Hotels, healthcare and hunchbacks

Facts and physics  What is the most important industry to the European economy? If you guessed finance, retail or construction, you’d be wrong. The industry that contributes most significantly to European GVA is, according to a recently published study by Cebr, the ‘physics-based industry’ (12% of GVA; €4.4tn). OK, this cheats a little, in that the roles which employ physics (including IT, engineering, life sciences, medicine and design) cross many traditional industry sectors. Nevertheless, physics’ contribution to highly skilled roles that contribute significantly in the long run, and which are typically resilient to automation is significant. These latter points are important, in that firstly, investments in physics tend to have multiplier effects that are not immediately apparent or direct. As European Physical Society President, Petra Rudolf illustrated, ‘Einstein, when he worked on stimulated emission, certainly did not think of lasers being used to operate on the eyes’. Secondly, the durability of these roles and associated businesses, is likely to lead to increased contributions to GVA over time relative to the contributions of other sectors. The industry ‘birth rate’ (the number of new businesses each year as a percentage of total businesses) has tracked consistently at around 11%, whereas the death rate has been consistently lower than that in the general economy, suggesting some measure of improved resilience in businesses which utilise physics in their operations. You can read the report here. #economics

 

Star studded hotels  If the future of real estate is about offering great experiences to those that use it, then the hotels sector, the home of experience and hospitality, should surely be at the cutting edge of industry innovations. There are two very different examples of this, which I’ve found this week. The first located in Hamburg is the proposed conversion of a Nazi-era bunker into a 136-bed hotel. The almost indestructible concrete structure, intended to provide shelter for up to 1,000 people in the event of an air raid, will presumably guarantee a good night’s sleep; The brutal building will be greened, and topped with a tiered roof terrace and bar. Not impressed? Then how about Disney’s Star Wars: Galactic Starcruiser hotel being developed in Orlando. Disney has increasingly delivered hotel experiences that bleed into the content of its theme park, including for instance an animal safari lodge complete with African wildlife and a Polynesian resort, with beach and Tiki huts. The Starcruiser hotel is expected to lift the bar, in an experience that will incorporate technology from its parks such as floating holograms, a visit to the planet of Batuu (as part of a multi-day cruise experience) and views into ‘space’ from every hotel room. This might not be the best hotel for business travellers (but then again, why not?), but as the level of immersion and customer service around all real estate assets increases, one should expect hotels to continue to push the boundaries and this feels like a great example. #hospitality #hotels

 

Gigafactory 3  As global trade tensions continue to rise, the importance of controlling one’s supplies becomes more important, as does finding ways to take risk out of cross-border transactions. For manufacturers, the simplest way to achieve this is to localise production. Tesla is about to do that at ginormous scale through the delivery of its first high volume production facility in Asia. ‘Affordable cars must be made on same continent as customers’, said Elon Musk, talking about his new 10 million sq ft facility outside Shanghai, which is expected to commence production this month. Speed to market is also a consideration; Gigafactory 3 will operate at a stabilised throughput of half a million cars per year. A key rationale for offshoring production has historically been found in labour arbitrage. However, as robotics costs continue to plummet and fall beneath the equivalent cost of labour, the cost advantage is eroded. Consequently, the case for repatriating elements of manufacturing that were offshored in the wave of globalisation starting in the 80s, builds (particularly for highly technical products like cars). A European equivalent of Gigafactory has been mooted for some time now, with rumours that this will find a home in Lower Saxony. Adidas had previously onshored its ‘hyper flexible and localised’ SpeedFactory to Germany for similar reasons. We see here what might be the thin end of a prospective onshoring wedge. #industrial #supplychain

 

Population redistribution  On a global stage, urbanisation has been one of the defining trends of the past decades. The economic gulf between gateway cities on the one hand and smaller towns and the countryside on the other has been steadily growing. However, cities across the world are becoming victims of their own success. The gravitation of populations towards urban centres has in most cases not been matched by equivalent expenditure in infrastructure, leaving them stretched. Meanwhile, on the other side of the coin, the thinning out of rural areas creates different problems, with concentrations of poorer and less mobile populations developing. A report by Forbes this week, which analyses new data from the US National Institute for Healthcare Management finds that those living in rural areas are older, have higher rates of obesity and are more likely to live below the poverty line. However, per capita, there are fewer healthcare practitioners and fewer hospitals in these areas in spite of the elevated need. Meanwhile, in Australia, the government announced this week that it is redistributing the number of skilled visas in favour of those willing to live in the country’s regions rather than its three big cities (where the population is growing at double the rate). The potential for a reversal of the urbanisation trend in mature economies feels eminently possible, whether by choice (e.g. in London and New York, where the trend is to outward migration to secure better standards of living) or through intervention (as in the case of Australia). #population #infrastructure

 

Emma  ‘Some people are born for Halloween, and some are just counting down the days until Christmas,’ said author Stephen Graham Jones. The former group will be dusting off their costumes for tomorrow, whereas the latter have an equally frightening 55 days on the clock. The shock of a Halloween no-deal Brexit now appears to be behind us; however, more gruesome fates await those who work in offices up and down the country. To support a recent report entitled ‘The Work Colleague of the Future’, the authors have created a life-sized doll called Emma to illustrate how our co-workers might appear in 20 years’ time. For those familiar with the other nightmarish dolls such as Chuckie, or Annabelle from The Conjuring series, you ain’t seen nothing yet. Emma is the product of a sedentary lifestyle, hunched over a laptop all day, with poor nutrition and little exercise. She has red eyes, a permanently bent back, varicose veins (from poor blood flow), a pot belly, eczema (caused by stress), sallow skin (from over exposure to artificial light), swollen sinuses (from poor air quality) and swollen wrists (from repetitive movement). Check out your future colleague (or perhaps future you) here,  and be very afraid. #weirdandwonderful #halloween