Financial Academy

Brexit-related stockpiling is driving up the cost of short-term space in UK warehouses, as companies across the country guard against a no-deal outcome that could cause gridlock at ports and chaos in cross-border trade.

Many businesses, especially smaller ones, have been reluctant to commit resources to costly contingency plans that might prove unnecessary. That is starting to change, with companies of all sizes and in all sectors laying plans to hoard raw materials, components, packaging and finished goods.

Companies now face even more acute uncertainty after the delay of a crucial parliamentary vote on Brexit, with the clock ticking ahead of the UK’s scheduled departure on March 29.

“We have seen a massive spike in calls in the two weeks to a month,” said Charlie Pool, the founder of Stowga — an online platform that serves as a kind of Airbnb for warehouses, matching businesses in need of extra space with suppliers who have spare capacity.

The extra demand had already driven up prices from an average of £1.85 per pallet per week in September to about £2 now, he said. Even so, most companies were still holding off booking once they had checked there was still space available.

Several listed companies — ranging from Airbus and Rolls-Royce to the food group Nestlé and retailers such as Topps Tiles — have said they are building bigger buffers against disruption and are urging their suppliers to take similar steps.

The Bank of England has warned that most UK companies have not yet made any change to their business plan in preparation for Brexit and are not ready to cope with the fallout of a no-deal exit. But when it comes to stockpiling, there are limits to what companies can achieve — and a heavy associated cost.

“Our extended supply chain could survive four weeks — possibly eight,” said Rowan Crozier, chief executive of Brandauer, which makes stamped metal components at its West Midlands factory. He sees Brexit as just an “additional dynamic” in his planning, but is building stocks of incoming materials by 10 per cent and laying plans to use alternative ports or to fly materials in if needed.

Why there is a big gap between output and orders

These contingency measures are now starting to show up in economic data.

In its quarterly survey of members, the EEF manufacturers’ organisation found an unusually big gap between reported output and new orders, suggesting companies were stepping up production to build inventories, not because of new business.

“As we sit here right now, business investment is being held back. The real investment that is going on would appear to be in stock building, short-term contingency planning,” Mark Carney, the Bank of England governor, told a parliamentary committee last week.

The BoE’s agents found that advance booking of warehousing space was now “the highest it has been in some time”, so much so that some companies were taking leases “on chilled storage even for non-perishable goods, in order to secure the space”. It added that many suppliers were planning to build inventories up to twice their usual level, enough to withstand two to four weeks of disruption.

However, hoarding will only go so far to mitigate the risks.

Drugmakers are building stocks beyond the level mandated by government, but as Pinder Sahota, general manager at Novo Nordisk, noted last week: “if all patients requested an extra prescription from their doctors . . . four weeks of stock would be wiped out.” Carmakers rely on a constant cross-border flow of trucks to feed just-in-time manufacturing processes, and say they would need unfeasibly vast stockpiles to maintain production if trade routes were blocked for any significant length of time.

Space and cash limit preparations

There are two big constraints that apply to all sectors: space and cash.

Temperature controlled warehouses are scarce. Some supermarket chains may have room for manoeuvre — Mr Pool said that Asda had previously listed 18 warehouses on Stowga that it had now reoccupied.

But Ian Wright, head of the Food and Drink Federation, said last week that for those without in-house capacity, chilled and frozen storage space was now in effect booked out.

There is still vacant space in standard warehouses, despite pressures caused by the growth of ecommerce. But these are usually let on long-term leases of at least five years. Companies do not want to make such a commitment as a hedge against temporary disruption.

“At the moment they are stockpiling into the most flexible space,” said one landlord, who had received inquiries from companies not yet willing to commit. For now, he said, businesses were likely to turn to third-party logistics providers such as DHL for short-term warehousing. “Once that runs out or the situation becomes permanent, we can see them signing five-year leases.”

Real estate analysts agreed there had been no rush yet for long-term tenancies, although Kevin Mofid, head of commercial research at Savills, said Brexit was probably one reason for a sharp rise this year in speculative developments of warehouses with no identified tenant.

For listed multinationals, stockpiling is an unwanted expense.

“At the end of the day you are tieing up cash,” said Duncan Brock, a group director at the Chartered Institute for Procurement and Supply. “You’ll end up with obsolescence. You’ll pile up stuff and end up with stuff you can’t use.”

For small businesses cash flow can be an existential issue. “At any one time, we have £200,000 tied up in transport,” said Peter Davies, co-founder of OSSL, a steel group whose products include horseshoes for much of Europe’s equine population. “With a 10-day delay, you’ve got £1m floating around. That is cash we may not have . . . That’s our biggest fear.”

Bigbasket’s founder V S Sudhakar said his company was reengineering its supply chain to allow for faster delivery to its resellers and to reduce the time from farm to customer.

Mirae Asset-Naver Asia Growth Fund (Mirae-Naver), a leading investor operating in global growth markets, the UK Government’s development finance institution,CDC Group, and Alibaba Group said on Monday they have led a $150-million round of fundraising for Supermarket Grocery Supplies (SGSPL), which owns the Bigbasket brand.

The round values Bigbasket at over $1 billion, according to the company, making it the newest Unicorn out of India. Business Standard first reported the deal on March 28.

The financing round, which Mirae-Naver has led through one of its funds, marks the group’s largest investment in India.

Mirae Asset-Naver Asia Growth Fund is a joint venture between Seoul-based Mirae Financial Group and Naver Corporation, South Korea’s leading internet company.

Alibaba Group, which had previously led the Series E round at SGSPL in 2017, participated in the current financing round as well.

The Jack Ma-led group aims to enable the growth of local Indian companies like SGSPL, as more users come online in the country.

CDC has been investing in India for over 30 years.

It has committed more than $1.7 billion to the country and has been an investor, directly or indirectly, in over 300 companies.

Its primary aim is to support responsible commercial growth that increases employment and access to services that improve quality of life.

All financial returns are reinvested into more impact focused businesses.

Founded in 2011, SGSPL is headquartered in Bengaluru and serves resellers in 10 metro cities and 15 Tier-II cities.

The proceeds of this round will be used to finance SGSPL’s growth through further penetration into existing markets with more investments in the first mile, scaling up its supply chain and developing new reseller channels.

Commenting on the investment, Ashish Dave, head of India Investments for Mirae Asset Global Investments, said: “SGSPL offers a transformational and convenient experience to its consumers, which makes it a preferred grocery platform. As India moves towards organised retail that offers standardised quality, comfort and speed in the shopping experience, we firmly believe the Bigbasket brand will continue to define this segment as a category leader.”

Bigbasket’s founder V S Sudhakar said his company was reengineering its supply chain to allow for faster delivery to its resellers and to reduce the time from farm to customer.

"We are also scaling up the back-end supply chain for our new businesses - BB Daily that deliver’s fresh milk and other fresh products and BB Instant that creates a network of vending machines.

"This coupled with an expansion in our range of private label products will create a solid foundation for growth in both revenue and profitability," he added.

The heightened activity level in the M&A landscape during 2018 is set to spill over to 2019 as deal fundamentals are expected to remain robust, says Mahesh Singhi.

IMAGE used for representation purpose only. Photograph: Danish Siddiqui/Reuters.

Rainmakers in the deal street may seem to have imbibed the full import of the saying "never let a good crisis go to waste" as they go on to double down on their bets in the corporate mergers and acquisitions (M&A) space on a global scale in 2019.

The narrative seems to be unravelling for a country like India which is on the cusp of a transition that may see many models and plans coming unstuck in 2019.

But what will lend balance to this equation is that the professionals, focussed on corporate marriages and arrangements, are out there on the street in full force to turn any good crisis into durable opportunities provided the dominant theme -- the domestic activity level -- remains intact.

Incidentally, India is inching closer to become a $5 trillion economy any time soon riding on the consumption theme though risks to growth such as fiscal slippage, farms distress, a diving rupee and job crisis are there.

A just released report by a global deal tracking firm which polled corporate executives and fund managers of global investment firms focused on M&A sheds light into this growing line of thinking among globetrotting deal makers.

The results of the survey unambiguously point out that the heightened activity level in the M&A landscape during 2018 is all set to spill over to 2019 as deal fundamentals are expected to remain robust.

Majority of the executives polled, says the survey, anticipate deal flow to perk up in 2019 both in terms of volume and value.

One of the key takeaways from the survey is the surprise uptick in optimism among deal makers despite the mounting odds and multiple headwinds global and local economies are facing.

The survey says corporate and private equity executives focused on M&A foresee further acceleration of deal flow in 2019.

Further, 79 per cent of the respondents polled by the survey expect the number of deals they close in the next 12 months to increase.

There is also a notable dive in the percentage of respondents who foresee deal flow flattening or abating.

The report also predicts a significant spike in the ticket size of deals.

There is, however, a notable change in the essential levers that will change the M&A template going forward -- that technology acquisition no longer reigns as the most critical aspect of M&A strategy.

Instead, most corporate respondents are focused on expanding their customer bases in existing geographies or expanding and diversifying their business offerings.

But what weighs on the mind space of the deal makers is the worrying fact that the return on investments from past deals are below the curve implying misplaced or inflated valuations and business is failing to generate cash flow as per preset milestones.

The blame is equally shared by factors not specific to business like the economic slowdown, market complexities and rigid regulations.

For Indian deal makers who went into a huddle in the second half of 2018 to revisit their style and strategy after a blockbuster first half, the key learning is going full steam ahead into 2019.

Mahesh Singhi is founder and managing director of Singhi Advisors.

Washington D.C., Oct. 5, 2018 —

This is the web version of the WSJ’s newsletter on the economy. You can sign up for daily delivery here.

What talent crunch? Ad agency employment surged to its highest level since 2000, according to the latest Bureau of Labor Statistics figures.

The uptick signals at least a short-term turnaround from a sluggish period of employment: Agencies actually cut jobs each month from September 2017 through January 2018 and then did only limited hiring from February through May.

Agencies had been on the sidelines this year while the nation's overall employment continued to hit records, with the U.S. unemployment rate in August holding at a low 3.9 percent.

U.S. ad agency employment reached 204,100 jobs in July, according to BLS data released Sept. 7. That's the highest point since December 2000 and not far from the all-time high (207,400) hit in August 2000 amid the dot-com ad-spending bubble. (During the period around the 2007-2009 Great Recession, agency employment slumped to just 160,600 jobs.)

While ad agency staffing has picked up, traditional media employment remains weak. TV, radio and magazine employment fell in July, and newspaper employment continues its downward spiral.

Digital media employment keeps growing. Internet publishing and broadcasting and web search portals in July reached an all-time high of 232,300 jobs, adding 7,500 jobs from the year-end 2017 level. Digital media employment has doubled since 2011.

See expanded ad jobs data at our own digital hub: AdAge.com/adjobs (Ad Age Datacenter subscription required.)

Everyone goes through times in their lives where blue skies and sunshine are a rarity. Too many clouds and storms, whether they involve business or personal issues, become the everyday occurrence and keep people from achieving whatever they want to do.

There have been many times on this business journey of my own where fogginess and haze have sent me to the mat. Trying to kick out at a 2-count when being pinned with all of this stuff seems unbearable.

In taking a holistic view (meaning looking at the entire picture) of where I am, what has changed? Clarity. Getting very clear on what I want to do and where I want to focus my creative direction. Yes, I’m a writer, content writer, copywriter, ghostwriter and creative. That’s one element of my own life. Another one involves being a voice for the voiceless in the craniofacial community around the world.

But this is not to simply focus on what I am doing now. This is about clarity, about getting laser-focused on what you want to do. If you have a coach or mentor in your life, then I’ll bet you have heard them say on one or multiple occasions that you have to “get clear” on what you want to offer.

Here are three core reasons clarity is an important factor for your business:

1. You Stand Out From The Crowd

You cannot go anywhere on social media and not see people putting out content. Some may be good; others are meh. It does not matter, though, if it is good or not. What matters is about conversion. Does the content turn into sales? Does it attract and speak to people’s problems?

Not everyone can be a jack-of-all-trades. You become a master-of-none pretty quick. Theories abound about niching down and finding that sweet spot where you can deliver your mastery to those in need. Think of the millions of niches out there: cannabis, fitness, spirituality, relationships, finances, food, and on it goes.

Every one of these niches need people who can come in and put clarity around their products and services. If these businesses are not clear on what they do and solve to those seeking solutions, then they are not going to have clients and eventually will have to shut the doors.

Learning to stand out from the crowd is going to make you a powerful voice in whatever niche or field you are looking to dominate in all the time.

“It’s a lack of clarity that creates chaos and frustration. Those emotions are poison to any living goal.” – Steve Maraboli

2. You Attract A Lot of Clients

If you wanted to apply one of those ancient universal laws to your business – for instance, like the very popular Law of Attraction – then you would understand what attracts people to you. Nikola Tesla, one of the world’s greatest inventors, once said that if people understood energy and vibration alone and how that works then they’d understand a lot of how things actually work in the world.

Clarity brings out a new energy from your words and actions. You come from a place of total and unbelievable awareness where you look around one day and go, “Dang, look at all of the people who want my services.”

Trust me. This is one of those lessons that I have to come back to over and over again. People might know who I am and what I do from this or that space. Yet is it really crystal clear enough to a targeted section of people? Um, it’s still a work in progress.

In order, though, to actually move forward in business and have the level of success that I desire, then clarity must come into play. Clarity attracts clients. They solidly know what you do and what you offer. There’s no wishy-washy stuff taking place. Understand this core reason to achieve clarity and watch what happens to your very own business and brand.

3. You Begin To Believe In Yourself

There’s this ongoing idea around “imposter syndrome” that folks on the interweb love to discuss. Showing up online like you are a real go-getter and hotshot, but offline that’s not the same person…that’s a problem.

“Imposter syndrome,” to me, starts happening when a person stretches out of his or her comfort zone and it feels miserable. Instead of getting up at 11 a.m. after working a night shift job, you get up at 8 a.m. to get a head-start on tasks and obligations around what you do. Thoughts like “this will never work out” or “I’m never going to succeed and get out of debt” start swirling around your mind like a bunch of chattering monkeys.

Clarity, though, allows you the benefit of starting to truly believe in yourself. In his famous book “The Power of Positive Thinking,” Norman Vincent Peale writes in the first chapter’s first line “Believe in yourself.” That’s it. Then the book goes on to describe different ways of building up your positive mindset through prayer, faith, action, and other real-life examples. Peale’s work may not appeal to you directly, but the mere thought of believing in yourself and your dreams is appealing.

“Clarity comes from action not thought.” – Marie Forleo

Find yourself getting clear on what you want and where you want to go and begin to truly believe in yourself and your abilities. There are lots of people who definitely need your services and work around the world. There might even be people right in your own town who do, too.

When tackling the issue of clarity for your business, take these three factors into account. Think about them seriously. Take stock around where this can be an effective place for you to succeed every single day.

Look for the sunshine and blue skies in your business. They are there. All you have to do is some sightseeing and all of it will pop out very clearly.

Wyndham Hotels and Resorts also operates the Wyndham Batumi and Ramada Encore Tiblisi in Georgia.

The group is targeting growth in the region, and currently has 15 hotels across Armenia, Azerbaijan, Georgia, Kazakhstan, Russia, Ukraine and Uzbekistan.

Dimitris Manikis, President and Managing Director for EMEA at Wyndham Hotels and Resorts, commented: “Georgia is experiencing unprecedented growth in visitor numbers, as travellers discover this beautiful country’s charming architecture, rich culture, delectable cuisine and many significant historic sites.

“Wyndham Hotels and Resorts is thrilled to be one of the fastest growing hotel companies in the country, bringing yet another of our internationally recognised hotel brands to Georgia, and adding the vibrant capital city of Tbilisi to the list of international destinations where Wyndham Grand hotels can be found.”

wyndhamhotels.com

Research shows that the typical worker is interrupted about every three minutes. All those little breaks tank our productivity.
Today we’ll tell you how to—

• Silence the noise (literally) that interrupts your focus.
• Gently but firmly discourage drop-in visitors from breaking your concentration.
• Use technology to fight technology, which so often interrupts your work.
• Increase your frustration tolerance so you resist the temptation to bail on a task.
• Heighten your focus with music scientifically proven to help you concentrate.
• Use social cues to signal your unavailability for a “quick question.”
• Wean yourself off of dopamine, the brain chemical that produces a momentary high when checking messages.

This episode is sponsored by my (Michael’s) new book, Free to Focus: A Total Productivity System to Achieve More by Doing Less. This proven system has helped thousands of people end the overwhelm and regain their margin at work and at home. You can pre-order the book now and claim a ton of exclusive bonuses. The bonuses are for a limited time, so order now.

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Resources Mentioned in This Episode