Monday, 25 April 2016
Not shaping up as the best year
Businesses go bust all the time. It is the way of Capitalism and overall is a force for the good. Rubbish is cleared away and shiny, new and hopefully more efficient beasts are freed to emerge.
More likely, old and knackered companies are taken out where the new ones have already won the field.
BHS going into administration is the latest such event. Online retailing and a changing high street (seriously, youngsters die for iphones and wifi, they have few material needs beyond this that I can see apart from cheap fashion) mix have done for a format that was all things to all men circa 1995.
It is said a buyer will be sought, but they have already tried that and Dominic Chappell did not really have any answers to the business model, just attempted financial engineering.
So the shops will be sold piecemeal and BHS will be gone with Woolworths. Of course, there is the Tata steel issue too, where doey-eyed management is trying to get the Government onside with a sizeable bale out. No such thing is required, there is plenty of steel in the world and plenty for the future. It is not like the iron ore is from the UK so it is hard to make this a 'national security' issue.
But taken together these two sad stories do not do much to show the country is robust health. The high street continues its long term re-arrangement but does the online world generate the jobs and economy of the pre-online high street. If not, what are we to do to cover the gap? In steel we cannot compete with China's over-investment - same as in ship-building previously. Again, what can be done.
Currently unemployment is low in the UK, but for how long if the economy remains uncompetitive and based on a zero interest rate policy. The UK should make it through this bumpy period post the referendum, but it is a sign perhaps that resilience has its limits.