Philippa Kaur

Boom-and-bust cycles all tend to look the same. A consumer fad or industrial urgency fuels demand for a product. Prices rise. Producers invest in capacity. By the time new supply materialises it outstrips already sated demand. Prices crash. Then, at some point, things get so cheap as to set off another demand upswing. And so on.The inevitability is comforting for bosses in industries from mining to chipmaking. Not, though, in battery manufacturing. Anticipating booming demand for electric vehicles (EVs), since 2018 companies around the world have ploughed more than $520bn into battery-making, according to Benchmark Mineral Intelligence, a research firm. Sure enough, the investments (plus improvements in technology) have pushed down the prices of batteries and, since these make up a third of the cost of an EV, of battery-powered cars. But not sufficiently to entice motorists to go electric. And so the industry is facing a bust without ever having had much of a boom. More

GERMAN POLITICS is followed closely in Paris. So is French politics in Berlin. Olaf Scholz, the German chancellor, said on July 8th that he was “relieved” that the far right failed to win the French parliamentary election on July 7th. What Mr Scholz did not mention were worries in German companies about what the New Popular Front (NFP), the leftist alliance which won the most votes and includes a hard-left element led by a former Trotskyist, have in store for business.What happens to French business matters to Germans because ties between Deutschland AG and France SA are closer than ever. Germany is France’s biggest export market and its biggest trading partner. France is likewise among the largest recipients of German goods and services. Businesses in each country invest a lot across the Rhine. Airbus, a Franco-German planemaking Goliath worth over €100bn ($108bn), is among Europe’s most valuable companies. Siemens, a German engineering conglomerate, and Alstom, a French one, were blocked by EU trustbusters from creating an Airbus for trains but still plan to build locomotives together. More

Behind every on-screen loan shark is an even harder character making sure the mob’s debts are paid—make Peter pay, or Paulie might break your legs. The financial system is less violent, but similarly interconnected. Intrum, Europe’s biggest debt collector, has struggled to make its business of buying and settling bad loans work. Now it is under pressure from its own excessive borrowing. The firm’s $6bn pile of debt trades at levels indicating deep distress. So do its shares, whose value has fallen by half this year (see chart).Chart: The EconomistOn July 11th Intrum said it had reached an agreement with its creditors. Most bondholders will take a 10% haircut in exchange for new shares in the company, which looks like a cross between a call centre and a hedge fund. It earns around half its revenue collecting non-performing loans (NPLs) on behalf of other firms—this involves hassling errant borrowers with letters and telephone calls. The second, more troublesome part of Intrum’s business entails not just chasing loans but actually owning them. More

“HE INSPIRED NEITHER love nor fear, nor even respect…He originated nothing, he could keep the routine going—that’s all.” As a description of your typical middle manager, it is hard to surpass Marlow’s view of the boss at a river port in Joseph Conrad’s “Heart of Darkness”. The novella is a critique of colonialism in Africa, and an exploration of power and morality. It is also a guide to dealing with corporate bureaucracy. Marlow’s steamboat is in tatters and the manager is useless—Marlow must solve the problem himself. It sounds like an ordinary day at a Fortune 500 company.Bookshops are stuffed with management tomes on how to be a good leader, inspire others, survive office politics, navigate cultural differences and win negotiations. But executives would do well to ignore the corporate self-help shelves and head instead for the classics section. Great works of literature, with their piercing examination of the human condition, have much to teach the aspiring chief executive about business—values of honesty, empathy and commercial acumen, as well as insights into vanity, pettiness, greed and ruthless ambition, all of which punctuate the journey from cubicle to corner office.Ditching corporate prose for fabulous stories is itself the subject of at least one business book. In “Questions of Character: Illuminating the Heart of Leadership Through Literature”, Joseph Badaracco, a professor of business ethics at Harvard Business School, considers eight works that provide lessons on what good leadership is—and isn’t. If Mr Badaracco had to recommend one book executives should read this summer, it would be “Things Fall Apart” by Chinua Achebe. “Serious literature tends to be tragic literature,” he says. “The struggles of the main character, Okonkwo, reveal the profound challenges leaders confront when they face evolving social norms, novel economic challenges, shifting power dynamics and the challenge of communicating across cultural divides.” Your guest Bartleby has other literary recommendations, on a range of management topics. More

IN the TRADE war between the West and China, a battle over electric vehicles (evs) has begun. In May, as part of a broader volley against Chinese tech, America slapped a 100% duty on Chinese evs. On July 2nd Canada launched a consultation on what it called “unfair Chinese trade practices” in the EV industry. Two days later a provisional tariff of 37.6% on Chinese EVs took effect in the EU. On July 10th, days after the symbolic swipe of opening an anti-dumping investigation into European brandy, China’s ministry of commerce signalled it will not take the assault lying down. It says it will study whether the EU’s tariffs create barriers to free trade. More

At the turn of the century Boeing launched an advertising blitz to show what a marvel of American manufacturing it was. Called “Forever New Frontiers”, it highlighted its pioneering work on some of the 20th century’s biggest breakthroughs, from passenger and fighter jets to space rockets and satellites. Coming a few years after its merger with McDonnell Douglas, a smaller rival, Boeing stood tall in the fast-consolidating aerospace industry.How far it has fallen since. On July 7th the American government said Boeing had agreed in principle to plead guilty to fraud in connection with two deadly crashes by its 737 MAX jets in 2018 and 2019. This latest frontier, its most disgraceful yet, makes it the corporate equivalent of a criminal. Looking back over the decades, it becomes clear that Boeing’s embrace of what were once the defining trends in American business have come back to haunt it.First, its acquisition of McDonnell Douglas in 1997 was part of what The Economist then approvingly called “one of the great industrial upheavals of all time”: the hammering together of America’s fragmented defence industry into a few global Goliaths. Since then consolidation has been the name of the game across corporate America. The second trend was outsourcing. In 2005 Boeing joined the rush to offload capital-intensive manufacturing and cut labour costs by selling off parts of its production line, becoming an assembler of planes rather than a vertically integrated manufacturer. Third, like many listed American firms, Boeing showered stockholders with cash via share repurchases and dividends rather than investing in non-financial innovation. More

ARMSMAKING IS NOT like other businesses. It is impervious to macroeconomics and sheltered from fickle consumer tastes. Its prospects are determined by one factor—how militarily threatened its government customers are feeling. With wars blazing in Ukraine and Gaza, another on the brink between Israel and Lebanon, and more conflict looming as China eyes Taiwan, the perceived threat level as leaders of NATO countries gather for a summit in Washington on July 9th-11th is through the roof.Last year NATO’s 32 members spent $1.3trn on defence, a record high after adjusting for inflation at least since the fall of the Soviet Union. America, by far the biggest spender, is budgeting $842bn this year. Historically more peacenik Europeans, spooked by Russian tanks on their doorstep, are undoing decades of stinginess that has resulted in accumulated underinvestment in equipment of about $600bn. This year NATO expects 18 members to meet the target of dedicating 2% of GDP to defence, up from three in 2014. More

Few bosses worry about European politics more than its bankers. In Italy and Spain new taxes have been levied as punishment for higher profits. The populist surge in France has redoubled concern. When Emmanuel Macron announced shock parliamentary elections in June, investors in French banks legged it. The final round of the election, held on July 7th, is likely to empower reckless spenders on the hard left or hard right. In an interview with Bloomberg in May, Mr Macron made a rare political pitch for a more integrated banking market, including cross-border deals. Now the sharp election-related fall in the price of France’s government debt has instead revived memories of the “doom loops” of the euro-zone crisis of the early 2010s, when worries about the solvency of sovereigns and of lenders fed off one another.More volatile politics could make European banks even more parochial and less ambitious than they already are. One exception is Banco Bilbao Vizcaya Argentaria (BBVA), which cannot be accused of being either. The Spanish lender makes more than half its profit in Mexico. After Spain, its next largest market is Turkey, where the economy is so dire that BBVA uses “hyperinflation accounting” in its bookkeeping. And it is no shrinking violet at home. In May BBVA made a €12bn ($13bn) hostile offer to acquire Sabadell, a Spanish competitor it came close to buying in 2020. More