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Inflation fear: More SME owners willing to take a pay cut to keep their biz alive

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Inflation fear: More SME owners willing to take a pay cut to keep their biz alive

Frustration, annoyance, and anxiety. These are just a few of the sentiments that small business owners have as the inflation rate climbs beyond double-digit percentage levels. 

According to a survey of 253 Australian SME owners conducted by an independent panel for Small Business Loans Australia, 85 per cent of companies will make difficult decisions to get through a difficult financial year. 

In particular, 40 per cent of business owners stated that they would lower their own salaries: 45 per cent of microbusiness owners (1–10 employees) would do so compared to 31 per cent of small business owners (11–50 employees) and 27 per cent of medium-sized business owners (27 per cent).

Some participants propose to raise available funds to resolve their existing liabilities: 10 per cent will refinance or find ways to pay off their debts quickly, and an additional eight (8) per cent of respondents will seek financing to help the business through the tough period. 

The big picture

Earlier, we reported that Australians are getting ready to dramatically cut the frequency of their visits to restaurants, pubs, and cafés, as well as the amount of money they spend there, according to new research by SevenRooms

Responses to biggest challenges SMEs anticipate in FY 23. Via: Small Business Loans Australia

A very rigorous fiscal year is anticipated for Australian businesses, which are already feeling the strains of a competitive labour market, capacity limitations, stricter lending standards, and supply chain disruptions. Business exit rates in Australia reached about 4 per cent in March 2022 because of expectations that inflation and interest rates would continue to rise.

The ‘Cost of Living’ research found that as much as 30 per cent of hospitality spending could be lost over the coming months. In addition, 82 per cent of Australians believe the present cost-of-living crisis has already affected their spending patterns, and another 13 per cent think it will do so in the near future. 

The target of their budget cuts will be the hospitality industry in particular. Three-quarters (78 per cent) of Australians will visit restaurants, cafes, and bars less -and 79 per cent said they’d spend less when they do see – due to the cost-of-living pressure.

Rising wages

The wage price index in Australia has risen at the quickest rate in over eight years, but it still lags behind the country’s headline inflation rate. Wages rose 0.7 per cent in the last three months to 2.6 per cent, according to Australian Bureau of Statistics statistics issued Wednesday.

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While much below the inflation rate of 6.1 per cent and economist projections of a 2.7 per cent annual increase, this is Australia’s greatest wage growth rate since September 2014.

Bigger challenges for FY23

The major challenges that respondents might encounter in FY23 were asked to be identified. Just 10 per cent of respondents said they would not suffer any obstacles through FY23, while 90 per cent of respondents said they expect their business to endure difficulties. 

Fast-rising inflation was cited as the greatest difficulty by forty-two (42) per cent of respondents, while 41 per cent cited RBA rate increases and decreased consumer or client expenditure as their top worries.

Other challenges SME owners expect to face in FY23 included fast-rising interest rates (chosen by 28 per cent of respondents); having to pay higher wages on the back of the minimum wage increase and employee wage expectations (chosen by 22 per cent); the inability to fill roles in the business due to candidate shortages (19 per cent); and accessing financing or servicing loans and other debts (11 per cent).

Meanwhile, larger SMEs were more likely to identify significant challenges for FY23. Fifty-one (51) per cent of medium-sized businesses (51-200 employees) indicated that fast-rising inflation was their biggest challenge, compared with 41 per cent of small businesses (11- 50 employees) and 40 per cent of micro-businesses (1-10 employees).

Paying higher wages on the back of the minimum wage increase was also identified as a major challenge for medium-sized businesses, at 46 per cent. In contrast, 35 per cent of small businesses and just 13 per cent of micro-businesses said the same. This is likely because medium businesses have a higher headcount compared with micro- businesses that operate with just a few staff. Larger businesses also navigate higher overheads and other costs that are likely steadily increasing in price due to inflation.

Forty (40) per cent of medium-sized businesses also identified fast-rising interest rates as a significant challenge, compared with 37 per cent of small businesses and 23 per cent of micro-businesses.

Via Small Business Loans Australia

Alon Rajic, founder and CEO of Small Business Loans Australia, says: “Our research suggests that small business owners will do everything they can to minimise the impact of fast-growing inflation and interest rates on their business, including cutting costs and even underpaying themselves. They will aim to avoid incurring larger businesses’ debts while rates are still rising, directly impacting their investment spending. 

However, businesses know recessions usually don’t last long, so thankfully, letting go of their employees seems to be a last resort, and only if needed.”

Alon says: “Our results suggest that inflation and a potential recession will have a bigger impact on the SME sector than the 5.2 per cent increase to the national minimum wage and a shortage of workers. Despite a 10 per cent decrease in the number of unemployed people in June this year, price hikes and reduced consumer spending come out on top as the biggest obstacle with almost half of Australian businesses fearing future struggles with loan repayments and debt.” 

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One in 10 (10 per cent) of respondents said they would refinance their current loans to get a better deal, and 8 per cent said they would get financing. Alon says, “Looking for the right loan product in the current environment of rising interest rates and a plethora of loan options can be overwhelming for small businesses. 

“Comparison websites are one of the easiest ways to shop around –particularly ones that specialise in business lending. In addition to interest rates, consider fees, charges and any options that give you flexibility in paying down your loan.”

The full survey results, including breakdowns across ages and States, can be found here: smallbusinessloansaustralia.com/resources/australian-smes-2023.html

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Michigan farmworker diagnosed with bird flu, becoming 2nd US case tied to dairy cows

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Michigan farmworker diagnosed with bird flu, becoming 2nd US case tied to dairy cows

A Michigan dairy worker has been diagnosed with bird flu — the second human case associated with an outbreak in U.S. dairy cows.

The male worker had been in contact with cows at a farm with infected animals. He experienced mild eye symptoms and has recovered, U.S. and Michigan health officials said in announcing the case Wednesday.

A nasal swab from the person tested negative for the virus, but an eye swab tested Tuesday was positive for bird flu, “indicating an eye infection,” U.S. Centers for Disease Control and Prevention officials said.

The worker developed a “gritty feeling” in his eye earlier this month but it was a “very mild case,” said Dr. Natasha Bagdasarian, Michigan’s chief medical executive. He was not treated with oseltamivir, a medication advised for treating bird flu, she said.

The risk to the public remains low, but farmworkers exposed to infected animals are at higher risk, health officials said. They said those workers should be offered protective equipment, especially for their eyes.

Health officials say they do not know if the Michigan farmworker was wearing protective eyewear, but an investigation is continuing.

In late March, a farmworker in Texas was diagnosed in what officials called the first known instance globally of a person catching this version of bird flu from a mammal. That patient reported only eye inflammation and recovered.

Since 2020, a bird flu virus has been spreading among more animal species — including dogs, cats, skunks, bears and even seals and porpoises — in scores of countries.

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The detection in U.S. livestock earlier this year was an unexpected twist that sparked questions about food safety and whether it would start spreading among humans.

That hasn’t happened, although there’s been a steady increase of reported infections in cows. As of Wednesday, the virus had been confirmed in 51 dairy herds in nine states, according to the U.S. Agriculture Department. Fifteen of the herds were in Michigan.

The CDC’s Dr. Nirav Shah said the case was “not unexpected” and it’s possible more infections could be diagnosed in people who work around infected cows.

U.S. officials said they had tested 40 people since the first cow cases were discovered in late March. Michigan has tested 35 of them, Bagdasarian told The Associated Press in an interview.

Shah praised Michigan officials for actively monitoring farmworkers. He said health officials there have been sending daily text messages to workers exposed to infected cows asking about possible symptoms, and that the effort helped officials catch this infection. He said no other workers had reported symptoms.

That’s encouraging news, said Michael Osterholm, a University of Minnesota epidemiologist who has studied bird flu for decades. There’s no sign to date that the virus is causing flu-like illness or that it is spreading among people.

“If we had four or five people seriously ill with respiratory illness, we would be picking that up,” he said.

The virus has been found in high levels in the raw milk of infected cows, but government officials say pasteurized products sold in grocery stores are safe because heat treatment has been confirmed to kill the virus.

The new case marks the third time a person in the United States has been diagnosed with what’s known as Type A H5N1 virus. In 2022, a prison inmate in a work program picked it up while killing infected birds at a poultry farm in Montrose County, Colorado. His only symptom was fatigue, and he recovered. That predated the virus’s appearance in cows.

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The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.

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At collapsed Baltimore bridge, focus shifts to the weighty job of removing the massive structure

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At collapsed Baltimore bridge, focus shifts to the weighty job of removing the massive structure

BALTIMORE (AP) — Teams of engineers worked Saturday on the intricate process of cutting and lifting the first section of twisted steel from the collapsed Francis Scott Key Bridge, which crumpled into the Patapsco River this week after a massive cargo ship crashed into one of its supports.

Sparks could be seen flying from a section of bent and crumpled steel in the afternoon, and video released by officials in the evening showed demolition crews using a cutting torch to slice through the thick beams. The joint incident command said in a statement that the work was being done on the top of the north side of the collapsed structure.

Crews were carefully measuring and cutting the steel from the broken bridge before attaching straps so it can be lifted onto a barge and floated away, Coast Guard Rear Adm. Shannon Gilreath said.

Seven floating cranes — including a massive one capable of lifting 1,000 tons — 10 tugboats, nine barges, eight salvage vessels and five Coast Guard boats were on site in the water southeast of Baltimore.

Each movement affects what happens next and ultimately how long it will take to remove all the debris and reopen the ship channel and the blocked Port of Baltimore, Maryland Gov. Wes Moore said.

“I cannot stress enough how important today and the first movement of this bridge and of the wreckage is. This is going to be a remarkably complicated process,” Moore said.

Undeterred by the chilly morning weather, longtime Baltimore resident Randy Lichtenberg and others took cellphone photos or just quietly looked at the broken pieces of the bridge, which including its steel trusses weigh as much as 4,000 tons.

“I wouldn’t want to be in that water. It’s got to be cold. It’s a tough job,” Lichtenberg said from a spot on the river called Sparrows Point.

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The shock of waking up Tuesday morning to video of what he called an iconic part of the Baltimore skyline falling into the water has given way to sadness.

“It never hits you that quickly. It’s just unbelievable,” Lichtenberg said.

WHAT HAPPENS NEXT

One of the first goals for crews on the water is to get a smaller auxiliary ship channel open so tugboats and other small barges can move freely. Crews also want to stabilize the site so divers can resume searching for four missing workers who are presumed dead.

Two other workers were rescued from the water in the hours following the bridge collapse, and the bodies of two more were recovered from a pickup truck that fell and was submerged in the river. They had been filling potholes on the bridge and while police were able to stop vehicle traffic after the ship called in a mayday, they could not get to the construction workers, who were from Mexico, Guatemala, Honduras and El Salvador.

The crew of the cargo ship Dali, which is managed by Synergy Marine Group, remained on board with the debris from the bridge around it, and were safe and were being interviewed. They are keeping the ship running as they will be needed to get it out of the channel once more debris has been removed.

The vessel is owned by Grace Ocean Private Ltd. and was chartered by Danish shipping giant Maersk.

The collision and collapse appeared to be an accident that came after the ship lost power. Federal and state investigators are still trying to determine why.

Assuaging concern about possible pollution from the crash, Adam Ortiz, the Environmental Protection Agency’s mid-Atlantic Regional Administrator, said there was no indication in the water of active releases from the ship or materials hazardous to human health.

REBUILDING

Officials are also trying to figure out how to handle the economic impact of a closed port and the severing of a major highway link. The bridge was completed in 1977 and carried Interstate 695 around southeast Baltimore.

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Maryland transportation officials are planning to rebuild the bridge, promising to consider innovative designs or building materials to hopefully shorten a project that could take years.

President Joe Biden’s administration has approved $60 million in immediate aid and promised the federal government will pay the full cost to rebuild.

Ship traffic at the Port of Baltimore remains suspended, but the Maryland Port Administration said trucks were still being processed at marine terminals.

The loss of a road that carried 30,000 vehicles a day and the port disruption will affect not only thousands of dockworkers and commuters, but also U.S. consumers, who are likely to feel the impact of shipping delays. The port handles more cars and more farm equipment than any other U.S. facility.

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Collins reported from Columbia, South Carolina. Associated Press writers Sarah Brumfield in Washington, D.C.; Kristin M. Hall in Nashville, Tennessee; Adrian Sainz in Memphis, Tennessee; and Lisa Baumann in Bellingham, Washington, contributed.

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The Texas attorney general is investigating a key Boeing supplier and asking about diversity

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The Texas attorney general is investigating a key Boeing supplier and asking about diversity

DALLAS (AP) — The Texas attorney general has opened an investigation into a key Boeing supplier that is already facing scrutiny from federal regulators over quality of parts that it provides to the aircraft maker.

The office of Texas Attorney General Ken Paxton said it began looking into Spirit AeroSystems because of “apparent manufacturing defects” in parts that “have led to numerous concerning or dangerous incidents.”

In a statement Friday, a Spirit spokesman said, “While we do not comment on investigations, Spirit is wholly focused on providing the highest quality products to all our customers, to include the Boeing Company.”

Paxton asked the Wichita, Kansas-based supplier to turn over documents produced since the start of 2022 about communication with investors and Boeing about flaws in parts and corrective steps the company took.

The request goes into detail in seeking internal discussions around Spirit’s efforts to create a diverse workforce “and whether those commitments are unlawful or are compromising the company’s manufacturing processes.” Paxton asked for a breakdown of Spirit’s workforce by race, sexual orientation and other factors, and whether the makeup has changed over time.

Since a Spirit-made door-plug panel blew off an Alaska Airlines Boeing 737 Max in January, some conservatives have tried to link aviation safety to diversity at manufacturers.

Paxton is a conservative Republican who this week agreed to pay $271,000 in restitution to victims and take 15 hours of training in legal ethics to settle felony charges of securities fraud. Paxton did not admit wrongdoing in the 9-year-old case.

The Federal Aviation Administration launched an investigation into Boeing Spirit after the Alaska Airlines incident. An FAA audit of manufacturing procedures in Spirit’s factory gave the company failing grades in seven of 13 areas.

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Boeing is in talks to buy back Spirit, which it spun off nearly 20 years ago, as part of a plan to tighten oversight of manufacturing in its supply chain.

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