The Robocalypse is here.
That’s what some people said last month after news came that the first fully autonomous urban drone delivery was made in the US state of Nevada.
Our friends over at Palm Beach Daily in America even cottoned on to the fact that Aussie pizza firm Domino’s [ASX: DMP] is currently testing a delivery robot.
Are robots coming for all the jobs? Plenty of people seem to think so.
Today’s Money Morning casts a suspicious eye on such a forecast. Something doesn’t quite square with the idea of robots taking all our jobs.
One of the industries already using automation is the aviation industry. It’s not as if Biggles is holding a stick and wearing goggles in most cockpits these days. Computers can fly planes.
And yet the demand for pilots is skyrocketing. That’s thanks to one thing — the huge development of the Chinese aviation industry.
Stealing pilots from all over the world
Don’t take my word for it. Aircraft manufacturer Boeing says that Asia will need 226,000 new pilots in the next 20 years. That’s more than North America, Africa and Europe combined.
According to the Wall Street Journal, planes stay grounded in China because of the shortage of crews to fly them.
Hence a giant sucking sound is resounding around the world as China lures pilots from everywhere. It’s quicker to import them than train them. Airlines outside of China now face the prospect of training staff only to see them go for the money in China.
And it must be tempting if you’re a pilot. Chinese airlines are offering between US$200,000 to US$300,000 a year. That can include housing and school subsidies.
South Koreans are the most desirable because they’re the closest culturally. They’re also the biggest in terms of numbers. That’s causing the South Koreans staying behind to demand large wage increases.
But I happen to know one Aussie pilot with his eye on the money on China.
There must be more…
Tourism boom can’t save Virgin
It does make me wonder if John Borghetti is keeping an eye on this trend. He’s the CEO and Managing Director of Virgin Australia Holdings [ASX: VAH].
His international division is losing money, and his company has a huge $3 billion dollar debt. The last thing he needs in his plate is a shortage of pilots to drive up his fixed costs.
He has more than that headache. Virgin’s share price is languishing while Qantas has skyrocketed recently.
Now comes the news from the Australian Financial Review yesterday that Moody’s has put the company’s credit rating on review for a possible downgrade.
Its current credit rating is already below investment grade.
Meanwhile, conditions domestically don’t get much better for airlines than right now.
Tourism is booming, oil is low and the Aussie dollar is capping the level of Australians taking overseas visits. More people are spending their money here, close to home.
Just to give you an idea on some of this, 2015 saw international and domestic tourism contribute $94.5 billion to the Australian economy. International tourist arrivals reached a record 7.4 million.
In the last five years, Chinese tourist arrivals have doubled. January of this year saw annual visitors from China reach one million for the first time.
The Chinese are already the biggest overseas spenders in Australia, despite being second to Kiwis as the top tourist market in terms of the number of actual people arriving on our shores.
That won’t last long. 125 million Chinese travelled overseas last year. Even more will travel in the years to come. It’s going to be one of the biggest growth industries for years and years, if not decades.
In fact, the Chinese are shaking things the world over. Just ask the Canadians…
The Canadian and Aussie Property Boom
The Wall Street Journal reports Chinese property developers are looking to build a bigger presence in Canada. That’s especially true for Canadian cities with Chinese communities.
The falling Canadian dollar is giving Chinese companies even more bang for their buck. Chinese buyers also like investing in Canada because their money is safe there.
That’s not much comfort to the average Canadian trying to get into the housing market. The Wall Street Journal also cited research firm RealNet Canada this week. They say the average price for high-density land in the Vancouver region is now three times what it was in early 2006. Land prices were up 12% in the last quarter of 2015 alone.
Of course, we’ve all heard the same thing about Canada as we have about Australia over the last five years. That’s its completely overpriced and a bubble about to burst.
But very few people understand the real estate market. Land prices are taking the gains all over the world. The prodigious wealth being created, especially now out of China, is driving this.
Few people get this. But stop and ask yourself why most of us still have to work a 40 hour week. It’s because we have to afford the land price.
The economic gains of the 20th century were enormous. So was the rise in land (house) values. Coincidence? No.
My colleague Phillip J Anderson predicted all this land boom worldwide, when the world economy looked at its worst in a generation — 2008.
Perhaps the most thrilling part — or the scariest — is his position that the rise in land values around the world still has so far to go.
We’re in the middle of the biggest property boom of all time. This could drives land values to undreamt of heights. You’ll find out why on Saturday. Stay tuned.