Companies in Asia ramping up workforce amid economic downturn

Posted: 24 June 2009 2114 hrs

Japanese businessmen

SINGAPORE: Companies in Asia are ramping up their workforce planning activities in response to the current economic downturn, according to a survey by global consulting firm Watson Wyatt.

The survey, released Wednesday, showed that more than seven out of every 10 companies in the region believe that workforce planning has become more important amid the current economic slowdown.

In fact, more than half have already begun to increase such activities within their organisations.

Workforce planning is the process by which an organisation aligns its workforce requirements to the business strategy using business analytics.

Although such planning is growing in importance, 60 per cent of those surveyed do not have a structured approach to workforce planning.

Instead, their attention is focused on immediate concerns like filling job vacancies, rather than longer term strategic issues relating to their workforce.

Asia Pacific Director of Watson Wyatt's Human Capital Group Russell Huntington said companies need to focus on longer term plans and review the capabilities needed in light of the current adverse business conditions.

He added that reducing employee costs cannot just be a numbers game, but should be a well thought-through, data-driven strategic exercise.

- CNA/yb

From ChannelNewsAsia.com; see the source article here.

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Survey shows big Japanese firms less pessimistic

Posted: 22 June 2009 1324 hrs

File picture of a share prices board in Tokyo

TOKYO: Japan's large companies were less pessimistic about the economy in the year's second quarter than they were during the previous three-month period, a government survey has shown.

The large company business sentiment index on current conditions was at minus 22.4 in the second quarter against minus 51.3 in January-March, according to a joint survey by the Ministry of Finance and the Cabinet Office.

The index is calculated by taking the percentage of companies that see an improvement in the economy and subtracting from that the percentage of companies that say the economy is getting worse.

The outlook index for big companies stood at minus 2.6 for July-September last year, and at plus 8.7 for the October-December period.

The recent improvement raised expectations that the Bank of Japan's closely watched "Tankan" business confidence survey, due on July 1, may also point towards a bottoming-out of Japan's worst recession since World War II.

The Nikkei financial daily reported on Sunday that the Tankan survey by the central bank would likely show the first improvement in sentiment in two-and-a-half years among major manufacturers.

The index in January-March slumped to a record low of minus 58, as the world's second biggest economy slid deeper into recession.

But it is forecast to recover to minus 41 for the April-June quarter, the daily said, citing estimates by 25 private research bodies.

Official data have shown Japan's economy, Asia's biggest, shrank at an annualised 14.2 per cent in the first quarter of 2009, its worst rate on record.

- AFP/yb

From ChannelNewsAsia.com; see the source article here.

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Survey shows Singapore managers put health, work—life balance over career

Channel NewsAsia - Friday, June 19

SINGAPORE: A local survey shows that Singapore managers are a pragmatic lot, with over 80 per cent polled viewing good health, work—life balance and passion for work as more important than career advancement and higher salary.

In comparison, only 61 per cent scored career advancement and high salary as more important despite the financial pressures of the economic downturn.

The inaugural survey, commissioned by the Singapore Institute of Management (SIM), shows 86 per cent intended to work beyond the retirement age of 62, although more than half would prefer to work on a part—time basis, doing freelance or consulting work.

When it came to training, seven in 10 managers viewed skills and knowledge upgrading as important. Most, however, preferred to implement on—the—job training through learning of best practices and short—term courses than long—term programs or job rotations within the organisation.

Tracking the general sentiments on the economy, there was more pessimism about the global economy than Singapore economy.

Compared with the 77 per cent who voiced their uncertainty about how the global economy was performing, only 61 per cent of respondents said they were concerned about how Singapore’s economy fared.

This might explain why only slightly more than half the 750 respondents were confident of keeping their jobs.

Executive director, SIM, Ronald Tan, said: "It shows how they realign their priorities, vis-a-vis, the current turbulent times. So they have to very quickly look at what is most critical to them to ride out the storm, given the limited resources that they have. So we see that there is a general and common reaction underpinned by a sense of prudence, pragmatism and being realistic."

Some 750 respondents took part in this survey which will be conducted twice a year. The SIM Management Monitor is a comprehensive management survey that aims to identify key trends in management and better understand the issues, concerns and challenges that Singapore managers uniquely face.

— 938LIVE/CNA/yt

From Yahoo! News; see the source article here.

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British Airways asks staff to work unpaid for up to a month

Just how bad is the economic recession? At least, for some industries, the impact is really that disastrous…

----------

June 16, 2009 -- Updated 2053 GMT (0453 HKT)

Story Highlights

• Union spokesman: Workers could not afford to work for free for a month
  
• British Airways employs just more than 40,000 people in the United Kingdom
  
• Airline's CEO: There are "absolutely no signs of recovery" in the industry
  
• Last month, the company posted a record annual loss $656 million
  

British Airways plans to reduce capacity by 4 percent next winter by parking up to 16 aircraft.

LONDON, England (CNN) -- British Airways is asking thousands of its staff to work for free for up to four weeks, spokeswoman Kirsten Millard said Tuesday.

In an e-mail to all its staff, the airline offered workers between one and four weeks of unpaid leave -- but with the option to work during this period. British Airways employs just more than 40,000 people in the United Kingdom.

Last month, the company posted a record annual loss of £400 million ($656 million).

Its chief executive declared at the time there were "absolutely no signs of recovery" in the industry.

"I'm 30 years in this business and I've never seen anything like this. This is by far the biggest crisis the industry has ever faced," said Willie Walsh, British Airways' chief executive.

A spokesman for one of Britain's biggest unions said its workers could not afford to work for free for a month.

"It's all well and good for Willie Walsh to say he's prepared to work for free when he earns four times in a month what they do in a year," said Ciaran Naidoo, a spokesman for Unite.

He pointed out that the airline was not ordering staff to work without pay.

"It's a request -- you can take unpaid leave or you can work for free, and the chances of people working for free are very unlikely, but there might be some people who want to take unpaid leave."

Demand for the airline's passenger seats and cargo holds fell during the last financial year, while its fuel bill rocketed to almost £3 billion ($4.7 billion).

Walsh said British Airways' woes were inextricably linked to the downturn in the global economy and that there had been no sign of any "green shoots" of recovery.

Like its premium-class competitors, British Airways is losing customers to cheaper rivals.

The airline's premium passenger numbers fell 13 percent in the second half of last year, in line with the industry average.

Total traffic fell 3.4 percent and while the airline carried 33.1 million passengers last year, it was a drop of 4.3 percent from the previous year.

The dip in demand for British Airways' flights has forced a switch in strategy at the airline.

From the end of last year, it has been trying to tempt passengers with lower fares, sacrificing profit per seat for "bums on seats."

It plans to reduce capacity by 4 percent next winter by parking up to 16 aircraft.

From CNN.com; see the source article here.

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Market panic: Wild gyrations, risks and opportunities in stock markets

BRAIN FOOD

Stephen Vines

Should investors be dumping stocks just because it's a recession?

No, as there are always chances to take advantage of the downturn, says author and successful businessman Stephen Vines.

In Market Panic, Vines, a former journalist whose Hong Kong-based company Pan Britain provides consultancy services to major corporations in East Asia, takes a hard look at current trends and offers simple tips for succeeding in volatile markets.

He challenges some long-held theories about the benefits of investment diversification; offers new ways of understanding the panic cycle and teaches investors how to predict the onset of panics.

"Stock markets show remarkable resilience in the face of crises, scandals and all other forms of extreme behaviour," Vines writes. "If more people understand the opportunities arising from markets at their supposedly weakest moments ... the potential for profit is greater than when fear, irrationality and extreme behaviour dominate stock markets."

Vines provides real-life case studies by interviewing fund managers and traders, who tell how they were caught in market panics and how they countered these challenges head on.

The book is easy to follow and jargon-free, perfect reading material for the budding investor. ZUL OTHMAN

From TODAY, Business – Monday, 01-Jun-2009

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It’s time to revisit the dual citizenship issue: MP

IT HAS been a bone of contention here, but could dual citizenship be the carrot needed to draw talented foreigners to Singapore in this economic upheaval?

Member of Parliament (West Coast GRC) Cedric Foo urged the Government to "reconsider offering dual citizenship or other pull factors" to lure top talent to our shores.

Such a policy could target "a few hundred per year of the very top talent from all fields", and not thousands of foreign talent who would compete with Singaporeans for jobs, he said.

The current economic downturn presents Singapore with an opportunity to draw talent, as foreign companies unable to secure government funding may be scouting for greener pastures to relocate to.

Singapore can also bank on its reputation as a liveable city and the absence of language barriers, said Mr Foo. This select group of top talent would "add dynamism and we would do well to welcome them", he said. Neo Chai Chin

From TODAYOnline.com; see the source article here.

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Geithner's warning on speed of economic recovery

AFP - Saturday, May 9

WASHINGTON (AFP) - - US Treasury Secretary Timothy Geithner has said that there is a risk that US economic recovery could take a long time, but vowed to take all necessary steps to speed it up.

"Well, that's the risk," Geithner said in a PBS television interview on Friday when asked if the recovery could take several years.

"I mean, people -- economists generally worry that a recession that comes after a long period where people borrowed too much, banks took on too much risk -- requires a slower, longer recovery, because people have to reduce debt, they're going to have to save more," the treasury secretary pointed out.

But he promised that the administration of President Barack Obama was "going to do everything" it can to accelerate the process.

"We're laying the foundation for a more sustainable, more balanced, more healthy recovery for this economy," Geithner noted.

From Yahoo! News; see the source article here.

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Why a ‘blood transfusion’ may not work

The other day, we had our communication session, and I was having a small discussion with one of our teammates, and how some of the management decisions seemed inconsistent with the drive to reduce cost, especially during these hard times. And that is exactly what this article is discussing: retrenching 'experienced' workers, then hiring new blood… may not be warm blood after all, and even then, may not be warm enough to bring about the heat to induce the much-needed energy to propel changes – for the better.

-----

IT MAY be a time-tested policy, but the "blood transfusion" approach — retrenching workers during a downturn and hiring new ones when the good times return — may not be in the company's best interests these days.

Instead, companies should look at ways to manage costs and retain existing manpower, said labour chief Lim Swee Say.

"The blood transfusion method means that at the company level, you're going to lose a lot of experience, a lot of skill and time... it takes time to hire and retrain new workers. And if you're in a knowledge-based economy, the time needed to retrain new entrants will be much longer compared to a labour-intensive operation. It's better to upgrade and restructure with your existing workforce," said Mr Lim.

Companies restructuring operations should focus on reskilling, upskilling and multi-skilling existing workers while keeping their wage costs down, he added. This would lead to a win-win situation for workers, companies and Singapore's economy.

    The seminar also saw human resource experts offering some tips on how to manage employees during a downturn. CHANNEL

NEWSASIA, 938LIVE

-----

From TODAY, News – Thursday, 07-May-2009

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Retrain and prepare for a different world

Image via Wikipedia

PM Lee's May Day Message

AMID the uncertainty over when the United States can pull itself out of recession and what measures will help boost economies around the world, one thing is sure: Singaporeans must seize this time to "mount a major effort" in worker training and skills upgrading, Prime Minister Lee Hsien Loong said yesterday in his May Day message.

While noting that Singaporeans have "reason to be quietly confident" given that the nation's economy has important strengths and "few countries are in as a secure position", Mr Lee also warned them to brace for "a prolonged difficult period".

"I urge workers to go for training, to up-skill and re-skill yourselves. If you are seeking a new job, do take up one of the many jobs still available, even if it is not your first choice," said Mr Lee.

"Have realistic salary expectations, and be willing to learn new things and adapt to different working conditions."

If global demand continues to be weak, Singaporeans can expect more job losses, despite measures announced in the Budget.

"In some sectors, things will get worse before they get better," said Mr Lee. "In the worst case, if troubled banks are not put right, the problems can drag on for several years."

He also cautioned that the Republic's access to foreign markets could become more difficult, if governments, under political pressure to help domestic producers, were forced to raise protectionist barriers.

Singapore, however, will not follow this route. "The basic strategy for Singapore must still be to stay open and linked to the world. We prosper by servicing the region, Asia and the world, and by being equal to the best in niche areas," said Mr Lee.

Singapore will continue to develop new markets, such as Latin America and Africa, and its wide network of free trade agreements with major trading partners will prove "invaluable", he added.

The country will also remain a major financial centre, especially in areas such as fund management or global treasury business.

And precisely because Singapore is an open economy, the key to being globally competitive, said Mr Lee was to "gather talent from all over the world to strengthen the Singapore team" and for the local workforce to upgrade their skills.

Mr Lee said he also expected employers to play their part.

"Think of all possible ways to save costs, and consider retrenchment only as a last resort. Make full use of government programmes and work closely with the unions. For any cost-cutting measures, management should lead by example," he added.

Singaporeans have reason to be quietly confident

Most importantly, though, "everyone must be mentally prepared, and be ready for sacrifices in these difficult times".

Nonetheless, on a more upbeat note, Mr Lee noted: "Our economy has important strengths. Our banks are sound, our industries are competitive, our wage systems are flexible, and many good jobs are still available ... Few countries are in as secure a position as Singapore."

Mr Lee summed up his message this year with the future firmly in mind.

"We must use this crisis to prepare for a different, more competitive world when the storm passes.

"We must build resilience in a new generation of Singaporeans, and strengthen their bonds with a new team of leaders. Most of all, we must unite as a nation, keep our calm, unflinching spirit and emerge stronger from the crisis," he said.

Derrick A Paulo

From TODAY, News – Friday, 01-May-2009

The financial crisis explained in simple terms

Okey folks, this is a "truthful" revelation… whichever way we look at it, the fact is always stranger than the truth…

-----

HEIDI is the proprietor of a bar in Berlin. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around and as a result increasing numbers of customers flood into Heidi's bar. Taking advantage of her customers' freedom from immediate payment constraints, Heidi increases her prices for wine and beer, the most-consumed beverages. Her sales volume increases massively. Since she was buying more liquor, she got extended debt period from her alcohol suppliers to bar.

A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases Heidi's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the bank's corporate headquarters, expert bankers transform these customer assets into bonds like DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed.

Nevertheless, as their prices continuously climb, the securities become top-selling items. So no one was complaining, Customer getting drink on debt, Heidi getting drink on credit from supplier and paying it with the money she get with the banker. Banker sold it off to market as bond and these bonds were being purchased and sold among investment bankers among themselves. One day, although the prices are still climbing, a risk manager (the spoil sport) of the bank decides that the time has come to demand payment of the debts incurred by the drinkers at Heidi's bar.

However they cannot pay back the debts. Heidi cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKBOND drop in price by 95%. PUKEBOND performs better, stabilizing in price after dropping by 80%. The suppliers of Heidi's bar, having granted her generous payment due dates and having invested in the securities are faced with a new situation. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor. The bank is saved by the Government following dramatic round-the-clock consultations by leaders from the governing political parties. The funds required for this purpose are obtained by a tax levied on the non-drinkers.

Cheers!!!

Swine flu could worsen global recession: analysts

AFP - Sunday, May 3

SINGAPORE (AFP) - - The swine flu outbreak could shatter fragile signs of a global economic rebound, but the gravity of its impact depends on the death toll it inflicts and the panic it generates, analysts said.

For Asia, where some countries are in recession, the crisis has revived memories of the severe acute respiratory syndrome (SARS) outbreak in 2003 that killed hundreds, halted travel and sent economies reeling.

Asia's first case of the A(H1N1) virus was confirmed in Hong Kong Friday, the epicentre of the 2003 SARS outbreak when close to 300 people died.

"The global economy faces yet another huge challenge," research firm Moody's Economy.com said in a market analysis.

"The recent outbreak of swine flu in Mexico and its rapid spread to other countries could interrupt trade and investment, exacerbating the worldwide recession for an uncertain period."

The World Health Organization has raised its flu alert level to five out of six, signalling a pandemic was "imminent" as more nations announced cases.

At least 19 confirmed deaths from the virus have been reported in Mexico and one death in the United States.

If the swine flu outbreak is similar to SARS, the impact will be sharp but would last only for several months, economists said.

"The risk here is if swine flu is actually more lethal than SARS and containment measures are not effective," Leong Wai Ho, a Singapore-based regional economist with Barclays Capital, told AFP.

"Under that scenario, the impact is likely to be prolonged and more profound."

Song Seng Wun, a regional economist with CIMB-GK Research, said swine flu could stamp out any tentative signs of recovery from the worst global economic crisis since the Great Depression.

"If it stays as a flu bug... perhaps it may not do too much damage to the current signs of stabilisation," he said. "But if things were to take a turn for the worse, the early shoots of recovery may be snuffed out."

Song said business confidence has begun to show signs of revival after governments worldwide rolled out stimulus packages to fight the recession and some companies were starting to receive more orders.

"If there's any knock to the fragile business confidence at this point, it may easily die out again," he warned.

Swiss banking giant Credit Suisse said the economies most vulnerable to a fallout from swine flu would be "those having sizeable tourism, retail and transportation sectors" like Hong Kong, Malaysia, Singapore and Thailand.

Moody's said the world's poorer nations, where infections might be harder to detect and treatment may not be readily available, will bear the brunt of the impact should the outbreak escalate into a pandemic.

This could affect efforts to reduce poverty, Moody's said.

For more developed economies like Singapore, Hong Kong and Taiwan, "weak confidence may be a bigger threat than the disease itself," it added.

Private consumption, a key economic growth driver after exports have fallen, could suffer if swine flu forces people to stay indoors.

This could hinder an economic rebound in the same way as SARS, which came as the region recovered from the impact of the technology crash in 2001 and the Bali bombings in 2002, analysts said.

"The economic effects of consumers and travellers staying at home will most likely be larger than the costs of fighting the virus," Moody's said.

Economists said that Asia and other major economies such as the United States and European nations are better prepared now to tackle the threat.

"For a start, swine flu appears to respond well to treatment using existing drugs," said London-based Capital Economics, noting that most of the deaths have been in Mexico where the health care system is relatively poor.

"Secondly, the world is now much better prepared to deal with these sorts of crises, thanks to the experience of SARS and persistent threat of avian flu," the research consultancy said.

It noted that the main economic damage so far "has typically come from panic measures to control a potential pandemic rather than the impact of the disease itself."

 

From Yahoo! News; source article is here.

Second act

CHANNEL NEWSASIA

The Primetime morning interview

Jennifer Alejandro, jennifer@channelnewsasia.com

"I was past being angry. I was emotionally drained."

Thum Cheng Cheong, 46, received his biggest career blow last November. He was laid off from a European bank where he was the chief of legal and credit administration.

It happened so fast, he was shocked. He got the notice midday, putting an abrupt stop to a 16-year career in the banking.

At first he thought it was good to spend more time with his family. "It seemed like a good opportunity to rest and relax, because when would you get such a long break from work?"

But the worry set in fairly quickly, once Thum realised his job search was not yielding results. The worry was compounded by the knowledge that Singapore was caught in the midst of a global recession.

For help, he decided to turn to his passion for mind-mapping, and it turned out to be the answer he had hoped for.

Thum, a regular at mind-mapping workshops conducted by international author Tony Buzan since 2004, remembers thinking, "There were no jobs in banking at my level so I might as well take a risk. I have been assisting mind-mapping seminars for a couple of years now, so I asked myself, why not make my hobby a full time job?"

In January, the former banker and lawyer called up the local office of the Tony Buzan Learning Centre. With his track record, he was hired almost immediately as a mind-mapping trainer and in-house legal counsel.

He now moderates three workshops a week and does administrative legal work for the learning centre. He earns only half of his old salary but Thum said: "I'm happy that I could get this chance to tell people my story and do something I love."

I learned about Thum's story while researching for a series. Many have shared wonderful and touching stories with me. I remember a 51-year-old man who was retrenched by a local bank in November after 29 years in its customer service department. For almost two months, he attended job fairs and consulted agencies for assistance.

As luck would have it, a surprise came just in time for the New Year. Through a friend, he landed an interview at a secondary school and was hired as a teacher.

These are real-life survivors — people open to trying something they might never have considered, who had the courage to face up to change. After all, many of life's "second acts" begin only after a crisis.

We are looking for people who have re-invented themselves and got the better of retrenchment. If you have a story to tell, email second_act@channelnewsasia.com. Turn that page. Everybody deserves a second chance.

From TODAY, Plus – Weekend, 25/56-April-2009

First dip in resale flat prices since 2006

BUSINESS ANALYSIS

Prices of HDB resale flats fell 0.8 per cent in the first quarter compared with the previous quarter, marking the first decline since 2006.

This was slightly worse than the 0.6 -per-cent fall estimated by HDB earlier this month.

Price increases in resale flats have been moderating since the third quarter of last year. The median Cash-Over-Valuation amount for resale transactions dropped to $4,000 in the first quarter, a plunge of 73 per cent from the fourth quarter of last year.

The number of resale applications rose by 4 per cent to around 6,400. 938LIVE

From TODAY, Business – Weekend, 25/56-April-2009

Economic recovery a slow thaw

Tan Hui Leng, huileng@mediacorp.com.sg

GLOBAL economic recovery is likely later in the year, but sustainable growth will be slow, said investment strategists here yesterday.

Describing the recovery as a "slow thaw", Societe Generale Asset Management (SGAM) strategy and economic research head Michala Marcussen said she expects weak growth in the next two years before sustainable recovery in 2012.

Barclays Wealth's Aaron Gurwitz, managing director and head of global investment strategy, said while he is "less pessimistic" the recession will creep into the next year, downside risks still remain, with the weak economy and crippled banking system vulnerable to external shocks.

Ms Marcussen, one of Europe's 100 most influential women in finance, noted that even amid signs of a pick-up in the economy, credit is still not flowing normally. But she is encouraged by evidence of improvement, such as stabilisation in inventory levels, policies to stimulate the economy, as well as positive signals in business confidence.

"Ordinarily with all this stimulus out there, business confidence would have soared up to historically high levels rather than stabilising at historical levels, so that shows that there is something out there slowing down the economy," she said.

    Economic recovery, she noted, would come with deleveraging — as the current downturn, triggered by the sub-prime crisis is due to the world being increasingly leveraged and dependent on short-term loans.

Thus, a key challenge is the deleveraging of US household debt. But unlike previous crises when the world would, at some point, depend on the US to increase leverage, it is unlikely to happen this time round, she added. Asia is unlikely to pick up the slack because it does not yet have independent domestic growth engines in place, something that is likely to change only in the longer term.

From TODAY, Business – Thursday, 23-April-2009

CEO’s nod needed for business trips

TRAVEL WATCH
As recession bites, companies are cutting back on such expenses

ESTHER NG
estherng@mediacorp.com.sg

AS IF they don't already have enough on their plates, some head honchos of multinational companies (MNCs) here have taken to scrutinising their employees' business trips.

Such expenses, it seems, require the chief executive's (CEO) nod in some 67 per cent of organisations, as companies tighten their budgets, according to the latest Hewitt Compensation Watch Survey.

The international human resource firm had polled 53 companies, mostly MNCs.

Is this the best use of a CEO's time?

"A total waste of effort," said Mr Henry Cheong, managing director of Telesto Broadcast Solutions. "It might work for a small company, but not for one that has 500 to 1,000 people or more."

As it is, CEOs have other bigger worries. "We have to find ways to grow our business, all the more in these economic times, find new markets and improve our bottom line," said Philips Electronics chief Wong Lup Wai, adding that the MNC would not be adopting this tack any time soon.

"We believe in empowering our business unit managers to make these decisions," he said.

Other MNCs that Today spoke to were coy about revealing whether they had resorted to taxing their CEOs in this manner. However, they did admit to switching their travel mode from business class to economy or even budget, video- and teleconferencing.

However, Ms Annie Yap, managing director of AYP, believes that the practice is more of a deterrent than the CEO going through a pile of applications.

"It's to weed out the non-critical from the critical business trips," she said.

Business travel expenses are projected to be cut by 21 per cent this year. Other findings in the Hewitt survey include fewer retention bonuses, reduced year-end variable bonuses and overtime pay.

Salary projections in Singapore are expected to slump by minus 5.4 per cent in June to September, with the lowest increase among senior management (1.9 per cent). But professional and general staff will experience the highest pay increase at 2.3 per cent.

Job seekers looking for a big jump might want to head to India, with companies there offering 8.2 per cent in wage hikes — highest Asia-wide.

From TODAY, News – Wednesday, 22-April-2009

Top firms saw plunge in profits: Fortune

WASHINGTON — The top 500 corporations in the United States saw their profits plunge 85 per cent last year, their worst showing in more than half a century, Fortune magazine reported yesterday.

“The sumptuous profits America posted over the past few years weren’t part of a new world order, but a bubble that, like the others, went out with a bang. And what a bang,” the magazine reported in its latest issue.

“Last year was the worst economic performance in the 55-year history of the Fortune 500 list of America’s biggest 500 companies,” Fortune said.

“Earnings dropped 84.7 per cent from the previous year, from US$645 billion ($968.2 billion) to US$98.9 billion, marking the largest one-year decline ever,” it said.

“For every dollar in profits the 500 garnered in 2006, its members made 13 cents in 2008.

“The economy’s fall was precipitous, leaving companies little time to adjust and pushing the 500 from the summit to something resembling an earnings depression,” it said.

Unsurprisingly, the financial and automotive sectors were the worst hit, with the former reporting US$214.3 billion in losses, US$99.3 billion of which came from one company — the insurance group AIG.

In Fortune’s latest annual listing of the top 500 US companies, energy and oil firms held three of the top four positions, led by ExxonMobil, which snagged top spot from retail giant Wal-Mart. The retailer dropped to No 2.

Chevron came in third, followed by ConocoPhilipps and General Electric.

Automaker General Motors was sixth, despite being on the verge of bankruptcy, followed by Ford in seventh place.

AIG suffered the biggest drop in the standings, falling from 13th to 245^th place. AFP

From TODAY, Business – Monday, 20-April-2009

Any job should do...

COPING WITH THE RECESSION

Flexibility will impress future employers, Gan tells youth who raise discrimination concerns

ESTHER NG, estherng@mediacorp.com.sg

AS A fresh graduate, do I really have to accept a blue-collar job?

This plaintive question — sent via SMS by a participant in the audience, who worried that it would affect one’s shot at a PMET job after the economy recovers — drew some laughter as it was read aloud.

But Manpower Minister Gan Kim Yong was in earnest as he advised this participant, and the other 80 or so youthful participants at the dialogue session with Young NTUC, to be flexible when jobhunting in a downturn. He urged them to “take up any job that is available”, as there would always be “opportunities to upgrade later on”.

Say an employer asks why you’ve not been working for the past one year — do you answer that there were “no jobs available”?

“Employers will not believe because there are always jobs available,” said Mr Gan. “Employers will think ... if in a crisis situation you’re willing to sit at home and do nothing, it means that you’re not flexible.”

For instance, Mr Gan revealed his “dream job” had been to teach, but the closest he got to it was as Minister of State for Education.

“The important thing is not to look for things we like to do, but to like the things that you’re doing”, he stressed, reiterating that many jobs are available in the fields of early childhood education, tourism, science and technology.

The two-hour forum at NTUC Centre yesterday involved mostly young unionists, and the issues they raised centred on the recession and other hurdles for graduates in the job market.

One asked: Are there enough training places for everyone, and should they look to upgrade their skills in an area they like — or train for where there is a market need?

Giving his assurance of sufficient training resources and capacity, Mr Gan advised job-seekers to approach the Employment and Employability Institute or Community Development Councils, where “career consultants” will help match their abilities with “market needs”. Training comes in where there is a mismatch, he said.

Ms Joyce Wong, 21, wondered if local graduates with degrees from private institutions enjoy equal job prospects as graduates from the three local universities.

Ms Mabel Siew, 23, wanted to know why applicants are compelled to disclose whether they are bankrupt and their medical conditions. Should they answer truthfully? “Because if you do, chances are you may not get the job,” she told Today later.

Both were hoping for some form of anti-discrimination legislation, but were not surprised when Mr Gan said the Government would “rather not legislate because the employer can get information through other means”.

He advised job applicants to be “honest” and, if they encounter discrimination, to approach the Tripartite Centre for Fair Employment.

On recognition of degrees, he said: “Even if you put up legislation, when you apply, (employers) can choose not to accept.” Rather, it’s up to private education providers to market themselves — like UniSIM, which has “built up its reputation” and “companies are happy with their graduates”, said Mr Gan.

The question about a CPF cut also cropped up. Mr Gan’s reply: There would not be one “for the time being”.

“Let’s focus on pushing ahead with Spur (Skills Programme for Upgrading and Resilience) and Jobs Credit.

“I think Jobs Credit has been very effective in helping companies manage their cost of employing local workers... We also have Workfare Income Supplement and so on — we need to get these implemented,” he said.

From TODAY – 20-April-2009

DON’T COUNT YOUR CHICKENS

FINANCIAL MELTDOWN

Talk about the end of the crisis could be premature — dangerously so

PAUL KRUGMAN, xtra@mediacorp.com.sg

BEN Bernanke, the Federal Reserve chairman, sees “green shoots”. President Obama sees “glimmers of hope”. And the stock market has been on a tear.

So is it time to sound the all-clear? Here are four reasons to be cautious about the economic outlook.

1 Things are still getting worse. Industrial production just hit a 10-year low. Housing starts remain incredibly weak. Foreclosures, which dipped as mortgage companies waited for details of the Obama administration’s housing plans, are surging again.

The most you can say is that there are scattered signs that things are getting worse more slowly — that the economy isn’t plunging quite as fast as it was. And I do mean scattered: The latest edition of the Beige Book, the Fed’s periodic survey of business conditions, reports that “five of the 12 Districts noted a moderation in the pace of decline”. Whoopee.

2 Some of the good news isn’t convincing. The biggest positive news in recent days has come from banks, which have been announcing surprisingly good earnings. But some of those earnings reports look a little... funny.

Wells Fargo, for example, announced its best quarterly earnings ever. But a bank’s reported earnings aren’t a hard number, like sales; for example, they depend a lot on the amount the bank sets aside to cover expected future losses on its loans. And some analysts expressed considerable doubt about Wells Fargo’s assumptions, as well as other accounting issues.

Meanwhile, Goldman Sachs announced a huge jump in profits from Q4, 2008 to Q1, 2009. But as analysts quickly noticed, Goldman changed its definition of “quarter” (in response to a change in its legal status), so that — I kid you not — the month of December, which happened to be a bad one for the bank, disappeared from this comparison.

I don’t want to go overboard here. Maybe the banks really have swung from deep losses to hefty profits in record time. But scepticism comes naturally in this age of Madoff.

Oh, and for those expecting the Treasury Department’s “stress tests” to make everything clear: The White House spokesman, Robert Gibbs, says that “you will see in a systematic and coordinated way the transparency of determining and showing to all involved some of the results of these stress tests”. No, I don’t know what that means, either.

3 There may be other shoes yet to drop. Even in the Great Depression, things didn’t head straight down. There was, in particular, a pause in the plunge about a year-and-a-half in — roughly where we are now. But then came a series of bank failures on both sides of the Atlantic, combined with some disastrous policy moves as countries tried to defend the dying gold standard, and the world economy fell off another cliff.

Can this happen again? Well, commercial real estate is coming apart at the seams, credit card losses are surging and nobody knows yet just how bad things will get in Japan or Eastern Europe. We probably won’t repeat the disaster of 1931, but it’s far from certain that the worst is over.

4 Even when it’s over, it won’t be over. The 2001 recession officially lasted only eight months, ending in November of that year. But unemployment kept rising for another year and a half. The same thing happened after the 1990-91 recession. And there’s every reason to believe that it will happen this time too. Don’t be surprised if unemployment keeps rising right through 2010.

Why? “V-shaped” recoveries, in which employment comes roaring back, take place only when there’s a lot of pent-up demand. In 1982, for example, housing was crushed by high interest rates, so when the Fed eased up, home sales surged. That’s not what’s going on this time: Today, the economy is depressed, loosely speaking, because we ran up too much debt and built too many shopping malls, and nobody is in the mood for a new burst of spending.

Employment will eventually recover — it always does. But it probably won’t happen fast.

So now that I’ve got everyone depressed, what’s the answer? Persistence.

History shows that one of the great policy dangers, in the face of a severe economic slump, is premature optimism. Franklin D Roosevelt responded to signs of recovery by cutting the Works Progress Administration in half and raising taxes; the Great Depression promptly returned in full force. Japan slackened its efforts halfway through its lost decade, ensuring another five years of stagnation.

The Obama administration’s economists understand this. They say all the right things about staying the course. But there’s a real risk that all the talk of green shoots and glimmers will breed a dangerous complacency.

So here’s my advice, to the public and policymakers alike: Don’t count your recoveries before they’re hatched. THE NEW YORK TIMES

WEEKEND XTRA

From WEEKEND TODAY, Business – 18, 19-April-2009

Cuts are in the air

AIRLINE WOES

SINGAPORE Airlines (SIA) and Cathay Pacific Airways may soon have to go down the path that Qantas took earlier this week when the Aussie carrier slashed its profit forecast and announced 1,750 job cuts, say analysts.

“All airlines in Asia will have to make similar tough decisions,” said Mr Jim Eckes, managing director of industry adviser Indoswiss Aviation. “With traffic falling so rapidly, it’s going to be difficult for many airlines to make a profit.”

Traffic for Asia-Pacific carriers sank almost 13 per cent in February, the steepest decline since June, according to the International Air Transport Association (Iata).

Qantas is examining measures, such as passengers tagging their own bags or checking in via mobile phone, to further cut costs.

“If your top line has fallen off the cliff, then you have to adjust your costs,” said Mr Christopher Wong, a fund manager at Aberdeen Asset Management Asia in Singapore. “Whether it’s cutting headcount or reducing working hours, that’s the only thing airlines can adjust.”

Already, SIA — which gets 40 per cent of its revenue from premium travel — is removing 17 per cent of its fleet starting April, slashing work days and freezing management wages and negotiating with pilots to take unpaid leave.

Cathay has also offered staff unpaid leave, curbed capacity growth and delayed a new cargo terminal in the city after posting a loss of HK$7.9 billion ($1.5 billion) in the second half. Its chairman Christopher Pratt last month said the aviation industry was in a “crisis”.

Mr Eckes said Asia Pacific airlines might be the hardest hit by the crisis because of their dependence on premium travellers. Filling up the coach-class seats won’t be enough to compensate for lack of premium travellers.

“Business demand has dropped sharply since August and that’s hurting profits,” said Makoto Murayama, an analyst Nomura Securities in Tokyo. “Things are going to get worse.”

Premium travel dropped the most in Asia in January, falling 23 per cent within the region, and 25 per cent on routes across the Pacific, according to Iata. BLOOMBERG

From TODAY, Business - Thursday, 16-April-2009

Savers spend, spenders save

BUSINESS COMMENT

Policies that encourage such rebalancing will help world economy

Stephen Roach

 

DEBATE rages over the endgame For the Great Recession. The broad consensus among policymakers and business leaders is that the world economy is in the midst of its worst decline since the 1930s Depression. There is a presumption that another depression is a distinct possibility if immediate steps are not taken to contain the downward spiral.

This debate misses the point — and dangerously so. Monetary and fiscal authorities have made it quite clear that they are prepared to do everything in their power to avoid such an outcome. I suspect they will ultimately get their way. Yet there is a serious risk to this policy strategy. By fixating on the anti-depression drill, the authorities are failing to address the root cause of the current crisis and recession — the lethal unwinding of unsustainable global imbalances.

Unfortunately, the myopia of the political cycle pre-ordains such a policy response. A resumption of economic growth is all that ever seems to matter for poll-driven politicians. Tough problems are always deferred with a vacuous promise to tackle them in due course. Then that due course always is pushed out further and further in time.

This is the mindset that got us into this mess. The United States’ current account deficit, one of the most glaring manifestations of an economy built on quicksand, did not emerge out of thin air. It was the outgrowth of an unprecedented shortfall of domestic saving. Saving itself was depressed by the illusions of an asset-dependent American economy and a willingness of consumers to live well beyond their means through extracting equity from over-valued homes.

The denial was global in scope. Export-led economies were delighted to draw support from bubble-dependent American consumers. And now, that house of cards has collapsed.

The Depression Foil might well end up recreating this madness. Once again, the US is leading the charge. The Fed wants to get credit flowing again to still over-extended American consumers, Congress wants to stop the bleeding in the housing market, and the White House wants consumers to start spending again.

Put it together and it all smacks of a dangerous sense of deja vu — promoting a false recovery by kick-starting over-extended American consumers to borrow once again by leveraging their major asset.

The Depression Foil blinds policymakers and politicians to the imperatives of global rebalancing. This crisis and the wrenching recession it has spawned are all about a destabilising shift in the mix of global saving and aggregate demand.

That mix needs to be redressed. The excess spenders in the US need to save and the excess savers in the rest of the world, especially in Asia, need to spend. Policies that encourage such rebalancing will put the world economy on a more stable and sustainable path and go a long way in avoiding another crisis like this.

Yet, the Depression Foil makes it exceedingly difficult for an unbalanced world to get its act together. The recently concluded G20 summit was notable for its failure to address this critical challenge. Policymakers and politicians need to move beyond their depression fixation and aim at achieving a better balance in the global economy before it is too late.

The writer is the chairman of Morgan Stanley Asia. This is an abridged version of a commentary that first appeared on Bloomberg yesterday.

From TODAY, Business – Tuesday, 14-April-2009