Post-virus – and after Brexit – everything is going to change. That’s the dominant view of national and international media. But how exactly do they see the future? This regular digest section gives some of their answers and views/Edited by George Hamilton
In this edition (June 12)
One in eight manufacturers in Northern Ireland say they fear for their futures
- “A gloomy picture” says trade body Manufacturing NI
Young workers in Northern Ireland to be hit hardest post-virus
- New Ulster University study says major reason is that so many are in hospitality – likely to be the last to unlock
£95m extension to Belfast film studio and residential development under review, but others have the green light
- Overall “no retreat from developments” says Belfast Chamber of Commerce
One in ten may lose job as recession bites UK hardest
- Britain will suffer more than 36 other rich countries
The small shop blueprint to save town centres
- There are big ambitions behind a £400m plan to redevelop a 1970s mall in Berkshire
‘Customers will be too scared to rush back to the shops’
- Government needs to provide clear guidance to give people confidence
Coronavirus is going to tear your office in two
- As offices start to open after lockdown, one half of the workforce will be in social distancing dystopia, and the other isolated and stuck online
US tradeshows: going online this summer
- In America, virtual showrooms will replace 450 events – a taste of what’s to come in the UK?
Virus-induced change: the end of cinemas?
- It looks like the end of exclusive, theatrical motion picture releases in the US – also surely coming to a cinema near you in the UK
ONE in eight manufacturers in Northern Ireland fear they won’t survive until the end of this year, a survey of the industry has found.
Despite the widespread use of furloughing, three out of five firms are currently anticipating redundancies, with more than half likely to shed up to a third of their workforces.
The findings have emerged from a survey of 198 companies conducted by Manufacturing NI, aimed at getting a vital snapshot of the industry at this massively important time.
“In truth, this paints a gloomy picture for the sector as companies returned to work and got a stronger sense of where their markets are,” the umbrella body’s chief executive Stephen Kelly said.
The survey found that while most manufacturers have some staff back, 13 per cent are still to begin any form of production and of those back producing, one in three have less than half their employees back in work. Only a quarter of firms have almost a full complement of workers back.
The government’s Job Retention Scheme has been widely used to avoid redundancy for now, with a fifth of firms reporting they had their entire workforce on furlough at some point.
Almost two thirds had more than three quarters of their staff on furlough, demonstrating production had largely stopped across the sector, and only 14 per cent of the respondents had no staff on furlough at all.
“The biggest reasons for furlough was a lack of work, wanting to keep their skills base intact to hopefully return to meet customer demand and to implement social distancing within the workplace,” Mr Kelly said.
“But despite the widespread use of furloughing, three firms in five are currently anticipating redundancies, with more than half of firms anticipating having to shed up to one third of their workforce.”
The amendment to the Job Retention Scheme announced by the Chancellor will initially help avoid redundancies, with just about half (49 per cent) believing the new ‘flexi-furlough’ from July 1 will alter their need to make redundancies.
But only 18 per cent say that redundancies can be saved when the Chancellor brings in greater employer contributions such as national insurance and pension payments from August onwards.
Among the other findings, just 6 per cent of firms have seen an increase in turnover this quarter with 46 per cent seeing turnover at leave halve.
A quarter of respondents say they have received a grant or some financial support from government, but 73 per cent have not had any cash support. Only 8 per cent say they have received the £10,000 grant for micro manufacturing businesses.
The rest have relied on borrowing from directors or cash within their business, while one in four have had a CIBLS and 18 per cent relied on the VAT deferral scheme. Irish News June 4
The economic damage of the coronavirus crisis will hit young workers here hardest, an Ulster University study has suggested.
It estimated that youth (ages 16-24) unemployment in Northern Ireland could jump from 8% to 26% in 2020.
That compares to an estimated unemployment rate of about 10% for workers aged 25-49 this year.
The study was produced by Ulster University Economic Policy Centre researchers Mark Magill and Marguerite McPeake.
The study showed that young people are disproportionately employed in hospitality, which is likely to be the last sector to emerge from lockdown.
Just over 10% of all employees in Northern Ireland are under 25, but that age group accounts for 36% of hospitality employees.
The study said the impact of the lockdown on hospitality has been “intensively felt by young people”.
It also estimated that 45% of under-25s have been furloughed or laid off since the start of the crisis, compared to 25%-30% for older age groups.
A large proportion of furloughed workers will hopefully get their jobs back, but the study said “jobs within sectors significantly impacted by the restrictions are at a higher risk of being permanently lost”.
It also warned that the youth unemployment rate could spike in the autumn when students leaving school, colleges and universities will be seeking to begin their careers.
In a typical year, about 25,000 young people enter the Northern Ireland labour market.
“It risks long-term scarring effects on the labour market prospects of an entire cohort of education leavers.”
The study recommended that a set of measures be targeted at young people.
These include uncapping undergraduate numbers to keep more young people in education and offering a job or training guarantee for all young people unemployed for three months.
It said these policies would be expensive but “given the extent of the risk to young people being trapped in a period of worklessness and the associated scarring effect over the course of a person’s working life, the long-term benefits may well outweigh the costs”. BBC News June 10
Two major investments worth nearly £100m to extend film studios and build a new residential development are “under review” by developer Belfast Harbour as a result of the coronavirus pandemic.
But many other projects are going ahead, and Belfast Chamber of Commerce says it sees no “retreat from re-development or schemes being taken off or stopped”.
However, the city’s biggest hotel company, Andras House, has said it expects a new £19m aparthotel it’s planned for Bedford Street to be delayed by six months.
Belfast Harbour intends to spend £45m on quadrupling the size of its film studios at Giant’s Park and to invest up to £50m on a new buy-to-let residential development at City Quays 4.
The studio plans are the latest act in the story of Northern Ireland’s popularity as a location for TV and movie production.
The extended studio, which was due to be finished next year, was to bring 250 construction jobs and support around 1,000 creative industry roles.
When combined with the existing studio, the extension would create the largest studio complex outside the south east of England.
Cult fantasy series Game of Thrones, filmed at Titanic Studios and a string of other spots in Co Down and the north coast, has been the local industry’s biggest success story. The existing Belfast Harbour Studios was to host filming of Viking revenge film The Northman, starring Nicole Kidman, during the spring.
But film production has ground to a halt in Northern Ireland and further afield as a result of Covid-19.
A spokesman for Belfast Harbour said: “We’re still finalising the consenting process through Belfast City Council for the new extension to Belfast Harbour Studios and in parallel we will keep our investment under review, taking into consideration the timing of recovery in the sector after the current crisis.
“Along with our partners at NI Screen, we continue to engage with production companies to keep the profile of Belfast as a filming location high.”
Richard Williams, chief executive of Northern Ireland Screen, the publicly-funded body which supports the film industry here, said he’s hopeful that the continued rise of on-demand services such as Disney, Amazon Prime and Netflix will ensure demand for more studio space.
“With the era of the streamers only beginning, there is no reason to believe that demand for screen studio space will diminish in the medium term.”
Meanwhile, the lockdown has also meant a slowdown of work on building sites and, in some cases, doubts over the future viability of developments such as large-scale offices and flats.
Today’s residential housing market survey by the Royal Institution of Chartered Surveyors (RICS) and Ulster Bank says that surveyors expect a growing desire for properties with gardens or balconies, and towards homes located near green spaces.
Many surveyors also say there will be a fall in the appeal of tower blocks and 58% feel properties located in highly urban areas will be less enticing.
The Belfast Harbour spokesman said: “Regarding City Quays 4, a residential development, we continue to engage with the market around this opportunity to develop our plans and hope to be in a position to submit a planning application at some stage in the next 12 months but, again, we will keep this under review as we emerge from the Covid-19 crisis.”
It’s believed that the Harbour still expects the projects to go ahead but that they may be delayed.
Meanwhile, Rajesh Rana, chief executive of Andras House, which operates six hotels and serviced apartments in the city, said its Bedford Street aparthotel is “still in the planning approval stage”.
“We have secured a brand for the operation and, once planning is secured, we will work up detailed plans,” he said.
“We will review the market conditions at that time and we are keen to start this exciting project but it is likely that the start date will be delayed by around six months.”
Simon Hamilton, the chief executive of Belfast Chamber of Commerce, said he believed that some developers were reassessing plans in light of Covid-19.
“But I haven’t detected any retreat from redevelopment or schemes being taken off or stopped. Certainly there has been a look at the configuration of developments, and questions like what square footage do we need to give to an activity, and that’s a positive thing to do in the circumstances.
Despite the delays in Belfast Harbour’s future plans, other developments are still going ahead. Business advisory firm PwC said its move into new-build offices at Merchant Square in the city centre is on course.
Tribeca, a major redevelopment of the Cathedral Quarter, is progressing through the planning system, while it’s understood the Bywater and Ashmour redevelopment of the Gresham Street area is also going ahead.
Co Tyrone-based construction company McAleer and Rushe, which is working on developments including the revamp of Ewart’s Warehouse on Bedford Street, said: “Construction resumed in early May on our 213,000 sq ft landmark Bedford Square project and we’re proceeding towards completing the development in late 2021. Our project on the site of Norwich Union House received planning permission in March, with timing of the commencement of work to be confirmed.”
Belfast City Council, meanwhile, said it’s continuing with plans for regeneration.
“During lockdown, our Planning Service has adapted to minimise any delays caused by the pandemic, and given the green light to a number of new developments,” a spokesperson said. Belfast Telegraph June 10
One in ten may lose job as coronavirus recession bites UK hardest
Britain will suffer the worst recession of the world’s 37 rich nation economies as GDP shrinks by up to 14 per cent this year and one in ten workers is left unemployed.
In its latest global forecasts, the Organisation for Economic Co-operation and Development – a club of 37 wealthy nationas – ranks Britain alongside France, Italy and Spain as one of four countries that will lose more than a tenth of national output to the pandemic in 2020.
The OECD judges a second spike to be just as likely as containing the virus. Both scenarios would mean the deepest UK recession in three centuries. The jobs outlook is particularly bleak with unemployment in 2021 still more than double present levels in both scenarios.
“The UK is one of the hardest hit OECD countries for three reasons,” Jon Pareliussen, head of the OECD’s UK desk, said. “It is heavily dependent on services, it was hard hit by the disease and it imposed strict containment policies.”
“By the end of 2021 the loss of income [globally] exceeds that of any previous recession over the last hundred years outside wartime, with dire and long-lasting consequences for people, firms and governments,” Laurence Boone, the OECD chief economist, said.
“As long as no vaccine or treatment is widely available, policymakers around the world will continue to walk on a tightrope. Both scenarios are sobering, as economic activity does not and cannot return to normal under these circumstances.”
In a separate study, more than third of young adults in Britain believe that they will lose their jobs or see their pay or hours cut as a result of the economic impact of the pandemic.
The research, conducted by the website Compare the Market, found that about 17 per cent of 18 to 24-year-olds feared that they would be made redundant in the coming months, and 18 per cent believed their hours or pay would be reduced. It also found that 21 per cent of the age group said that they had struggled to pay bills in the previous week, up from 18 per cent the week before. The Times June 11
The failure of a shopping centre in Berkshire could become a blueprint for regenerating town centres.
A developer has submitted a planning application for a £400 million scheme to demolish and rebuild the Nicholsons shopping centre in Maidenhead.
The centre fell into receivership in 2018 and was bought for around £25 million a year ago by Areli Real Estate, run by Rob Tincknell — who spent a decade overseeing the redevelopment of Battersea Power Station in south London — with backing from Tikehau Capital, a French investment firm.
In what is thought to be the first wholesale regeneration proposal for a dilapidated centre in the retail downturn, the developer wants to demolish the 1970s structure and replace it with double the number of shops but half the overall retail space, adding new offices, 364 flats and 311 senior living homes.
The proposals also feature one and a half acres of “public realm”, including a square named by local residents after Sir Nicholas Winton, the late British humanitarian who saved hundreds of Jewish children from the Nazis in Prague.
Only six years ago, shopping centres were attracting some of the highest values in the property sector, in turn luring in investors with the promise of landlord-friendly rental agreements with fixed annual increases.
Today, Nicholsons is among about 600 shopping centres in Britain that are fighting against obsolescence as familiar high street names have closed stores or sought to cut rents.
About 14.4 per cent of shopping centre units were vacant at the end of last year, the highest level since 2015, according to the Local Data Company. Vacancy levels are expected to rise again this year as retailers and restaurants struggle to survive the Covid-19 pandemic.
“We’ve spent a lot of time thinking about the future of retailing,” Mr Tincknell, 53, said. “We believe it’s much more about local, smaller simpler shops and the restoration of what we used to have in towns — the butcher, the baker — specialised stores run by local people who really understand their catchment and their customers.”
He wants retail to become a “leisure-based experience” that is “fun and different”, regularly updated and cannot be replicated online. “That’s what is going to drive people back to towns.”
At present, there are about 30 shops in the Maidenhead centre spread across 190,000 sq ft. The plans include 61 shops and restaurants in about half that space. The centre is located in an affluent Berkshire commuter town, part of Theresa May’s parliamentary constituency. However, a lack of investment and competition from both online retail — the scourge of bricks-and-mortar stores — and nearby shopping centres in Reading and Windsor have led to a decline in shopper numbers.
Mr Tincknell’s plan to revive the site includes offering retailers and independent businesses more flexible lease terms linked to turnover. The investment value in the development will come from its office and residential space.
“I think an important factor in all of these town centre regeneration projects is that the retail needs to become almost an ancillary part,” he said. “That doesn’t for a second mean that it has less attention, but from an investment point of view it has to become more of an ancillary part to other uses, which provide the core value of the scheme.”
Recent shopping centre development plans have focused on building flats on car parks or revamping existing facilities, replacing department stores with leisure operators. Mr Tincknell called this “tinkering around the edges. Our approach is to level the whole place, start again and build a proper, original town centre.”
He sees an opportunity to cater for several residential markets, from flats for the over-70s — “People in their 70s want to be in active, exciting locations. I think they also offer a huge amount to the local economy because they’re out in the daytime, shopping, supporting local stores” — to commuting professionals. Nicholsons is a five-minute walk from a railway station that will take commuters to Bond Street in London’s West End in only 37 minutes once Crossrail is built.
According to Mr Tincknell, the Maidenhead scheme is one of the first British shopping centres where the investment value has dropped to a level below the land value, although others are likely to follow. He hopes, too, that the plans will form a blueprint for the regeneration of town centres around Britain, getting rid of “large, monolithic structures” that close at 7pm every night.
“No wonder our town centres are struggling when you’ve got that mass in the middle,” the developer said. “What we need is to break it down again into individual streets, squares, get some density in there, get some people living there, working there — and that’s what I think will revitalise our high streets.” The Times June 11
The reopening of shops is unlikely to lead to a resurgence in customers because fear continues to grip much of the population, a psychologist said.
Sander van der Linden, a lecturer in psychology at the University of Cambridge, said that British people had a higher risk perception of Covid-19 than other countries near the beginning of the pandemic and those attitudes were unlikely to have changed.
He and a team of researchers from Cambridge surveyed 7,000 people in ten countries in late March as global deaths were accelerating.
Respondents in Britain scored 5.45 out of 7 in their perception of risk, higher than Spain (5.19), the US (4.95) and Germany (4.93). At the other end of the scale were Mexico and South Korea, which both had scores of 4.78.
“We do know from a lot of health psychology research that people are ready to act on a risk if you tell them how to manage it. That’s the crucial part: I think that people might not know how to manage it. For example, if I go into the shop right now, I don’t know what the appropriate protocol is. The government hasn’t told me. So I’m continuing to hesitate until I know it’s safe for me and other people to do this. As long as the government doesn’t communicate this then we will continue to hesitate.”
“Objectively, have things improved and are people adjusting their perception in response to that? Or are things still pretty bad and the government is opening things up anyway? I think it’s difficult for people to know and it’s that tension that brings hesitation.
“The government could communicate the risks very clearly to people and I think that would impact people’s behaviours. Just opening shops is not going to do the trick without communication from the government.”
Customer behaviour may also be affected in the long run, as people have formed new habits. “The longer people are isolated, the more they internalise the norms and habits, the more difficult it becomes to revert back, for some behaviours,” Dr Van der Linden said.
“When it comes to going out and having a beer or a chat, I don’t think people are worried about that. But I do think that for touching people and touching things in shops and the things that are more psychologically salient in terms of pathogens, people are going to be a bit more conservative for a while longer.” The Times June 11
Over half of UK workers want to return to the office by the end of June, but are concerned about their safety when they return, according to a survey of 7,000 people conducted by job board Totaljobs.
This is a tale of two offices: one in social distancing dystopia, and the other isolated and stuck online.
Splitting the office in two (even if it’s done in an arbitrary way) can cause intergroup dynamics, automatic psychological processes that lead us to favour our group and denigrate the other, says Amy Edmondson, Novartis professor of Leadership and Management at Harvard Business School. “We think of ourselves as thoughtful people, and it would be silly to like someone less who’s now working at home when I’m back in the office or vice versa,” she says. But it turns out this happens with some regularity. We can’t help the sense that those who aren’t here, they’re less committed or they’re less important.”
People who return to offices are going to have an advantage. It’s always easier to pop your head around an office door or chat to colleagues about ideas in person than sending an email or setting up a video conference, Edmondson says. “Even though we’re all now more skilled in video meetings, we’re getting sick of them. That means that logistically, those who are physically present will just have a kind of privileged access or an advantage over those who are not.”
The same people who were at risk of being excluded from inside conversations and cliques before coronavirus are the last on the list to return to the office. Anyone who needs to work flexibly, has childcare needs or is a primary caregiver, anyone who is vulnerable to coronavirus or has a disability that would make taking public transport a logistical nightmare, are less likely to return to the office.
When office workers were sent home en masse in March, they all experienced a shock to the system together. Similar to people moving to another country for work, they had to figure out how to use technology that they were not familiar with and cope with the stress of a new environment.
Our reaction to the pandemic is similar to a classic cross-cultural adjustment curve that a person experiences when going abroad for work, says Hal Gregersen, senior lecturer at MIT and author of Questions are the Answer. First there is an initial honeymoon period, followed by depression and wanting to go home between month three and month nine.
“If they just hang in there, they’ll be able to get out of this adjustment low into performance highs,” he says. “We’re now maybe four to five months into this cross-cultural adjustment in the country of coronavirus. Instead of going on an international assignment, we went to a work at home assignment. The process is the same.”
Those that return to the office now will go through an adjustment similar to that of people returning to their home office after spending time working abroad. “Most people think ‘I’m going to go back and it’s all going to be like it once was’,” he says. “They’ll finally realise things like, I have a lot less autonomy during my work here than I ever had at home. I’m not sure I like that. And that’s when you start sliding down that performance and emotional adjustment curves.”
A partial return to work could unintentionally promote the “out of sight, out of mind” feeling already prevalent in some teams towards people working abroad or remotely. “Without a mentor who’s vigilant about awareness of this person’s work and interactions and contributions, they will easily get left out of promotion opportunities,” says Gregerson.
Ciaran Scullion, a logistics manager at Belfast-headquartered fit-out specialist Portview, has quietly spent the last few weeks preparing for a return to the office. Walking around the empty corridors, Scullion concedes that he has enjoyed having a chat with the other two coworkers manning the space. “It’s quite lonely but at least you have that interaction,” he says.
Most of the company’s office spaces are shared by two to three people at a time, who could work on a rota basis. “All those ideas are being discussed. We could operate at 50-60 per cent [capacity]. We are trying to give people the confidence to be happy to come back in. That has become an issue in the area where the office is.” He says the team has even turned taps on for up to ten minutes a day following fears that coronavirus may be in the water supply. Outside, he has prepared picnic tables for people to sit at a safe distance and have their lunch together on sunny days.
Scullion thinks that people with children are unlikely to come back to the office any time soon, but believes the remainder will. “I don’t know yet, but I think most of them are looking forward to a sense of normality and getting back to the office,” he says. Forbes June 4
Summer fashion trade shows in the US are going virtual. As America begins its reopening after the coronavirus shutdowns, convention halls will remain dormant while vendors and buyers transact online. A partnership just announced between Informa Markets and NuORDER will take the shows online beginning August 15th for menswear and September 1st for womenswear.
Informa Markets is a leading trade show and exhibition organizer that puts on over 450 events, including fashion-related trade shows Magic, Project, Coterie and Micam Americas.
NuORDER is a tech platform that streamlines the wholesale merchandise buying process. An image of the merchandise on racks features key collection items with a shoppable hotspot that allows the user to click on that item for a closer look. The virtual showroom experience also incorporates detailed 3D imagery for buyers to get a better sense of how the garment looks on the body. These features will be available to show exhibitors who sign up for a virtual booth.
The digital experience is not meant to replace live tradeshow events permanently but rather enhance them. “Fashion, in particular, is a tactile business—buyers want to feel fabrics in their own hands and see colors with their own eyes,” said Nancy Walsh, President of Informa Fashion Markets. Walsh also stated the future of fashion wholesale is a synergy of physical and digital
Another bonus is the time the selling of a collection remains open online. Typical trade shows last three to four days. However, the upcoming shows will be accessible online for eight weeks. “It’s a paradigm shift in the buying process, to extend the marketing time to discover a brand instead of rushing buyers at a show,” said NuORDER cofounder Heath Wells. “Informa is betting that buyers will take the time to curate their buys.” Forbes June 4
Before Covid-19 changed everything, movie exhibition chains like AMC, Regal and Cinemark in the US enjoyed an exclusive 90 day “dark window” where studios grudgingly agreed to keep their theatrically released films off of any other platform, including Paid-Video-On-Demand, aka PVOD.
Now we’re seeing what looks like the beginning of what will be the end of exclusive, theatrical motion picture releases.
According to Robert Fishman a Wall Street analyst for MoffettNathanson, the first films that will likely tear down the exclusivity wall, will be studio-financed, lower-budgeted movies, i.e. films in the less than $100 million dollar budgeted range.
These less expensive titles represented about 20% of all theatrical releases, pre-pandemic, with the other 80% of all movies being larger-budgeted, “blockbuster” franchise films.
Beneath all of this positioning by the studios to change the relationship with exhibitors are two real issues: audience safety and mounting marketing costs.
No one knows how much of the public will return to movie theaters once various stages of re-opening the economy come into full force. Studios must promote theatrical releases, with marketing budgets often running fully 50% or more of a film’s total cost. If a film is a non-franchise title, some modestly budgeted movies have even seen their marketing spends add up to more than the cost of the movie itself.
Before Covid-19, studios would then have to “re-publicize and re-market” the title as it went for its second often more profitable run 90 days or later, on PVOD.
In an effort to decrease multiple marketing spends, and with an eye towards appealing to consumers too risk-averse to test going out to the movies, studios are apparently finally succeeding at getting exhibitors to eliminate the “dark window” exclusivity period.
Exhibitors have long held the opinion that a “dark window” is sacred to the theatrical experience and core to their business strategy.
After Covid-19 though, studios finally are getting exhibitors to accept a new religion and we’re about to see core foundations shift, if not eventually get torn down completely.
If past is prologue, it won’t be long until consumers can watch their favorite Marvel, Lucasfilm or Pixar movie on Disney+, the same day and date as its theatrical release.
Exhibitors aren’t stupid. They know by compromising on lower-budgeted fare now, the day will arrive likely sooner than later, that all feature film titles will be simultaneously released on streaming or PVOD.
The bitter, decades-long rivalry between exhibitors and studios may have finally run its course.
Then the next question will be: how long do these independent movie chains really have to survive? Forbes June 2