, limited government and all that jazz.

However, I am not opposed to private Chinese investment. From the SMH today:

CHINESE buyers would snap up the car-making assets of Ford Australia or Holden if their US parents abandoned their Australian operations, an automotive industry analyst says.

The Chinese would develop export markets for Holden and Ford Australia where their current parent companies have not and likely set a new direction on sales and design, which would bring new money and secure local manufacturing.

Having said that, SMH is running a campaign against the local manufacturers. It is all doom and gloom apparently, even though Ford made money last year and both Holden and Ford are significant engineering centres for their parent companies, designing cars not sold in Australia: Camaro, Figo, BT-50, etc…