Monday, March 18, 2024

A 15-year problem that has plagued corporate America is finally turning around

Josh Schafer
·Reporter
Sat, March 16, 2024 

American workers are becoming more productive.

Recent analysis from Bank of America showed the average revenue per worker for companies in the S&P 500 hit an all-time high in February after 15 years of no gains. This is one of several signs that labor productivity is rebounding after slumping during 2022.


Some on Wall Street think the developments in labor productivity could help the stock market survive stickier-than-expected inflation that has emerged as a concern in recent weeks.

"If productivity goes higher, then [companies] are able to cut costs, improve margins, things like that," Bank of America US and Canada equity strategist Ohsung Kwon told Yahoo Finance. "That's why companies are so focused on improving productivity. There's a lot of macro headwinds happening. So they are trying to find ways to improve productivity and sort of offset those headwinds."

The headwinds Kwon references include the risk the Federal Reserve holds off on cutting interest rates as inflation's path downward continues to prove bumpier than initially hoped. Two separate reports released this week showed inflation was hotter than economists expected in February. And annual wage growth during the month was higher than what economists have said the Fed wants to see to feel confident inflation is moving down to its 2% target.

The research team at Carson Group argues an increase in productivity could offset these concerns, though.

"With productivity soaring like it is and will hopefully continue like it can, you don't have to worry about inflation coming back, you really don't," Carson Group chief market strategist Ryan Detrick told Yahoo Finance.

Detrick's colleague Sonu Varghese explained that persistent wage growth can usually cause an inflation problem if consumers have more money to spend on goods. Demand for goods would rise as workers make more money, therefore pushing prices higher. This paradigm shifts, though, if productivity picks up. In that instance, the economy could sustain higher wages because companies would also be producing more goods. If both the demand and supply of goods pick up, then prices can remain stable.

Varghese highlighted two different instances where wage growth surged. In the 1970s, wage growth picked up but productivity didn't, leading to a decade-long battle with persistent inflation. In the 1990s, wage growth gains were met with a productivity boom and subsequently led to a prosperous stretch for both US economic growth and stock market gains.
As productivity picks up, it increases the overall trajectory of the US economic growth, Renaissance Macro head of economic research Neil Dutta told Yahoo Finance.

That's welcome news for stocks.

Companies can choose to use their increased financial gains from productivity in a variety of ways. One would be to keep boosting wages to lure in more workers. But recent shifts in the labor market show that likely won't be the case.

The labor market has shown some signs of softening and the large pay bumps needed to lure workers in the post-lockdown job market have eased. The quits rate, a sign of confidence among workers, hit its lowest level since August 2020 in January.

This would indicate that companies would take their additional revenues from increased productivity and use them to boost margins. Higher margins are usually a tailwind for future company earnings, which would in theory lift equities.

All of this comes without a mention of artificial intelligence, which has been lauded as a potential productivity booster.

"AI is kind of like the cherry on the top," Kwon said. "AI obviously is going to be a huge productivity enhancer. I don't know when that's going to happen. But we do think that is going to happen and be a huge boost to productivity as well."



























Why a Native American Nation Is Challenging the U.S. Over a 1794 Treaty

Grace Ashford
Fri, March 15, 2024 

Joe Heath, a lawyer for the Onondaga Nation, at Onondaga Creek, south of Syracuse, N.Y., Nov. 30, 2023. (Lauren Petracca/The New York Times)


ONONDAGA NATION TERRITORY, N.Y. — Four or five years ago, Sidney Hill’s young son came to him with a question that Hill didn’t know how to answer.

The boy had learned that day about the millions of acres of land that his people, the Onondaga, had once called home, and the way that their homeland had been taken parcel by parcel by the state of New York, until all that was left was 11 square miles south of Syracuse.

“We lost all this land,” Hill recalled his son saying. “How can that be?”

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In many ways, Hill was the best person to answer that question. As Tadodaho, the spiritual leader of the Onondaga Nation, he was responsible for protecting its legacy and guiding it into the future. He was one of a handful of elders who have worked for decades on a legal and diplomatic strategy to fight back against the historic wrongs his son now sought to understand.

Even so, it caught him off balance.

The younger generation needed to know, he said. “But it doesn’t make much sense to them.”

Hill tried to reassure his son that all that injustice was in the past.

But he knew how hard it was to accept past wrongs, particularly when their consequences so informed the present. It was why he had spent so long pushing — first Onondaga elders, then the U.S. justice system and, finally, an international human rights commission — for a correction to that history.

The Onondaga claim that the United States violated a 1794 treaty, signed by George Washington, that guaranteed 2.5 million acres in central New York to them. The case, filed in 2014, is the second brought by an American Indian nation against the United States in an international human rights body; a finding is expected as soon as this year.

Even if the Onondaga are successful, the result will mostly be symbolic. The entity, the Inter-American Commission on Human Rights, has no power to enforce a finding or settlement, and the United States has said that it does not consider the commission’s recommendations to be binding.

“We could win against them, but that doesn’t mean that they have to abide by whatever,” Hill said in an interview.

The 2.5 million acres have long since been transformed by highways and utility lines, shopping malls, universities, airports and roller rinks.

The territory encompasses the cities of Binghamton and Syracuse, as well as more than 30 state forests, dozens of lakes and countless streams and tributaries. It is also home to 24 Superfund sites, the environmental detritus of the powerhouse economy that helped central New York thrive during the beginning and middle half of the 20th century.

Most notorious of these is Lake Onondaga, which once held the dubious title of America’s most polluted lake.

Industrial waste has left its mark on Onondaga territory, leaving the nation unable to fish from its streams and rivers. The history of environmental degradation is part of what motivates the Onondaga, who consider it their sacred responsibility to protect their land.

One of their chief objectives in filing the petition is a seat at the table on environmental decisions across the original territory. The other is an acknowledgment that New York, even if only in principle, owes them 2.5 million acres.

Across the nation, government officials have grappled with the notion of reparations to address historical injustices. In 2022, officials in Evanston, Illinois, began distributing $25,000 to Black descendants of enslaved people as reparations for housing discrimination.

In New York, people who were once imprisoned for marijuana crimes received preference for licenses to sell cannabis; Gov. Kathy Hochul last year also created a statewide task force to examine whether reparations can be made to address the legacy of racial injustice.

Some Native nations have been willing to drop land claims in exchange for licenses to operate casinos. But the Onondaga say they are not interested in cash. Nor are they interested in licenses to sell cannabis or operate a casino — which they consider socially irresponsible and a threat to their tribal sovereignty.

There’s really just one thing that Hill says would be an acceptable form of payment: land.

The Onondaga insist they are not looking to displace anyone. Instead they hope the state might turn over a tract of unspoiled land for the nation to hunt, fish, preserve or develop as it sees fit. One such repatriation effort is underway: the return of 1,000 acres as a part of a federal settlement with Honeywell International for the contamination of Onondaga Lake.

The United States has not contested the Onondaga’s account of how the nation lost its land. Indeed, the lawyers representing the United States in the Onondaga case have centered their argument on legal precedence, noting that courts at every level — including the U.S. Supreme Court — rejected the Onondaga’s claims as too old and most remedies too disruptive to the region’s current inhabitants.

To the Onondaga, the logic required to square these contentions seems unfair. Why should the United States be allowed to steal their land and face no obligation to give some back?

Joe Heath, a lawyer representing the Onondaga, said the refusal to acknowledge the past stands in the way of healing the future.

“If we don’t admit that those things have happened, how do we move forward together?” he said. But Heath understood that such an admission would have serious legal and practical implications.

“The problem is that all of the land in New York, in the United States, is stolen Indian land,” he said. “What does that mean in terms of U.S. property law?”

‘All of Our Country and for a Very Trifle’

There was a time when the United States worked with the Haudenosaunee, the confederacy that includes the Onondaga, Cayuga, Oneida, Tuscarora, Mohawk and Seneca nations, as the fledgling government sought to defuse conflicts in the aftermath of the Revolutionary War.

The federal government entered into three treaties that affirmed the confederacy’s sovereignty and ownership over much of the northern part of New York state. Critically, those treaties guaranteed that no one but the federal government would have the authority to deal with the Haudenosaunee.

But as early as 1788, New York state had started to chip away at the Haudenosaunee land and sovereignty. Over the next 34 years, the state would come to control nearly all of the Onondaga land — as well as most of that owned by the other Haudenosaunee nations — because of a series of transactions that the Onondaga say were illegal.

“The [New] York people have got almost all of our Country and for a very trifle,” Onondaga chiefs told federal officials in 1794, according to the papers of U.S. Indian Commissioner Timothy Pickering.

For the next two centuries, the Onondaga continued to fruitlessly press their case in numerous face-to-face meetings with presidents, members of Congress and governors of New York.

Legal options were limited: In New York, for example, Native people were not considered to have standing to sue on their own behalf until 1987.

When Indian nations did make it into the courtroom, many claims were dismissed.

The Onondaga’s decision to go to court was decades in the making, with the first discussions beginning more than 40 years ago. For the next 20 years, the council debated in the long house — a long, low structure made of whole logs used for ceremonial events and Haudenosaunee gatherings.

Hill is one of 14 chiefs on that council, each of whom represents a different clan. In the Onondaga tradition, these chiefs are male, but they are appointed by the clan mothers.

The chiefs did not initially embrace the idea of a lawsuit, seeing it as another venue for broken promises.

“Our elders were always afraid of going into courts,” Hill said. Many were concerned that losing in court could lead them to lose what little land they had left.

“We finally said: We have to do something,” Hill said.

In 2005, the Onondaga filed a version of their current claim in U.S. District Court in the Northern District of New York, naming as defendants the state of New York, its governor, Onondaga County, the city of Syracuse and a handful of the companies responsible for the environmental degradation over the past centuries. A similar case filed by the Oneida Nation was, at the time, pending before the Supreme Court.

But just 18 days after the Onondaga filed their petition, the Supreme Court rejected the Oneidas’ case. The decision referenced an colonial-era legal theory known as the Doctrine of Discovery, which holds, in part, that Indigenous property claims were nullified by the “discovery” of that land by Christians.

The “long lapse of time” and “the attendant dramatic changes in the character” precluded the Oneida nation from the “disruptive remedy” it sought, Justice Ruth Bader Ginsburg wrote in the majority decision.

The ruling appeared to doom the chances of any Native nation seeking recompense through the courts. The history seemed settled.

‘Disruptive to Who?’

Of the more than 1,600 words in the Supreme Court’s ruling, one stood out to Hill: “disruptive.”

“When I heard that, I said, ‘Well, OK, disruptive to who?’” he recalled. “It’s already been disruptive to us, as Indigenous people.”

Some might have left it at that: an admission that Native people could never be made whole for the profound wrongs perpetrated on them.

Instead, lawyers for the Onondaga used the rejection as the premise for a new argument. They contended that the U.S. court system’s refusal to find in their favor proved that they could not find justice in the United States.

The petition filed before the international commission amounts to the most direct challenge of the United States’ treatment of Indigenous people to date in terms of human rights — and the first to apply the lens of colonialism.

“What the Onondaga litigation is doing right now is to force a political dialogue with the colonial occupier,” said Andrew Reid, a lawyer representing the Onondaga, adding that a favorable finding could prompt a political conversation about the United States’ treatment of native people on the world stage.

Representatives for the State Department declined to be interviewed and did not respond to requests for comment. But in legal documents, the United States contended that the Onondaga’s central claims have been rejected in prior cases; that they have had “abundant opportunity” for their case to be heard; and that they are merely unhappy with the outcome. It also contended that the commission has no jurisdiction, given that the bulk of the nation’s losses took place two centuries before it was established.

“The judicial process functioned as it should have in this matter,” the United States wrote in legal papers.

The commission’s decision could come at any time, but Hill is trying not to focus on it.

Most days he is glad to have tried.

“We aren’t sure how it’s going to go,” he says. “But at least it won’t be hanging there for the next generation.”

c.2024 The New York Times Company

UK
Competition watchdog probes Barratt’s multi-billion pound Redrow deal

Laura McGuire
Fri, 15 March 2024 

The competition watchdog is to investigate Barratt’s £2.5bn acquisition of rival housebuilder Redrow.

The competition watchdog is to investigate Barratt’s £2.5bn acquisition of rival housebuilder Redrow.

This morning, the Competition and Markets Authority (CMA) said it is: “considering whether it may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002”.

“And, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.”

The CMA also said it is issuing a preliminary ‘invitation to comment’ to allow interested parties “to submit to the CMA any initial views on the impact that the transaction could have on competition in the UK.”

Barratt said at the time the deal would create the UK’s largest housebuilder and would help accelerate the “delivery of homes this country needs”.

However, the shock deal came shortly before the CMA published its review on the UK’s housebuilding sector, which hardly showered the industry with glory.

The competition regulator identified a number of issues with the market, including complex planning regulations holding back housebuilding, poor quality of homes constructed and high estate management charges during the year-long study.

The CMA also said it “found evidence” during the study, which indicated that some housebuilders may be sharing commercially sensitive information with their competitors. To that end, it launched a new review to investigate pricing practices in the sector.

An investigation has also been launched into some of the country’s biggest house builders, including Barratt, Bellway and Vistry.

The CMA said activity among housebuilders could be “influencing the build-out of sites and the prices of new homes.”

If formed, the ‘Barratt Redrow’ behemoth will have aggregate revenues of £7.45bn and build about 23,000 homes a year.

As part of the terms, Barrett’s shareholders will hold approximately 67.2 per cent of the combined group, whilst Redrow will account for the remaining 32.8 per cent.

Money flowing out of London stock market at a record pace, new figures show

Simon English
Fri, 15 March 2024 

Money is flowing out of the London equities at a faster pace than ever, despite government efforts to boost the stock market.

According to Investment Association recent figures UK savers took £14 billion out of UK equities last year, the eighth consecutive year of outflows.

New research by SCM Direct for the Evening Standard suggests this situation is getting worse rather than better despite some experts insisting London shares are now so cheap they represent a buying opportunity.

SCM looked at money flowing through Exchange Traded Funds, an increasingly popular tool for both small investors and large institutions.


Net retail sales of funds investing in UK equities (Evening Standard - data from SCM Direct)

Of 17 European countries, only four – Austria, Norway, Germany, Holland – have seen greater percentage outflows of money this year. The largest UK equity ETF is the iShares Core FTSE 100 ETF which has a massive £14.8 Bn invested in it – this compares with the largest US Equities ETF worldwide, the SPDR S&P 500 ETF that holds $507 Bn in assets.


Alan Miller of SCM Direct said: “Europe as a whole has seen money coming in not out. This is part of the reason for the abysmal showing of the UK market this year – the FTSE 100 is up just 0.2% vs +10.6% for the Euro Stoxx 50.”

Miller adds: “There are some underlying fundamental reasons for the poor performance of UK equities, the over-representation in the ‘old’ economy i rather than tech, together with the ongoing uncertainties surrounding Brexit and its economic implications. Political instability, including changes in leadership and policy direction, has also contributed to a lack of confidence in UK equities. But this simply does not account for the gulf in performance and valuations between the UK and its peers.”

In the budget last week Chancellor Jeremy Hunt unveiled a new “UK ISA” that allows investors to put £5,000 a year tax-free specifically in UK shares. That comes on top of the existing £20,000 annual allowance.

Miller adds: “The substantial outflows from UK equities present serious issues for the long-term health of the UK economy. It means that effectively the cost of capital for UK companies is higher as those seeking capital from the UK market must pay a higher price to attract demand and means that more and more UK companies will be prone to foreign takeovers which normally means less UK employment/investment.”

One problem is that pension funds have just 4% of their assets in UK shares compared to 50% in 1990.

This compares with Australia & Canada, both small markets, being 22% and 9% respectively of their pension funds. In fact, the pension fund that invests on behalf of Britain’s MPs and ministers, has just 1.7% invested in UK-listed companies.

There are growing calls for the government to mandate that pension funds hold a minimum level of UK equities.

The ONS, the Government’s own data cruncher, has just reported that Insurance and pension funds’ proportions in UK quoted shares have fallen since 1997 when the two sectors held a combined 45.7% of UK quoted shares. The two sectors held a total of 4.2% of UK listed shares in 2022 which is the lowest proportion jointly held by them on record.

The ONS blames this on ‘several factors, such as companies expecting more profitable returns on overseas shares as well as changes in pension fund regulations.’ At the end of 2022 57.7% of the UK market was held by non-UK investors – this percentage has increased every year since 1998 when it was just 30.7%.

Could Glencore really ditch the so-called ‘home of mining’ the London Stock Exchange?


Rhodri Morgan
Fri, 15 March 2024 

Glencore's shares have underperformed rivals since the company's listing in 2011

Activist investor Tribeca sent jitters through the City yesterday with the claim that London had lost its lustre for the likes of Glencore.

The London Stock Exchange, the Aussie hedge fund said, was no longer the “home of mining”. And to realise its true potential, Glencore should ditch its City hub and abandon much-touted plans to spin off its coal business.

The calls mirrored a similar move to that of FTSE 100 mining giant BHP in 2022 when it cancelled its London listing to head down under.

BHP was one of the comparators picked out by Tribeca as it pointed to the fact that Glencore had delivered returns of nine per cent since listing in 2011 against 95 per cent for BHP and 126 per cent for Rio Tinto.


Since the beginning of the year, shares in Glencore have fallen around 11 per cent and have struggled against a backdrop of turbulent commodity prices and uncertainty over the future of its coal business.

But the accusation against London in particular is likely to unsettle City watchers. For all the hand-wringing over the future of London as a listings venue, the capital’s role as a hub for the so-called old economy stocks of heavy industry has been largely unchallenged.

As the Chartered Governance Institute said yesterday, “mining is one of the UK’s greatest success stories”, and an exit from Glencore would be a “major setback.”

Scores of mining behemoths still populate London’s markets, however, and the suggestion of a swap for Glencore fell on largely deaf ears yesterday.

“Glencore has always said it will look at ways of maximizing value, but any idea of listing on the ASX is nonsensical,” a market source told City A.M.

Ben Davis, an analyst at Liberum, added that he doesn’t “expect much appetite from management” to switch its base to Australia.

“[It’s] unclear why Australia would need an even more heavy weighting to the mining sector than it already has, and questionable what valuation uplift it would deliver,” he added.

While Glencore’s sluggish share price has naturally attracted the attention of activists, the performance is also a symptom of the industry’s external headwinds. Lower commodity prices, for instance, have dented profits, particularly in its coal portfolio.

“A change of listing won’t magically fix these,” added Sophie Lund-Yates, an analyst at Hargreaves Lansdown.

More pressing, she says, is the uncertainty over the future of Glencore’s coal arm. Tribeca is calling on Glencore to retain the division, which it has said it will spin off following the acquisition of Canadian firm Teck Resources’ coal business last year.

Glencore paid $6.9bn (£5.4bn) in cash for a 77 per cent stake in Teck’s coal business that supplies the steel industry. Japan’s Nippon Steel and South Korea’s Posco own the rest. The deal valued the business at $9bn (£7.1bn).

The call from Tribeca runs counter to its campaign against miner Teck, which it previously pushed the firm to carve off its coal and oil sands business.

Glencore boss Gary Nagle has been insistent the firm will ultimately do what its shareholders decide.

“When we announced the transaction, we said our intention was to spin out, and that is our intention, but it’s always subject to what our shareholders want,” he said at the firm’s full-year results earlier this year.

He added: “We will consult with our shareholders, and it’s the decision of the shareholders ultimately to do that.”

While the future of its coal business will sit in the hands of investors, for now, its London base seems secure.

Telegraph gets new RECYCLED chairman to navigate UAE fallout

TORY TELEGRAPH PROTECTED FROM UAE PURCHASE BY TORY GOVERNMENT

Christopher Williams
Fri, 15 March 2024 

Mr McTighe is also chairman of BT's independent network arm Openreach and the FTSE 250 spread betting operator IG Group - Julian Simmonds

The Telegraph has won ministerial approval to appoint Mike McTighe as its chairman, as it faces the fallout from the failure of a takeover bid backed by the United Arab Emirates.

Mr McTighe, 70, was previously chairman of Press Acquisitions Limited, the parent company of The Telegraph and The Spectator magazine.

By becoming chairman of The Telegraph itself, it is expected he will become more closely involved in the day-to-day running of the company and the corporate, regulatory and political challenges posed by the continuing uncertainty over its ownership.

Mr McTighe, who is also chairman of BT’s independent network arm Openreach and the FTSE 250 spread betting operator IG Group, said he would seek “clarity and certainty” for The Telegraph to enable it to “continue delivering consistently high-quality and fiercely independent editorial content”.


“It is a privilege to join the board of Telegraph Media Group to provide representation for the company as we work to secure a strong future for this important organisation,” he said.

Anna Jones, chief executive of The Telegraph, said that Mr McTighe “brings a wealth of industry experience and he will provide additional stability to the operation of the business as we navigate the weeks and months ahead”.

The Telegraph’s ownership has been up in the air since June, when Lloyds Banking Group seized control as part of a debt dispute with the Barclay Family and planned to auction The Telegraph and The Spectator.

In December, RedBird IMI, a fund 75pc backed by the UAE and led by the former CNN chief Jeff Zucker, ambushed rival suitors by helping repay the £1.2bn in overdue borrowing with a new loan that included an option to immediately convert the lending to ownership.

Intervention by Culture Secretary Lucy Frazer suspended the manoeuvre for regulatory scrutiny of RedBird IMI’s plans. It meant that the Barclay family has regained ownership of The Telegraph, but are barred from exercising any control. Meanwhile, the company is barred from making any significant changes to its key personnel or structure.

Ms Frazer will continue to scrutinise The Telegraph takeover while peers debate the proposed law change - Stefan Rousseau/PA

Mr McTighe, who had been appointed chairman of Press Acquisitions Limited by Lloyds, was asked to remain in place when RedBird IMI swooped, along with two independent directors of The Telegraph.

Ms Frazer has now approved Mr McTighe joining them on the board of the operating company, despite her having protested against the decision in January to part company with the previous chief executive, Nick Hugh.

While the regulatory scrutiny of RedBird IMI continues, it was effectively superseded on Wednesday, when the Government announced it would legislate against foreign state ownership of newspapers.

The full details have not been published but are expected to outlaw RedBird IMI’s bid following an outcry over the potential threat to the public and national interest.

RedBird IMI, which had argued that the UAE would be a purely passive investor and that legally binding protections for press freedom would be put in place, immediately signalled it was likely to sell on its position.

An onward sale could allow another owner to buy the £600m loan it made to the Barclay family and convert it to ownership of The Telegraph and The Spectator.

At last year’s aborted auction, the Daily Mail owner Lord Rothermere, Rupert Murdoch’s News UK, the GB News co-owner Sir Paul Marshall, the local newspaper group National World, the Belgian publisher Mediahuis and German media empire Axel Springer all registered their interest in bidding, among others.

RedBird IMI also said that commercial interests would be the “sole priority” as it considered its next move. If the fund, a joint venture between the UAE and RedBird Capital, a US private equity firm, is unable to find a buyer to match the price it paid, it could seek an alternative exit.

RedBird IMI could “sell” the debt to one of the RedBird Capital funds that does not involve state funding. There would be challenges to this approach however, as it conducted no formal due diligence on The Telegraph before helping to repay the Barclay family debt.

It would therefore require a leap of faith from RedBird Capital’s more conventional Western backers, drawn from pension funds and family offices.
Britain to import energy from US under plan for transatlantic power cable


Jonathan Leake
Fri, 15 March 2024

Expansion of intercontinental connections could reduce Western dependence on fossil fuels from Russia and the Middle East - Christoffer Hellmann

Britain homes could one day be powered by electricity generated in America under plans to install up to six power cables across the Atlantic.

The cables would stretch roughly 3,500 miles across the ocean, reaching depths of up to 11,000 feet, and carrying power roughly equivalent to several nuclear power stations.

A group of London investors and energy consultants are behind the ambitious scheme, as they claim technological advances in subsea cables could allow the creation of a global “intercontinental grid”.

Simon Ludlam, one of the businessmen backing the project, says such a cable would enable electricity to be traded across the Atlantic, taking advantage of the differences in peak demand as the power line crosses time zones.

“When the sun is high in London, it’d be breakfast time in New York where people could use UK or European power to cook breakfast,” says Ludlam. “And then five hours later, the sun will be high in America, so solar and other power stations there will provide the power for cooking supper in the UK.”

The scheme, which is still in its early stages, is one of several long-distance subsea cable projects that have been prompted by rapid improvements in technology.

The most advanced is the Xlinks project to lay four cables between the UK and a network of wind and solar farms spread across the Sahara desert in Morocco – a distance of 2,400 miles.

Once completed, the scheme is expected to deliver about 3.6 gigawatts (GW) of electricity to the UK’s national grid – equating to about 8pc of total power demand.

Another, on the other side of the world, will see a cable laid from wind farms in Australia’s Northern Territory to Singapore, supplying the city-state with low-carbon power.

Saudi Arabia and India are also looking at plans to link the power grids of both countries via subsea cables.

Simon Morrish, chief executive of the Xlinks project, believes long-distance interconnectors will become a key tool in the battle to decarbonise.

“As of today, we are moving energy around via molecules – meaning gas oil products and coal,” he says.

“As we decarbonise, the electricity grid will support more of our transport, heating and other needs. So we’re going to need to move electrons around instead and long-distance interconnectors are the only feasible way to do that.”

He says the prospect of global electricity grids will solve the problem of intermittency among renewables, as you can shift power to areas that are short of solar or wind.

According to Morrish, there are no longer technological barriers to prevent this.

“China’s had 3,000-kilometre links since 2018, at double the voltage that we’re doing,” he says. “It’s just a question of putting all the pieces together.”

However, running a cable across the Atlantic would be the world’s longest and most challenging project to date, with Ludlam recognising the financial and regulatory hurdles in place.

He has, however, pioneered a number of similar smaller projects.

They include ElecLink, the power cable laid through the Channel tunnel, which started operations in 2022. The 1GW cable, which is now operated by the Eurotunnel’s owner Getlink, can support the power needs of up to 1.6 million homes.

Since that success, Ludlam has moved on to become chief executive of MaresConnect, a project to install an interconnector between the UK and Ireland, carrying surplus power from Irish windfarms to the UK.

The scheme is currently being assessed by Ofgem, Britain’s energy regulator.

A transatlantic system would, he warned, need to be built with extra resilience.

“Instead of having just one very large cable, you probably have maybe three sets of two – all of them at two gigawatts,” he says.

“That means the failure of a single cable couldn’t bring the whole system down.”

Ludlam’s colleagues on the project include Laurent Segalen, a Franco-British clean energy investment banker and founder of Megawatt-X, which has overseen more than 15GW of wind and solar transactions over the past eight years.

“Strategically and economically, a transatlantic cable makes a lot of sense,” says Segalen. “It especially makes sense for members of Nato to reinforce each others’ energy supplies.

“It also means we no longer have to buy dirty fossil fuels from Russia and the Middle East.”

The cost of such an ambitious project is uncertain, although current estimates suggest it will be above £20bn but potentially cheaper than the £46bn being spent on Hinkley Point C – Britain’s new nuclear power station.

The idea of laying interconnectors over such long distances would have been unthinkable until the last decade because the electrical resistance inherent in cables would have soaked up too much power over such distances.

In recent years, however, cable makers have improved the quality and size of their systems so that power losses amount to just 3pc for every 1,000km.

The deepest cable currently in operation has been laid at 1610m water depth in the Mediterranean Sea. Another project in the same area is also under construction, with plans to reach 2000m.

One of the world’s leading cable producers is Denmark’s NKT HV Solutions, which sells cables that are being used to build the 160-mile high voltage direct current link between Scotland and Shetland, and a smaller 24-mile link between Guernsey and Jersey in the Channel Isles.

Simone Pagliuca, a director at NKT says a single cable system could now be built with the capacity to carry 2.6GW – equivalent to the entire output of two large power stations.

“Interconnectors are essential components of a dynamic and evolving renewable energy ecosystem,” he says.

“Enabling the transition to a low-carbon future, electrified transportation, and smart city infrastructure – developing and expanding grid connections, along with improving energy system interconnectivity, serve as key enablers for this.”

The UK is fast adopting such technology. Its nine operational interconnectors mean it has become heavily reliant on its European neighbours for electricity. Last year UK consumers paid a record £3.1bn for electricity generated in foreign power stations, according to new government data.

The vast imports of foreign electricity have prompted developers to install another eight subsea cables, two of which have already won initial support from Ofgem.

One of the proposed new links, dubbed LionLink, would stretch from the UK to Holland, connecting North Sea windfarms to the British and Dutch grids.

The other, Tarchon, would create a second electricity link between British and German grids.

A National Grid spokesman said: “Interconnectors play a vital role in the transition to a greener energy system, moving green energy from where it is in abundance to where it is most needed.

“As we deploy more wind power to meet our climate and energy security targets, connections to our neighbouring countries will play a vital role increasing security of supply and reducing prices for consumers.”
Honda and Nissan join forces on electric car technology to chase Chinese rivals


Alex Lawson
Fri, 15 March 2024

China's electric vehicle carmaker BYD launches its Dolphin Mini EV in Mexico.
Photograph: Toya Sarno Jordan/Reuters

Honda and Nissan have put aside the “traditional approach” of fierce rivalry to join forces and work together on electric vehicle technology as Japan’s carmakers try to catch up with Chinese competitors.

The Japanese manufacturers will work together on technology for EVs, including components and software, after signing a memorandum of understanding on Friday.

Honda and Nissan, respectively the country’s second- and third-largest carmakers behind Toyota, aim to cut costs by combining resources.

Traditional manufacturers are struggling to compete profitably with upstart rivals as the electric vehicle sector grows rapidly, adding significant development costs.

China’s BYD and Li Auto have gained market share in a competitive industry, alongside Elon Musk’s Tesla. Earlier this year, BYD, which stands for Build Your Dreams, overtook Tesla as the world’s top-selling electric carmaker.


Nissan was an early mover in EVs: its all-electric Leaf model became what it claimed was the world’s first mass-market electric car when it was launched in 2009 from its Sunderland factory. But it has struggled to keep pace with Chinese players able to access cheaper raw materials and labour, as well as greater scale and potential customers.

The Nissan chief executive, Makoto Uchida, said: “Emerging players are very aggressive and are making inroads at incredible speed.

“We cannot win the competition as long as we stick to conventional wisdom and a traditional approach.”

Honda’s president, Toshihiro Mibe, said: “We are strapped for time and need to be speedy. In 2030, to be in a good position we need a decision now.

“The rise of emerging players is becoming faster and stronger. Companies that cannot respond to the changes will be wiped out.”

Honda and Nissan each sell more than 3m cars globally and the partnership is expected across operations in Japan and overseas.

The agreement between the companies is non-binding, meaning the partnership could still fall apart, and does not involve any capital. It has been reported that, in late 2019, Japanese government officials tried to convince the carmakers to enact a full-scale merger to create a national champion, but the idea was swiftly rejected by the companies.

David Bailey, a professor of business economics at the Birmingham business school, said: “It’s two Japanese laggards playing catch up. This highlights the threat from China to western car companies, including those in Japan, and the advantages that China has in being able to produce cars at 25% to 30% lower in price.

“The Chinese government has backed EV exports in a big way and you see more Chinese cars on the road as a result.”

In the UK, Honda closed its factory in Swindon in 2021 after 35 years. Nissan recently concluded production of the second-generation Leaf in Sunderland, with its successor expected to be made there from 2026.

Nissan last year moved to rebalance its troublesome partnership with Renault, with the French carmaker reducing its stake in the Japanese company to 43% and Nissan increasing the voting rights linked to its 15% holding in its partner company.

Renault used the proceeds to invest in its own EV unit, Ampere. Uchida has previously said that Ampere is viewed as “an enabler for Nissan to participate in new business opportunities in Europe”.

The pair loosened their two-decade-long alliance after an astonishing corporate scandal which involved former boss Carlos Ghosn being arrested for allegedly underreporting his income and then later escape house arrest by hiding in a musical equipment box and fleeing via a private jet.

Although EVs are an established part of the market, carmakers and suppliers are still racing to develop the next generation of technology, including solid-state batteries that have been touted as a route to improve the range of vehicles, as well as the safety of the battery.

The industry is also at the centre of geopolitical tensions, amid political concerns about an overdependence on raw materials from China. Late last year, Northvolt, Europe’s only large homegrown electric battery maker, said it had made a “breakthrough” sodium-ion battery that could counter the problem.
ScotRail workers to strike over on-call working arrangements

Alan Jones, PA Industrial Correspondent
Fri, 15 March 2024 



Managers at ScotRail are to stage a 48-hour strike in a long running dispute over on-call working arrangements.


Members of the Transport Salaried Staffs Association (TSSA) will walk out on March 30 and 31 in a dispute which dates back to 2021 involving Operations Team Manager grades.

TSSA general secretary Maryam Eslamdoust said: “It’s simply not acceptable to have ScotRail stick their heads in the sand and ignore the pressing concerns of our members. That is why we will act by returning to the picket line.

“Our union only goes on strike as a last resort and I would urge ScotRail to come back to the table with meaningful proposals regarding our numerous concerns about the terms and conditions of on-call duties.


“Our members are vital to the running of the Scotland’s railways and deserve to be treated with respect by their employers over their legitimate grievances.

“Since our last walkout we have only grown in strength among these grades.”

Baby formula lawsuit wipes £7bn off FTSE 100 giant

Daniel Woolfson
Mon, March 18, 2024

A feeding bottle with infant formula - Liudmila Chernetska/iStockphoto

Consumer goods giant Reckitt has suffered a £7bn share price slump after it lost a US legal case claiming its baby formula contributed to the death of a premature child.

London-listed Reckitt’s share price plunged by the most in two decades and to its lowest point in more than a decade after an Illinois jury ruled Reckitt had failed to warn about the risks of necrotising enterocolitis (NEC) from its milk-based Enfamil brand products.

NEC is an illness that damages the stomach and tends to affect premature babies. Reckitt’s US subsidiary Mead Johnson Nutrition had been sued by Jasmine Watson, who claimed the baby formula caused the death of her premature baby.

FTSE 100-constituent Reckitt has now been ordered to pay Ms Watson $60m (£47m) after losing the case.

Ashley Keller, a lawyer for Ms Watson, said: “The jury’s finding confirms what Mead Johnson folks already knew – that its formula dramatically increases the NEC risk. “This is the first verdict in the US, but won’t be the last, unless baby formula makers accept responsibility for their misdeeds.”

News of the decision sparked a near 20pc plunge in Reckitt’s share price, wiping around £7.3bn ($9.3bn) from its market value.

It comes amid hundreds of US lawsuits against formula makers over NEC. The Illinois case was the first to go to a jury trial.

Shares in Abbott Laboratories, another formula maker facing legal claims, fell almost 5pc. Jurors took less than two hours to decide that Mead Johnson should pay $60m in compensatory damages. Mr Keller said: “We only asked for $25m, but the jury came back with more than double that.”

More than 400 suits targeting Mead Johnson and Abbott are consolidated before a federal judge in Chicago for pre-trial information exchanges. The judge hasn’t yet scheduled a trial. Thousands of other suits are pending in state courts, Mr Keller said. Reckitt continues to insist its products are safe and not linked to NEC. It has vowed to appeal the Illinois case.

NEC has a fatality rate of as much as 40pc. It is a major cause of death among premature babies, though rarely occurs in full-term babies.

The disease, which affects intestinal tissues, can be hard to diagnose. According to the NHS, symptoms can include general signs of illness, problems feeding or vomiting, and a swollen and tender abdomen.


While it has a high fatality rate, it can be treated with intravenous feeding and antibiotics. In some cases it can require surgery.

Reckitt said in a stock market update that it stands by the safety of its products and “strongly rejects any assertion that any of our products cause NEC”.

The company added: “It is important to note that this is a single verdict in a single case and should not be extrapolated.

“This case, and others like it, exclusively involve products used under the strict supervision of neonatologists in neonatal intensive care units and provide lifesaving nutrition options for vulnerable premature infants.

“We are, of course, surprised and deeply disappointed with the verdict and will pursue all options to have it overturned.”

Reckitt is one of the world’s largest consumer goods companies, pulling in revenues of £14.6bn in 2023. As well as Enfamil, it makes products such as Durex condoms, Cillit Bang cleaning fluid and Gaviscon.

Nutrition brands account for about 16pc of its sales, contributing £2.4bn to its turnover last year.

News of the Illinois jury’s decision marks the latest in a series of blows for the company, which last month revealed a £55m hit to revenues caused by an accounting controversy in the Middle East.

Kris Licht, chief executive at Reckitt, said the company had unearthed “some commercial practices that we weren’t particularly pleased with”, leading to the dismissal of a number of employees.

Reckitt in January recalled two baby formula products from sale in the UK amid concerns they could contain dangerous bacteria, in an event unrelated to the case in the US.

FTSE 100 giant Reckitt responds to share price plunge as Enfamil baby formula lawsuits mount


Rupert Hargreaves
Fri, 15 March 2024 

Products produced by Reckitt Benckiser REUTERS/Stephen Hird

Shares in FTSE 100 consumer goods giant Reckitt plunged more than 15 per cent on Friday as concerns grew about the firm’s exposure to lawsuits in the US.

On Wednesday, an Illinois jury ordered Reckitt’s unit Mead Johnson to pay $60m (£41.1m) to the mother of a premature baby who died of an intestinal disease after being fed Mead’s baby formula product Enfamil.

The trial was the first of several hundred trials that are set to come to court surrounding the baby formula, and the result was always going to be seen as a test case for the company.

Mead Johnson could still appeal the Illinois court ruling.

More importantly for investors, the cleaning products to baby formula producer hasn’t made a provision for the lawsuits.

In a statement published late Friday afternoon, Reckitt said: “Reckitt/Mead Johnson stands by the safety of our products. We strongly reject any assertion that any of our products cause NEC, a serious gastrointestinal problem that mostly affects premature infants.

“While we continue to offer our deepest condolences to Ms. Watson, we strongly disagree with the jury’s decision to fault Mead Johnson and award damages. We continue to believe that the allegations from the plaintiff’s lawyers in this case were not supported by the science or experts in the medical community. This was underscored during the trial by a dozen neonatologist,” the statement continued.

The company added: “It is important to note that this is a single verdict in a single case and should not be extrapolated.

“This case, and others like it, exclusively involve products used under the strict supervision of neonatologists in neonatal intensive care units and provide lifesaving nutrition options for vulnerable premature infants.”

Reckitt summarized: “We are of course, surprised and deeply disappointed with the verdict and will pursue all options to have it overturned.”

The size of the initial case and the further impending court cases suggest Reckitt could be forced to make a substantial charge and provision for payouts that would take a large chunk out of its bottom line.

Reckitt reported an adjusted operating income of £3.4bn for 2023, disappointing investors with a worse-than-expected performance and lack of growth compared to peers.

Susannah Streeter, head of money and markets, Hargreaves Lansdown said: This ruling has come at a bad time for the Reckitt which had already been struggling with falling volumes across its household goods and hygiene ranges.

“It’s not simply the size of this payout which has caused nervousness, but the fact a long line of other lawsuits are pending, which could mount up to be huge sum for the company,” Streeter added.

“Although nutrition is Reckitt’s smallest division, it’s also been another volume drag, and hitting the headlines for the wrong reasons could also lead to reputational damage. After missing expectations in the fourth-quarter, investors were always going to be highly sensitive to set-backs and this judgement has led to a fresh loss of confidence.’’

The decline has taken the stock back to levels not seen since 2013.


THATCHER'S PRIVATIZATION 
Put Thames Water into special administration, Lib Dems tell ministers

CANADIAN PENSION; OMERS IS ONE OF THE LARGEST INVESTORS


Sandra Laville and Alex Lawson
Fri, 15 March 2024 

Thames Water this week declined to commit extra funds to a £180m industry-wide initiative to fast-track efforts to reduce sewage pollution.Photograph: Toby Melville/Reuters

Thames Water should be put into special administration by the government and reformed as a public benefit company, the Liberal Democrats have said.

Sarah Olney, the Lib Dems’ Treasury spokesperson, has called in a parliamentary debate for the biggest privatised English water company to be wound up under legislation that has recently been updated by ministers.

It makes the Lib Dems the first mainstream political party to say the struggling company must be taken over to secure water and sewerage services for 15 million people.

Thames Water is seeking a shareholder bailout of £2.5bn to the end of the decade to stay solvent, but it wants Ofwat, the water regulator, to allow it to increase customer bills by 40%, pay higher dividends and face lower fines for pollution in order to secure the shareholder investment.


Olney said in parliament: “Thames Water is no longer a functioning company and the government has a choice: either bail them out with taxpayer money or listen to our calls to put them into special administration to then be reformed into a company for the public benefit.”

Thames Water declined to commit extra funds this week to a £180m industry-wide initiative to fast-track efforts to reduce sewage pollution in England’s waterways. Its parent company has been told by its auditors that it could run out of money by April if shareholders do not inject more cash into the company. It needs to repay a £190m loan due in April.

Special administration can be triggered if a company cannot pay its debts or is not performing its statutory requirements.

“The final straw was this week, when Thames Water bosses refused to stump up the cash for new sewage investments,” said Olney. “It was shocking that Conservative ministers just let them get away with it.”

The government is drawing up an emergency plan, known as Project Timber, in the event of the collapse of Thames Water. But Olney said ministers must use their recently updated water insolvency legislation to put the company into special administration.

This can be triggered by the secretary of state or Ofwat. Olney said with the company unable to pay its debts, and recusing itself from new sewage investments, the threshold for special administration had been met.

Under the updated water insolvency legislation the company can be taken over as a going concern to make sure that water and wastewater services continue for 15 million people. The taxpayer would not be liable for the debts, which would stay with the holding company, according to independent analysis of the updated legislation by the House of Commons library.

Olney said the company, once in special administration, could be reformed as a public benefit company, where “profit is no longer put above environmental goals”.

Olney asked the government to provide details of Project Timber. In response, Mark Spencer refused to comment specifically on Thames Water, citing “market sensitivities around private companies”. The environment minister said “the government does have a plan” to support companies in essential services such as utilities or banking “in moments of distress”.

He said: “The government’s priority is the ongoing provision of water and wastewater services.”

Thames Water admits in its latest business plan, which has been submitted to Ofwat for approval, that it has overseen the “sweating of assets” and allowed its infrastructure to decline over decades because it has stretched the life of the assets, repairing rather than replacing.

It is promising to invest £4.7bn to tackle the decline of its infrastructure but says to fully repair its sewers would cost £1.5bn and its sewage works £2.2bn. Thames says it will not be able to deliver the full extent of the investment into its ageing assets nor meet the environmental obligations it had wanted to meet by the end of the decade.

The company is also under investigation by Ofwat and the Environment Agency for suspected illegal sewage discharges from many of its treatment works. The Ofwat investigation, which is due to report within months, could impose multimillion-pound fines on Thames. The company admits that 157 treatment works are non-compliant.

Thames Water declined to comment.

A government spokesperson said: “Water companies are commercial entities and we do not comment on the financial situation of specific companies as it would not be appropriate. We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would.”