Major International Business Headlines Brief::: 12 February 2022

Sat Feb 12 07:28:28 CAT 2022

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Major International Business Headlines Brief::: 12 February 2022 

 <https://www.nedbank.co.zw/> 

ü  The challenges of running a business in Ukraine's second city

ü  UK economy rebounds with fastest growth since WW2

ü  Cost of pasta and tinned tomatoes jumps as shop prices rise

ü  3,000 NYC staff face lost jobs over vaccine rules

ü  Business fires up the back-up generator as costs rise

ü  Cost of pasta and tinned tomatoes jumps as shop prices rise

ü  Billionaire Soros buys stake in EV startup Rivian

ü  U.S. posts $119 billion budget surplus in January; first in over 2 years

ü  Apple to turn iPhones into payment terminals in fintech push

ü  Walmart no longer requires masks for vaccinated U.S. workers

ü  Shell CEO sells $5.2 million of shares

ü  New Rio Tinto chairman to weigh CEO's future amid toxic culture crisis -
sources

ü  NFT marketplace shuts, citing 'rampant' fakes, plagiarism problem

ü  Wall St Week Ahead Crypto investors face more uncertainty after rocky
start to 2022

ü  Apple raises pay of many U.S. retail employees - Bloomberg News

ü  U.S. poultry producers harden safety measures as bird flu spreads

ü  Finland seals deal for U.S. F-35 stealth jets, reflecting tight ties to
NATO

ü  Oil soars 3% to 7-yr highs on Ukraine jitters, tight supplies

ü  Ford reconsiders India after halting production, this time for EVs

 <mailto:info at bulls.co.zw> 

The challenges of running a business in Ukraine's second city

What happens when your country faces invasion, and you just want to get on
with running your business?

In Ukraine, there is a distinct sense of déjà vu for people running small
and medium-sized businesses over the situation they now find themselves in.

Particularly in Ukraine's second city, Kharkiv, located just 26 miles (46km)
from the border. Over 100,000 Russian troops are gathered at several
strategic points along the border but Russia denies it is planning an
attack.

Most Kharkiv entrepreneurs clearly remember the huge task they faced to
reinvent themselves after the armed conflict in eastern Ukraine began back
in 2014.

"Our clients are very concerned," says Roman Shekin, chief operating officer
of the software company Zfort, in Kharkiv.

"What we're trying to tell them is, we're ready for any unexpected stuff,
because we've been at war for a few years already."

In 2014, Russia seized then annexed Crimea, and fighting broke out in the
Donbas region of eastern Ukraine, parts of which are now controlled by
Russian-backed separatists.

Over the space of a few months, businesses in Ukraine lost the vast majority
of their customers and suppliers in Russia. Overnight, the conflict cut off
old, established cross-border ties. Many companies collapsed and many more
had to start again from scratch.

For many it feels like their hard work to rebuild is about to be undone.

Zfort is one of thousands of Ukrainian IT companies that have flourished
since 2014, creating apps and websites for clients in the US and Western
Europe. Mr Shekin is trying to reassure his worried clients but some, he
says, have put contracts on hold, waiting for more clarity.

He hopes to put their minds at ease by explaining Zfort's contingency plans.
"All our infrastructure is cloud-based and hosted on European server. We can
continue operations even if something happens to our offices here
 our
employees would just move to a safe place and connect remotely."

But for Kharkiv's traditional heavy industry, setting up remotely on a
laptop is not an option.

Right in the centre of the city is the Kharkiv State Aircraft Manufacturer,
where the flagship Antonov aircraft, was produced.

But no aircraft have been built here for eight years, because 70% of the
components needed came from Russia. The firm is now $170m in debt, and has
been trying to attract foreign investors to save it from bankruptcy.

Managing director, Oleksandr Kryvokon says any interest he has had from
Western countries has dried-up. But since this latest ramping up of pressure
from Russia at the border, he sees a potential opportunity.

Mr Kryvokon wants Ukrainian companies to collaborate with him on producing
aircraft to defend their homeland. "Many factories started thinking, if
there's a conflict what are we going to do to help Ukraine?" he says.

Across town is the huge market of Barabashovo. Pitching-in to shore up
Ukraine's defence is a big theme for entrepreneurs here too.

It is the biggest market in eastern Europe, with 15,000 shops and 60,000
employees. One of them is Viktor Kuzmenko, who sells heating systems to the
building trade.

When the conflict with Russia began in 2014, Mr Kuzmenko lost 70% of his
business in a few short months - including almost all his loyal customers in
Russia.

He just about managed to keep his business going, mostly through online
sales.

January is usually pretty slow, but this past month he has made a loss. "I
depend on people with big money, who are ready to invest in construction,
and nobody's going to invest in building in a place where there's even the
tiniest threat to it," he says.

Like many of his fellow entrepreneurs, Mr Kuzmenko has dug into his savings
to support Ukrainian troops on the frontline. "My country's going through a
particularly tense time, I couldn't stand on the sidelines," he says. With
the money they raise, they buy tinned food, socks, and soap which are sent
to the troops.

Mr Kuzmenko and many other business owners are mostly resigned to the threat
their country faces and there's a sense of business as usual, according to
Peter Dickinson, the publisher of Business Ukraine magazine.

"One of the key [Russian] narratives is that Ukraine is a failure - a
chaotic, lawless, dysfunctional place - so, obviously damaging the economy
is a big part of that [strategy]," he explains.

The knock-on effect of that is withdrawal of Western investment. "It makes
Ukraine toxic," he adds, "because Ukraine becomes high risk all of a
sudden."

Orysia Lutsevych, Head of the Ukraine Forum at Chatham House agrees there is
a deliberate strategy to undermine Ukraine's modernisation 
. "Russia will
do everything to have Ukraine be this grey, buffer zone, where Russia will
take over while the West will be too risk averse to engage with Ukraine."

Ms Lutsevych, says Ukraine needs external economic support to sustain its
economy, and particularly to help small and medium sized business. This
could come, she says, from places like the International Monetary Fund, the
European Investment Bank, or the European Bank for Reconstruction and
Development. She wants to see the creation of "new [financial] instruments
to support small and medium businesses because they are taking the highest
toll of the suffering, on top of Covid"

"Ukrainians have done remarkably well over the last eight years to rebuild
the economy from the shocks of 2014, when the war began. This is a blow to
them and quite deliberately so," says Mr Dickinson.

Others are hopeful that there will be a period of regeneration eventually,
particularly for industries like design and engineering - mirroring the
years that followed 2014. "After periods of crisis it's creative and new
industries that flourish," says Dr Olga Onuch, associate professor in
Politics, University of Manchester.

But for now, back at Zfort, Roman Shekin is hopeful the situation can be
resolved soon. For now, he's telling his clients to hold their nerve.

He is also looking to the future: "We'll probably set up offices outside
Ukraine in countries like Poland or Slovakia. We have to show our clients we
can keep their projects safe and secure, no matter what."-BBC

UK economy rebounds with fastest growth since WW2

The UK economy rebounded last year with growth of 7.5% despite falling back
in December due to Omicron restrictions, official figures show.

It was the fastest pace of growth since 1941, although it came after a
dramatic 9.4% collapse in 2020 as the pandemic forced parts of the economy
to shut.

In December, the economy shrank 0.2% as Omicron restrictions hit the
hospitality and retail sectors.

Chancellor Rishi Sunak said the economy had been "remarkably resilient".

The Office for National Statistics (ONS) figures showed that in the last
three months of 2021 growth was 1%, which ONS director of economic
statistics Darren Morgan said was "pretty healthy" given Omicron's spread
and the introduction of some restrictions.

GDP graph.

The figures were stronger than expected, and Mr Morgan told the BBC the
expansion in 2021 showed the UK was the fastest growing economy in the G7
group of nations. However, he urged caution about making strict comparisons.

"The growth in 2021 comes from a low base in 2020, when the economy fell
sharply," Mr Morgan said. "And if you look at where the UK economy is now,
compared to its pre-pandemic level... the UK is middle of the pack, compared
with the G7."

He said using this comparison, the US, Canadian and French economies were
above the UK's, while the UK was above Italy, Germany and Japan.

The worst of the overall pandemic economic hit is now behind us but the
aftershocks remain.

Downing Street is unlikely to avoid the opportunity to boast about 2021.
During its hosting of the G7, the UK is now confirmed as the fastest growing
economy of these major nations.

But that comparison needs a great dollop of context.

The 7.5% growth the UK economy recorded in 2021 is the highest of the G7
major economies and that does indicate a strong bounceback.

This, as the ONS points to, should be seen alongside the sharpest fall of
9.4% for the UK compared to those same economies in 2020. On the
internationally comparable basis, the economy is still slightly smaller than
it was at the end of December 2019, unlike the US, France and Canada. On the
slightly more timely basis, using monthly data not available in other
countries, the UK economy is larger than it was in February 2020.

The UK economy grew by 1% in the final quarter of 2021, a little lower than
expectations, as the spread of the Omicron variant weighed on the economy in
December.

But as ever during these extraordinary times, this already looks like a rear
view mirror on events. Looking forward, the extraordinary cost of living
squeeze, with energy and other prices leading to falls in average living
standards, is the significant iceberg for the economy in 2022.

The ONS said that despite the fall in December, on a monthly basis GDP was
in line with its pre-coronavirus level in February 2020.

However, GDP in the October-to-December quarter remains 0.4% below its
pre-Covid levels in the final three months of 2019.

Mr Sunak told the BBC: "Today's figures show that despite Omicron the
economy was remarkably resilient. We were the fastest growing economy in the
G7 last year and are forecast to continue being the fastest growing economy
this year.

"But I know that people are worried about rising prices, particularly energy
bills... and that's why last week we announced a significant package of
support to help millions of families meet the cost of bills."

Last year's growth was the strongest since ONS records began in 1948 and the
fastest since 1941, during World War Two, using data collected by the Bank
of England.

The slump of 9.4% in 2020 was the biggest drop since 1919 when there was
demobilisation after World War One.

After 18 months of uncertainty, Ollie Vaulkhard's coffee shop and restaurant
chain in north east England was seeing a strong end to 2021.

He told the BBC's Wake up to Money programme that October and November were
great months for the Vaulkhard Group as the economy opened up, but then
things started to slow when Omicron hit.

"We lost customers, we lost staff to isolation and we had people being
cautious because they had plans for Christmas."

He doesn't regard December as a disaster, more a loss of momentum. "We lost
the fizz off the top of a glass of champagne," he said.

A better December would have been a good launch into 2022, when Mr Vaulkhard
expects some tough times.

"We have wage cost rises, we have supply cost rises, we've had some brewery
costs going up by 7% - they are all large," he said.

The pandemic and lockdown kept a lid on costs for two years, but suddenly
it's changing.

"I would prefer not to have them [price rises], but given the challenges we
had this seems like another bridge to cross that we'll have to find a way
over."

The economy is expected to face headwinds in 2022. Last week, the Bank of
England raised interest rates, cut its economic growth forecast from 5% to
3.75% for this year and predicted that households were about to suffer the
sharpest fall in living standards since records began three decades ago.

This, said Labour's shadow chief secretary to the Treasury, Pat McFadden,
would mean the economy will "crawl" this year and see the slowest growth of
any G7 country.

"The reality is the way the government runs our economy is trapping us in a
high tax, low growth cycle," he said.

Inflation is forecast to hit 7% in April, the same month workers and firms
will start to see a rise in their National Insurance (NI) contributions. Mr
Sunak has been under pressure to scrap the NI increase, but vowed this month
that it would go ahead.

Thomas Pugh, an economist at RSM UK, said he expected output lost during
December and January to be regained in February and March, "meaning that
Omicron should not have had a lasting impact on the economy".

But he warned that consumer spending power would take a big hit in 2002.

Suren Thiru, head of economics at the British Chamber of Commerce, said that
"crippling" inflation, tax rises in April, and higher energy bills means
"the UK economy is facing a materially weaker 2022".-BBC

Cost of pasta and tinned tomatoes jumps as shop prices rise

The price of pasta, tinned tomatoes and strawberry jam jumped last year as
the cost of supermarket staples rose, new figures for the BBC suggest.

Overall, the price of a basket filled with 15 standard food items rose by
£1.32, or 8%, in just one year.

Changes in the average cost of the food items at Asda, Morrisons,
Sainsbury's and Tesco were tracked by retail research firm Assosia.

Some items fell in price, with carrots and mild cheddar seeing small
declines.

The same basket of food made up of items from the cheaper "value" ranges at
the supermarkets recorded an overall fall in price, down 45p, or 4%. But
within that, items such as pasta and vanilla ice cream saw rises of more
than 6%.

Other items the firm tracked in the new research for BBC News included
tortilla chips, fish fingers, honey, blueberries, carrots and lemons.

Although official figures suggest that the overall cost of living increased
by 5.4% in the year to December, this number - known as the inflation rate -
can mask some steep rises seen at the tills, especially on everyday items.

There are many factors that can make it difficult to track how prices are
changing for households, such as promotions at supermarkets or a lack of
availability of certain products.

Asda, for example, recently pledged to stock its budget ranges in all of its
581 supermarkets and online after complaints from anti-poverty campaigner
Jack Monroe.

"Looking at food prices is a bit of a minefield", says Kay Staniland,
director at Assosia. Her company selected a snapshot of popular products
that were comparable across the value and standard ranges.

"I think the figures show that retailers are trying to avoid the biggest
increases to value lines as much as possible. But these value lines do make
up a small part of total ranges. The standard mid-tier range is where the
largest volume of sales come from," she says.

food prices

Adam Leyland, editor of The Grocer magazine, also tracks a weekly basket of
goods and how prices differ across the supermarket aisles. He says "we're
now in a 'once in a generation' moment for food inflation in the UK".

"We've not seen anything like this since the financial crash in 2008. And
this is just the start. It's going to go on for two or two and a half years,
probably as various costs and problems filter through into the system."

Inflation is everywhere in the food supply chain, he says, from rising
energy and labour costs to raw materials and packaging.

The supermarkets are now grappling with how much of these costs to pass on.

"The food market is incredibly competitive and if you put your prices up
ahead of the competition, the shopper will notice. Right now, more than
ever, price is the major focus for the shopper. And they will vote with
their feet," he says.

'We've completely changed how we shop'

Shoppers such as Fernanda Almeida have already been feeling the pinch,
though.

She lives with her partner in Worcester and the pair used to purchase
ready-meals, or pots of instant porridge, which he could take along to his
military barracks where cooking space is limited.

But after the shopping bill went up by about £20 a week, they introduced
some changes.

"Our shopping has changed completely... we're definitely cooking from
scratch a lot more now because it just works out cheaper," Fernanda says.

She says she feels "worried". "I've gone from someone who has a budget per
month but goes to the shop without a list, picks up things that I fancy
eating, to planning each meal, checking items off against the list."

She's noticed that tinned items in particular have gone up in price and it
can often be cheaper to buy individual items for recipes in larger
supermarkets, even in comparison with discount stores like Aldi or Lidl.

Vimbai Gwata-St John in Bexley has seen her food shop go up by about £20 a
week, too.

As a mum to an 18-week-old baby with food intolerances she has had to chop
and change what they are buying from week to week.

She says she used to follow a budget strictly until she became ill during
her pregnancy.

"Because of that, we didn't have time or ability to track our expenses, we
just bought what we needed out of desperation because of the other problems
at that point in our lives."

Now she is trying to get the budget back on track and is looking at
couponing or starting to buy items such as toilet paper or nappies in bulk.

Although prices are going up across the board, she says: "The one thing you
can't compromise on is food."

How supermarkets manage their own inflationary pressures will have
consequences for millions of households. And the least well-off, which spend
a bigger share of income on essentials such as food and energy, are less
able to absorb soaring prices in the aisles.

The big four supermarket chains have learned from the mistakes they made in
2008, when they put prices up. Aldi and Lidl swooped, stealing customers and
market share. Their businesses have since doubled in size and are still
opening new stores.

"It's a real dog-eat-dog situation," says Adam Leyland.

"The battleground is value. And they are determined to stop them (the
discounters) making further grounds. For instance, Tesco and Sainsbury's are
price-matching Aldi.

Cost cutting, shrinkflation - reducing the size of a product but not the
price - and cutting back on expensive ingredients are just some of the
tactics that retailers are using to mitigate the rising cost of groceries.
But the trend is clear.

Assosia recorded more than 17,000 price increases across the main
supermarkets last month, more than double the number in the same month last
year, and across every category.

"Inflation is everywhere" says Mr Leyland. And he agrees with the recent
warning from John Allan, the chairman of Tesco, that the worst is yet to
come.-BBC

3,000 NYC staff face lost jobs over vaccine rules

Roughly 3,000 teachers, firefighters and other New York City workers face
losing their jobs Friday after failing to get vaccinated against coronavirus
by the city's deadline.

New York City Mayor Eric Adams said he would not change the rules, despite
the city facing many days of protests since his predecessor announced the
policy last year.

More than 95% of staff have complied.

Opponents say the requirements violate their freedom.

More protests are planned for Friday and opponents have filed numerous legal
challenges, arguing, for example, that the rules violate protections against
the free practice of religion.

But though the US Supreme Court last month struck down a national policy
requiring vaccination or weekly tests for staff of large businesses, it has
declined to take a stance against more localised requirements.

New York City Mayor Eric Adams told a news conference it was not that the
city was firing employees, but that "people are quitting".

Many of the 3,000 unvaccinated have been on unpaid leave since the mandate
went into effect last autumn. Roughly 1,000 other employees, who were hired
after the mandate was announced and had agreed to get the jabs, risk losing
their positions Friday if they fail to submit proof of vaccination.

New York City - the epicentre of the pandemic when it first struck in 2020 -
is not alone among US cities in insisting that public employees get the
jabs, which experts say is the safest way to protect against infection.

San Francisco, Boston and Chicago are among the cities and states that have
implemented similar rules, which typically allow staff to seek exemptions.

Many health workers also face the mandates as a result of state or national
rules, while some large employers have also moved forward with mandates.

More than 85% of adults in New York City are fully vaccinated - compared to
about 75% nationally - and more than half of eligible children.

But there are pockets of resistance. Roughly 13,000 people applied for
exemptions from New York City's rules. The city has processed about half of
those requests.

Former elementary school teacher Bonnie Skala Kiladitis, who has taught in
Queens since 1993 and sits on the steering committee of the Teachers for
Choice activist group, said she had applied four times on religious grounds,
believing it should be her choice.

She said she's heard nothing about her employment status as of yet, but
she's not optimistic.

"It's been a tough call but I'm absolutely confident in the decisions I
made," the mother of two, 49, told the BBC. "You don't force people to do
this."

"If it means I'm no longer going to be a teacher ... with sadness, so be it.
I can't go against what I believe in," she said. "I have no intention of
quitting. The DOE [Department of Education] is going to have to fire
me."-BBC

Business fires up the back-up generator as costs rise

Soaring energy costs are hitting businesses as hard as they're looming for
households, making even diesel generators a more attractive option than
buying power from the grid.

Other costs are crowding in; raw materials, packaging, recruitment and
retention, insurance, shipping, haulage, and payroll tax is soon to rise for
both employers and employees.

More than three-quarters of businesses are putting up prices more than they
normally would, or they expect to. And they face the added threat of
consumer spending being pulled back as household budgets are soaked up by
rising heating and fuel bills.

Imagine you've just bought 68 new buses, powered by electric battery. Helped
by a wadge of public cash, you wire up your bus depots with chargers.

Then the price of electricity goes through the roof, and it turns out that
the best business option is to fire them up with power from a diesel-fuelled
generator.

It's not quite the clean, green future of public transport that we were sold
last year at COP26, as big government grants went into renewing bus fleets
with batteries.

But that's how energy prices are up-ending parts of the economy.

The scenario of battery buses powered, albeit indirectly, by dirty diesel
has been briefly explored by the chief executive of McGill's Buses.

Ralph Roberts tweeted that the procurement team at the Inverclyde-based bus
operator had run the numbers on the £624,000 increase in its energy bill.

"They are advising that we charge our zero emission buses by diesel
generators," he wrote.

Three emojis followed, the latter showing an exploding head.

He subsequently clarified this was "to draw attention to the impact that the
electricity price rises are about to have".

"We are NOT suggesting that we actually would use diesel to charge electric
buses, except in emergencies," he added.

'Over the precipice'

For other businesses, the cost of power is already biting. While most
businesses lock in prices for at least a year at a time, and often in
September, the owner of one food processing firm has told me that he is
trialling use of his emergency back-up generator, to see if that will come
in cheaper than using the grid supply.

He explains that he had budgeted for a 62% increase, as indicated by his
supplier. But last week, it said the 62% renewal deal was off the table, and
it would instead be an increase of 125%, with the contract lasting six
months.

And if he didn't like that, moving onto the variable rate would start at
more than 300% above his previous contract.

"That's extortion," he said. "Except even the Sopranos wouldn't do that.
They knew it was in their interests to keep businesses open."

He has kept his sense of humour, but only just, saying many such companies
are "looking over the precipice".

He prefers to keep his company's brand out of the media on this subject, for
fear of spooking suppliers, customers and trade credit.

But unlike McGill's, he is serious about shifting to a diesel-powered
generator, even if it goes against the drive to cut emissions.

He is also looking at the possibility of moving to night shifts, if his
power bill for night-time work can be cheaper than daytime.

Against the grain

The pressure on business from soaring bills for oil, gas and electricity is
closely aligned with rising prices for households.

Companies are seeing sharp increases in raw materials, when they can get
them. A survey out this week from the Fraser of Allander economics institute
showed two thirds of manufacturers are struggling to get the materials they
require.

Partly, that is down to increased transport costs. A shipping container from
China to Europe went up in price last year by an average of around
seven-fold. That disruption is far from over, and prices remain elevated.

Haulage within Britain and from the EU was also sharply up, due to the
shortage of drivers.

Labour costs are up. According to a regular Royal Bank of Scotland survey of
recruitment consultants, starting pay for new recruits hit record levels in
November, and last month's just below that.

An Easter Ross farmer I interviewed last week, Ewan Macdonald, said farm
labour wages are up by about 50% - partly due to Brexit, and the difficulty
of recruiting workers when they can't be brought from European Union
countries.

He pointed to a sharp increase in the cost of agricultural machinery, and in
red diesel to run it, while fertiliser costs are closely aligned with the
cost of gas required to make it. He is looking at fertiliser up at least
50%, and says these costs will have to be passed on.

Farm prices are not set by farmers, but by markets. If the price doesn't
cover costs, Macdonald says there will be less grain sown or less fertiliser
used. Either way, that curtails supply later this year, putting further
upward pressure on prices.

James Withers, chief executive of trade body Food and Drink Scotland, adds
insurance costs to the bill, pushed up by the increased risks businesses
face with Covid, as insurers try to cover themselves against the
consequences of renewed restrictions to trade.

And an index of packaging costs, across all sectors, is running at more than
30% up on last year, having peaked above 60% during last year.

In sectors which have benefited from temporary tax cuts, those are being
unwound, including VAT on hospitality returning to 20%, from 12.5% since
October, and 5% before then. Business rates reductions for the most
Covid-hit sectors are removed later in the year.

Upstream oil

The regular Allander monitor, covering more than 400 Scottish firm and
working with legal firm Addleshaw Goddard, found 80% of companies were
expecting to raise prices more than usual, and 20% will cut back production
because of rising costs.

In December and January, 80% were struggling to recruit staff, while quarter
were finding it difficult to retain workers. Nearly half expected weak or
very weak growth this year - although at the time of the survey, the Omicron
variant of Covid-19 may have cast a longer shadow than it does now.

That was reinforced on Thursday, when a survey of 1,000 British Chambers of
Commerce members showed 73% of firms were already putting up prices, in
response to pressures that have been building for some months.

Fuel was a big issue for more than 60% of them, and wages for a similar
share, while 90% of manufacturers said raw material costs were rising. One
in twenty were thinking they may stop trading.

Looming in little more than six weeks is a hike in National Insurance
Contributions (NICs). That can seem stealthy, in that not that many people
understand it. But it's hitting employment twice.-BBC

Cost of pasta and tinned tomatoes jumps as shop prices rise