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Concern is mounting about zombie companies: why that matters for the economic recovery

Illustration of zombie in front of burning city.
Some economists are worried about a growing army of ‘zombie companies’. leolintang via Shutterstock

This is a transcript of episode 10 of The Conversation Weekly podcast “The zombie company problem and what it means for our economies”. In this episode, why some economists are worried about a growing army of “zombie companies” with lots of debts – and what this could mean for the shape of our economies. And researchers have found a new way to prevent predators from eating endangered birds and their eggs – via a form of biological, psychological warfare.

NOTE: Transcripts may contain errors. Please check the corresponding audio before quoting in print.

Dan Merino: Hello and welcome to The Conversation Weekly.

Gemma Ware: This week, why some economists are worried about a growing army of companies with lots of debts – known as “zombie companies”. We speak to two experts on what this could mean for the shape of our economies.

Karl Schmedders: We will see bankruptcies and some of these companies will no longer exist by their own.

Dan: And I speak to a researcher who has found a new way to prevent predators from eating endangered birds and their eggs. It’s a bit of biological, psychological warfare.

Catherine Price: It’s just mucking with their minds and getting them to ignore what is actually the smell of the bird.

Dan: I’m Dan Merino in San Francisco.

Gemma: And I’m Gemma Ware in London and you’re listening to The Conversation Weekly, the world explained by experts.

Gemma: Some companies have done better out of the pandemic than others. There have been clear winners and losers.

Dan: Online retailers have been riding high as consumer patterns have shifted. Amazon of course, has had a stellar year. Zoom, share price through the roof.

Gemma: Pharmaceutical companies have had a good year too, particularly those who successfully developed their own coronavirus vaccines.

Dan: But, it’s been bad for huge swathes of the economy.

Dan: Physical retailers such as shops and department stores, airlines, hotels… anyone of course, whose business is tourism, and the service sector have all been hit pretty hard.

Gemma: Some of these companies were ticking along nicely before the pandemic. It’s the coronavirus restrictions that have really hurt their revenues, they’ve just not had enough money coming in to cover outgoing costs. But, with a solid foundation, these companies are pinning their hopes on the recovery.

But other companies went into the pandemic hampered by large debts – economists call these zombie companies.

Dan: Ooh, zombies. OK, why are we calling companies undead?

Gemma: Well these ones aren’t quite dead, and they’re not insolvent, but they’re just about alive. It’s a term used to describe what happened to many Japanese companies in the 1990s after a bad financial crash there, or to firms in Europe and the US after the 2008 financial crisis.

But now some economists are concerned about a new and growing army of zombie companies, exacerbated by the pandemic. I’ve spoken to two financial experts about all this, and about why the situation is harder for smaller companies than larger ones.

Karl Schmedders: My name is Karl Schmedders I’m a professor of finance at IMD, a small business school in Lausanne, Switzerland.

Gemma: Karl researches the relationship between the real economy and the financial markets. I asked him what a zombie company is.

Karl: Zombie company describes a company that may be even earning money from its operation. However, these earnings are not enough to make debt payments to pay back loans or to pay back the interest on loans that they received from banks, from other lenders, or in the general financial market through bonds, through these pieces of paper that are sold in the market to take on loans.

Gemma: The financial crisis caused by the pandemic has made life even worse for many of these firms – but many were in trouble before anyone had even heard the word COVID.

Now, there may be any number of reasons why one particular company isn’t doing very well at any particular time. But Karl points to interest rates as part of the problem for the current crop of zombie companies. In Europe and the US, they’ve never been so low for long.

Some places, including Japan, Switzerland and the eurozone, have even been living with negative interest rates for a few years now.


Read more: Negative interest rates will not fix the global economy – just ask Switzerland


All this means cheap cash. Companies have been able to borrow money from banks at low cost, and so many went on a borrowing and spending spree.

Karl: For years already, interest rates were very low, so it didn’t make sense on a short-term view for companies to hold a lot of cash for a rainy day. Why? Because they received no interest, or very little interest, and so shareholders or owners said that doesn’t make sense to hold a lot of cash in a bank account. Either spend it or give it back to us through dividends or share buybacks.

Gemma: A share buyback is when a company buys back its own shares on the stock market. This reduces the number of shares and in turn can increase a key metric, called earnings per share, which financial analysts watch very closely. Share buybacks can also push up the value of a company’s own stock – which is good for the shareholders.

Karl: And so that’s what a lot of companies did. They reduced their cash holdings because it didn’t make sense to hold cash.

Gemma: But some firms went even further.

Karl: Because money was so cheap, some company even borrowed money in order to buy back their shares. Let that idea sink in. Companies, borrowed money, because money was so cheap, because interest rates are so small. Then they use the borrowed money not to invest in research and development, not to buy other companies, they borrowed money to buy back their own shares in order to drive up the share price. But at the same time, they were increasing their debt. And this is now the situation that’s happened before COVID-19 a lot.

Gemma: The problem isn’t that companies were buying back their own shares – this is a fairly common practice – but that some of the companies doing so were on shaky financial ground. They were spending borrowed money on their own shares, rather than investing it into in research and development or in an effort to become more productive.

Karl: What happened when COVID-19 occurred? Suddenly economic activity went down a lot. Some of these companies suddenly didn’t earn enough money anymore in order to pay back those loans. And now suddenly they’re in trouble and they become a type of this zombie company.

Gemma: So they’re inefficient because they’re trying to service the debt, they’re trying to pay the interest on their debt, but at the moment, they’ve hit a crunch point because they have no earnings to help service it?

Karl: That’s a beautiful summary, that’s exactly what’s happening.

Gemma: And are there specific sectors that are more affected than others?

Karl: Clearly we see these types of companies, in those areas where earnings have really fallen apart. One area that has been hit hard are the airlines. The airline business is asset intensive. Airplanes are very expensive, and airlines typically do not have the funds, the equity to pay for these airplanes in cash. So they have a lot of debt, but we all know, we are not allowed to fly. So airlines, are not earning enough money to pay these loans.

A leading example is in the United States, Delta Airlines, which is sort of an iconic company, which at the same time is a zombie. Then we also see a company such as Boeing. Boeing is selling airplanes. Nobody is buying airplanes right now. At the same time Boeing had a lot of these share buybacks in recent years.

Gemma: The pain was also felt further down the supply chain.

Karl: Another area where we see this is in the oil industry. There was a drastic reduction in the demand for oil-based products. We all drove less in our cars. The airlines needed much less kerosene for their airplanes because they couldn’t fly. And so some of the oil companies, suddenly find themselves not earning enough money to cover their interest expenses.

Gemma: Are there any estimates of the size of this zombie problem in zombie companies around the world?

Karl: Before COVID, Morgan and Stanley came out with an estimate that about one in six companies in the United States are zombies. Bloomberg came up with a study in November of 2020. They looked at Russell 3000 companies. These are the 3000 largest companies listed on the stock market in the US.

And they saw that more than a quarter – that’s a big number – more than one in four companies in their most recent business year had these problems, were zombies. For Europe there are similar numbers or maybe numbers slightly larger.

Karl: Although there are no official statistics on zombie companies globally, data suggests these figures are similar for other rich countries.

Karl: While I don’t like to speculate, I think we can say that somewhere between 20% and 30% are sort of the current estimates, by people observing these zombie firms around the world.

Gemma: When the pandemic hit, governments around the world stepped in to help companies through the crisis – whether they were healthy or not. Some central banks moved to buy up corporate bonds.

And governments around the world also gave out huge sums of state aid to companies in the form of grants, loans or employment support schemes such as furlough.

Karl: There are some cynics who even say that some zombie companies who paid out too many dividends, who took out too many loans, were saved through COVID-19. Because of this global shock of COVID-19, the central banks came in with so much money and supported the economy so much, that some companies who in under normal circumstances may have gone bankrupt have been saved.

Gemma: Do you believe that?

Karl: Yes. I believe that some companies, have been saved by very cheap money.


Read more: Attack of zombie companies: don't let them eat bailouts that are vital to restore the economy


Gemma: In fact, data from the International Monetary Fund suggests that while a recession as drastic as the one we’re in one would usually be followed by a rise in bankruptcies, in the world’s 13 biggest economies, the number has actually fallen.

Still, concerns are growing about what will happen once governments around the world stop their pandemic support programmes. For some analysts, the situation looks precarious. Figures published this week indicated the default rate in Europe on corporate loans – the rate at which companies are not able to pay back their debts when they come due – has doubled over the past year. I asked Karl what the prognosis is for zombie companies from here.

Karl: It will be a very difficult process to slow down the support of worldwide economies without causing another recession that then is caused by zombie company insolvencies. So, central banks and governments face a huge task when they decide to reduce and eventually completely take out their support.

Now, certainly we hope that companies with a viable business model will see a big increase in earnings after the end of the lockdowns, if economic activity resumes and that some companies then have big earnings again so that their debt to earnings ratio will decrease and they will survive. But clearly some companies won’t see that.

Gemma: How a company fares after the pandemic may depend on its size. To understand more, I reached out to Sandy Brian Hager.

Sandy Brian Hager: I’m a senior lecturer in international political economy at City University in London. And my main research focus concerns inequality and issues of corporate power.

Gemma: Sandy is particularly concerned about what’s been happening to smaller companies. Earlier this year, he published new research with his colleague Joseph Baines at King’s College in London tracking the performance of corporations listed on the US stock exchange over the past few decades. They ranked companies based on their overall revenues, and then divided them up – into the top 10% of large corporations, the next 40% of medium-sized ones – and then the bottom 50% of smaller corporations. It’s these smaller corporations that Sandy says we should be worried about.


Read more: Giant firms have a hidden borrowing advantage that has helped keep them on top for decades – new research


Sandy: So these aren’t, you know, your mom and pop corner stores if you will, these are more, generally larger than that.

Based on our research, we’ve shown that they’ve been suffering for decades now, in terms of their profitability. Because of their smaller and often negative profit rates they’re definitely not able to tap into corporate bond markets. They have to borrow from banks at a much higher rate as well.

Gemma: Larger corporations have benefited for a long time from what’s called a borrowing advantage.

Sandy: Quite simply they have better access to loans at favourable rates from the banks. They’re are also able to tap into corporate debt markets and borrow at very cheap rates on the bond market as well. That means that they’re able to borrow on a more favourable basis that allows them to consolidate their position within markets and continue to borrow at those favourable rates.

Gemma: Smaller companies, on the other hand are at a disadvantage because the loans they have access to are more expensive – they come with higher interest rates. That means they have to spend more of their hard-earned cash on paying them back.

Sandy: There’s a kind of vicious circle going on that we talk about in our research. We’ve shown that they have to borrow from banks at a much higher rate, and that obviously eats into their profits even more because they’re having to spend so much in terms of the amounts that they pay back to banks in the form of interest.

Gemma: Crucially, even during the pandemic, when the US government issued emergency loans to try and lessen the impact on the economy, Sandy says larger companies have been treated more favourably.

Sandy: If you look at, the intervention, for example, that we’ve seen in the United States, they’ve established a bunch of different lending facilities for companies of different sizes. So there’s the main street facilities that have been aimed at small- and medium-sized corporations. And then we have the corporate credit facilities that have been aimed at larger corporations. Federal Reserve has promised to prop up the corporate bond market by intervening and buying up debt if need be. And what we saw is that lending rates for larger corporations plummeted as a result and they went on a kind of borrowing spree through the pandemic.

Now, the main street facilities, they were meant to sort of help more smaller and medium-sized corporations. And the problem with the main street facilities is that a lot of the criteria that they established for companies to access them was really prohibitive. So a lot of the smaller companies were already in financial distress and they didn’t meet the requirements. Those companies that were eligible for the main street facilities, oftentimes they found that the administrative burden of accessing the facilities was just too high. So they’ve really been starved for financing through the pandemic.

Gemma: Karl says those companies that are in a more stable financial position may see this as an opportunity to acquire competitors that are struggling. And this will usher in a wave of mergers and acquisitions.


Read more: Takeovers: a tidal wave of buyouts is coming in 2021 – here's what it means


Karl: Some of these companies may be competitors to healthy companies. And so these healthy companies say, “Oh, we can get a larger market share. So why don’t we buy this distressed company?” To get, sort of out of the zombie situation and reduce zombies, we will see bankruptcies, but we will also see some of these companies will no longer exist by their own, but then will be bought out by larger companies.

Gemma: The pandemic may also prompt some healthy companies to move in new directions.

Karl Schmedders: We may see in this merger and acquisition activity very strange marriages where one company depends in some form on another company and wants to keep it alive. There was a very interesting example in the United States last year, where a big department store, JC Penney, went under. And nobody wanted to buy them, so it looked like they would literally completely vanish. And then they were bought not by another retailer, they were bought by real estate companies owning shopping centres because they’ve wanted the store to stay in these buildings.

Gemma: When I asked Sandy Brian Hager about what might happen next, he said he feared that larger companies could get even richer and bigger, while smaller ones suffer even more. This is what he calls a K-shaped recovery.

Sandy: You know, you can imagine the shape of a letter K. And what it means is that large corporations are kind of seeing their fortunes rebound. Since the pandemic first hit, they’re seeing their profitability and sales being restored. They’re seeing their financial conditions improving. Whereas smaller corporations are heading in the opposite direction.

Gemma: But it would be a mistake to think that this has been caused by the pandemic. Sandy says that in the US and the UK, the economy has been developing in a K-shape for some time.

Sandy: So if we look at, you know, the improving fortunes of large corporations that’s a process that’s been taking place since the early 1980s. And smaller corporations have been in, in a lot of financial distress for decades now.
There’s this argument that’s making the rounds at the moment that suggests that, you know, the pandemic might be an opportunity of sorts in that the pandemic might actually end up killing off a lot of these zombies and that will restore dynamism to the economy. And I think that certainly could be the case. But if the pandemic ends up killing off a lot of these smaller companies, there’s no guarantee that dynamism is going to be restored.

Gemma: Sandy’s research shows that over the past few decades it’s smaller corporations which have been investing more of their revenues in the kinds of activities that create jobs.

Sandy: What we see is that smaller corporations have actually been increasing their fixed investment. And large corporations have actually been decreasing the amounts they invest in productive capacity the past few decades.

Gemma: Productive capacity refers to a company’s means to produce goods and services that will help it grow.

Sandy: Large corporations have a monopoly position, they don’t feel sort of pressures to invest in productive capacity because of that monopoly position. Whereas smaller corporations do feel that they have to expand productive capacity just to try to compete within this system and so those kinds of wishing for a lot of companies to be killed off as a way of trimming the fat – that’s not necessarily going to be a good thing.

Gemma: And he says, smaller companies going bankrupt or being bought out by bigger ones, that could ultimately threaten the overall health of the economy.

Sandy: I think if we look at the trends over the past few decades, there’s been a trend toward corporate concentration in most of the advanced economies and the consequences of that have been negative for society as a whole. So we’ve seen stagnation in terms of wages. We’ve seen a decreasing dynamism, decreasing innovation throughout the economy, decreasing productive investment as a result of concentration. And of course, we’re staring down this, um, prospect of climate breakdown as well.

We’re going to see more dominance from corporations at the top, particularly from the tech firms, from the pharmaceutical companies, those that have fared best out of the pandemic. I think that translates into increasing political power for these dominant corporations.

Gemma: Help has been forthcoming for some of these smaller businesses. In the US, the Biden administration’s US$1.9 trillion so-called American Rescue Plan, passed in early March, is targeting more government support at small businesses, particularly those in sectors most hit by the pandemic. But Sandy that says governments still need to address some of the structural issues that mean smaller companies struggle, while bigger ones thrive.


Read more: Joe Biden's US$1.9 trillion stimulus won't be enough to reignite world economy on its own


Sandy: If we think in the medium term, I think one of the major issues is that governments are going to have to tackle this issue of monopoly power and corporate concentration, and that would mean restoring, maybe antitrust regulation, which has been rolled back since the 1980s. It would involve something maybe like patent reform to break up monopolies and try to spur innovation in product markets. And it would also involve, I think, corporate tax reform. And we wrote a piece earlier in The Conversation where we show that smaller corporations are also at a huge disadvantage when it comes to corporate tax. So the rates they pay on their domestic income, relative to the rates that larger corporations pay on their domestic income, is so much higher.

Gemma: In the longer term, Sandy proposes using government-backed loans in a more targeted way, to help address some of the imbalances in the economy.

Sandy: Thinking even more longer term, I think we need to think about bolder reforms that might reassert some kind of democratic control over the economy, and that could involve establishing some sort of national investment fund or development bank where assistance and funding and financing for companies could be targeted at those businesses that are producing vital new technologies, such as, you know, green energy or alternatives to plastic or something like that.

Not to sound overly sort of pessimistic, about it, I just don’t see there being a good outcome unless we use this pandemic as a chance to implement really meaningful changes to the way that the business system operates.

Dan: As with a lot of things about this pandemic, it sounds like we’re just going to have to wait and see what happens next – and much of that depends on what governments around the world decide to do.

Gemma: Yep, and for those zombie companies, if interest rates start to go up and companies find they just can’t pay back their loans, or do a deal to restructure their debt, it could get pretty difficult. So watch this space.

Gemma: You can read more about Sandy Brian Hager’s recent research on US corporations, and Karl Schmedders’s analysis of the risk from zombie companies in their articles on The Conversation. Find the links in the show notes.

Dan: Coming up, we hear about a surprising – and very smelly, new conservation technique for endangered birds.

Gemma: But first, here’s Luthfi Dzulfikar, associate editor at The Conversation in Indonesia, with a few recommended reads.

Lutfhi Dzulfikar: Hi, my name is Luthfi Dzulfikar, an editor at The conversation based in Jakarta. Last week, we published a story by researchers from Universitas Indonesia and how a lot of low-income Indonesians currently do not have documents of personal identification and are excluded from national registries.

In Indonesia, access to around 17 different public services, including education, health insurance, sanitation and electricity requires identification such as through national IDs, household cards and birth certificates. But around 14% of children under 18 currently do not have one, with a sharp divide among groups of different income levels and between urban and rural households. Many factors contribute to the situation, but chief among them are lack of transportation infrastructure and scarcity of government presence in rural areas which make it difficult for low-income families to get in touch with civil registration offices.

Our second story comes from Nuril Huda from the State Islamic University in Lampung, Sumatra, on the adoption of cinema and filmmaking practices by the Santri, traditional practitioners of Islam who are typically students that study at Islamic boarding schools. The emergence of numerous popular Islamic movies in recent years, the rise of the Santri middle-class and modernisation of the Islam boarding school system have driven the Santri to celebrate cinema through screenings, film discussions, and even festivals.

Based on his PhD thesis, Dr Huda observed how this adoption of cinema have not only helped the Santri preserve Islamic culture on screen, but also to criticise and question it. For instance, the views and customs within these Islamic boarding schools are traditionally dominated by male religious leaders. However, female Santris in reputable boarding schools have started to use cinema as a medium to advocate more gender-inclusive Islamic traditions. That’s it from the team in Jakarta. Stay safe, everyone.

Gemma: Luthfi Dzulfikar in Jakarta there.

Dan: OK. Onto our next story now, and we’re going into the world of bird conservation. Birds in many places are having a tough go of things and their populations are plummeting. Conservationist really struggle to protect them, but a few researchers have found a new way to use misinformation to fool predators

Gemma: Misinformation, so are we talking fake news here?

Dan: You could say fake news, although not the kind that circulates on the internet, of course. But the idea is the same: confuse predators by giving them some of their favourite info, in this case smells. The team just published a new paper testing this technique in New Zealand. I called up one of the researchers based in Sydney to find out more.

Catherine Price: My name’s Catherine Price. I’m a postdoctoral researcher at the University of Sydney in Australia.

Dan: And you study wildlife, do you not?

Catherine: I do. Yep. I worked in the conservation agency in New South Wales for quite a few years. And that got me very interested and I guess kind of concerned in how we protect threatened species in particular. Like, are we doing it in ways that are effective and can we improve those ways? And that led me to go back to uni and do a PhD.

Dan: When you were working in conservation, when you were going back to school, what motivated you to do this?


Read more: Scientists used 'fake news' to stop predators killing endangered birds — and the result was remarkable


Catherine: Yeah, so well in Australia and in New Zealand, a lot of birds, particularly ground nesting, birds are in decline, basically. They are constantly losing their nests and losing their chicks from predators. And in Australia, Europeans brought over a whole lot of species, things like foxes and cats and the birds that we have here, and also actually in New Zealand and other parts of the Pacific, they didn’t evolve with these predators.

New Zealand has this terrible problem with introduced predators cos they have no native mammals other than a bat. So their animals are just being absolutely destroyed. In Australia. I think it’s something like 95 species are threatened by foxes and cats. I think in New Zealand they’ve lost something like 57 or 60 species of birds or are either endangered or threatened. And at the moment, really all we can do is either try and kill the predator, which is obviously good if you can get rid of all of them, or fence off the birds, you know, somehow. We just kind of were thinking, we need some other techniques really.

Dan: I can hear it in your tone, you were just like, ugh, none of this is working. It’s bad for the environment. It’s hard. What was the idea you guys came up with?

Catherine: So, most predators, in fact most animals, you know, they have to find food and they have to find it every day. And so they want to be as efficient as possible. They don’t want to waste physical effort, but they also don’t want to waste their headspace.

So, they use what we call rules of thumb, you know, they use clues as to what is going to work based on what’s worked for them before. And so animals use smell. It’s kind of evolved from the earliest bacteria. It’s a really reliable and useful source of information to tell an animal that food is where it should be.

Peter Banks, who was my PhD supervisor, he’d kind of been thinking a lot about smell and how predators use smell. And he basically just kind of came up with this crazy idea: what if we put smell everywhere and then it kind of makes it not useful for the predator?

In a sense it’s really simple. It’s like, well, if predators are finding their food using smell and you know, anyone who’s had a dog has watched how they’ve kind of honed in on something using smell. If they keep honing in on a smell and then there’s no food there, won’t they ignore it? Like if you kept kind of smelling someone having a barbecue next door and going next door, and there was no barbecue, eventually you’d stopped going. You would start to ignore that smell and use other information to try and find your food.

It’s just mucking with their minds, mucking with what information they’re using and getting them to ignore what is actually the smell of the bird.

Dan: OK, so you came up with this idea, but you needed to test it to see if it actually works right?

Catherine: Yeah, cause it’s a pretty crazy idea. And so that was basically my PhD, was testing the idea and trying to understand which aspects of it we could use. And so we were, I guess, predicting that they would initially be really interested in a new smell that they thought would be linked to food, but really quickly, if they found that it wasn’t useful, they would start to ignore it. And that’s what we found with rats in the bush around Sydney. So this was sort of the first trial to test the idea, to see if the rats would respond when they encountered a smell, but it wasn’t necessarily associated with any kind of food. It worked remarkably well.
Dan: You went out and did this on a bigger scale. So can you tell me about your project out in the Mackenzie Basin?

Catherine: Yeah, so it was fortuitous, we were at a conference and we knew Grant Norbury, who’s the lead author of the paper, from previous work. And he’s a great guy, amazing scientist. Peter was chatting to him about the results. And he pulled together an amazing team of people from Landcare and we worked with them and set up this incredible experiment in the Mackenzie basin, which is in the middle of the South Island of New Zealand, beautiful, beautiful countryside. It’s the area where the rivers are coming off the mountains. You’ve got these huge braided river beds. Huge expanses of gravel with mountains in the background, it’s just stunning. But it’s full of ferrets and stoats and hedgehogs, they have introduced over there. There’s feral cats and there’s rats.

Dan: So all the baddies.

Catherine: All the baddies, and they have these shorebirds that come in and nest on the braided river beds, these sort of big expanses of gravel. And the nests are incredibly well camouflaged, you cannot see them at all.

Dan: And what kind of species of birds are we talking here?

Catherine: So, the main one we worked on was double-banded plovers, which are these sort of small, you know, they’re like the size of your fist kind of thing. And they lay these tiny eggs, which just look like gravel. They also have, wrybills, which are another endangered shorebird, which are very similar. And then there were also a bigger bird called the South Island oyster catcher. And all of these birds, the main cause of their decline is that the predators just come in and take the nests and they’ll lose up to 95% of their nests each year. Like it’s amazing there are any left at all really, when you look at it.

Dan: So walk me through: what’s step one?

Catherine: Grant works for Landcare, they have a team of chemists. So the first thing was, well, we’ve got to make bird odour. How do we make bird smell in the quantities that we’re going to need? And we went out and caught a couple of these birds. And tried to see if we could get the smell off them by rubbing them in towels – without hurting the birds, obviously. And basically they don’t actually smell that much from what we could pick up off a towel. So it’s like, “Jeepers, what are we going to do?” So we thought, well, what about if we could use, just chicken, quail, maybe duck or something like that? Get a whole lot of easy-to-obtain bird smells. Could we get the predators to essentially kind of generalise them all together? And so that’s, that’s what we did. We did some trials in captivity and showed that the predators did do that if they were exposed to one bird odour, they’d sort of ignore all bird odours. And so that instantly made it feasible.

So the chemists at Landcare were able to essentially just boil up in a solvent chickens and quails. I think these guys are normally used to doing these really fine experiments and that was stuffing whole birds into these massive kind of jugs of solvent and then mixing them up, you know, and extracting these tiny amounts of goop. But it really did smell like the bird. It was amazing.

Dan: So you’ve got this bird scent. Then what happens?

Catherine: Mix it into Vaseline. And then we had sites where we knew the birds would come and nest. And so for about a month before we knew the birds would arrive, we were walking back and forth across this landscape and dolloping bird smell every sort of 100 metres throughout this area. I mean, it was pretty labour intensive.

We also had cameras monitoring predator behaviour around the bird smell and monitoring the number of predators that were around. I didn’t do it the whole time. The guys that did it were so fit by the end of it. Like it was snowing at times. It was so windy, it would rain. Yeah, they just did an amazing, incredible job.

Dan: OK. So did you save the birds? Tell me the results.

Catherine: It did, it worked. The birds arrived. We had another team of ornithologists, so specialised bird biologists, who were monitoring the nests at both the sites where we had odour and the sites where we didn’t. And we got, it was like a 70% increase.

Dan: Wow.

Catherine: In hatching success. Yeah. Pretty much across the board of all the species. So it was pretty astounding, because we didn’t remove any predators. There was the same, pretty much the same number of predators at the control versus the treatment sites. What we noticed with the predator behaviour is when we first started putting the smell out, the predators are really interested and then that interest in the odour drops off quite quickly. And then it’s fairly low for the rest of the experiment. When the birds arrive, there’s a slight uptick in the interest, but then it drops off again.

Dan: That’s a huge increase, 70% increase in hatching success. So are you going to start seeing increases in populations of the birds because of this?

Catherine: We had some, modellers at Landcare look at that and say, well, if you did this and you got this increase each year, does it have a population-level kind of benefit? And it really does. So it basically adds about 700 birds to the population over kind of 25 years or something, I think – if you start at kind of a thousand birds. So you essentially, almost, you’re getting towards doubling the population.

Dan: It’s great to have this result. Do you think this might get put into practice other places? Have people contacted you, I guess?

Catherine: Yeah, so we’ve had quite a bit of interest. People in Hawaii who are trying to deal with feral pigs taking birds there, because Hawaii has a big problem with invasive predators. We’ve also had people in other parts of America who are actually dealing with crabs and coyotes taking birds.

There’s in the UK and Europe, issues with, so foxes are native there and take shorebirds. So they don’t want to call the foxes. They’ve also got a whole lot of endangered native predators, like pine martins and wolves and things like that. So there’s a lot of potential in areas where you’ve got endangered predators that you obviously don’t want to hurt, but you’ve also got endangered birds that you’re trying to protect from them. And that’s, I guess, where we see it potentially having really big uptake.

Dan: Catherine, thank you so much for taking the time to speak with me today. Thank you for coming up with this, cause I can always use a good news, conservation story.

Catherine: Thanks.

Dan: If any of our listeners are conservationists and want to get in touch with Catherine Price, she was very happy to speak with anyone interested.

You can read the article she co-authored with her colleague Peter Banks about their new study in the Mackenzie basin by clicking on the link in the show notes.

Gemma: That’s it for this week. Thanks to all the academics who’ve spoken to us for this episode – and to The Conversation editors Steven Vass, Luthfi Dzulfikar and Stephen Khan. And thanks too to Alice Mason, Imriel Morgan and Sharai White for our social media promotion.

Dan: You can find us on Twitter @TC_Audio or on Instagram at theconversationdotcom or email us at podcast@theconversation.com.

And if you want to learn more about any of the things we talked about on the show today, links are of course in the shownotes and you can sign up to our free daily email.

Gemma: This episode is co-produced by Mend Mariwany and me, Gemma Ware, with sound design by Eloise Stevens. Our theme music is by Neeta Sarl.

Dan: And I’m Dan Merino. Thank you all and we’ll talk to you next week.

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