Chain Reaction
Chain Reaction is the podcast 'All About Supply Chain Advantage' containing regular audio snippets relevant to C suite executives, supply chain professionals, researchers, policy makers in government, students, media commentators and the wider public. New episodes each week discuss hot topics in the news and supply chain ideas relevant to everyone involved in supply chain management. There are special editions too.
Our goal is to keep our listeners updated and informed about the various factors that can influence the dynamics of supply chains. As the world continues to evolve, so too do the complexities of global supply chains. By keeping an eye on these global events, we can anticipate potential challenges and opportunities, and navigate the ever-changing landscape of supply chains with agility and insight.
Chain Reaction
Global Political Shake-Up: Trump's Appointments and Economic Impact
Brace yourself for a seismic shift in global politics as President-elect Trump gears up for his second term, appointing some of the most unexpected figures to key positions. Ever imagined Elon Musk spearheading a new Department of Government Efficiency or Robert F. Kennedy steering U.S. health policy? We're unraveling Trump's strategic focus on loyalty and the potential global ripple effects of his appointments. Expect insight into how these selections could lead to heightened tariffs and border enforcement, posing challenges for international trade and compelling businesses to rethink supply chain strategies.
In a world grappling with rising costs and economic uncertainty, we tackle the pressing issues affecting consumers and retailers. From the UK's sluggish growth and the service sector's struggles to the contentious climate negotiations at COP29, our conversation spans the globe. We also shed light on the financial turmoil hitting iconic British brands like Typhoo Tea and Homebase, both teetering on the brink of administration. Tune in for an enlightening discussion on how these developments might shape the future economic landscape and what it all means for everyday people.
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About Tony Hines and the Chain Reaction Podcast – All About Supply Chain Advantage
I have been researching and writing about supply chains for over 25 years. I wrote my first book on supply chain strategies in the early 2000s. The latest edition is published in 2024 available from Routledge, Amazon and all good book stores. Each week we have special episodes on particular topics relating to supply chains. We have a weekly news round up every Saturday at 12 noon...
Hello, tony Hines. Here You're listening to the Chain Reaction Podcast. All about supply chain advantage. Great to be here. Thanks for stopping by today, the News Roundup coming up in just a moment. This is the News Edition All things impacting global supply chains this week. Supply chains this week.
Tony Hines:Now, the big news of the week in the United States is that President-elect Trump met Joe Biden and discussed the peaceful handover of the White House in the new year and that seemed to go very well. And of course, president Trump has been appointing people to various posts during the week and they seem to be quite controversial. He's appointed Robert F Kennedy as the health minister. He's a known anti-vax person and he seems to be sceptical about all kinds of things, including COVID, thinks things are a conspiracy. So lots of conspiracy theories kicking about and people are quite concerned about that. And of course he has to go through the approval of Senate for these nominations. But of course he has to go through the approval of Senate for these nominations. But of course President Trump is controlling Senate. So is that really going to be any problem? Many think not, but some suggest that some people in his own Republican Party may still be skeptical about some of the appointments, and President Trump-elect has said that of course, robert F Kennedy can go wild, wild wild on health care. Well, there's an invitation. I think I would like somebody who's sensible when it comes to health to protect the nation, because that protects me as an individual as well. So we'll have to wait and see how that actually plays out. And the other appointment of the week, of course, is that we've got this new department called DOGE Department of Government Efficiency and that's headed up by Elon Musk and of course, he's a multi-billionaire and there's some concern that Musk has very little experience of government and he's got this advisory role, which is probably quite important because that could cut off budgets for all kinds of things that maybe some people think are desirable. So we'll have to wait and see.
Tony Hines:Of course, the wisdom that's around suggests that if Trump fulfills his promises of increasing tariffs, whether that will come to fruition or not is another matter. But if he does, suggests that if Trump fulfills his promises of increasing tariffs, whether that will come to fruition or not is another matter. But if he does, that will cause higher prices into the United States, it will cut off some supplies, it will make prices higher for many Americans and that could be quite problematic for industry too and could, combined with sending lots of people back and the lots of people that are going to be sent back, of course, are probably going to be Mexican or other immigrants and those groups generally provide lower-cost labour, and so if lower-cost labour disappears, that means higher prices too. So the very thing that the American people voted for, which is get inflation down, get the economy stable, get control of finances well, we'll have to see if those policies are the right ones to do that, or indeed whether President Trump is simply posturing at this stage, and maybe we'll have to wait until later to see what actually happens. The other controversial appointment of the week, of course, was Tulsi Gabbard, who's been appointed as the Director of National Intelligence because she seems to have some affinity with Russia, and so I think people are quite concerned about that, apart from the Russians, of course.
Tony Hines:Well, this week, donald Trump has made several key appointments for his second term as President. Susie Wiles was appointed, the first female Chief of Staff in American history, and Wiles is a veteran Republic campaign manager who's worked with Ronald Reagan, ron DeSantis and Trump himself. Elon Musk, appointed to head the new Department of Government Efficiency, doge alongside former Republican presidential candidate Vivek Ramaswamy. This department is to dismantle government bureaucracy and slash excess regulations. It's a cost-cutting exercise. Stephen Miller returning as White House Deputy Chief of Staff for Policy, known for his hardline immigration policies. Thomas Homan appointed as Trump's immigration czar, signaling the return to stricter border enforcement. Mike Waltz appointed the National Security Advisor, and Waltz is the National Security Advisor, and Waltz is a retired army colonel and a critic of China. Elise Stefanik is appointed as the US Ambassador to the United Nations, and Stefanik is known for her vocal criticism of Chinese interference. Mike Huckabee appointed as the US Ambassador to Israel, indicating a more aggressive Middle East policy.
Tony Hines:Trump is focusing on loyalty and strategic vision for his second term in office. He's also appointed Kristi Noem, the governor of South Dakota, as the Secretary of Homeland Security. Noem has been a strong supporter of Trump's immigration policies and has previously sent National Guard troops to the southern border to assist with border security. She'll work closely with Tom Homan, the newly appointed border czar, implementing Trump's plans for securing the border and conducting mass deportations. Tulsi Gabbard has been appointed as the Director of National Intelligence, which has sparked some controversy because she's perceived to have a pro-Russian stance. Gabbard has been criticized for her anti-interventionist views and for echoing Russian propaganda, particularly regarding US foreign policy in Ukraine and Syria. Her appointment has raised concerns among intelligence officials and lawmakers about the potential impact on US intelligence officials and lawmakers about the potential impact on US intelligence operations and alliances Overall.
Tony Hines:Of course, there's a consensus developing by various commentators that Donald Trump's recent appointments and his renewed focus on protectionist policies could have significant impacts on global trade and supply chains. The increase in tariffs that Trump has pledged to impose on imports, particularly from China, could lead to higher costs for businesses and consumers, potentially causing inflation and reducing demand for imported goods. The proposed tariffs and trade restrictions could disrupt existing supply chains, forcing companies to rethink their sourcing strategies, and some businesses might consider nearshoring or onshoring operations to avoid tariffs and ensure supply chain resilience. There's a risk also of trade wars developing, similar to what we had the last time Trump was president with China, and if other countries retaliate with their own tariffs and trade restrictions, this could lead to increased uncertainty and volatility in global markets. There might be different industries that will be affected in various ways. For example, electronics manufacturers might face component shortages, while chemical companies could benefit from reshoring, and the chip industry, of course could be problematic. With low unemployment rates, finding additional labor to meet increased production demand could be challenging and this could further complicate efforts to reshore manufacturing operations. Trump's appointments and policies are expected to create a more protectionist environment, with America first always Well, the economy in the United Kingdom grew by just 0.1% in the last quarter, that's from July through to September, and that's a bit disappointing, especially when the government came in on a policy for growth and many put it down to the increase in national insurance, although it's probably too early for that to have been fully responsible for that downturn at this point.
Tony Hines:But I think people are feeling the pinch from costs, and those lingering costs such as energy costs and the fear of increased energy prices are still in the background. And, of course, food costs have gone up and many people have held back on expenditure. So that's some of the reasons why growth has been lower than expected, and I saw an article this week from the British Retail Consortium and other retailers and there was one comment that caught my eye from the chair of the BRC where it said that inflation, higher borrowing costs, a tax on employment and lower disposable incomes will all cause increased costs for retailers and those increased costs, also in the form of the additional costs they'll have to spend out on labour as well. With the rise in the living wage, going up means only one alternative for retailers, and that is that prices will go up. So up, up up. When we look at growth figures, of course the United States has growth figures of 0.7% in the three months to September, france 0.4%, germany 0.2%, japan 0.2% and the UK lagging behind a bit at 0.1%. The ONS in the United Kingdom said growth was subdued across most industries in the last quarter. One big factor was a slowdown in the service sector, which dominates the UK economy and covers businesses such as shops, bars and restaurants.
Tony Hines:It's a bit early to see whether the budget for growth has actually worked, but most people seem to be forming a consensus around the notion that it wasn't really a budget for growth. It's a budget for tax and spend, and the spending is on infrastructure, and most business people agree, and most of the organizations that support business have said that they can see nothing in the budget that will stimulate growth. One employer in the manufacturing business said that he has 100 employees and the national insurance cost on the employer and the other measures in terms of the wage increases for the lower paid would actually increase his wage bill by about £1,000 per employee over the next year, so that's £100,000 on his cost immediately. It's interesting to see what will actually happen. And that doesn't really encourage growth, does it? It just gives you cost. There are other measures in the budget, of course, that were referred to by the Chancellor that might actually help with other costs and minimise those, but that's pretty unclear. It's a bit murky water, this, and it's all uncertain.
Tony Hines:Well, cop29 does not really appear to have been a great success. The Azerbaijani government apparently has used COP to crack down on environmental activists and political opponents. That's according to human rights groups. It's the third time in three years that there's been a problem with regard to the country hosting the climate summit. The Climate Action Network, a group of nearly 2,000 climate groups, apparently said to the BBC that the protection of civil society is crucial if countries want to see progress on climate change. Global leaders meeting at COP to discuss solutions to the warming planet have called for a rethink on how countries are selected to host the climate summit. It didn't help, of course, with the chair of COP29 expressing prior to the start of COP29 that oil and fossil fuel was a gift from God, and then there have been allegations that he was also seen trying to negotiate deals on fossil fuels with people at COP. So not a good start. And when figures like Christina Figueres and the Chair of the United Nations are actually being critical of how COP29 proceeded, then it would appear to be a problem.
Tony Hines:Well, the financial part of COP, where they focused on redress for the developing world from the richer nations, seems to have become a central tenet of what happens at COP, and there are pleas made for funding. Problem, of course, is that the developed world is already making strides to actually reduce carbon for Prince, and it wants other parts of the world to do the same. But in many developing nations it's difficult to take those choices if it means losing national income. And the problem for the developed world is can they afford another cost on their budget when they're already making strives in their own country to reduce emissions? But the expectations have been set and that's going to be a problem. As COP moves forward, the budget comes afterwards. We need the plans first to say how the reductions would take place, and they need to be measurable. And if there's any money that exchanges hands, it has to be obviously geared to those improvements improvements.
Tony Hines:Typhoo Tea is set to appoint administrators. It's a brand that's 120 years old, but with sales diminishing and losses increasing, debts have risen and the company has filed a notice for administration. To give it breathing space. It has a factory in Moreton. It suffered a setback, according to the BBC, after trespassers damaged its former factory in Moreton on Merseyside last year, and given the delicate nature of this, mr McNulty said he wasn't in a position to comment any further. Ey have been appointed to handle the administrative process. Company losses were $38 million from $9.6 million in the year to the end of September 2023, and sales have fallen to $25.3 million from $33.7 million over the year.
Tony Hines:The company was founded in 1903 and has some of the biggest brands PG Tips, tetley's and Yorkshire Tea. Typhoo is owned by Zetland Capital. The company had £24.1 million worth of exceptional costs on its balance sheet and that related to the break-in at the Morton plant and other matters from last year. Trespassers broke in and occupied the plant for several days in August 2023, causing extensive damage, making the site inaccessible. Much of the tea was rendered unusable and it was unable to fulfil some customer orders.
Tony Hines:Homebase has collapsed into administration, with 200 jobs at risk. Hilco, the owner of Homebase, have been hoping to sell the struggling retailer, but they haven't found a buyer. The company behind the range retail chain is buying 70 stores, as well as the Homebase brand stores, as well as the Homebase brand. That's likely to save about 1,600 jobs, but it still leaves 49 shops and thousands of jobs under threat. Those jobs, of course, will also be in the wider supply chain. The shops will continue to trade while they look for a buyer.
Tony Hines:Hilco bought Homebase from West Farmers in 2018 for a pound, and they'd bought it back in 2016, and the first thing they did was sack the senior management team. They've admitted making a series of unforced errors that caused problems with the home base retail offer. The company struggled and during the cost of living crisis, it's reported to have lost about £84.2 million in the last year. It's been a tale of woe, really. They haven't been able to get back to the position they had prior to the West Farmers takeover. There's a lot more competition in the market, of course, with other stores moving in, and consumer demand in that particular area of home improvements has actually fallen significantly.
Tony Hines:Some other news likely to influence supply chains this week are the changing exchange rates. In the United States, the dollar has strengthened on the outcome of the election, with President Trump-elect firmly in place. This has had an impact both on euro currencies and the UK pound. The UK pound has hit its biggest fall in a number of weeks. It closed on Friday at about $1.27 to the dollar. It's been constantly around the $1.31, to the dollar. It's been constantly around the $1.31, $1.32 mark. Oil prices are down to $71.25.
Tony Hines:China's economy showed signs of rebalancing last week and it had its fastest rise in household expenditure since the start of the year. Retail sales jumped by 4.8%. Drug companies such as AstraZeneca and GSK saw falls in their share price this week on the announcement of the appointment of Robert F Kennedy. At least that's what the market analysts are putting it down to. You can see why if he's an anti-vaxxer, they're not going to sell vaccines. Blue Sky, which is a rival to X, run by a former Twitter owner, has seen a rise in its subscribers this week as people have walked away from X following Elon Musk's close association with the new president. Blue Sky has hit 16 million subscribers and still rising. The UK trade deficit also grew more than expected this week. It's up £1.5 billion to £11.4 billion.
Tony Hines:We're likely to see tractors on the streets of London next week as farmers come to the city to protest against the recent budget changes to inheritance tax that affect the passing on of their family farm. They were out in force at the weekend in Llandudno in North Wales, where Keir Starmer was giving a speech to reinforce all the good things that his new government is doing, and he ignored the claims of the farmers outside the protesters and just carried on. As we're reaching the end of this year 2024, I think we're in for some tough times ahead, and early in the new year, I'll be giving my economic forecast for 2025 and beyond, so I hope you'll tune in to that particular episode early in the new year, and I hope I've got some good news as well as what I think will actually happen during that period, which may not be quite so good. I think we're in for turbulent times. Well, that's it for this week.
Tony Hines:I hope you've learned something from the news edition of the Chain Reaction Podcast, and there are some great episodes coming your way in the next couple of weeks. So get subscribed and find out about those new episodes as they drop, and I'll see you next time in the Chain Reaction Podcast. I'm Tony Hines. I'm signing off. Thanks for listening. Bye, for now you've been listening to the chain reaction podcast, written, presented and produced by tony hines.