Tag Archives: Nutricia

April 7, 2014 · 20:06

Should governments provide?

This is the question I had after watching the Dutch newscast at the NOS. The issue is that the Dutch are lagging more and more behind the Germans (except for soccer). Now part of that statement is a joke as Germany is 850% the size of the Netherlands. In addition, Germany has large deposits of ores. They are regarded as one of the world’s foremost producers of iron, steel, coal, cement, chemicals, machinery, vehicles, machine tools, electronics, food and beverages, shipbuilding and textiles. So why is this comparison even an issue?

Ineke Dezentjé Hamming, president of the FME (an organisation for the Dutch technological industry) stated “Wij verliezen onze positie als exportland als we niet snel vernieuwen en mee-ontwikkelen met de Duitsers” (translated as) “We are losing our position as an export nation if we do not renew and develop our technologies with the Germans“. In addition there is the statement that Germany is now in its fourth cycle of industries, where factories and ICT are completely integrated (at http://nos.nl/artikel/632638-nl-raakt-achter-op-duitsland.html).

An example could be the New VDL Nedcar factory, which allows for 24 hours a day production. The NOS newscast implies in my view (they did not state) that the approach of the FME is that the government should be handing over the funds to allow for this. In opposition of my own words, I must state that her statement in the Hannover Messe does not imply that at all (at http://www.hannovermesse.de/en/exhibition/partner-country/ineke-dezentje-hammink-blue.xhtml). Yet, the changes in infrastructure will require massive funds and there is plenty of clarity that the industry corners do not seem to have it.

I am still in awe that the Dutch want to get on equal footing with the Germans on an industrial ground. It almost reads like David stating towards Goliath ‘where are the other eleven?‘ which make me wonder, why is this even an issue?

Yes, as the article stated, the Dutch have for too long relied on services, which was not the best choice, yet, what are the options? The Dutch have no mining options, they have an excellence in ship building, yet that market is not doing too well. Let us not forget that the Dutch did have an excellence in services too. They had the East India Company, which should be regarded as the first and largest multinational ever, starting in 1602 lasting almost 200 years, which is a much better track record then IBM can proud itself on.

But in this day and age, after a multiple joke echelon of services based organisations (from the late 90’s), relying on selling concepts, the age of services is dwindling down. Even now, when we see the Business Industry relying on services and selling them, we see a decline as many customers selected (sometimes forced) to find internal solutions. Many corporations had to wise up fast. This is at the heart of the issue I have with the thoughts of Ineke Dezentjé Hamming-Bluemink. She is correct in the thoughts she phrases, yet again, when compared to the Germans, the Dutch had let these options slide for too long. An integrated ICT means that ICT skills are essential to these companies. If not, then those services will explode in costing’s as the ICT will suddenly rise in value, in an unbalanced way, which created a news hype bubble and there is no way that this is a good thing. This is where the shoes become too tight for the dance of industry. To get this all in motion, training and adaptation should have started two years ago. If the entire track is started now, we will see a wildfire of services and needs, which will drown common sense and pragmatism, which in turn will only hurt industries further.

So, why am I writing this?

The issue is that Ineke Dezentjé Hamming-Bluemink brings up an issue that is at the centre for not just the Netherlands, but the situation also applies to the United Kingdom and Australia. This industry 4.0 as they call it might be needed, but that need goes far beyond just high tech industry. The NHS is just one of many service based organisations where the need for strong and correct integration is required (which seems to be a mess). The ICT integration has been a requirement since the late 90’s. Yet, greed got in the way and as these firms all hunkered down on selling concepts and ‘solutions’, the ICT developers got lazy and many decided to forsake on created products and they all walked down to the path of some 80% readied toolbox with additional training and consultancy.

It was extremely counterproductive.

The Dutch have seen in the last three years how ‘Deutche Grundligkeit’ has taken foothold and it gives way to additional growth in Germany. So, the Dutch want to get on this 4.0 horse as some might see it, but why and for whom? The Netherlands does have an industry, however when we get past the breweries and Nutricia, what is left? Unilever, Akzo-Nobel and perhaps Philips? So, in this smaller list, why is industry 4.0 such a story?

That is the puzzling part, which gets me to the (by me) implied need for government ‘subsidies’. This I see as another approach to overspending, by those who should be keeping their wallets closed (the unfortunate consequence of being in debt for almost 500 billion dollars).

Is industry 4.0 anymore then the latest hype?

This is a question that is a lot harder to answer. Yes, it is hype, but the issue with ‘hype’ that this word also implies that its need tends to be overstated to some degree. This is where I tend to side with the need for it. If all parties need to cut costs, then Industry 4.0 is a definite need, but getting there will require spending and is this truly an option for some?

Here we need to see the words of Journalist Frank Gersdorf from the ‘Financieele Dagblad’ (Financial Paper) “De toekomstvisie wordt in Duitsland met zoveel geweld gepusht, zoals met een overheidstoelage van € 200 mln en promotiefilmpjes, dat je bijna gelooft dat dit echt de toekomst is en dat wij in Nederland de boot missen“, translated it states “The futuristic vision is getting pushed in Germany with such ferocity, like with the subsidy of € 200 million and promotion films, that it is implied that this is the real future and that the Dutch are missing the opportunity” (at http://duitslandnieuws.nl/archief/2014/02/frank-gersdorf-industrie-4-0-misschien-een-hype-maar-heeft-wel-toekomst/)

These words give strength to my implied acts from Ineke Dezentjé Hamming-Bluemink seeing them as an attempt to shake the governmental money tree to see what might drop down. it makes perfect sense that she was doing this as it is her job to get what she can to work for and fight for her interest group. This is all fair enough and we cannot fault her for that. I just wonder if the Dutch and several other groups are even ready for this. Germany has always believed in unity (their version of it) and as such, they had set out a path, which has been in motion since 2004 (at http://www.din.de/sixcms_upload/media/2896/DNS_english%5B1%5D.pdf).

This shows that Germany has been on the industrial choices for a decade; the Dutch cannot just step in and ‘proclaim’ that we should get there too just overnight. This I can proclaim as I was there in the late 70’s and 80’s as the Rotterdam harbours were in a transitional need for upgrading. Take 3 large harbour barons and you got 7 opinions, 14 options and no solution. I reckon that Anthony Veder was the last of the true famous harbour barons. As I witnessed the sales fight between IBM, Hewlett Packard (mainframes) and Digital Equipment Corporation (DEC), things were never standard in any way. For the record, my voice was always with DEC with VAX/VMS, which showed true paths of open standardisation. There is only so many times you can stomach the ‘answer‘ “we are IBM” as it was an actual answer to a question. This is however not about IBM, this is about the needs for industry 4.0 and as such a new form of true standard ‘plug and produce’ solutions. There is no commitment to a path, too many players want the door to remain open so that they might get a shot at this and at the same instance, nothing gets done and no one will decide. So it is not just about the advantage Germany is building, it is about the increased distance it is creating by actually going for any solution.

The Germans do have a massive advantage. When the need was there almost 5 years ago, Germany did tighten the belt, the rest (Netherlands, UK, France and Italy) played their ‘fair weather’ games and as such they are now in additional hardships, which is likely disabling that money tree to be shaken. At least, until there is a clear shown path for an ROI for the Dutch taxpayer. This is however not just about the Dutch; the Commonwealth is in a similar situation. In the magazine Industrial Technology of January 2014 (at http://www.gambica.org.uk/app/images/documents/articles/Industrial_Technology_Jan2014.pdf) where we see the following quote at the end: “Industry 4.0 could be the reason why the UK is ultimately successful in redefining itself as a manufacturing economy“. This I can agree with, just as I did not disagree with the statements given by Ineke Dezentjé Hamming-Bluemink. The issue of funds will remain, no matter how needed it might be and if this is good for business, why should the government fund it? Consider the statement “we could be profitable if the tax office foots the bill“. That is what this current Industry 4.0 situation amounts to. This does not mean that it should not happen, but what is the Return On Investment? If it takes longer than that, is it a good deal to put money in something whilst the main objective for the Netherlands and the UK should be to lower their debts.

The issue is already getting the consultants to crawl out of the woodwork (like Roland Berger), where we can read (at http://www.rolandberger.com/press_releases/Industry_4_0_opportunities_for_European_industry.html)

“The Roland Berger experts explain what companies and politics should do to support the development of Industry 4.0 and leverage this opportunity for Europe“. It seems to me that this is another one sided step to get the cards shoved into the hands of politics to spend, spend, spend. They also illuminated a second side to this all. The second quote gives us the cake with toppings “This is where politics needs to support the process by initiating research and development programs at the European level“. Why? Why can this not be instigated by IBM, Oracle or by Hewlett Packard? If it makes business sense, then these three will hop on that horse right quick. Why must tax Euros be used one way or another? They made billions, which means that sponsoring should not really be a prerequisite.

In my view, I find that new technologies are usually a step forward, yet when we consider on how people jump on and off funding horses with the greatest of easy within their political terms, should we allow certain corporate evolutions at the expense of the government coffers?

 

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May 15, 2013 · 20:52

A noun of non-profit

The EU is getting a few more jabs using jibs, as it sails through the rough weathers of recession. Germany is up, France is down and the UK is about to remove their ship. If the Dutch economy does go up, it will be a plain victory through Nutricia as it shipped several containers of baby milk powder to China. As each container contains 20.000 boxes of Nutrilon (Source: http://www.nos.nl) this could be a first step to stem the tide of some safety for the Chinese baby nutrition. Yes, the article could not leave out the emotional side of crying mothers at the cash register. There is in opposition to the statement in the article little or no guarantee that supermarket hoggers will stop trying to ship baby food to China for now, as it is fast money for those involved and there are additional groups of tourists and foreign students trying to lend a helping hand to their families. This is the one consumer strongly aiding babies and the Dutch economy.

However, they are not there yet. The EU economy is no milk run as it is presently presented. It is not just the economy. If you think that just the local (read national) budgets are a problem, no it gets worse. The EU Budget itself is also coming up short. So that clearly reads that we have nations with a deficit, and now that the group that they belong, which also has a budget is ALSO in deficit. In an interview president of the Euro group Jeroen Dijsselbloem stated on the NOS journal in the Netherlands that the Dutch budget will get hit for up to a little over 500 million Euro (which was stated to be a worst case scenario). In addition the IMF stated the worrying condition of the Netherlands. The Dutch NOS reported the prediction that even though the Dutch economy will shrink another 0.5%, they do predict a growth of 1.1% next year. I personally join the group “Oh ye of little faith!” on that one and if they are able to get the economy up to 0.2% positive in 2014 than they would have achieved quite the small miracle.

The shortage, extra payments and several other ‘bad news’ moments we are likely to hear during 2013 would effectively prevent that 1.1% growth. We will know the actual number next year, but I am putting it out, right here, right now! I must admit that the idea of calling Christine Lagarde next year telling her “told you so!” seems definitely more appealing than a 2 week free for all in the Playboy Mansion (but then, as many have stated before, I was always wired slightly weird).

So, the Dutch government, who was unable to keep their budgets (like several other nations), and after getting a 1 year extension to get their budgets in order, this happens. The Netherlands is however not the only one, and this is not about having a go at the Dutch.

The French are also on the recession list. Or better stated, the French situation might soon become dicey to say the least. Even though their economy is not deep into the dip of bad economy, 0.2% is still an issue, especially as this is a continuing line of sub zero numbers goes on. If we look at the IMF Document called ‘World Economic Outlook‘, April 2013 (http://www.imf.org/external/pubs/ft/weo/2013/01/pdf/text.pdf) shows that these numbers who seem to be on par, are not that accurate. If we take the word from Dutch (NOS) and Belgium (VRT) sources we see that the Belgium shortage is now set past the 3% point, which is a big no-no as the EU had set an upper margin of 2.8%. So the account balance which was set for Belgium in the time range from 2012 to 2014 was supposed to be -0.5, -0.1 to 0.2 is now -0.5, -0.3 and ??? So we need to take into account that these were predictions, yet, if the numbers are off either by registration or by prediction (0.2% national difference is a lot of money), then we have another issue. What else is missed?

 

This is exactly why governments should not be allowed to skate to the edge of the ice (read maximum budget shortage) to that extent. All these predictors and good weather ‘reporters’ that the ice is good and the ice looks fine and the ice is thick enough feels to me that it would be part of the flim-flam confusion act. The issue is that even though these statements might all be correct, people forget that all involved parties neglected to check the quality of the ice below the surface. That part is now breaking off, in part due to many others jumping up and down on the ice for an extended period of time to the point that the skater now ends up taking a dive in the water and is starting to drown. There lies the problem! Should you doubt this part, than reflect on these events in regards to the Greece eternal debt.

Consider that the big nations are all in debt, even Germany. Yet Germany took a hard handle on their debts and fought it to lessen the power debt had. The issues that the other large players are stuck in a wrestling embrace with recessions and risk taking banks should not be lost on us. In addition several of them like France, Italy, Spain, Portugal, The Netherlands, Belgium and Slovenia are in a less good shape at present. When we then add Greece and Cyprus, we end up in a garden party with large portions of recession and deficits to go around for all players of the economy game.

I am not telling anything I had not blogged before, yet the issue remains and the game seems to be changing at present. If the UK, by pressure of its population is moved to walk away from the EU then we have a new situation. As long as the UK was part of the EU, they had a stable anchor in play.

Consider a large (really large) barge, that barge was kept in place by 4 strong anchors. UK, France, Germany and Italy. Yes, we to do know that most are in shabby state, yet, overall these nations are large, stable and democratic (that matters). They keep the Barge EU afloat in a stable place on the whimsy stormy sea called economy. If the UK walks away, then we have a new situation. None of the other nations have the size and strength of the anchor required and the EU now becomes a less stable place where the barge shifts. This will have consequences, but at present, the actual damage cannot be easily foreseen. Any claim that there is no consequence and they predict no issues, remember this moment! The Barge (as is), will lose stability and the smaller members thinking they are on a big boat are now thrown left to right then left again as the storm rages on. The smaller nations will get damaged and in addition, the weaker ones (Cyprus and Greece) could still collapse, especially if the UK takes a non EU gander.

There is however an additional look. Some could take at a paper by Edda Zoli called “Italian Sovereign Spreads: Their Determinants and Pass-through to Bank Funding Costs and Lending Conditions“. It is an impressive piece of work. and can be found at: “http://www.imf.org/external/pubs/ft/wp/2013/wp1384.pdf“.

The abstract states: “Volatility in Italian sovereign spreads has increased since mid-2011. This paper finds that news on the Euro area debt crisis and country specific events were important drivers of sovereign spreads. Movements in sovereign spreads affect CDS spreads and bond yields of Italian banks, and are transmitted rapidly to firm lending rates.”

Oops! That is interesting, as this is exactly the fear that drives some of us, especially when we saw Cyprus and recently the worries that the Co-Op Banking group is giving us and not to mention to unresolved issues on Barclays, Royal Bank of Scotland, SNS Reaal (now nationalised) as well as possible future issues with Banca D’Italia (The Bank of Italy), who currently seems firm and strong, yet if Italy continues to fend of the Austerity measures we will see an increased wave of issues that could have far fetching and long term consequences.

In regards to the UK, when looking at Barclays I found this with the New York Times in March 2013 By Julia Werdigier. “Despite the bank’s weak profit and legal woes, top executives at Barclays have been richly rewarded in the years since the financial crisis.” In addition it states “The payouts come at a difficult time for Barclays. While the stock was awarded before 2012, the compensation may still give additional fodder for critics, who have complained about the industry’s outsize pay packages.” That is not all! On May 7th Reuters reported that the Citigroup has sued Barclays PLC for over 140 million dollars for the 2008 Lehman Brothers party, a party from which some banks are still trying to recover from almost 5 years later. In addition there is the LIBOR rate ‘scheme’, which costed Barclays in the form of a fine exceeding a quarter of a billion pounds. Then we get Citigroup now claiming, wanting desiring and demanding over 140 million. Oh Joy! Yes the Barclay executives (around 430) ended up with a total bonus of over 650 million. So how much money did Barclays make? (Read on to learn)

This example shows exactly my fear. If we see the paper by Adda Zoli, we see part of the issue. If the national debt grows, the risk increases. The UK has a debt in excess of 1 trillion pounds. That is a lot! Banks seem to have less and less, and as such you and me (you know your average dopey lender) has less and less chance of any future in these dark days. Now, to be clear, Barclays was NOT bailed out by the government. They took the high road and decided to cut down on staff by almost 7000 (over a period exceeding one year). Like that is not additional pressure on the government? Yet, all these bonuses, which might have allowed them to hold all their staff for another 4 years for the price of 1 year of executive bonus.

In addition, Zoli’s paper is specific to Italy, yet that same approach might also be used to look at the danger levels in several EU countries. Take these facts and now extrapolate back to the big barge called EU. We can speculate that as people on the boat are thrown overboard. It changes the weight of the vessel as it loses, not gain stability. In addition, some get such high rewards, rewards that are kept to them, not used to maintain the barge! These factors will impede that barge even more and those additional factors are overseen and given to us in the form of ‘bad news’ moments that just pop up. Remember the extra EU payment at the beginning? So a barge, now less stable and a drowning population, all in the Economic Ocean, a restless pond, that is East of the Atlantic and West of the Pacific.

It is important to realise that these Barclays executives have not broken any laws. They were ‘rewarded’, yet Barclays reported a Nett loss of 1 billion for 2012. Seems utterly wrong doesn’t it?

 

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