Top 10 Stories of the Week! 02/01/17

 Happy New Year!

This week’s news includes; Ford cancels plans to move to Mexico,  Samsung recovers from Galaxy Note saga, Indian government to adopt universal basic income, Vinyl sales hit 25 year high.

Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories.

Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.

 

Opinion articles of the week:

  • University of Cambridge academics claim that the Treasury’s Brexit forecasts ‘have little basis in reality’. – Business Insider

  • City A.M’s Philippa Kelly argues that we won’t close the City’s gender pay gap without tackling family pressures.

  • The Telegraph explores why Amazon should buy failing retailer American Apparel.

 

1. FORD CANCELS PLANS TO MOVE TO MEXICO

Ford has said it will cancel a $1.6bn (£1.3bn) plant it planned to build in Mexico and instead extend operations at its factory in Michigan. The US car giant will spend $700m on expanding the plant at Flat Rock.

Ford boss Mark Fields said the decision was partly due to falling sales of small cars and partly a “vote of confidence” in Donald Trump’s policies. The President-elect has criticised both Ford and its rival General Motors over production of models in Mexico. Mr Trump earlier on Tuesday tweeted criticism of GM’s production of its Chevy Cruze model in Mexico.

Ford’s chief executive, Mark Fields, told the BBC that the main decision to cancel the plant in Mexico was because of a “dramatic decline for the demand for small cars here in North America,” allowing the company to cope with its existing plant.

But he said another factor in the decision was the “more favourable US business environment that we see under President-elect Trump and some of the pro-growth policies that he’s been talking about”.

“That did play a part and it’s a vote of confidence that he can deliver on these things,” Mr Fields added.

Ford is not abandoning production completely in Mexico, but is switching production of its Focus model to its existing plant in Hermosillo there to improve profitability. It makes the current version at its plant in Wayne in Michigan. Production at that facility will switch to two new models, which it says will safeguard 3,500 US jobs.

The planned $1.6bn plant in Mexico was to be built in San Luis Potosi, but Ford said it would now invest some of that sum in Flat Rock, creating 700 jobs building a range of electric cars. Mexico’s economy ministry said it regretted Ford’s decision, adding that it had assurances that the US car firm would pay the state of San Luis Potosi for any costs incurred from the cancellation. (BBC news)

2. FTSE 100 ENJOYS LONGEST RUN OF RECORD CLOSING HIGHS SINCE 1997

London’s FTSE 100 enjoyed its longest run of record closes in 20 years, after the benchmark index set another all-time peak.

After a stellar run in the final days of 2016, the blue chip index extended its end-of-year rally, which began on December 28, into the new year.

In volatile trading, it crawled across the finish line into positive territory, up 5.57 points, or 0.08pc, to 7,195.31, marking its sixth record close in a row. This compares to the longest run of consecutive closing highs in the FTSE 100’s 33-year history in May 1997, when it finished at all-time peaks for eight straight sessions.

Britain’s benchmark index also managed to set a new all-time intraday high of 7,211.96, surpassing its previous peak of 7,205.45 which it hit on Tuesday.

However, Michael Hewson, of CMC Markets, cautioned: “There’s been little in the way of follow-through buying, suggesting some caution, in the wake of Wednesday’s Fed minutes and the clear lack of certainty with respect to the timings of further policy tightening measures.”

The recent rally has been driven by the persistent weakness in sterling. Since the Brexit vote last June, the slump in sterling has boosted multinational companies listed on the FTSE 100, with many benefiting from earnings in currencies that are stronger than the pound. US President-elect Donald Trump’s commitment to boost infrastructure spending when he takes office later this month has also contributed to the bounce in international earners on the index.

In 2016, the FTSE 100 made gains of 14.4pc, marking its best year since 2009. (The Telegraph)

3. UK M&A ACTIVITY FELL IN 2016

The UK, hit by uncertainty around Brexit, led a decline in mergers and acquisitions (M&A) activity last year. New figures released yesterday show that M&A deal values totalled $3.84 trillion (£3.13 trilion) in 2016, down 18 per cent from a record $4.66 trillion in 2015.

Over the year, there were 2,979 UK-targeted deals tracked by Dealogic, which were worth $222.3bn. The number of deals increased on 2015, up from 2,629, but their total value fell by 48 per cent from $431.6bn.

The UK remained the third most targeted country globally, behind the US (total deal value down 21 per cent to $1.72 trillion) and China (down 28 per cent to $479.3bn).

The biggest deal announced during the year was AT&T’s $108bn merger with Time Warner in the US. This was followed by German company Bayer’s $66bn deal for US seeds firm Monsanto and British American Tobacco’s $58.1bn takeover offer for Reynolds American, which has not been agreed.

Goldman Sachs topped Dealogic’s adviser table, taking a 25.4 per cent share of the market, with 323 deals worth $970.4bn, followed by Morgan Stanley and JP Morgan. (City A.M)

 

4. SAMSUNG RECOVERS FROM GALAXY NOTE 7 SAGA

Samsung is likely to forecast its best quarterly profit in nearly three years on Friday, analysts said, with robust memory chip sales easing the pain of the costly failure of a flagship smartphone.

The South Korean firm discontinued sales of the Galaxy Note 7 phones after some of the devices caught fire, warning of a $2.1 billion hit to its profit in the fourth quarter of 2016 due to expenses tied to an ongoing global recall and lost sales.

But investors are betting a surge in sales of memory chips and organic light-emitting diode screens for smartphones will translate to strong earnings growth for the October-December period and through 2017.

Samsung’s operating profit likely rose for a second straight quarter to 8.4 trillion won ($7 billion) over October-December, according to a Thomson Reuters StarMine SmartEstimate derived from a survey of 15 analysts, up 37 percent from a year ago and the highest since the first quarter of 2014.

“We look for the memory business to post a big earnings improvement and contribute 50 percent of its (Samsung’s) total operating profit for Q416,” Daiwa said in a report.

Memory chip prices have spiked recently on demand for more firepower on mobile devices. But it is the sales of the higher-end 3D NAND chips which have rallied significantly, helping Samsung rake in profits given it is ahead of its rivals such as Toshiba Corp and SK Hynix in the mass production of these chips, analysts said.

Samsung’s semiconductor profit likely surged to a record 4.5 trillion won for the fourth quarter and 13.1 trillion won for 2016, Eugene Investment said in a report, adding chip earnings will grow further this year on firm demand.

For the recently ended quarter, Samsung’s mobile earnings likely rebounded from the dismal third quarter on healthy sales of the Galaxy S7 and S7 edge smartphones, analysts said. (Business Insider)

 

5. BIKE COURIER WINS ‘GIG’ ECONOMY EMPLOYMENT RIGHTS CASE

A bicycle courier has won an employment rights case in a ruling which could have implications for the “gig economy”.

A tribunal found that Maggie Dewhurst, a courier with logistics firm City Sprint, should be classed as a worker rather than self-employed.

As a worker, she would be entitled to basic rights including holiday and sick pay and the national living wage.

City Sprint said it was “disappointed” and will review the ruling “in detail”.

While Friday’s decision will only apply to Ms Dewhurst, it highlights the working practices of the so-called “gig economy”, where people are employed by companies on a job-by-job basis.

It is the first of four legal challenges being taken against courier companies, which include Addison Lee, Excel and E-Courier.

The case follows a similar ruling against the taxi-hailing service Uber in October last year, which found that drivers should be classed as workers rather than self-employed. Uber intends to appeal.

City Sprint said: “This case has demonstrated that there is still widespread confusion regarding this area of law, which is why we are calling on the government to provide better support and help for businesses across the UK who could be similarly affected.” (BBC News)

6. BRITISH-IRISH TRADE NETWORK SET UP TO OFFSET BREXIT IMPACT

A new network to link up Irish and British trading partners has been formed to offset any negative Brexit impact on trade between the UK and Ireland.

The British Irish Chamber of Commerce (BICC) has launched the British Irish Gateway for Trade service, which connects firms from either side of the Irish Sea. Britain remains Ireland’s biggest trading partner, with business between the UK and the Republic supporting 400,000 jobs and generating €60bn, according to the BICC.

Its chairman, John McGrane, said the network would promote more growth in trade between Ireland and the UK in the face of the Brexit challenge.

McGrane said: “At a time when businesses are preparing for Brexit, they appreciate a resource like BIG which helps them to grow their business by being introduced to more customers and suppliers across the UK and Ireland.”

He continued: “2017 will focus all our minds on the importance of the trade between Britain and Ireland which supports over 400,000 jobs. Firms on both sides of the Irish Sea are looking for more trading opportunities and this new service supports the work of Chambers and the various state agencies to make those connections easier to find for businesses north south east and west.”

The new service will be backed up by the resources of BICC and the input of enterprise supporters. The new service, which is free to use for members of trade organisations, is now open for registration at www.bigconnections.org.

BICC is a private sector trade organisation, founded in 2011 to represent businesses and employers with interests in the two islands of Great Britain and Ireland. It says its mission is to highlight, protect and grow trade between Ireland, Northern Ireland, Scotland, Wales and England. (The Guardian)

7. INDIAN GOVERNMENT TO ADOPT UNIVERSAL BASIC INCOME

India is going to endorse a Universal Basic Income (UBI), according to a leading advocate of the system.

The world’s largest democracy will release a report in January stating that UBI is “basically the way forward,” according to Professor Guy Standing, who has worked on universal income pilot projects in India.

If implemented, India would join Finland in providing free money to citizens. However, Prof Standing, a founding member of the Basic Income Earth Network, didn’t believe UBI would be introduced universally across India because of its radical nature.

Under a universal income system, citizens would receive a set amount of money from the state, forfeiting other benefits.  India, which has an estimated population of 1.3 billion people, has a growing economy but around 29.5 per cent of people live in poverty, according to a 2014 government report – particularly in rural areas.

Prof Standing told Business Insider the effects of the UBI trials had been “remarkable positive” on their communities, allowing people to have a sense of control over their money, reducing debt and empowering women.

“As a consequence of this,” Prof Standing said, “The Indian government is coming out with a big report in January. As you can imagine that makes me very excited. It will basically say this is the way forward.”

While Prof Standing said the government report would say UBI was “feasible” he added: “I don’t expect them to go the full way, because it’s such a dramatic conversion.” (The Independent)

8. RECORD NUMBER OF OIL & GAS COMPANIES GO BUST

A record number of oil and gas companies became insolvent last year, according to a new study which environmentalists said highlighted the need for the UK to prepare for the move to a low-carbon economy.

They warned that the loss of jobs in the sector when it becomes clear that fossil fuels can no longer be burned because of the effect on global warming would lead to “desolate communities” unless people were retrained to work in the “new industries of the 21st century”.

The study by accountancy firm Moore Stephens found 16 oil and gas companies went insolvent last year, compared to none at all in 2012.

After oil prices fell from about $120 a barrel to under $50 for most of the past year, smaller firms in the sector were unable to cope, Moore Stephens found.

Jeremy Willmont, who carried out the research, said: “The collapse of the price of oil has stretched many UK independents to breaking point.

“The last 15 years has seen a large increase in the number of UK oil and gas independents exploring and producing everywhere from Iraq to the Falkland Islands.

“Unless there is a consistent upward trend in the oil price, conditions will remain tough for many of those and insolvencies may continue.” (The Independent)

 9. RUN DMC SUES AMAZON & WAL-MART

A member of Run DMC has filed a $50m (£40m) trademark lawsuit against Wal-Mart, Amazon and other US retailers.

Darryl ‘DMC’ McDaniels has accused the corporate giants of “advertising, selling, manufacturing, promoting and distributing multiple products” in the group’s trademarked name without his consent. The 52-year-old rapper is the founder of the 1980s hip-hop group and the owner of the band’s brand name.

The lawsuit was filed in the Southern District of New York by McDaniels, regarding products including glasses, hats, t-shirts, patches, wallets and other items of the DMC brand. The lawsuit alleges the retailers have “improperly profited, diluted and harmed Run DMC”.

The rapper says the brand has generated more than $100m (£80m) in revenue since its inception in 1981. The group is considered a hip-hop pioneer, with hits including King of Rock, It’s Tricky and the Aerosmith collaboration Walk This Way.

Run DMC was founded in New York by McDaniels, Joseph ‘Run’ Simmons and Jason ‘Jam Master Jay’ Mizell. The group stopped recording after Master Jay was shot dead in his Queens recording studio in 2002.

The Run DMC logo became a symbol of hip-hop culture and its success outlived the group. Amazon and Wal-Mart, which also owns similarly accused Jet, did not immediately respond to a request for comment. (Sky News)

10. VINYL SALES HIT 25 YEAR HIGH

Vinyl sales in the UK topped the three million mark over the last 12 months, reaching a 25-year high. Official figures show a surge in audio streaming and an accelerating demand for vinyl LPs in Britain.

More than 3.2 million records were sold in 2016, a rise of 53% on the previous year, according to the UK music industry’s trade body, the British Phonographic Industry (BPI). The figure is the highest annual total since 1991, when Simply Red’s Stars was the best-selling album.

David Bowie’s Mercury Prize shortlisted Blackstar was 2016’s most popular vinyl, selling more than double the number of copies of 2015’s best-seller – Adele’s 25. Amy Winehouse’s Back To Black vinyl made number two with accumulated sales of 35,500, followed by the Guardians Of The Galaxy soundtrack and Radiohead’s A Moon Shaped Pool.

It is the ninth year in a row that vinyl sales have increased and, for one unprecedented week in early December, made even more money than digital albums.

Music streaming, on the other hand, hit the milestone of one billion streams in one week in 2016.

Served through growing services like Spotify, Apple, Deezer and Tidal, audio streaming saw a 68% rise from 2015. Geoff Taylor, BPI’s chief executive, believes the numbers “are indicative of the promise of a new era for music, where investments in a digital future fuel compelling benefits for all”. In total, 123 million albums or their equivalent were either streamed, purchased on physical format or downloaded by UK music consumers in 2016. (Sky News)

Be the first to comment

Leave a Reply