Monday 30 September 2013

GOING OFF THE RAILS (2)

Putting official purchases out to competitive tender is in principle a good thing, since it gives the state the opportunity to secure goods and services at the lowest price. However, it doesn't always go well, as the saga of the IC4 trains in Denmark shows.

In 2000 Denmark's state-owned train operator DSB ordered 82 IC4 train sets from the Italian firm Ansaldo Breda to replace the ageing IC3 trains which are the mainstay of the national network. The contract had a value of more than Dkr.5 billion, the first train would be delivered in 2002 and all the trains were due to be in service by 2006.

The project went wrong from the start. Already in 2002 DSB agreed with the Italians that the trains could be delivered late. The first units arrived in 2003, but could not be put into service. The start date was put back to the beginning of 2006, but the first train didn't enter service until August 2008. In May 2009 DSB received Dkr.2.25 billion in compensation, plus a guarantee that the last train sets would be delivered in the third quarter of 2012. However, the last of the 82 sets was finally delivered today; and only 23 of them are in service.

As the head of DSB put it, it has been 13 years of suffering for both DSB and the travelling public. As an example of how things can go wrong, it is a case study. One fact in particular stands out. DSB did in fact order 83 train sets, not 82. The 83rd unit was found in a railway siding in Libya when coalition forces moved in after Ghadaffi had been toppled; apparently he had been given it as a present by Italian's then Prime Minister Silvio Berlusconi!

Walter Blotscher

Saturday 28 September 2013

48 HOURS

Consultancies are always thinking up ways of improving companies. But what about improving a whole town?

My town has just been through such an exercise. 50 or so young people from a business education college descended on us on Thursday and spent the next 48 hours thinking up ways in which we could make the town a better place in which to live. They came from a wide variety of backgrounds - tourism, energy, entrepreneurship, web design and so on - and came up with some interesting ideas. Whether those ideas get taken up and come to fruition is of course another question entirely. But at least there is something to work on.

This was a first for Denmark. The traditional way of getting things done in a high tax, social democratic society is to ask the local authority to do it. However, times are hard and local authorities are short of cash. So if things are going to get done, then they have to be done by the citizens themselves. A group of people have come together and are trying to do just that; the 48 hours project was their idea, so it bodes well.

I was involved on the periphery, since they used the local cinema to present their ideas. A good example of creative thinking, since it shows that the cinema can be used for things other than just showing films. A point not lost on the mayor, who was on hand to kickstart the 48 hours project; his political party have booked the cinema for a political meeting on a Saturday morning next month.

Walter Blotscher

Friday 27 September 2013

PARISH COUNCILS

The last time I was involved in the local parish council was a year ago, when I was invited to dinner (as the partner of my wife, who had just been elected) in order to meet the new priest. I later discovered that the council has funds to go out to dinner, with partners, once a year. This year it was this evening.

Being a parish council, there has to be some sort of religious element, so we visited two churches on the way. One of them, Bogense, has a wonderful location, with the churchyard overlooking the Baltic to the north of Funen. It also has a fantastic organ, which one of the councillors played for us. I have always loved the sound of a proper church organ, not least because church buildings often have good natural accoustics. At some point in my life, I would like to learn to play one. Perhaps that will be my project for the first year of my retirement.

After the visit we walked down to a fish restaurant in Bogense harbour. The buffet included 15 types of fish, both hot and cold, and was delicious. Sometimes it is easy to see the advantages in having a state church. 

Walter Blotscher

Thursday 26 September 2013

RESUSCITATION

As people live ever longer and eventually move into care institutions, the issue arises of what to do about resuscitation. As the law currently stands in Denmark, care personnel are obliged to try and resuscitate elderly patients who have a heart attack, even in cases where the person concerned has previously expressed a clear desire not be treated in such a situation. Normally that would involve first aid and heart massage until such time as an ambulance arrives. However, more and more care homes have now installed heart starters, which will increase the chances of a patient's surviving a heart attack.

What is problematic is that the legal position is different from that in a hospital, where patients have clearly defined rights, including the right not to be treated in certain circumstances. The somewhat paradoxical result is that the less the personnel are medically trained, the more they have a legal responsibility to try and prolong life.

This is not in anybody's interest, least of all the individual's. As with many other things in a modern and complicated welfare state, there needs to be a review of the law in order to bring it into line with reality.

Walter Blotscher


Tuesday 24 September 2013

BRIDGE (9)

After our debacle of last month, I am pleased to say that my partner and I have started the new bridge season well, and have won the warm-up tournament that finished this evening. We couldn't do much against opponents who bid and made 6 and 7 no trumps when nobody else in the room did. On the other hand, we won a succession of small part scores by getting that vital extra trick that makes all the difference when you are playing duplicate.

Nothing fancy, just sticking to the system and solid play.

Walter Blotscher

Monday 23 September 2013

NAIROBI (2)

Three weeks ago, I was in Nariobi on business. It was a peaceful, bustling, slightly chaotic city. Today, part of it is a bloodbath, as terrorists linked to Al-Qaeda have shot and killed a lot of people in a busy shopping centre. The stand-off with security forces is not yet over.

What is different about violence in the world today from (say) when I was gowing up is that it is so random. Innocents are killed, and are meant to be killed. Whether you as an innocent are caught up in that violence is purely a matter of luck. That is scary.

Walter Blotscher

Sunday 22 September 2013

DANISH POLITICS (4)

Six months on from their worst ever polling result, the Social Democrats, the party of Prime Minister Helle Thorning-Schmidt, are still languishing in the polls at 17.5%. However, whereas in March the main beneficiaries of that unpopularity were the very left-wing Enhedslisten, today it is the very right-wing Danish People's Party. For the first time ever, they are polling higher than the Social Democrats, at 20.2%, up from 12.3% at the last election.

Voters seem to have worked out that while Enhedslisten has absolutely no chance of being in Government either before or after the next election, it is quite possible that the DPP will be part of the expected right-of-centre coalition. That would not be a particularly fun prospect, in my view; but would nevertheless be a remarkable advance in a Scandinavian country for a political movement founded on being against taxes and immigrants.

Walter Blotscher

Friday 20 September 2013

POTENTIAL MELTDOWN (7)

Two years ago, the U.S. avoided a potential financial meltdown (albeit at the cost of its losing its AAA rating for the first time in history) by agreeing an eleventh hour deal to raise the federal debt ceiling. However, one of the prices of budget deficits since then is that that new ceiling is about to be breached, probably some time in October. Which means in turn that a new potential meltdown looms.

As in 2011, the battle lines have been drawn. The Republicans say that they will not agree to a raising of the debt ceiling unless the President and other Democrats agree a major concession such as the abolition of Obamacare. Since the House of Representatives has already voted 40 times to abolish Obamacare, without those votes getting anywhere in the Senate (let alone through a Presidential veto), agreement looks unlikely. In which case, as in 1996, the Federal Government will start to shut down sometime next month.

The U.S. constitution is carefully written in order to ensure that no part of the political process lords it over another. The upside of this is that there are many checks and balances; the downside is that if there is deadlock in Congress or between Congress and the President, then there is real deadlock. You would think that allowing the country to pay its bills would be something that every national politician could and should be able to sign up to. Unfortunately, there are more than a few American politicians who would rather be "ideologically pure" than sensible. It's going to be a tricky couple of months.

Walter Blotscher

Thursday 19 September 2013

AN UNEXPECTED NO

Last November I wondered whether other Danish companies would try and do the same as SAS, and try and cut workers' pay, probably the ultimate taboo in Danish labour relations. SAS managed to push the changes through because the alternative would have been bankruptcy. Nevertheless, a precedent had been set; and once a door has been opened, it's possible that others will attempt the same.

Another Danish industry suffering from high wage costs and cheaper competition is the slaughtering of pigs. Pigs are one of the great success stories of Denmark, but in recent years it has become more profitable to send pigs to be fattened and/or slaughtered in Germany and elsewhere. Exports of live pigs have soared from 1.4 million in 2000 to a projected 10.2 million this year. At the same time, although slaughterings rose from 20.9 million in 2000 to 22.6 million in 2004, they have since fallen to a projected 19.0 million this year. Even worse, everyone believes they will continue to fall over the next 10 years.

Danish Crown, the dominant player in the market, has a turnover of some Dkr.56 billion and employs more people today than it did in 2000. But that is only because it has taken on labour abroad. In Denmark, the number of workers has fallen from more than 15,000 to under 9,000; abroad, it has gone the other way, from a couple of thousand to almost 15,000.

Against that depressing background, the company put forward an unusual plan. The workforce would take a cut in wages, leading to savings of roughly kr.600 million over four years. However, instead of those savings staying within the company, they would be geared up with loans to kr.3 billion and invested in extra production facilities here in Denmark. The key point, of course, is that that extra production would be "captive", and slaughtered in Danish Crown's own abbatoirs, instead of being sent abroad. In order to concentrate the minds, the company said that if nothing happened, then further redundancies in Denmark would probably follow.

Backed by the unions, the consensus was that the idea would be approved by the workforce. So it came as something of a shock this week that the workers overwhelmingly voted against it. Some thought that it was because although they would be providing the equity for the new investment, they wouldn't have reaped the benefits in the form of dividends. Others because although there would be more investment in the sector in Denmark, there was no gurantee that there wouldn't be redundancies anyhow.

The proposal is not completely dead, it may return in a modified form. What it probably shows more than anything is that the average Dane is sceptical of anything that smacks of financial engineering. Which is fair enough.

Walter Blotscher

Wednesday 18 September 2013

DEAD MAN WALKING

My English students are currently doing a theme of crime and punishment, of which the death penalty forms a part. So it was an obvious idea to show them the 1995 film Dead Man Walking. A very good film, it was directed by Tim Robbins and stars Susan Sarandon and Sean Penn. Both were nominated for Oscars; Sarandon won the one for best actress.

Anybody who believes that the death penalty is fair and just should watch this film.Taking the long view, the continuous reduction in the amount and reach of state-sanctioned murder is one of the few undoubtedly positive developments in history. It's just a pity that the U.S. (notably) and other countries haven't yet got to that point.

Walter Blotscher

Tuesday 17 September 2013

DANSKE BANK

Danske Bank is Denmark's largest financial institution. It is also in trouble, as today's events have shown; Eivind Kolding, its Managing Director, was fired this morning with immediate effect.

Mr. Kolding originally came to Danske Bank from the shipping conglomerate A.P.Møller Mærsk, which (wrongly, in my view) still has a sizeable shareholding in the bank and tends to informally vet its big decisions. But he came as Chairman, not Managing Director, and his major task was to find a replacement for the then Managing Director, who had been at the helm for more than a decade. In one of those slightly bizarre happenings (think Dick Cheney and the Vice Presidency) the selection committee with Mr. Kolding at its head could find nobody who was suitably qualified. Instead, they came up with him as the best person to lead the bank out of the financial crisis, even though he had absolutely no banking experience. He started work in February 2012 with the unanimous backing of the Board, a Board in which the then Deputy Chairman moved up to become Chairman.

It is that Board which today unanimously fired Mr. Kolding on the grounds that, er, he had no banking experience. When reporters pointed out that he now in fact had more banking experience than he had had when that same Board appointed him eighteen months ago, there was a lot of wriggling and weasel words. Basically, they had made a big mistake before; better to accept that and try something different. The new man, Thomas Borgen, is an insider, who probably felt hard done by, when he was passed over for the top job back in 2012.

Whether he will do a better job than Mr. Kolding is uncertain. Danske Bank has the predominant market position in Denmark, but it is also suffering from a terrible reputation, with customers leaving it in droves. There has also been a marked turnover of personnel amongst the upper echelons of the firm. Neither factor makes for a happy workplace.

During the noughties, Danske Bank enjoyed a position both of knowing how to manage money, and of knowing better than the average Dane. Catastrophic investments, notably in Ireland, big losses and now personnel disputes, have shredded that reputation. Yet another example of hubris in the financial sector.

Walter Blotscher

Sunday 15 September 2013

THE COST OF AGEING

A theme of this blog has been the looming crunch in Denmark (and elsewhere) caused by the growth in the number of old people. The number of 80-year olds here, for example, is projected to increase by 30% over the next 10 years, from 233,000 to 304,000. Looking after 80-year olds is expensive.

Just how expensive is shown by new figures. Annual spending on health and social care costs, on average, is around Dkr.26,000 for someone aged 30, a figure that changes very little over the next twenty years or so. After 50, social care costs remain unchanged, but health care costs begin to rise, so that the annual total is around Dkr.40,000 on average for a 60-year old.

Thereafter, costs explode. It costs Dkr.56,000 a year to look after a 70-year old, Dkr.104,000 for an 80-year old and a whopping Dkr.163,000 for a 90-year old. Social care in their situation costs more than the total cost for a 70-year old.

Given that the pensioners of the future have already been born, this is is not a problem that is going to go away. What is beginning to happen is the start of a long-delayed debate about what older people can expect to receive from the state in terms of support, and what should be provided by either the elderly themselves or their relatives. The generation in their sixties has a very nice life; money in their pockets, no obligation to work any more, good health and a long (30-year) life expectancy. Should they expect the state (i.e. the rest of us, through our taxes) to continue to support them in that life, or should they do more themselves? That debate will be sharp-edged, perhaps bitter, at times; but it is good that it has begun.

Walter Blotscher

Friday 13 September 2013

SYRIA (6)

I suspect that only a handful of people in the whole world know both who carried out the chemical weapons attack in Syria and why, and I don't think that that handful includes politicians. Civil wars are messy affairs at the best of times, and it is more than a possibility either that it was the work of a low-level commander acting on their own initiative, or a simple blunder. Politicians love to see patterns and clear motives in all things; sometimes there just aren't any.

Being both a trained lawyer and a successful politician, President Obama loves patterns more than most and quickly found himself in the unenviable position of promoting that "something must be done". Quite what that something would be was never quite made clear, not least because there were huge risks involved. Hitting the Syrian regime's remaining chemical weapons stockpiles would probably kill as many people as in the original attack; hitting other military targets, which are often situated in civilian areas, would still result in "collateral damage".

Thankfully, the something has not happened, partly because the British Parliament voted against David Cameron's recommendation (the first time a British Government has lost a vote on a matter of war and peace in more than two centuries), and partly because the President decided to ask Congress for support before he acted. That gave a window of opportunity, which the Syrian Government and their Russian allies have gratefully exploited. Syria, one of the few countries in the world which is not a signatory to the U.N. convention banning the use of chemical weapons, promptly signed up to it, and agreed to hand over its existing stocks, through Russia, to the U.N.

This is a smart move by the Syrians, for two reasons. First, chemical weapons being tricky things, it will take a long time to sort out the mechanics and details; verification, transportation, security etc etc. Secondly, while all this is taking place, it distracts attention from the civil war which is still ongoing and which is being waged with ordinary weapons. The Government thinks it is winning this war, so by the time the world's diplomats have finished discussing chemical weapons and turn their attention back to ordinary ones, they will be in a position to negotiate with the rebels from strength.

I have just finished reading C.V.Wedgwood's history of the Thirty Years War. The Peace Congress that would eventually end it opened on 4 December 1644. This was thirty two months after the date originally fixed by the delegates for its start, and forty six months before the date the peace treaties were eventually signed. During this seven-year period, the war continued as before, as each side sought to use success on the battlefield to extract concessions at the negotiating table. Only when the exhausted parties realised that neither side was ever going to win a comprehensive victory could the necessary compromises be made. I said in my previous post on Syria that the parties there were not yet ready to compromise. So the next months (and years) will probably involve lots of high-level chemical weapons talk, and lots of low-level killing. As in seventeenth century Germany, the real losers will be ordinary Syrians.

Hegel once said that the only thing we learn from history is that we learn nothing from history. I agree.

Walter Blotscher

Wednesday 11 September 2013

ARRANGED MARRIAGE

Would you, living in a developed country which allows you to take decisions about your own life, voluntarily marry someone, whom you had never seen before you entered the town hall on the day of the wedding? That is exactly what is happening in Denmark, in a slightly bizarre combination of reality television and social experiment.

Four experts, a priest, a sexologist, a relationship therapist and an anthropologist, have scientifically matched three couples from a group of about 25 singles in their late twenties. The deal is that they have to get married without seeing each other before the wedding, and live together as man and wife for a minimum of four weeks. If at that point in time they can't stand each other, then they can get divorced. Adding to what must be a huge amount of natural pressure, the whole thing is filmed for the benefit of the rest of the population.

I missed episode 1, which dealt with the matching. Episode 2 this evening covered the wedding itself and the party afterwards, complete with in-laws and speeches. It was at the same time both slightly toe-curling and fascinating. My wife, who watched it with me, thinks that one them could last and possibly two. Time will tell.

Walter Blotscher  

Tuesday 10 September 2013

CARDBOARD BOXES

The cardboard box is a wonderful invention. By itself, it is very light and easily portable; but when it's opened out, the flaps fitted under each other, and sticky tape applied to the joints, it is surprisingly sturdy. And the rectangular shape makes it ideal for putting them on pallets and fitting them into containers.

I have had a lot of experience of all the above during the past couple of days. The old seats from the local cinema had to be dismantled into their component pieces, packed in cardboard boxes, put on pallets, shrink-wrapped and sent somewhere else in the world. I am not sure who would want them, but apparently someone does.

Walter Blotscher

Monday 9 September 2013

WRESTLING

It is hard to imagine a more Olympic sport than wrestling. It was part of the games back in Ancient Greece, and has continued to be a part ever since the games were reinstated in 1896. However, in a shock move in February, it was dumped from the programme after the Rio games in 2016, owing to various misdemeanours in its administration and policies.

In a partial repieve, it was asked to plead its case for reinstatement in the 2020 and 2024 games in competition with squash (trying for inclusion for the very first time) and a combined baseball/softball. At the IOC meeting this weekend which gave the 2020 games to Tokyo, it was announced that wrestling had won.

And rightly so. I say this, even though squash was my main sport for 20 years. Ideally, both should have been included; but if there was only room for one, then it should be wrestling. After all, they didn't play squash in Ancient Greece.

Walter Blotscher

Sunday 8 September 2013

NAIROBI

I went to Nairobi on business last week. It was a short, but tough, trip, since I flew from London overnight on Sunday and flew back overnight on Tuesday. The seats on Kenya Airways' 777 were a lot better than those on Ryanair's 737s, which is what I am used to, but it still left me with cricks in my neck and a lack of sleep.

It was my first time back in Africa since I left Tanzania at the turn of the century, and it was amazing to be able to re-experience those peculiarly African things that you don't get in Denmark. Interminable form filling at the airport; people selling newspapers on the motorway in the middle of the traffic; matatus; cold Tusker beer; mud roads in the middle of the city; the mix of Swahili and English; rubbish everywhere; ordinary people's friendliness; the blinding colour of bougainvillea and other flowers; scaffolding made from bamboo poles.

Nairobi is not cheap; the rack rate at our hotel on the road to the motorway was a whopping US$270 a night. However, because we were working with the airline, we got the crew rate, which was a more digestible US$95. They also need to do something about the traffic, which is appalling. A light railway down the middle of the motorway to the airport would be my suggestion, though I doubt that it will happen any time soon.

I haven't really spoken Swahili for 13 years. But after a couple of hours, I could feel the gears in my brain beginning to creak, and by the end I was managing a conversation with the taxi driver on the way to the airport. Enough to make me want to come back again before too long.

Walter Blotscher