Editorials

Brexit: Where To From Here?

The majority of my readers will be well aware that I rarely comment on politics, preferring instead to focus upon aspects of performance improvement, even though the need for continuous performance improvement and cost reduction is often made necessary as a result of adverse political decisions, over which we have little or no control.

Whatever your political beliefs regarding our status with the EU, whether you voted to leave or remain, it is hard to believe that anyone can be satisfied with the absolute shambles that has masqueraded for progress in the Brexit talks during the past 2 years, since the referendum.

It is especially hard to believe that anyone voted leave so that we could pay £40 billion to the EU with no agreement on future trading relationships, immigration or the Irish border problem. Similarly, it’s hard to believe that anyone voting remain would have wanted to remain part of such a dysfunctional and wasteful EU in which we have invested so heavily over several decades.

It would seem that both leavers and remainers share a common desire for change.

The EU, on the other hand, seem determined to maintain the EU just as it has been for so long, and Junker has even said that he wants more of the eastern European countries to join the EU. Does he not realise that such action would ensure that the EU would become swollen by even more nett beneficiaries, meaning that the few nett payees would be paying even more per capita to stay in the club?

Two years to achieve little more than threats and counter threats, plus capitulation on the UK’s behalf in terms of the £40 billion, without even an agreement to enjoy tariff-free sales across the European Union but, even worse, to leave British and European manufacturers wrestling with an unprecedented level of uncertainty and insecurity. This period has already cost dearly on both sides of the channel for nobody’s benefit. Juncker, Barnier, Tusk et al, seem determined to punish the UK for leaving the EU and the UK seem determined to give away any aces they hold in the hope of appealing to the EU’s ‘better nature’. What a joke! Well, it might be if it wasn’t such a serious issue. The more we try to offer the olive branch, the more the EU appear to see this as UK weakness to be exploited.

However this pans out, it is hard to see that there will be quick, if any, wins for UK food and drink manufacturers, especially those heavily dependent upon the importation of considerable quantities of raw materials in order to manufacture short shelf life products, with little opportunity to gain through quantities of exported, value-added, products.

Has the EU Ever Been a Level Playing Field?

As UK manufacturing companies face legislated annual minimum wage increases and pension contributions for their workforces, increased raw material costs and increased energy costs, Bulgaria still have a minimum wage barely above £1 per hour, Poland are still less than £3 per hour and Italy (one of the key EU players) have no minimum wage at all. Where is this level playing field, guys?

As regards many of the farmers, they are already suffering hardship in finding EU workers willing to work here for fruit or vegetable picking, or in other relatively low skilled repetitive occupations, not because our wages are not attractive enough, but because of the uncertainty created by our entire government’s in-fighting and procrastination over Brexit.

Where does all this leave the already pressured UK Manufacturing Sector?

Some of the changes like annual increases to minimum wage and pension contributions would probably have happened anyway, but the best I believe we can hope for is a relatively soft Brexit with no trading barriers between us and our EU partners and relatively free movement of personnel, so long as they have jobs to come to in the UK, even if, as looks highly likely, this ends up costing us a huge payment to the EU. It is difficult in any case to see how we can have a truly hard Brexit without a resolution to suitable arrangements between the North and the Republic of Ireland, Gibraltar and Spain and the UK Channel Islands, without significant border posts being reimplemented, which doubtless nobody wants.

One thing is certain in my mind, that UK manufacturers can expect no help from the UK government. The last time I can remember any legislation which actually helped UK food and drink manufacturers (hugely) was the introduction of Average Quantity Law back in 1979. This law as most people realise did nothing to benefit the consumer but everything to benefit the manufacturers who understood enough to take full advantage of it. Some companies we know saved millions of pounds per year through this one piece of legislation alone and have continued to do so since its inception, though sadly, many still fail to save as much as they should.

Make it Lean

It seems that with all these increasing costs and little or no opportunity to increase prices to retailers, food and drink manufacturers have no other option but to focus internal more so than they had ever done before to minimise cost and risk within their businesses, create consistently high-quality products and improve productivity/profitability.

Is this easy to achieve? Yes, but only with the right system, the right support at all manufacturing levels and effective training for the people involved to encourage the highest level of buy-in to the new order of performance optimisation. For this to work effectively, everyone, from the CEO, the planning department and throughout the operational levels to the factory floor, must be fully involved and on the same page. If this co-ordinated personal buy-in and training does not happen, then even the best and most immediate real-time paperless system will simply become an expensive white elephant.

Having had more than 40 years’ experience, focussed predominantly in the food and drink manufacturing sector, we have more experience than most in knowing what works well and what doesn’t in helping companies to achieve their Lean objectives. If you would like more information, please feel free to contact the author.

Roy Green, Harford Control

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