What’s the Future for UK Food Industry after Brexit?
In recent months I have been privileged to write about a number of important topics affecting the UK food industry, all of which revolve around improving and sustaining a competitive edge amidst increasing uncertainty and increased competition, not to mention the ever increasing supermarket demands for greater variety, more consistent quality, total compliance, shorter batch runs, with few if any price increases allowed.
A few months ago, I wrote about the potential effects of Brexit but, nearly a year on from the vote, no politicians really seems to have a clue about what’s going on, what the likely outcomes will be and what effect this will have on jobs, trading partners abroad, and so on. It seems the only certainty is that the uncertainty continues.
The rhetoric has certainly become more heated on both sides of the channel but still no real information. The PFA (plucked from air) £50 billion divorce fee, would be a totally ludicrous imposition to be placed upon the UK for leaving the EU, especially when they export far more to us than we do to them. Though far from an expert in divorce matters I can’t imagine any divorce judge awarding £50 billion to one estranged party with nothing to the other.
Furthermore, there is absolutely no EU Treaty that I have been able to find which dictates that a member state leaving the EU would need to pay any divorce settlement. This £50 billion appears to be made up of the cost of so-called on-going projects, the costs of moving certain EU entities abroad which are currently housed in London, such as the European Medicines Agency and EU MEPs’ pensions. Why on earth we should be lumbered with any of this is totally beyond me, especially as we are already net contributors (one of only ten amongst 28) to the tune of nearly £10 billion per year. What’s wrong for example with leaving the EMA where it is in London? Just because we are leaving the EU doesn’t mean that we are not going to continue to be good Europeans.
The EU in any case would be unwise to risk damaging relationships by the imposition of a £50 billion exit fee or anything like it, especially when, by the lowest estimates, the EU currently exports some £60 billion more per year to the UK than we export to them.
However, what’s all this got to do with the food industry? Well, quite a lot. According to one article, “The UK currently ranks as the second worst country for productivity amongst the industrialised nations and, if we could raise productivity to the levels of the USA, each household would be £21,000 per year better off.” In my earlier Brexit article, I highlighted the differences in minimum wage rates across the EU member states and the fact that, whilst, at the time ours was £7.20 per hour, the minimum wage in Bulgaria was circa £1 per hour, it is easy to see potential problems on the horizon. It appears we are, to use a well-worn cliché, caught between a rock and a hard place:- on the one hand, we are apparently the second worst of the industrialised nations when it comes to productivity and, on the other, countries like Bulgaria have minimum labour rates around 13% of our own.
Doubtless, automation will help in some sectors, but to see the real benefits of automation often requires long batch runs. The trend for food manufacturers supplying supermarkets, however, is for shorter and shorter batch runs, which might suggest that much of the industry will therefore need to remain labour intensive, increasing the risk from lower priced imports originating within lower waged economies. Interestingly, Bulgaria is one of the few countries within the EU that buys more from us than we buy from them, but only just, and of course that could easily change, given the differentials in wage rates.
Whether there is a justification to automate processes or for certain processes to remain somewhat manually intensive, we still need to increase efficiency at every opportunity and reduce waste. This surely means picking the most appropriate tools and techniques for the right operations, but also doing more ‘Right First Time’ and thereby eliminating rework.
It would be fair to say that much has already changed. When I first came into the food and drinks industry some 50 years ago, many companies actually had rework lines due to the frequency of errors. At that time, the industry was largely focussed upon making products as quickly as possible and inspecting out defects before despatch. This all too frequently resulted in making the wrong products or applying the wrong labels (insufficient application of Right First Time) and sorting/reworking of batches returned as rejections, often due to the inadequacies of quality inspection routines.
Most companies have long since accepted that 100% inspection after production, does not work (unless through an automated vision system) and that a shift to quality assurance and Right First Time methodologies is the most successful and proven approach. There are still a few pockets of resistance where manual inspection is applied but these are gradually giving way to quality assurance techniques whereby more credence is given to accurate line set-up, followed by applicable sampling routines to ensure that the process remains ‘in control’.
In the last couple of articles I’ve touched upon some of the tools used for Lean Manufacturing, including Lean Six Sigma, Short Interval Control and Value Stream Mapping and we will revisit some of these in more detail during next month’s article, but it is quite obvious now to most industry professionals that, Brexit or no Brexit, the problems for UK food and drinks manufacturers will remain the same, i.e. optimising efficiency and minimising waste, whilst simultaneously achieving total compliance and thereby reducing unit costs.
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