Morning:
6°c
When Waterford Wedgwood went down, Robert Peston said, rightly, on the radio that the collapse of the pottery firm was a tragedy as it deprived Britain of a part of the manufacturing base it will need when the recession is over.
As I listened to this, I conjured up an image of someone sitting in Whitehall, a Grand Vizier responsible for driving us forward into the rest of the century, who, while all around us burned, was even now, dreaming up a bright future. Then I remembered my time as a reporter at Westminster and realised, sadly, that such a person almost certainly does not exist.
Governments do not do long-term strategy. There's no mileage in being the politician who whiles away the hours thinking of schemes to pass on to the next generation. How else to explain the lurching from one headline-grabbing subject to another? There's no consistency, no substance and to use a word beloved of a former Prime Minister, ultimately no delivery.
Occasionally, the mould is broken. So Michael Heseltine did inspire enough to ensure a blueprint for Docklands was created. At a meeting with one of those closely involved in the building of the Olympics legacy, it was striking that he spoke still of Heseltine's initiative in reverential terms. In urban regeneration terms, it remains the development against which others are judged.
But that is the exception. We let problems mount and do nothing. Too late, when the car crash occurs, because the vehicle is faulty, we react with bewilderment. So, we allow our flood defences to crumble and then we're shocked when floods occur.
Same with the economy. We've no industrial policy to speak of and then express our fear as one of the few large-scale manufacturers and employers we have left goes under. We abandoned the trade apprenticeships and now, guess what, we're having to resurrect the apprenticeship scheme because there's a shortage of skilled labour.
In Barrow-in-Furness, where I'm from, orders for nuclear submarines were held up while they searched far and wide for people capable of working on them.
Yet I remember seeing the section of the shipyard devoted to training, and I also recall its subsequent demolition.
For years, it didn't matter that we no longer made things because the City was more than picking up the slack. Now, though, that banking is taking such a hammering, we're left wondering what it is we do as an economy.
In many towns outside the M25 the main employers are the National Health Service, the town hall and the retail park. That's where we've reached as a nation.
It didn't happen overnight but suddenly, we're waking up to this reality. The Government is rushing through initiatives to encourage employers to take on apprentices and to get those who have been on the dole for more than six months back to work.
Unfortunately, we're also in the teeth of a recession so, rather like their imploring of banks to lend more (does anyone know a bank that hands out cash willy-nilly in a downturn?) the timing leaves a lot to be desired.
What will happen is that we will get through this crisis, the shoots of recovery will return (albeit later than Baroness Vadera suggested) and we will move on, until the next disaster when the alarm bells will ring again. I'd like to think there is a person in Whitehall who isn't laying out the croissants and orange juice for business leaders called in for yet another early-morning dressing-down, but who is looking ahead. I'm not holding my breath.
A trio it's all happening for
IN case you think there is no hope for manufacturing, there are businesses that show what can be achieved. Here are three:
• Hesco Bastion — makes the blast walls that protect bases in Iraq and Afghanistan, now moving the same technology into flood defences. Profits, sales and employees doubled last year. It won a $500 million Pentagon order as its technology was so far ahead of anything else.
• Fandstan Electric — does the clever bits for railway electrification here and abroad. Managed record profits in its latest figures and is in line to prosper from the rolling programme of electrification soon to start here (it was nearly 30 years ago that the old British Rail suggested such an upgrade and it got short shrift from the government of the day, but hey ho).
• Langley Holdings — mini-industrial conglomerate, makes cranes to cement-cooling machines. It reported in July 2008 that its order book was at a record level and realises the way to go is to find niches and become the best and strongest there is (exactly what we need to do as a country).
Debts stunt by struggling ventures leaves a bad taste
CELEBRITY chef Tom Aikens puts two indebted restaurants into administration, arranges for a private-equity firm to buy them back and carries on as normal, leaving suppliers £900,000 out of pocket.
Neither Tom's Kitchen nor his Chelsea dining room, Tom Aikens, ever closed. The 38-year-old remains as head chef and partner under the new arrangement. It's appalling and scandalous, and an identical trick is being pulled as you read this by another business and another group of creditors is being left high and dry.
Inevitably those that suffer are the small fry, the firms that can be easily replaced. Sadly, in a recession, there are plenty of businesses willing to step in and fill the void that has been left by a previous supplier.
Aikens' stunt was a form of “pre-pack”, where the sale of all or part of the business is negotiated prior to the appointment of administrators. Not surprisingly, the latter love these deals; for them, it really is easy money.
The Government should act and crack down. Jon Moulton, boss of Alchemy, the private-equity firm, is spot on when he says: “There is a legitimate reason for concern. Some pre-packs seem to have a reason; others feel more like a stitch-up than an administration.” Retail Week magazine is running a survey on its website and 70% of those voting have said they believe the wheeze is unfair. That ought to be the sort of poll result that ministers understand. If they really care about small businesses, as they claim, they must intervene. Now.
Big firms, not banks, should be the target
THE banks aren't playing ball, and the Government is getting in a right old two and eight about it.
First, as I mention elsewhere, there's a recession on, and banks don't normally like handing out cash to a business they suspect might go under.
But there are other reasons for the banks' reluctance to lend. They're called Basel 2 and the new IFRS accounting standards, and they require banks to maintain their capital ratios at higher levels.
The problem is that they can't issue more shares to raise cash because the markets are shot to bits, so they're cutting back on their lending.
The Government is wasting its time. Far better, if it really wants to help businesses and make a real difference, would be to move against those big companies that have extended their payment periods, thus crippling cash flows — or, as I also write here, aren't paying at all.
