Hundreds of jobs lost as Bosch moves from Wales to Hungary
The Bosch Group - a privately owned German multinational manufacturing business has announced the closure of it’s car parts factory in south Wales with the loss of hundreds of jobs. With 900 jobs going at the factory itself, the final scale of extra unemployment will be significantly higher because of the negative multiplier effects for the local and regional economy.
read more...»Jimmy’s Global Harvest
A warm woolly hat tip to Himesh Patel from the Heathland School, Hounslow for spotting this superb resource that will be available for a while on the BBC iPlayer. Himesh points out that Jimmy’s Global Harvest: Brazil on BBC1 last night was an excellent epsiode that explained how Brazil produces biofuels using its crop harvest. The show goes through the full production phase from harvest to final product. If you teach anyone sitting the AS Micro paper next week, it is extremely useful for the evaluation of biofuels as an alternative to traditional fossil fuel energy. In addition it is pitched at the correct level enabling access for all students. The link is here Pay particular attention from 22.12 mins (where the biofuel begins). Definately something to recommend students to watch.
Salt Union and Elasticity of Supply
The Big Freeze has caused a huge rise in the demand for grit to treat road surfaces. Most of this demand comes from local authorities and inevitably the supply-side of the market has found it difficult to match production with demand.
The Salt Union is the dominant supplier of rock salt to use on Britain’s roads. Their mine at Winsford in Cheshire is the UK’s biggest rock salt mine and is capable of extracting 30,000 tonnes per week, it has nearly 140 miles of roads some 200 metres below ground. But their plant has been working at full capacity since mid December and the Salt Union has admitted that - despite working 24 hours-a-day seven days-a-week at a maximum output of 30,000 tonnes a week, it is not possible to sustain the unprecedented level of repeat orders coming in. The potash mine at Boulby in Cleveland is the other big source of rock salt in the UK, it too is working at capacity and has opted to divert planned exports to local authorities because of unexpected depletion of stocks. The third main supplier of rock salt comes from Northern Ireland - the Irish Salt Mining and Exploration Company
Stocks of rock salt have dropped sharply and the main supplier is working at capacity - two factors that have made the short run supply of rock salt highly inelastic in response to strong demand. The free market price of salt ought to rise in such circumstances and there is evidence that local councils who have flexible salt supply contracts with the Salt Union are seeing a rise in the cost of salt per tonne. This BBC magazine article tries to unearth some of the detail on salt contract prices.
Assorted Links (6 Jan)
Today’s assorted links focus on some topical video and audio reports on business and macroeconomic issues
1/ Paul Mason on Newsnight - Economic predictions for 2010 - this is a superb 6 minute report from Paul Mason. Newsnight’s Economics editor Paul Mason outlines how he thinks UK and global finances will fare in 2010 and what the chances are of a double dip recession here in the UK
2/ Rory Cellan-Jones (BBC) on the launch of the Nexus One - Google said the Nexus One represented the next frontier in the company’s $20bn (£12.4bn) core business - selling advertising through search
3/ Nigel Cassidy (BBC) - are purchasing managers optimistic? - an interesting look at some cyclical industries in the economy such as advertising, travel and transport that are likely to be at the forefront of an upturn in demand and production.
4/ Simon Johnson (interviewed on the Today programme) - Banks ‘must be small enough’ to fail - Simon Johnson, professor of economics at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund, discusses banking system reforms
Is UK manufacturing turning a corner?
Whisper it quietly but there are signs of a rebound in orders and production in UK manufacturing industry. In recent weeks we have seen a cluster of articles suggesting that some of the industrial production that left the UK during an age of out-sourcing is now starting to return home. Having plunged last year manufacturing ouptu appears to have stabilised and today we heard news from the Chartered Institute of Purchasing & Supply’s purchasing managers’ index that UK manufacturing activity grew at its fastest pace in more than two years in December 2009. And last week Last week, a survey by the Engineering Employers Federation revealed that one in seven British companies had repatriated manufacturing operations to the UK in the past two years. Keep in mind that manufacturing contributes less than 12% of UK GDP - although many service sector jobs and businesses depend directly on the health of the industrial sector. Manufacturing may be making a comeback because of:
1/ Sterling: The weaker value of sterling against the Euro and the US dollar has given manufacturing industry a competitive boost
2/ Relative costs and supply issues: Higher than expected costs and quality problems have been cited by some businesses that have outsourced some manufacturing - high wage inflation in fast-growing emerging market countries has narrowed some of the unit labour cost gap between the UK and rivals
3/ Oil and transport costs: The high price of oil has increased the cost of shipping goods around the world encouraging producers to focus output closer to the market
4/ Overseas markets: Signs of a recovery in some of the UK’s main export markets - the majority of manufacturing production in the UK is exported, manufacturing industry in Britain is sensitive to the global economic cycle
Sunday Times (3rd Jan) Made in Britain: How manufacturing is returning to the UK
Scotsman: 15% of British firms switching production back to UK
Assorted Links (31 Dec 2009)
1/ Firms move production back to UK (BBC news) based on a new report from the Engineering Employers Federation
2/ Japan pledges to end economic spiral (The Times) - The ten-year plan would see Japan shift some of the focus of its giant economy, with new emphasis placed on environmental technology, science, tourism and medical care.
3/ Economics emerges from the rubble in fragile state (Larry Elliot in the Guardian)
4/ Freakonomics meets More or Less (BBC Radio 4) - Tim Harford gets together with Steve Levitt for a special edition of the excellent Radio 4 programme
5/ Counting the cost of high speed trains (BBC Global Business) - how large are the economic and environmental benefits of investment in new high speed trains?
Google Wave on Foreign Direct Investment
Our wave this week looked at some of the policies designed to encourage FDI flows and the benefits and costs of FDI for the UK economy
read more...»Google Wave: Benefits and Costs of Monopoly
The number of Google Wavers among the Economics teaching community continues to grow. Last night we generated ideas and resources useful in evaluating the impact of monopoly power in markets - the results are shown below
read more...»Structural decline in Russian motoring
Here are two revealing BBC news videos about the decline in Russian car production and the economic and social challenges that result from it. In the first we visit a town heavily dependent on car manufacturing and one desperately seeking to generate new small businesses as part of a structural change in the local economy. In the second a report on the financial crisis facing loss making vehicle maker Lada and demands for state support to keep open an industry that perhaps should have closed years ago. The video is memorable partly for the continued use of the hammer to put the finishing touches to new cars! How can a business survive by employing 100,000 people but making only 130,000 cars a year?
230 million unemployed worldwide - the economic and social fallout
I was listening to BBC Business World today and came across this revealing and thoughtful interview on the global impact of the huge rise in joblessness. According to the UN’s International Labour Organisation, there are upwards of 230 million unemployed people on this planet, around seven per cent of the workforce. This is a figure set to rise sharply despite an upturn in the global economic cycle - for as we know, unemployment is a lagging indicator. It tends to turn around with a delay after demand and production has started to rise again.
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