Conservatory has to face the shareholders and stand up to Marksist analysis
Tense times lie ahead for Conservatory Holdings (writes my political investment correspondent, P.E. Ratio). At next week's annual general meeting, two questions will be on shareholders' minds or even on their lips. Is this historic company going the way of Marks & Spencer — and if so, would that be bad news or, conceivably, good news? No doubt the chief executive, Michael Howard, will contrive some upbeat answers. He is in his job, after all, because at the last AGM his predecessor forfeited the shareholders' confidence and fell victim to a boardroom coup. The parallels are striking, as Harold Wilson was the first to notice. We shall find it hard, he said, to convince people that nationalising M&S would make it as efficient as the Co-op. Like M&S, Conservatory had a faithful following, and came to dominate its market for so long that, in the end, it took itself for granted. Then the succession was botched, feuding managers lost concentration and customers, and false dawns alternated with desperate results, to be followed by recurrent makeovers. The competitors, meanwhile, had learned some new tricks and entrenched themselves in new territory. Conservatory's board, like M&S's, may secretly fear that theirs is a business in decline — but, once again like M&S, it still has an enviable franchise, and they must hope to pull it round by sacking the consultants and making the managers manage: getting back to basics, as a previous chief executive might have said. As with M&S, not all these hopes are, just now, in the share price.
Funk is good
Some analysts (P.E. Ratio adds) argue that Conservatory's fortunes and misfortunes are governed by Nicolai Kondratieffs long wave. He was the economist who discerned a wave-like pattern in markets and economies — building up gradually over half a century or more, then crashing down, then swilling around in a trough before the process starts again. In Stalin's Russia, this heretical argument proved fatal to him, making him one of the profession's few martyrs. He might now suggest that Conservatory was still in the trough. Another version of the stock market cycle is that it leads from confidence to enthusiasm to panic to funk, and so round again. At this time last year Michael Howard was identi fied as having arrived on the cusp between panic and funk. By now he could fairly claim that funk is well established. That could be called an achievement — for him, for Conservatory and, of course, for the cycle.
God helps those . . .
From those high-minded people at Christian Aid comes a picture of a hog in a pin-striped suit, with money spilling out of its breast pocket. This hog rides piggy-back on a cloaked figure with a fly-whisk, who may be a Senegalese onion-grower. 'Free trade', so the caption reads — some people love it.' We are urged to write to Tony Blair about it, and tell him that Senegal's markets are flooded with onions imported from Europe. I would rather tell him that free trade could do more for the oniongrowers than any aid agency. Free trade, if we had it, would mean that the farmers of Senegal could flood Europe with their onions — but, of course, their way is blocked by the Common Agricultural Policy. This institutionalised antithesis of free trade rigs its own markets and then dumps its surpluses in Senegal. Can we expect the Christian Alders to caricature the CAP and urge us to write to the Prime Minister about it? That will be the day.
. . . who help themselves The Christian Aiders might like to tune in to Moeletsi Mbeki, who is deputy chairman of the South African Institute for International Affairs and also, as it happens, President Thabo Mbeki's brother. Giving farmers greater access to international markets, he says, would help to hand financial power back to the poorest of Africa's poor. He reserves his contempt, though, for the political leaders who help themselves to their countries' resources and
park them in Swiss bank accounts: The more they strengthen their hold over the state, the more peasants are likely to become poorer and the more African economies are likely to regress.' Perhaps Christian Aid would like to portray them as hogs? Their activities, after all, lend force to Bauer's Law, which teaches us that aid is a transfer of resources from poor people in rich countries to rich people in poor countries — less, of course, a percentage for the running costs of Christian Aid.
Concrete playground
Adios, RMC. The world's biggest maker of ready mixed concrete — you guessed it — is being dumped in the mixer and shipped out to Mexico. This will cost a company called Cemex £2.3 billion and build its debts up to $11.5 billion. Given that Mexico has defaulted on its bankers twice in the last two dozen years, who is putting up the money? The usual suckers, I suppose. As with Santander and Abbey, any credible domestic bidder would be trumped by the Competition Commission, so the wild card scoops the pool. This derives from a policy which is supposed, with a quick change of metaphor, to create a level playing field. I never expected to see it concreted over.
No free breakfast
A captious call from Manchester (Piccadilly) station signals that my railway correspondent, I.K. Gricer, has dismounted from Sir Richard Branson's tilting train and is returning to the vertical. He is pleased, so he says, that after all the expense and disruption, trains can now run on the West Coast Main Line at 125 mph. They have been doing this on the East Coast Main Line — and, of course, on the Great Western's main lines — for decades, without fuss. Fastest trains in the new timetables: Manchester to London (184 miles), 2 hours 6 minutes: London to York (188 miles), 1 hour 45 minutes. The trains to York offer an excellent breakfast (Craster kippers) without class distinction. Breakfast on a West Coast train requires a first-class ticket and is included in the price, which runs far into three figures. When Sir Peter Parker ran the railways, he insisted that breakfast should not cost more on the train than at the Savoy. He might have added that there is no such thing as a free breakfast.
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