Mixed results for the Brits at the Golden Globes, but I’m pleased to announce that my Golden Monkey Wrench for media manipulation goes to Mick Cash and his team at the Rail Maritime & Transport union, for securing wall-to-wall sympathetic coverage of the collapse of courier firm City Link — some 2,300 of whose workers learned on Christmas day that their jobs were doomed. It would be fair to say Mick had not made much impact as general secretary of RMT (give or take some pointless Tube strikes) since the death of his mighty predecessor Bob Crow last March, but he certainly grabbed the City Link story by the throat — and has been busy this week urging MPs to investigate ‘the whole murky business’.
Not without justification: even if it was inevitable some players would fail in the cut-price gladiatorial arena that the parcel delivery sector has become, City Link’s Christmas announcement was cruel. And the vehemence of the union’s response was driven less by seasonal sentiment than by hatred of Jon Moulton, the serial turnaround investor whose firm Better Capital bought City Link — already loss-making for five years — for a token £1 in 2013, but finally abandoned the effort to save it, which Moulton claimed would have required £100 million. Moulton is a minor hero of this column: as uncompromisingly robust, I once wrote, as the ‘Recession Red’ he used to produce at his Kent vineyard. It was me who suggested he should be the UK’s next EU commissioner (an off-the-wall idea I was pleased to find bouncing round the national media) because his philosophy that ‘something better emerges [when] things are tossed on the bonfire’ is just what Brussels needs. But his downbeat outspokenness and Guernsey-domiciled nine-digit fortune do not win him friends, and the left has loathed him since his previous firm Alchemy emerged as a potential bidder for MG Rover in 2000: union leaders and Labour trade secretary Stephen Byers preferred the so-called Phoenix Four, the Midlands consortium who were allowed to buy the car company for £10 and take £40 million out of it for themselves. Moulton, meanwhile, was branded by Tony Woodley and Jack Dromey of the then TGWU as an ‘asset stripper’, but had the last laugh when the remains of MG Rover were sold off to China in 2005.
The brothers never forgave him, and must have been gleeful that Mick Cash’s campaign forced him into an uncharacteristic post-Christmas apology: ‘We’re very sorry about the horrible effects that follow for the workforce.’ But if Moulton could not reverse City Link’s fortunes, I suspect no one could. Several other Better Capital bets went bad last year — the UK arm of Readers Digest, bought for £14 million in 2010, was disposed of for £1 — but he still controls the Jaeger fashion brand, Fairline yachts and Everest double-glazing, and this week another of his investments, Redx Pharma, announced an £80 million Aim listing. Rebarbative his tone may be, but Moulton is always worth watching and has done a lot more for prosperity and business efficiency than Mick Cash ever will.
Runner-up for the Golden Monkey Wrench must surely be Tesco chief executive Dave Lewis, who seems to have persuaded investors and headline writers that the supermarket giant is now a ‘recovery stock’ — the shares leapt 15 per cent in a day — on the strength of his plan to shut 43 stores, scrap 50 new ones, move the head office from Cheshunt to Welwyn Garden City and replace most of the executive team with outsiders. Behind this blizzard of new-broom news is a slight deceleration in the rate of sales decline: but by no means enough to suggest that, after just four months in post, Lewis has actually found a cure for Tesco’s fundamental problem — that of being the unloved, asset-heavy giant of a sector in which consumer preferences are rapidly evolving towards an alternative model combining online shopping with discount chasing and renewed enthusiasm for smaller local retailers.
Still, the media are happy for the time being to compare Lewis favourably with peers such as Marc Bolland of Marks & Spencer — on whom ‘pressure is mounting’ after a 5.8 per cent fall in general merchandise (including clothing) sales over the Christmas period — and Dalton Philips of Morrisons, who has just been given the heave-ho after a 3.1 per cent fall in like-for-like sales. Morrisons would also like to be seen as a long-term recovery story, but Philips has proved a lot less persuasive than Lewis: at the group’s AGM in June, founder turned beef farmer Sir Ken Morrison shouted at the chief executive from the floor: ‘I’ve got 1,000 bullocks, Dalton, but you’ve got a lot more bullshit than me.’
More heads will roll and many more stores will close before current retail turmoil settles into a new configuration consonant with 21st-century demands and habits. That will be good for consumers and smart entrepreneurs, but harsh on squeezed suppliers. In this category today are Britain’s dwindling band of dairy farmers, receiving as little as 20 pence per litre of milk against production costs estimated at 28 pence (and being paid late because their wholesale co-operative, First Milk, has itself been thrown into crisis) while supermarkets sell the stuff cheaper than bottled water.
Farmers are famously prone to moaning, and current oversupply of milk is in part due to last year’s benign conditions for grass-growing, which may not be repeated. But still we should be conscious that a shake-out of the way we shop for groceries is not a good thing if it makes us ever more dependent on imports because domestic production is unviable and farming is in decline as a way of life. As with energy supply, we abandon self-sufficiency in food at our peril. And by the way, doesn’t this story tell us that bottled water is a scandalous rip-off?
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