Philippa Kaur

Spiritual growth is an odd mandate for business schools preparing graduates to make manna in a secular world. One such institution, hec Paris, has nevertheless decided to send students on a trek through the French countryside to a remote village, where a Benedictine monk (a former lawyer) guides them through ethical dilemmas. Whether or not the three-day seminar represents a shift away from the profit-driven logic of business and towards a kinder, gentler form of capitalism is up for debate. But it shows that expectations for what makes a great mba programme—and, by extension, a great executive—are in flux.Listen to this story. Enjoy more audio and podcasts on More

As every wartime quartermaster knows, it is only when things go really wrong that you get noticed—or shot. The same is true in the logistics business. That is why it made news recently that Dave Clark, Amazon’s former logistician-in-chief, left the Seattle-based online giant to become ceo of Flexport, a shipping-software company. His departure comes just as Amazon is deluged with overcapacity in its vast warehousing and distribution business, which he captained during most of his 23 years at the firm. Some wondered whether he had faced the firing squad. In fact Mr Clark’s move looks to have been a voluntary one—with a hint of masochism. After doing a job that would have finished off most people, namely blitzkrieging through the retail landscape to bombard the world with Amazon packages, he now wants to prop up firms battling to get to grips with global supply chains. In doing so, Mr Clark leaves behind him a severe headache for Andy Jassy, Amazon’s boss. The titan of e-commerce is not just overbuilt and overstaffed. For the first time in its 28-year history it is in the midst of an inflationary whirlwind, which is playing havoc with its ability to predict the future. The situation is bad enough in Amazon’s American heartland. It is worse in its operations elsewhere. That makes it harder to fix.When looking at Amazon, most attention is paid to its North American retail business—mainly the United States, but also Canada and Mexico. It accounts for the vast bulk of sales, almost 60% in the first quarter. The hinterland, which is to say its international business, includes dozens of countries, from Japan to India, parts of western Europe and elsewhere, that punch well below their weight. Strange as it sounds to non-Americans tied to the tyranny of the doorbell, collectively they contribute just 25% of Amazon’s overall sales. Amazon Web Services, the fast-growing cloud business, makes up the rest. Unsurprisingly, then, Amazon’s frenetic logistics drive in the past two years began at home. Since the early days of the covid-19 pandemic, the firm realised that lockdowns would fuel demand for online shopping. It threw caution to the wind and went on a domestic warehouse-building and hiring binge. In two years, as Marc Wulfraat of mwpvl, a logistics consultancy, puts it, Amazon created as much fulfilment square footage as Walmart, America’s ubiquitous supermarket giant, has built in half a century. Its logistics business, started only in 2014, has leapfrogged FedEx and is catching up with ups. Amazon’s total workforce almost doubled after 2019, to 1.6m. The feat was a Herculean one—with Hydra-headed consequences when inflation and covid-19’s contagious Omicron variant hit. In round numbers, overbuilding, overstaffing and inflation each added $2bn to Amazon’s costs in the first quarter, year on year, driving it into the red. The next epic task is to squeeze those costs out. This is where the rest of the world becomes a big problem. For cost control may prove harder abroad than at home. Although Amazon says it will keep building American fulfilment centres, it plans to sublease some of the space until demand recovers. It also hopes to reduce staffing through attrition and allow third-party sellers to use some of the spare capacity. It assumes that domestic retail growth will pick up later this year. Prologis, the world’s largest warehouse operator (and a big supplier to Amazon), showed similar faith in the future on June 13th when it agreed to buy Duke Realty, an American rival, for $26bn.Look outside the United States and such optimism becomes harder to sustain. Amazon’s international business is, as in America, awash with overcapacity. But whereas North American sales grew by 8% year on year in the first quarter, in the rest of the world they shrank by 6%. Worse, in some big foreign markets, such as Britain and Germany, conditions may be deteriorating. Mark Shmulik of Bernstein, a broker, notes that overall e-commerce penetration is shrinking in Britain and mainland Europe for the first time in years. Consumer confidence is plummeting. Europe’s woes may be exacerbated by its proximity to the war in Ukraine. They may also be a harbinger of trouble in America.Some of the deep-seated problems in these non-American markets were easy to make light of when business was booming, but loom larger now. The biggest is profitability. Amazon’s international operations are almost perennially loss-making, mainly because of the huge amounts of cash it is ploughing into expansion; the losses were particularly severe in the first three months of this year. Another is spending power. Mr Wulfraat calculates that Amazon sells $881-worth of stuff and services a year for every American. No other country comes close; the figure is $436 in Britain, $97 in Italy and $13 in Mexico. Third, in the poorer regions where the company operates, such as India and Latin America, the infrastructure is shoddy and local competition intense. That makes it look like it is throwing good money after bad. Amazon says it intends to continue its international expansion. It believes the slowdown in e-commerce penetration in Europe is partly a reaction to excessive dependence on online shopping during lockdowns. And whatever happens to the world economy, Amazon is confident that the structural shift from offline to online commerce is real and permanent. Cutting down the Amazon When Jeff Bezos was running the company he founded, few would have second-guessed such assumptions. But this is new leadership in turbulent times. Mr Jassy, who took the helm less than a year ago, is still on probation. If Amazon’s forecasts are correct, pretty soon the successor to Mr Clark will be building yet more warehouses and Amazon will be back to the races. If they are wrong, the newish ceo may have little choice but to consider reducing Amazon’s exposure to some of the more peripheral parts of its hinterland. Would he have the guts? ■Read more from Schumpeter, our columnist on global business:What’s gone wrong with the Committee to Save the Planet? (Jun 9th)Why Proxy advisers are losing their power (Jun 2nd)BASF’s plan to wean itself off cheap Russian gas comes with pitfalls (May 28th)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Few things are more depressing than estimates of how much time people spend on a specific activity over the course of their lives. You know the sort of thing: you will spend one-third of your life asleep, almost a decade looking at your phone and four months deciding what to watch on streaming services. A new study, by academics from the Maryland and Delaware Enterprise University Partnership (madeup), applies this approach to the workplace. By conducting a time-use survey of 5,000 office workers in America and Britain, the researchers identify the number of minutes that people waste on pointless activities each working day. (Meetings are excluded: they often turn out to be useless but not always and not for everyone.) The authors then extrapolate these figures to come up with a “weighted total futility” (wtf) lifetime estimate of time that could have been better spent. The results are literally unbelievable.Correcting typos takes up an average of 20 minutes in every white-collar worker’s day, the equivalent of 180 days, or half a year, over a 45-year career. Some words are mistyped so frequently that on their own they can waste days of the average employee’s existence. “Thnaks” is the worst offender in the English-speaking world, followed by “teh”, “yuo” and “remeber”. The amount of time the average worker spends writing “Bets wishes” is also counted in days.The gestation period of a goat is around 145 days. Which is also how long the average worker spends logging into things during his or her working life. Security concerns mean that some time is bound to be absorbed in this way. But months are wasted trying to remember passwords, entering them wrongly or updating them. Just as much time is spent waiting for something to happen, a great economy-wide period of vacant staring at a screen. If getting into things wastes lots of time, so does closing them down. Eliminating help windows and tool-tip boxes takes up days over a career. Rejecting repeated requests to schedule updates to your operating system is another chunk of existence that you will never get back. Zapping pop-up ads and trying to pause auto-playing video absorbs time that could have been spent learning to knit or visiting Machu Picchu.A bundle of “tidying up” activities absorbs over four months of the average worker’s life. Deleting emails takes up about six weeks of your life. Clicking on Slack channels to read through messages that are not meant for you, or clearing notifications on your phone screen for articles that you will never look at: tasks like these each eat up several days. Various types of formatting tasks constitute another huge time-suck. Think of those attempts to change the margins on Word or Google documents, or the hours spent trying to work out where exactly you need to put the missing bracket in that broken spreadsheet formula. Shakespeare wrote “King Lear” in the time an average office worker spends changing font sizes during their career. Redoing work that you have failed to save is in a category all of its own, because of the psychological trauma involved. This problem has been mitigated now that revisions are saved automatically on many programs, but it has not been solved. Batteries still run out at crucial moments, internet connections still fail. Making a series of deeply insightful comments in a Google doc, failing to save them and then closing everything down causes a special kind of despair. So does creating an org chart with hundreds of arrows and text boxes, and realising you missed someone out.These are only some of the many ways in which time is routinely wasted. Co-ordinating diaries for meetings that will later be cancelled: another month. Waiting for people to repeat themselves because they were on mute by mistake: a fortnight. Spending hours crafting an email and then leaving it in the drafts folder: two days. Desperately opening and shutting various flaps on a recalcitrant printer: a day. The madeup study shows that technology lies at the heart of this squandered time. Technology can also help. Services that sync up diaries and autocorrect options already do; passwords will doubtless end up being replaced by facial recognition and fingerprint logins. Whether the time thereby saved would be put to more productive use, like reading this column, is a reasonable question. But years of workers’ lives are wasted on utterly pointless activities. All improvements warrant heartfelt thnaks.Read more from Bartleby, our columnist on management and work:Corporate jets: emblem of greed or a boon to business? (Jun 9th)Do not bring your whole self to work (Jun 2nd)The power of small gestures (May 28th) More

If you want to see how technology and deglobalisation are changing the global economy, there are few better places to look than the car industry. Not only is it going through an epochal shift: away from the internal-combustion engine (ice) and towards electric vehicles (evs). Automobiles are also becoming, in effect, computers on wheels, running as much on processing power as the horse variety. And the pandemic has wreaked havoc on car companies’ complex global supply chains, most prominently of semiconductors. As carmakers electrify, computerise and refashion their supply chains for the new reality, the giant sector is undergoing the greatest transformation in decades.Having outsourced much of the manufacturing process over the past few decades to focus on design, supplier management and parts assembly, car companies are trying to exert greater control over their value chain—from the metals that go into their batteries to the software their evs run on and the shops in which they are sold. They want to turn their ev arms into tech startups. In both respects, control and startupiness, Big Auto wants to be more like Tesla, the world’s undisputed ev champion. As with earlier examples of companies tailgating a rival that tries something that works, from Ford’s moving assembly line or Toyota’s just-in-time manufacturing, Teslafication of the car business will prove disruptive.Doing everything under one roof is an idea both old and new. Tesla’s industrial system is at one glance an embrace of Silicon Valley’s “full stack”—internalising all aspects of production, and thus all the profits. Elon Musk, Tesla’s opinionated boss, once claimed that his company is “absurdly vertically integrated” by any standard, not just the car industry’s. In fact, Mr Musk borrows heavily from carmaking’s past. Henry Ford often sourced raw materials, like rubber for tyres and steel for chassis, from plantations and blast furnaces owned by his firm. His River Rouge factory in Detroit was powered by coal from Ford mines. In an echo of Fordism, Tesla has struck recent deals with lithium miners and graphite suppliers and last month confirmed a deal with Vale, a Brazilian mining giant, to acquire nickel. The plan is to acquire most of its lithium, over half its cobalt and around one-third of its nickel directly from nine mining companies. It will use those minerals in its “gigafactories”, the first of which started making batteries in 2017 in Nevada in partnership with Panasonic of Japan. It plans to make more cells on its own at its three other gigafactories around the world. Tesla has also pulled other bits of the powertrain in-house. It makes its own motors and a lot of its own electronics, giving it more control over costs as well as over the technology, says Dan Levy of Credit Suisse, a bank. Although rumours swirling last year that Mr Musk might buy his own chip factory have faded, Tesla designs its own semiconductors and has closer links than other carmakers with companies that manufacture them. That has helped it weather the global chips shortage better than rivals. Tesla’s software engineers have created a centralised computing architecture to run on those chips, ensuring smooth integration with the four-wheeled hardware. Mr Musk has even dispensed with the dealership-based sales model, instead opening his own swanky Tesla stores. Jealously eyeing Tesla’s market capitalisation of $850bn, which is roughly as much as the next nine biggest carmakers combined (see chart 1), other car bosses are desperate to emulate Mr Musk’s digger-to-dealership control. According to ubs, another bank, “integration represents a strong competitive edge in an environment of structurally tight supply chains.” As Jim Farley, Ford’s current boss, recently declared, “The most important thing is we vertically integrate. Henry Ford…was right.”This reverses decades of outsourcing to big suppliers such as Bosch, Continental and Denso in order to concentrate on managing supply chains, integrating separate parts, design, and marketing. Suppliers sold similar sorts of the same components to many customers using scale to keep prices low. This freed up capital for carmakers but put technological innovation at one step removed. Carlos Tavares, ceo of Stellantis, an Italian-American giant (whose big shareholder, Exor, also owns a stake in The Economist’s parent company), has said that his cars are 85% “bolt-on parts”. Mercedes-Benz puts the value-added split at 70/30 in favour of suppliers. Established car firms now want their ratios to more closely resemble Tesla’s, which Philippe Houchois of Jefferies, an investment bank, puts at around 50-50 and rising in favour of in-house. This starts with raw materials. As demand for battery minerals and processing capacity continues to outstrip supply, car firms are striking deals which would have Henry Ford nodding with approval. Getting their hands dirty by short-circuiting supply chains is, in the words of one former mining titan, “extraordinary”. bmw said in 2021 that it has put $334m into an Argentine lithium project. Last year Stellantis and Renault also each signed deals with Vulcan Energy Resources, and gm revealed a “multimillion-dollar investment” in Controlled Thermal Resources, in each case for lithium. In April Ford inked one with Lake Resources for the same mineral. The same month Stellantis and Mercedes entered an arrangement with Umicore, a Belgian chemicals giant, to supply cathode materials for acc, the two carmakers’ battery joint venture. In March byd, a more Tesla-like Chinese firm that started out making phone batteries before buying a small car company in 2003 and turning into one of the world’s biggest ev-makers, announced a nearly $500m investment in a Chinese lithium miner. It is said to have bought six mines in Africa. The terms of such deals are generally opaque but the sums involved are large and growing. Car bosses agree that they will become commonplace. Efforts to emulate Tesla’s battery gigafactories are also getting into gear. Carmakers are hoping to break the stranglehold of China and South Korea on battery-making, bringing production closer to home to keep costs in check and supplies reliable. Volkswagen (vw) is creating some in-house battery-making capacity. It has earmarked €2bn ($2.1bn) for its German factory, and says it will build six battery factories in Europe by 2030.Plans for such fully fledged in-house battery units remain rare (see chart 2). Most companies prefer to team up with specialist producers. Ford and sk Innovations of South Korea will stump up $7bn and $4.4bn, respectively, for three joint gigafactories in America. Last year gm unveiled an investment of $2.3bn for a battery plant in Tennessee built with lg, another South Korean firm. Sometimes, as with acc, rival car companies band together to share the cost of battery production. Stellantis and Mercedes (along with TotalEnergies, a French oil giant) will invest $7bn in acc factories in France and Germany. vw has a 20% stake, worth 1.4bn, in Northvolt, a Swedish firm that also counts Volvo as an investor. Buying off-the-shelf electric motors from suppliers is also falling out of favour. Hyundai, and the long-standing alliance between Renault and two Japanese carmakers, Nissan and Mitsubishi, are mostly going it alone. bmw, Ford, gm, Mercedes-Benz and vw are among those planning to make more motors in their own factories. Although no car boss is about to outdo Mr Musk and make the leap into semiconductor manufacturing, the 7.7m cars in lost production last year as a result of the global chip shortage has made the industry forge closer links with chip designers such as Qualcomm and Nvidia, which would once have sold chips to firms far down the carmakers’ supply chain. The car firms are also employing chip specialists to help them semi-tailor specifications to make them, as one car boss puts it, “smarter buyers”. vw is hatching plans to design its own custom silicon, as Tesla does. Something similar is happening in software development. Last month vw’s boss, Herbert Diess, told a meeting of his employees that “development of our own software expertise is the biggest switch the automotive industry has to make.” Mr Diess’s fellow industry leaders share his analysis. In the next few years software is expected to become the main source of revenue for the industry. ubs reckons car-software sales will bring in around $1.9trn annually by 2030 (see chart 3). Small wonder that car companies want to appear more techie. In September Ford poached Doug Field, who had been in charge of special projects at Apple, a tech giant with its own long-rumoured automotive ambitions. Jim Rowan, who took charge of Volvo in February, is a former boss of Dyson, an electronics firm. Even Ferrari, an Italian sports-car brand defined by the roar of its petrol engines (which is also part-owned by Exor), has been run since September by Benedetto Vigna, recruited from stMicroelectronics, a Swiss chip company. In 2020 vw created a separate software arm, cariad, to sidestep its slow decision-making bureaucracy. Despite teething troubles with the software on its id.3 hatchback that surfaced at the end of 2019, the firm has recently said that it aims to develop most of its own software in 15 years’ time, up from about 10% now. That includes plans for a proprietary operating system, something that Mercedes and Toyota are also contemplating. (Ford and gm are instead adopting Google’s Android operating system.) To that end, vw plans to invest around €30bn over the next five years. Stellantis wants to hire 4,500 software engineers by 2024. Several carmakers are setting up research-and-development centres in tech hubs, from Silicon Valley and Shanghai to Berlin and Bangalore, in order to tap those places’ existing talent pools.As for sales, established car firms have no intention of ditching the dealership system. It serves useful functions in servicing, for example—as Tesla’s long-running struggles in this area illustrate. Still, more car companies are shifting to an “agency model”, selling cars directly to customers, like Tesla, rather than through a third party. Charging fixed prices could boost margins. Direct sales also forge a closer bond with buyers that might go on to purchase additional services and upgrades. If they really want to catch up with Tesla, let alone overtake it, car companies have to “move at Silicon Valley speed”, as Barclays, a bank, puts it. That means simplifying not just their supplier networks but their corporate structures, which have become complex and siloed. As long ago as 2019 Volvo and Geely, its Chinese parent company, merged their ice operation as a stand-alone business. That has allowed the Swedish marque to go full speed to becoming electric-only by 2030. In March Ford said that it would create an ev unit, Ford Model e, and separate it from the ice operations. Renault is considering doing something similar, also with a view to accelerating innovation. All this amounts to a huge upheaval for a globe-spanning industry involving thousands of companies, millions of workers and billions in sunk ice-age costs. Refashioning value chains means spending lots of time and money, and comes with the risk of failure. For suppliers, it potentially means less business, as vertical integration makes them less central to carmaking—a prospect reflected in the sliding share prices of some, including Continental, in the past few years. For car bosses, that means more headaches, as they consider how best to deploy their firms’ resources and skills, without provoking a backlash from governments and unions fearful of the loss of well-paying manufacturing jobs. As a result, the sector’s Teslafication drive will be uneven and fitful. But the direction of travel is unmistakably Muskian. ■ More

Didi global ought to be dead. Over the past year the Chinese government has stopped the domestic ride-hailing giant from signing up new users and launched a cyber-security investigation into its operations, days after its $4.4bn initial public offering in New York last June. In a seemingly fatal blow, Didi is being forced to delist from America but blocked from relisting in Hong Kong. That the company has not collapsed is a testament to the strength of its business. Its future survival—and that of other Chinese tech darlings—remains in the gift of the Communist Party.The probe into Didi is expected to wrap up shortly and on June 6th the Wall Street Journal reported that the firm will soon be able to take on new customers. The news propelled Didi’s share price up by 60%. It still faces an investigation in America, where it is alleged to have underplayed regulatory risks in its domestic market, and investors are suing it on similar grounds. But these problems seem piffling next to what it has soldiered through at home.The first sign that the Communist Party’s two-year campaign against big tech would ease came in March from Liu He, a top economics adviser to President Xi Jinping. In May Mr Liu met a handful of tech executives and spoke of supporting the digital economy and balancing the relationship between state and market. The potential resumption of Didi’s business in China is one sign that things are indeed normalising. Some large tech platforms’ first-quarter results were also better than expected. Meituan, a delivery super-app, said on June 6th that revenue grew by 25% year on year in the first three months of 2022. Yet China’s tech companies are returning to a very new normal. Its two mightiest tech titans, Alibaba and Tencent, are growing much more slowly than in the past. Room to expand into new areas beyond their core businesses (e-commerce, and social media and video-gaming, respectively) has all but vanished. Outspoken entrepreneurs such as Jack Ma, Alibaba’s co-founder, are a thing of the past. Tech executives instead parrot official lines about ending their industry’s “reckless expansion” (which has also meant laying off tens of thousands of employees). And the state is taking direct stakes in their firms.Not long ago global investors shuddered at the prospect of state ownership. Now some are coming around to the idea. When Bloomberg reported on May 27th that faw, a state-run carmaker, was planning to buy a large stake in Didi, the ride-hailer’s share price surged by 10%. A big state investor such as faw could help Didi navigate compliance and governance issues, explains Cherry Leung of Bernstein, a broker. State investors have been eyeing the consumer-lending and credit-scoring businesses of Ant Group, Alibaba’s financial affiliate at the heart of the techlash. Once viewed as a drag on profitability, backing from a powerful government group is increasingly seen as a precondition for big tech firms to remain going concerns. It may be the only way for companies that have fallen foul of Mr Xi, and his grand plan for achieving “common prosperity” in China, to stay alive. Investors appear happy to forget about Didi’s death throes now that the firm has been resuscitated. They would be wise to remember that China’s leader has changed his mind before—and could do so again. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

The pandemic denied both the pleasures and tribulations of travel. The urge to make up for lost holidays and reunions with friends and families has brought the sort of airport holiday chaos that travellers avoided while covid-19 scuppered their plans. A rush to take advantage of school breaks caused recent misery in Europe. Passengers queued for hours at airports from Mallorca to Manchester, and flights were delayed or cancelled. Americans were furious after nearly 3,000 flights were scrapped in the four days around the Memorial Day weekend in late May. At least the hordes of unsatisfied customers are a sign that air travel is returning to normal. “Pent-up demand for travel is becoming un-pent,” says Andrew Charlton of Aviation Advocacy, a consultancy. The number of seats available on European airlines in the week commencing June 6th was only 9% below the same week in 2019. In North America it was just 5.6% down, according to oag, another consultancy. Japan, which was in effect shut to tourists for two years, said on May 26th that it would start to relax restrictions on visitors. With the exception of China, where severe recent lockdowns set back a strong recovery in domestic flying, the planes are back in the air at close to pre-pandemic levels. Bookings also look encouraging for the summer. Airlines are having to cope with a new uncertainty—a tendency of travellers to buy tickets later, induced by the riskiness of planning too far ahead during the pandemic. Even so, up to September sales for international routes are at 72% of their level in 2019 and those on domestic ones are at 66%, according to iata, an industry body. Capacity is ascending towards pre-covid levels, according to oag (see chart). Willie Walsh, iata’s boss, said in May that the speed of the rebound meant that passenger numbers worldwide would match figures from 2019 by 2023, a year earlier than previously forecast.The pace of the recovery has caught out an industry that has been rebuilding at a steady clip. In particular, traffic has become much more concentrated in peak periods, according to aci Europe, a group representing the region’s airports. Passenger numbers are already exceeding pre-pandemic levels in short spells in some places. Airports, in particular, are struggling to cope with these peaks. Replacing workers laid off during the pandemic is tough amid tight labour markets, especially so because of the extra security checks required to hire airport staff. Swissport, the world’s largest airport-service firm, said in May that it needed to take on 30,000 new workers worldwide by the summer on top of the 45,000 it now employs. Staff shortages have already prevented some airlines from adding even more capacity to meet the surging demand. Continuing disruptions may deter passengers, especially if the novelty of taking a holiday in a faraway place wears off. Even if airlines and airports are able to recruit staff to make the summer months less painful, other problems remain.Foremost is a sky-high oil price. Mr Walsh said recently that surging fuel costs had added 10% to fares already. Michael O’Leary, the irrepressibly bouncy boss of Ryanair, Europe’s biggest carrier, admits only to “cautious grounds for optimism”. A white-hot summer could be followed by a difficult winter. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

“For the last two months it has been busy like the weekend every day,” sighs a sales assistant at a large Zara store on Tauentzienstrasse, a shopping street in the centre of Berlin. On the Tuesday after the long Pentecost weekend about a dozen ladies were queuing for the fitting room, each carrying several items, many of them in hot pink or canary yellow, colours en vogue this season. They don’t seem to be deterred by Zara’s higher garment prices. At least not yet.Shoppers are still “revenge buying” to make up for all the time when shops were closed and socialising banned amid waves of covid-19. After grafting pajama bottoms onto their legs over the past two years, buyers are snapping up office and party wear. On June 8th Inditex, which own Zara, Bershka and Massimo Dutti, among other brands, reported glittery results for its latest quarter. Revenues rose by 36% year on year, to €6.7bn ($7.2bn), surpassing levels before the pandemic. Net profit jumped by 80% year on year. Online sales dipped compared with the same period in 2021, when the internet was the only place to shop for clothes owing to lockdowns in America and Europe. But the decline of 6% was much slower than expected, which suggests that people have got used to buying garb on the internet. In another boost, China is reopening after the latest bout of lockdowns. Only four of Inditex’s Chinese outlets remain closed, down from 67 in the three months to April. h&m, Inditex’s Swedish fast-fashion rival, is expected to report similarly perky results on June 15th.The big question for Óscar García Maceiras, who took over as chief executive of Inditex in November, and his opposite numbers at other fast-fashion firms, is whether the party can last. The short answer is that it probably won’t. But if anyone can keep it going for a bit longer, it is Inditex. As Georgina Johanan of JPMorgan Chase, a bank, notes, the Spanish giant looks best-placed to withstand the combined pressures of war, competition, inflation and, possibly, recession. Start with the problems. Fast-fashion firms had to put a complete halt to their operations in Russia and Ukraine after Vladimir Putin invaded his southern neighbour in February. Inditex, which has more than 500 shops in Russia, derived 8.5% of its operating profit from the country in 2021. This year it has had to make a €216m provision for the estimated cost of the war to its Ukrainian and Russian businesses. Beyond eastern Europe, fashion retailers are being squeezed by competition from Shein, an online-only challenger from China that has sashayed into Western wardrobes in the past few years. And then there is the twin “stagflationary” challenge of higher costs and flagging demand. This is acute for clothes pedlars, since many of their customers have already replenished their closets—and a new pair of trousers is a less urgent need than energy, food and rent, all of which have been getting pricier.No fast-fashion house is immune to these forces. But with the exception of the Russia-Ukraine war, Inditex does look less vulnerable than the others. Shein, whose items sell for an average of $20 or so, poses less of a direct threat to the Spanish company’s mid-market frocks, which go for just under $40 at Zara, according to estimates by Anne Critchlow of Société Générale, a bank. In recent years Inditex has also done a better job than its rivals of unifying its online operations with its more than 6,000 shops around the world, thanks to clever radio-frequency trackers, an in-house digital platform and a group-wide inventory database. Crucially, Inditex enjoys one more advantage over rivals when it comes to inventory, the management of which is particularly important in times of stagflation. The company produces around two-thirds of its items in Europe or in nearby north Africa and Turkey. That allows it to adjust output more quickly in response to demand than firms like h&m, which sources 80% of its clothes from Asia. In a slowdown it pays to be faster in fast fashion. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

The original Rorschach test involves showing a series of ten inkblots to someone, and asking them what images they see. Although the test’s psychological validity is debatable, no one can dispute its wild success as a metaphor: a single object can mean very different things to different people. In business a prime example of Rorschachiness is the corporate jet. Depending on your perspective, it can signal untrammelled greed, rational decision-making, post-pandemic work habits or the fight against climate change. Those who see excess regard the company jet as the worst in a pile of gold-plated perks for overpaid executives. While minions reacquaint themselves with airport queues and the curse of six hours next to the chatty stranger in 24a, bosses skip the lines and travel in luxury. It is difficult to remain grounded in these circumstances. ey, a global accounting firm, reportedly calls its plane “ey One”; on touchdown, auditors doubtless fantasise about radioing that “the eygle has landed”. If jets were used only for work trips, that would be bad enough. But more than half of the ceos of a 500-strong group of companies monitored by Equilar, an analytics outfit, made use of their firm’s jet for personal purposes in 2020. This view equates the company plane with entitlement and waste. The bosses of America’s big carmakers were excoriated for using their jets to travel to Washington, dc, to ask for a bail-out during the financial crisis in 2008. Disquiet about his use of Credit Suisse’s private jet was one reason why António Horta-Osório resigned as chairman of the Swiss bank earlier in the year. When Jeff Immelt, a former chief executive of ge, travelled on the firm’s private plane, a second one would sometimes follow him around the world as backup. Mr Immelt’s successor, John Flannery, made a point of putting ge’s jets up for sale when he took over in 2017. A research study from 2012 found that cost-conscious private-equity firms reduced corporate-jet fleets at firms they had acquired. If the corporate-jet inkblot spells excess to some, to others it represents hard-headed pragmatism. The personal safety of top executives is one consideration: private aircraft are a big part of Meta’s outsized spending ($27m in 2021) on the security of Mark Zuckerberg, its chief executive. So is privacy: it is really hard to finalise a secret takeover when there is a stranger spilling pretzels on you. (Both of these arguments are slightly weakened by the scraping of air-traffic data that lets people track specific aircraft; a paper published last year described a machine-learning algorithm designed to predict where a corporate jet is going to land while it is still in the air.) Above all, chief executives are busy people. If boards would rather they spent more time working and less time watching someone repack their suitcase at the security gates, that’s their call. And because private jets can land on more airfields than commercial airliners can, they are often the only way for executives to travel directly from headquarters to factories and subsidiaries in less accessible locations. A paper published in 2018 by academics at Boston College and Drexel University found that business-related flights of this kind improved firms’ operational performance. Some look at corporate jets and primarily see an enemy in the fight against climate change. Because of the small number of passengers on board, private planes emit much more carbon per passenger mile than commercial flights do. Elon Musk, a clean-tech tycoon who is fast becoming a Rorschach test in his own right, was pilloried recently when his jet took a nine-minute flight from San Jose to San Francisco. Mr Musk is also an outspoken critic of remote work, which is another thing that private jets bring to mind. The argument for using them rests heavily on the importance of in-person communication, something that has become a lot more contentious in the post-pandemic workplace. The point of the Rorschach test is that it has no single right answer. Corporate jets look unjustifiable to some and sensible to others. They can improve productivity or be a sign of an out-of-control ceo; the paper from 2018 found that planes made more flights to resorts when a firm’s boss had been in place for longer and when it had dual-class shares. They raise questions of fairness among critics and spell efficiency to defenders. They have become a useful shortcut for testing someone’s gut instincts on management, as well as for beating the queues. Read more from Bartleby, our columnist on management and work:Do not bring your whole self to work (Jun 2nd)The power of small gestures (May 28th)Making brainstorming better (May 21st) More