Tag Archives: cadbury

We never manufacture things any more…

A common refrain about the state of the world today is the economic emphasis on services rather than manufactured products – the cry that we don’t make ‘stuff’ anymore, we just import it all from low-cost countries and the only jobs are in shops or giving acupuncture to dogs with wealthy owners.

But take a look at the news about British car manufacturing in the Financial Times today. Production of cars and commerical vehicles has jumped to over 1.4m vehicles in 2010 – that’s up 28% on the year before.

But it’s still not like the good old days is it? The Rovers and British Leyland marques that dominated the world?

Well, the absolute peak of vehicle production in the UK was in 1970 when just over 2m units were produced. That’s right, just 2m. Not much more than today is it? And by 1980, car and commercial vehicle production in the UK had slumped to 1.3m units – less than today’s figures.

But they are all foreign brands, none of them are British anymore might seem the next response…

But those companies – like Nissan, Toyota, Honda, VW, GM, and Ford – are all employing local British workers to build their vehicles in Britain, so those companies are creating British jobs and investing in the industrial manufacturing heritage of the nation.

Who complains about Santander being one of the dominant high street banks today (and not British)? Or Green & Blacks chocolate being the dominant brand of organic confectionary (and not British)? Or that cup of (Indian) Tetley tea?

The world has certainly changed since the automotive industry was all about local design, local production, and local sales, but it can’t be said that Britain doesn’t build anything these days. Britain is still building and exporting, it’s just not always British brands that are exported from Britain.
Morris Oxford

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Robbing Peter to pay Paul

I know that the British government doesn’t have much control over private enterprise, and it’s not desirable for them to have strict control over what companies can get up to. Can you imagine the situation if companies had to ask permission of the government before borrowing, lending, or buying interests in other companies – we would be similar to China.

But, the recent situation with Cadbury seems quite bizarre.

If Cadbury shareholders believe they have now got a good price for their shares then there is nothing to stop them selling to Kraft. That is just business and the emotional response to the loss of another British company is actually not fair – though it’s worth remembering that the majority of shareholders are just funds (pension funds) and so they have no emotion anyway. If British people want to prevent foreign investors buying into Britain, then that restriction would apply in the opposite direction too… Britain would find itself unable to invest in foreign businesses as a reciprocal measure.

But, Kraft had to borrow money to finance the deal. And the British bank Royal Bank of Scotland (RBS) financed Kraft. And Royal Bank of Scotland is 84%-owned by the British government, and therefore by the British people. So the British public are effectively financing a deal to buy their favourite chocolate manufacturer.

The government is claiming that RBS can’t be controlled like a government department, that it needs to operate as a regular bank so it can return to profit and that’s mostly correct. But surely someone must have seen this public relations disaster looming on the horizon? Billy Bragg has initiated a campaign where he is refusing to pay income tax, until the government starts controlling the publicly-owned banks – particularly the hefty bonuses bankers are already starting to pay themselves again so soon after the economic collapse.

Bragg won’t change much with this campaign. Even he acknowledges that the government will get their tax from him in the end, but he is demonstrating that the British public are not stupid. They care about how the banks behave and when they own a share of those banks they have a right for their views to be respected.