Monday, 19 March 2018

Boom, what boom?

It is sad to see Micro Focus, the epitome of UK's post-manufacturing future, in the same company as Carpetright and Mothercare. All three have seen their share prices fall, the last two after warnings about trading losses and amidst a welter of store closures.

The carpet business has been one of boom-and-bust for at least the last two generations. The usual pattern is of expansion on the back of rising wealth and new home ownership, followed by failure when the country goes into recession. Of all high street retailers, carpet sellers should be least threatened by on-line purchases as buyers will want to see and feel the product before commitment. For Carpetright to be in serious trouble at a time of global recovery demonstrates that the UK is not taking advantage of the general rise in economic activity, despite chancellor Hammond's upbeat spring statement.

Mothercare has been in trouble before (one remembers the closure of a huge store in Swansea's Kingsway), but it looks more serious this time as internet shopping must be cutting into footfall in its shops. This could be the end for a pioneering company, whose growth coincided with that of my own family.

Micro Focus grew shortly afterwards, its founders spotting that micro-computers would graduate from being sophisticated toys to becoming essential equipment for enterprise, and thus would need software to move programs from big central mainframes to PCs. This provided some bread-and-butter during my contract programming days. It is the sort of business which Mrs Thatcher had in mind when she shed no tears over the decline in British computer manufacture, seeing the future for the UK as providing services for machinery made elsewhere. MF's big mistake seems to have been taking on Hewlett-Packard's software services arm, which was not as sound as they were led to believe. However, their current difficulties also suggest that businesses are not investing in new IT systems thus reducing the MF cash-flow. If so, it reflects badly on business confidence on both sides of the Atlantic.

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