Business News (February 2018)

Road to nowhere

The Automobile Associations (AA) who offer breakdown assistance, road maps, driving lessons and financial services are set to cut 100 jobs and close their Six Hills Training Headquarters. However, in a recent statement they have confirmed that jobs at the frontline would remain safe.

With 100 jobs to be cut, it is believed that managerial and administrative staff mainly from its Basingstoke Headquarters would be the first to go. The Six Hills Training Centre, based in Leicestershire has also been deemed to be outdated, and that all 15 employees will be losing their jobs.  It is believed that a new training centre will re-open, its eventual location yet to be confirmed.

A statement from the GMB union accuses the AA of taking these actions prior to the business being franchised. However, President of the AA, Edmund King has confirmed that the decisions being made are not connected to any franchise deals.  King confirmed that by reducing management and head office roles, more investments can be made with contact centres and patrol vehicles.  Large investments will be taking place, with ‘state-of-the-art’ training to improve their patrols, which in time it is said, will enhance performances on the front line.

GMB representatives believe that the closure of the Six Hills centre will have an impact on the “quality of service” that is provided by the front-line patrols. The consultation periods for the plans to restructure the AA end on 24th February, following talks held last summer to potentially amalgamate their insurance division with a rival company.

Should have gone to Nandos

It appears that KFC was warned about their deliveries, or should we say non-deliveries, according to members of the GMB union prior to this week’s reported delivery crisis this week. The union first highlighted their doubts with KFC and DHL’s ability to ‘wing’ their way to success by running their operation from a single warehouse several months ago.  With the crisis set to run into another week, nearly half of the KFC outlets across the UK are to remain closed.

Although KFC expected a “little disruption” while the transition from delivery service Bidvest Logistics to DHL took place, they could not have foreseen the issues that they’ve witnessed this week.

Currently, just over 400 branches of KFC stores are closed across the UK following the move to use cheaper delivery service DHL. The closures have caused massive consumer anger and problems with our emergency services.  Police across the UK, have received emergency calls about closed stores, wasting significant amounts of officer’s time while dealing with the complaints received.  Police based in Tower Hamlets, London have urged the public not to call about closed branches of KFC.

It was last October that the GMB union first issued a warning regarding the proposed change of delivery companies, using the example of fast food chain Burger King changing from Bidvest to DHL six years ago.  Again, Burger King chose DHL in a money saving exercise. Although not at the same scale as the KFC debacle, Burger King faced the same supply problems and poor distribution service – the changes were that significant that Burger King pleaded with Bidvest Logistics to take them back within 6 months of the change.

The KFC crisis has been blamed on a change of warehouse facilities. Once based in 6 warehouses that were managed by Bidvest, KFC now has one distribution centre based in Rugby, run by DHL.  According to insiders, the conditions within the Rugby warehouse have been described as an “utter shambles”.

By approving the lower tender with DHL, combined with a combination of broken promises, the system has been considered by some as unable to cope. It has been reported that executives from KFC were informed 3 weeks ago of the problems that would soon arise due to concerns over the set-up and the systems that DHL use.

The GMB Union have urged KFC to return to Bidvest to help resolve the crisis, however, since losing the KFC contract, Bidvest have made over 250 redundancies.  It is believed that if Bidvest asked, many of their ex-employees would return given the chance.

Although no figures have been divulged, it is firmly believed that DHL would not be able to provide the service that they had originally quoted for. Even with the help of industry experts, it would take weeks, even months to sort out the current mess within the Rugby warehouse.

A spokesperson from KFC still firmly believes that they have made the right move, even with Bidvest making hundreds of redundancies. KFC confirmed that the decision to change distributor was not taken lightly, and that much thought had gone into it, and they were especially positive about the opening of the new distribution centre and the introduction of 300 new jobs.

How long the chicken crisis will continue is anybody’s guess, as across the UK, many KFC outlets are set to lose thousands of pounds, fuelling the fear of further closures.

Maplin looks for new owner

Founded in 1972, with over 200 stores spread across the country, Maplin’s have found themselves racing to find a buyer that could help save the business from administration.  The large electronics chain, has been financed by private equity house Rutland Partners for the last 4 years. According to specialists, Maplin’s could potentially be purchased by Edinburgh Woollen Mill (owners of Jaegar, Peacocks and Jane Norman).

A spokesperson from Maplin’s has confirmed this week that they are in talks with several parties. and a final announcement will be made by the end of this week. Once an agreement has been put in place and secured, Maplin will start work on their plans to provide its 2020 multichannel smart technology strategy.

Maplin remains optimistic with the sale, and insiders believe that it will be good news all around for the 2,500 employees across the UK.

Should the sale not take place, Maplin could be sold as a ‘pre-pack’ sale. This would allow the successful part of the business to be sold on, once it has gone into administration. A pre-pack deal will only be considered if a solvent sale is not reached.

Figures obtained from Companies House in January showed Maplin recording a pre-tax loss of £3.9 million during 2016-17, a rise from the £2.1 milion during 2015-16.  Figures also showed that Maplin saw a rise in their turnover from £234.6 million to £235.8 million the year before. The figures produced for 2016-17 were presented along with a statement quoting a “transformational and challenging year”, and emphasis put upon the group’s “2020 Vision Strategy”.

Maplin first stepped on rocky ground prior to Christmas, seeing their insurers withdrawing credit cover following a fall in Maplin’s profits.  This then was followed by shortages within stock levels and sale numbers in the lead up to Christmas.

Current Chief Executive, Oliver Meakin, who is due to step down from his position, blames Brexit and the impact it has had upon the business.  Most items that Maplins purchase to sell are bought by the dollar,  the cost of which has meant the price of items have escalated by 15%.  Meakin was emphatic about his concerns. “When your costs go up by that margin, you cannot shoulder that as a retailer”.

Blip in employment figures

For the first time in 2 years, the UK is set to see an unexpected rise in unemployment. According to the Office for National Statistics, the rate of unemployment within the UK has risen from 4.3% to 4.4% during the last 3 months of 2017. By contrast, the UK saw a rise in the total number of people in work by 88,000 throughout the same period.

The increased figures have been reported as the people due to those previously classified as “inactive”, “not looking for work”, “moving into the workforce” or registering as “unemployed” in a recent ONS survey.

It remains to be seen if this is the end of the long run of unemployment numbers falling across the UK, and not a sign of labour market weakness. The ONS believe that the numbers could be indicative of inactive people in the search for work, whilst others are still searching, hence being labelled as unemployed.

Acting Chief Economist, Ian Brinkley, from the CIPD, a firm that represents professionals in Human Resources believes that there are reasons behind the rising figures rather than a future larger crisis within employment.

Figures of unemployment and employment rates are worked out by using the following methods: Anyone over the age of 16 is classified as being either employed, unemployed or economically inactive.  To classify as an ‘inactive’, these people do not work, or are not looking for work – these include students, carers and long-term sick people.

The figures show, that it is estimated that the number of people who have been previously “economically inactive” have either started working or have started looking for work.

Banking on it

A landmark year for the Lloyds Banking Group has seen a full year of strong profits following their first year as a fully private enterprise.  Figures show that the Lloyds Banking Group saw pre-tax profits for 2017 hit £5.3 billion, nearly 25% higher than in 2016, making this their biggest profit since 2006.  Lloyds Banking Group consists of Lloyds Bank, Halifax, the Royal Bank of Scotland and Scottish Widows.

Antonio Horta Osorio, the current Chief Executive announced that £1 billion of these profits will be used to buy back shares previously sold by the government.  In May 2017, the government sold the last of the Lloyds shares following a £20 billion investment to help save Lloyds.

Lloyds Banking Group, have been named as the largest mortgage provider, and will be using £3 billion to invest in new technology that will allow staff to take part in a three-year plan, that will involve them and allow them to focus on expanding their digital services.

Lloyds understand that there is a need to provide better products for the customers to make banking more convenient. This will also involve the introduction of safer products. Lloyds want to invest a further £6 billion towards small businesses nationwide over a three-year period, as well as investing £10 billion to first time house buyers.

It is believed that with the addition of these investments, it will assist with the changing of consumers banking habits.

Lloyds haven’t forgotten the PPI payments issue, and have set aside an additional £600 million during the current final quarter to cover the costs of compensation for mis-sold payment protection plans, taking Lloyds payments for PPI to £1.6 billion across the year.

Although Osorio oversaw branch closures and job losses throughout the last 7 years, it was the government that held a 43% stake in Lloyds. He firmly believes that the success of the last year has “marked a step-change”.  It was only last year, after the government had sold its remaining shares that Lloyds were able to hand tax-payers money back, which Osorio admits that he felt “a moment of pride”.

Head of Markets at Interactive Investor, Richard Hunter, said that the results shown were below what they had expected, however, they showed strong improvements compared to previous figures. He believes that since Lloyds no longer have the ‘shackles’ of the government, they can now move on and concentrate on their business, whilst building financial growth and repairing consumer damage.

ETX Capital representative Neil Wilson firmly believes that Lloyds as a bank, has come back with vengeance and on a mission, with more success stories to come, and investors welcoming the positive news.  Shareholders are expected to receive a 6% return on investments with a combination of the dividends and new share buyback scheme in place.

Unfortunately, the success will not please everyone. With a planned loss of over 900 jobs across the UK that will see High Street branches closing, and more emphasis on online banking, Lloyds have confirmed that job opportunities will be available as new posts will be created.

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Business News (January 2018)

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The Starjammer Bulletin is the official newsletter for The Starjammer Group, its customers, clients, affiliates and subscribers. With over ten years under our belt, we are proud of our commitment to our clients, and of our assurance that we provide them with the best level of service and help that they have come to know and respect us for. The Starjammer Group is proud of its track record to date, and strives to improve its products, services and standing on all fronts. Our mantra has always been '21st century thinking'. Why? Simple: we love doing what we do, enjoy our work, and work on the principle that our customers, clients and associates should share in the fun. Business shouldn't be a chore: we spend on average 8 hours per working day in the office, or factory, behind a desk, stall or wheel. We employ people who are not only competent and good at their job, but people who have that something; that little spark that grabs our attention. It can't be defined, and it's not always obvious. Nethertheless, we have been lucky to attract and keep the right people. Something we are proud of.