Monday, June 27, 2016

A new hope

As UK  voters opt for the EU exit, companies will need to take a new look at their marketing plans.

Although just 6% of UK businesses export products or services, removal of the protectionism of tariff walls and non-financial barriers to trade will create a more competitive market in the UK. Businesses that only trade in the UK should still be assessing their products, manufacturing costs and profitability to ensure they compete against a probable new wave of imports that now can enter the country duty free. One option is to evaluate not just against product cost, but also look at some form of arrangement with the manufacturers to represent their products in the UK and increase your market share. If the imported products can expand the product portfolio presented to the UK  market, may be the reverse will be true and there is an opportunity to sell your products back in return.  This is just one thing to look at to a] protect your local UK market, b] increase market share and c] find new markets for your products previously only sold to the UK  market.

The UK is also a net importer of goods from the EU and it is reasonable to assume that the producers in Germany, France, Italy, Spain and all the rest will continue to want to sell their products in the UK. The new arrangements will offer opportunities especially for the smaller companies in the EU to form partnerships at a business to business level. We once coined a phrase that businesses should 'Think Globally, Market Locally.' For small businesses [SMEs] setting up an operation in each, of say, the top 5 countries in the EU is an expensive thing to do. But partnering with an existing business immediately gives that 'local' presence. 

Generally speaking the benefits of an independent UK  should appeal more to SMEs than big companies. Big companies prefer dealing with other big organisations, they have company headquarters where it is most tax efficient, do deals with other big organisations, such as government, lobby Brussel's law makers, trade unions and minimise or eliminate  tax due. A UK partner company offer EU based business opportunities too and crucially an English speaking operation as a native language that is used so extensively in global business.

Rather than the gloom and doom prophecies of proponents of remaining in the EU, there is now a new hope. Or in the words attributed to an earlier advocate of a European political union - "Europe today, tomorrow the world."








Monday, June 20, 2016

EU - It's time to go

With just a few days until the EU Referendum, the main UK papers have now published their editorial positions, whether opting for 'In''or 'Out'. Last night in Milton Keynes the Prime Minister in the words of the Independent got "absolutely savaged". I  had applied to the BBC for a ticket to be part of that  TV audience which incidentally demanded a significant amount of personal detail on the application, but they didn't call. Denied the opportunity to contribute to the great debate via television, through the platform of this blog  I offer my reasons why Britain should leave the EU,


1. The EU - What is it and where is it heading - a free trade zone and customs union, or a super state?
The 'Remain' campaign's over arching reason for staying in the EU rests on the supposed economic  benefits of being a member of a single market of 28 countries with 5 million people. Leaving this vast market they say will lead to a recession, a big hole in the UK  budget, which will have to be filled by increased taxation and job losses. In short it is primarily for economic reasons the UK should remain within this tariff barrier. But the ambitions of the EU go way beyond selling British goods to the EU, and buying theirs in return.

The EU has a much loftier goal than creating  a simple customs union that the Remain campaign are banking on by frightening the electorate not to vote to leave at the peril of losing their jobs, lower pay, paying more for goods in general and paying more tax. In Brussels it is referred to as The European Project.  It is a long term project that its architects envisage driving towards a European superstate. Institutions, structures, laws and the trappings of a superstate are step by step being put in place. Most are already set up. The EU already has a parliament, a civil service, courts, a flag and a national anthem, but there are at least two big issues yet to be implemented. The EU is well aware that there is little popular support or interest in a superstate and crucially lacks a unifying common language. As more eastern states have joined, so have people with German as their mother tongue - 100 million of the total EU population of 500 million - has increased. Mrs Merkel's Christian Democratic Union  party has already proposed the working language of Europe should be German. And the other big issue? A German controlled European army!

When voting for remaining in the EU, it is not voting for some cosy business club set up to keep the rest of the world out and protecting inefficient EU producers  from global competition thanks to  tariff barriers, it is voting for a German dominated United States of Europe!

2. The European Project
Voting to remain in the EU is unlikely to be a vote to preserve the status quo - even the Remain speakers recognise it needs reform and argue that there is more chance of doing this within the organisation than outside. Unfortunately the British experience of reform actually goes to the sacred held tenets of EU faith. Free movement of labour being just one that is a current issue. The British have little or no appetite for a massive federal super state - especially a state that rules by directive. One that legislates for eventualities they may never occur or are not a problem. The British press has long taken great delight in lampooning directives that seek to specify the shape, size, colour etc of fruit and vegetables such as the legal curvature of a banana. During the second world war German officers handbooks on military matters included the authority to raise the left arm in ritualistic salute to the Fuhrer should the right have been lost in battle. And here is a serious problem - the British not only think this obsession with rules and regulations is authoritarian, but a huge joke. The laws that insisted vegetables and goods in general could not be sold by Imperial measures anymore which gave rise to the 'Metric Martyrs' and buying milk in 2.72 litre containers, yet still drinking pints of beer in the pub, buying petrol in litres but driving distances in miles. Despite 40 years or so of metrication, even people not born when it came in, still talk of their height in feet and inches, talk about 'going the extra mile' and drinking a pint or having the other half - the old measures were more related to human experience and are deeply entrenched in our language and culture . A cricket pitch at 22 yards, also known as a chain or in Euro speak 20.1168 meters would never have been proposed by a Eurocrat, but then again few European countries play cricket, none at world class. The British way is just different, so why on earth join the club in the first case? The British were never given the choice? We have long memories and now its payback time.


3. Towards European domination
The British have also had a soft spot for the little guy, especially when pitched against the odds. In football we applaud the little village team of tradesmen and shop keepers who knock an expensively assembled top league team out of the FA Cup. The outsider who has no chance against the professionals, men like 'Eddie the Eagle' who competed in a winter Olympics in ski jumping against the sporting elite of the ski world. Even more so that he wore pebble lens glasses and looked gawky and awkward, but we cheered on the audacity and sheer nerve to even compete. He didn't get anywhere near the winners rostrum, but we still remember him, long after all the famous names have been forgotten. It is not just in sport where we like people and teams who defy the odds, but on he field of battle too. Shakespeare's Henry V captures the mood with 20,000 well equipped French lined up against a tired, sick and depleted English force out numbered more than 3 to one. And yet despite  the superiority of men and armour Agincourt was a famous English victory over the French. Centuries later it was another  English army in retreat at Dunkirk. France had fallen to the armoured might of the German  Panzer tanks and Stukah dive bombers and with the British Expeditionary Force pushed back to the Channel coast the British were the next on Hitler's 'European Tour. In later years some clothing vendor came up with a commemorative T-Shirt based on the style popular for a while celebrating a major pop tour with the dates and venues of the gigs. The "Adolph Hitler  European Tour 1939 -1945."It listed the countries invaded - September 1939 - Poland, April 1940 -Norway, May 1940 - Luxembourg, May 1940 - Belgium, May 1940 - France, September 1940 - England Cancelled, April 1941 - Yugoslavia, May 1941 - Greece, June 1941 - Crete, August 1942 - Russia. Cancelled, July 1945 - The Bunker, Berlin. After Dunkirk Churchill made his famous, "We shall fight them on the beaches .. speech to the House of Commons. In 1942 Hitler had a report prepared by a committee of bankers and academics- Europaische Wirtschafts Gemeinschaft – which translates to European Economic Community [EEC] for the post war administration of Europe which he believed Germany would win. There were many echoes of this document in the Treaty of Rome in 1945.

4. EU - The democratic deficit 
One serious flaw with today's EU is that the directives are not initiated by elected parliamentary representatives, but emanate from unelected bureaucrats. People not in the public eye and not accountable to the people they effectively rule. Those MEPs who are elected have no power to stop or initiate directives. They merely a fake parliament to give an impression of democracy. The voter turnout is very low at Euro elections and in Britain UKIP has the biggest elected group of MEPs.


5. The EU - Does it work?
Finally does this expensive, slow moving, wasteful, corrupt and dictatorial organisation work? There is some dispute as to whether the books have been signed off in the last 20 years. Unlike commercial organisations an EU funded Court of Auditors checks the accounts and has reported on wasteful use of funds by recipient countries and cases of fraud.

It is on the slide as the share of world trade continue's to decline.

It has no idea what to do about the millions of refugees entering its borders.

The euro has caused great austerity to countries like Greece.

It is not democratic - the bureaucrats are not elected or electable.

It is outdated, inward looking, stifles enterprise and inefficient ...

...... it is time to say goodbye.


Tuesday, June 14, 2016

EU - In or Out - what is best for business?

The referendum campaigning shifted ground last week to focus on whether membership or independence was best for business. And associated with this the question of immigration - is that beneficial or a drain on the economy?

The 'Remain' side had focussed strongly on the economy until then which they maintained would be in better shape by remaining in the EU with free movement of people an essential requirement for having enough people in the work force. The 'Leave' side had suggested that the EU and its fondness for masses of new legislation year after year was itself an impediment to business success, not to the global business so much as to the 99% of  the rest - the small and medium size companies who mainly traded in the UK.

Another argument sometimes brought up to illustrate the good works of the EU is that the continent has been kept  at peace for the last half century. Well if you ignore the Balkans,  Ukraine,   terrorist campaigns and European expeditionary wars in the Middle East, Africa, the South Atlantic etc, western Europe has not experienced anything on the scale of the two world wars of the 20th Century. It might be more realistic to recognised the key role of NATO - The North Atlantic Treaty Organisation and in particular the major participation of the USA. Looking to the USA has been more the traditional role of Britain which has for centuries looked across the oceans for business and the USA is Britain's biggest export market. But if the EU  has been so successful in maintaining the peace, give or take local and regional problems, why  does Europe need its own army and why is this not being announced until after the referendum?

Why does the EU need an army when NATO already exists to provide security in the area? Who, what or where is the enemy against which the army will be deployed should the worse happen? A lot of questions at a time when the attacks are homeland terrorism requiring different response than a modern mechanised army. The French military seem alarmed at the plans for a Euro army and there are  reports of  Germany being secretly engaged on such a purpose. Of course this will not be admitted true or not, but this is exactly what happened after the first world war as warships, armour and air power were secretly built up. My parents generation lived through the results of this and the older generation instinctively still harbours concerns, so not surprising the older voters are showing the greatest tendency to leave the EU  before it is too late. Out of respect for the generation that gave so much to free European countries to regain their sovereignty and to ensure Britain remained free a vote to leave is  obvious choice. Hitler had a vision for Europe, for a few years in the early 1940s Germany ruled the continent. The EU has drawn up familiar sounding plans in their vision for Europe all the more disturbing  when the voters have scant knowledge of who is operating the levers of power. And what's more we can't vote them out of office. Controlling fishing and agriculture, determining the size of carrots and straightness of bananas is one thing. Controlling a Euro army is a chilling prospect.

Wednesday, June 08, 2016

The EU - a single market or 28 individual country markets?

I  have dealt with a number of companies during several decades in marketing and consultancy and observed how they variously trade with other countries.

The main thrust of the 'Remain' campaign in the upcoming referendum on EU  membership seems to increasingly rest on the assertion for the UK  economy flourishing within the EU or with all sorts of upheaval and disaster predicted should the UK quit the EU. Even Government statistics show that despite expanding in membership, the EU continues to lose share of global GDP falling from 30% in 1993 to 24% in 2013. What's more the proportion of UK trade with the EU has fallen consistently since 1999, while trade with non-EU countries is growing.

So what about this famous single market of 500 million customers that we will somehow be excluded from selling to? But what about the quality of these millions of customers. Are they in fact even customers or prospects at all. If the single market is so essential why are countries like Greece all but broke? Why if it makes goods cheaper do the British pay more for cars, many food items, travel and loads more? The truth is that there are not 28 countries waiting to buy British goods, but probably only a few and of these only Germany that is a serious world player. The rest range from former USSR occupied countries, basket case economies and over regulated inefficient old fashioned economies. The reason the EU bag of all sorts is destined to fail is the rest of the world is surging ahead.

Does the UK want to stay on a sinking ship or take to the life boats?

Lets consider three broad categories of companies operating in the UK:

  1. Country divisions of major global companies.
  2. UK based companies that export products or services.
  3. UK companies that do not export at all.
The global companies tend to divide up the world into huge areas and Europe is not generally one of them but tucked in with the Middle East and Africa. American companies I  have been involved with are surprised that Europe is not one place but a collection of countries of varying size, varying customs and their own languages! One American boss I  reported to would phone late at night from his west coast office to tell me he was coming to Europe. Oh where? Europe! One major German electrical company I dealt with used English as its company language. Outposts of the corporate empire find their marketing dictated from a head office in America or Japan. Inter company transfer prices become more important than market prices and where goods originate or are invoiced employs the time of plenty of book keepers.

For the UK based companies who have some export business there are not many countries in Europe they usually need to bother about. Traditional markets such as America and Canada, the former British colonies, the Middle East, Far East and Australia and New Zealand often use British Standards, speak English and like British products. As for Europe, Germany, France, Scandinavia, Benelux, Italy and possibly Spain and Portugal  are enough to take on.

The last group, which in terms of numbers of companies is large, are small businesses, often local and for them the EU is just a source of unwanted rules, regulations and red tape.

 



Thursday, June 02, 2016

Fortress Europe or global free trade? In or out?

Not long to the UK Referendum to remain in the EU or leave. Our essay looks at the back story.

Whichever route the voters choose could have an impact on marketing along with a lot of other things. In recent blogs we have looked at some key issues such as product specifications with regard to standards compliance, price models from inside or outside tariff barriers and what customers actually want from your product.

This blog takes a quick look at why Britain is often at odds with the EU and why our history and culture has taken us down another path. So are the politicians trying to fit a square peg into a round hole? Is Britain suited to the rather different aims and ambitions and attitudes of our continental neighbours in Europe, or should Britain return to what has worked so well in the past?

The UK is the world's 9th largest exporting economy  with the top destinations for UK  exports being, the USA ($51 billion), Germany ($46.5b), The Netherlands ($34.2b), Switzerland ($33.6 b) and France ($27 b). Interestingly the USA  is not a member of the EU  single market and the UK  does not have a trade agreement with the USA either.  Switzerland is not in the EU either  but ranks highly in global indexes of top performing economies, especially in terms of freedom and economic innovation. Arguably the Netherlands is over stated due to the way the EU counts goods forwarded via Rotterdam port as exports from the UK and other European countries, whereas much is exported to the rest of the world. So although  the 'in' or 'out' decision might cause some re-arrangements of how the UK trades with other countries,  it unlikely to result in the total disaster the campaigners predict. The UK is 3rd biggest of Germany's export markets, selling more than twice as much to us as we sell to them. Not surprisingly Germany, France and the UK  are not only the EU's biggest economies, but the paymasters for the other 25 EU countries too. The EU's importance to UK trade is in decline and shrinking all the time, from 55% in 1999 to 44% last year and allowing for the Rotterdam figures probably under 40% and according to some studies less than before Britain joined in 1973.

Worryingly we see signs of civil unrest in both Germany, protesting about immigration and in France, protesting about some modest changes to labour laws. The violent street protests are disturbing to us, because by and large this is not the British way. The real issue for Europe now, is not how the UK will survive outside the EU, or more likely prosper, but what happens to the EU itself? And what if voters in Germany and France call a halt to supporting the rest of the member states and choose to exit as well? Without doubt there remain big cultural differences between our island race and the continentals. Britain's long existence as a maritime nation put us on a different path centuries ago. A direction that  promoted freedom, empowered merchant adventurers and the founding of colonies where trade followed the flag. By 1922 the 'Empire on which the sun never sets' ruled over one fifth of the world's population at that time and controlled around a quarter of the earth's total land mass. Although the Empire was largely dismantled by peaceful transition to local populations, the British had created and left a viable infra structure that included a democratic form of government, a professional civil service, legal systems, cities,  railways and ports and established English as the global language of business, not just in the legacy Commonwealth nations, but globally.

While Britain looked outwards to the world where trade flourished, the continent was going through often turbulent times. In England enterprising innovators and entrepreneurs had created the Industrial Revolution [between 1760 to 1840] which provided new forms of employment and churned out mass produced products to sell to a global, English speaking world. While England developed industry and trade, France embarked on bloody revolution, leading eventually to Napoleon and a military bid for domination of the continent. Dismissing the English as 'a nation of shop keepers', his ill fated bid for domination of the continent was to lead to his Waterloo. An ambition to somehow recreate the Holy Roman Empire was also taken up by the Kaiser and Hitler in due course. Britain largely took the line of helping maintain the balance of power on the continent, leaving Britain to rule and influence the rest of the world. The two world wars of the 20th Century seriously damaged both British and European economies, rebuilt with significant aid to Europe by the Americans after WW2. Britain too needed help to rebuild with much of its infra structure worn out from 6 intensive years of global war but the socialist government made things worse - even requiring food rationing. For the British people WW2  might have ended the long pre-war economic slump of the 1930's, the war itself and then the austerity of the early 1950's. With the 1960's came the dismantling of the British Empire.  Meanwhile  Germany boosted by Marshall Aid and with a new open approach to freedom and enterprise was enjoying an 'economic miracle'. The Suez Campaign of 1956 was a low point with Britain forced to concede to the American super power it had now become. The EEC suddenly began to look more interesting as a counter to the USA and USSR super powers, a replacement for the Empire and to hope some of the German economic miracle might rebuild Britain too.

At that time it was still rare for the average British citizen to travel to what was still known as the continent. Office worker and labourer alike opted for either a brash seaside resort such as Blackpool or the genteel pleasures of Eastbourne. Foreigners started across the English Channel, their water was apparently undrinkable, there were toilets in the streets and worst of all they spoke funny. General De Gaulle was the highest ranking French officer to escape the German invasion of France in May 1940 and while in London, Churchill kind of invented him and his trademark pillbox cap straight out of the Foreign Legion, as the Leader of the Free French, quite an elevation for a tank commander. But it was De Gaulle who went on to become President of France and in that role vetoed the British application to join the Common Market. His short tenure in London had given him sufficient insight into the British way of things to figure membership would not sit easily with the continental countries. The British who had ventured abroad were more likely to be on tour with a British Expeditionary Force to participate in the latest continental war. A war that gave rise to the term - 'Dunkirk Spirit'. So what's that all about then? Well, in the dark days of May to June 1940 the remnants of the once best equipped ever British Expeditionary Force was in retreat via the otherwise unremarkable channel port of Dunkirk. Most of the British Army and some French over 338,226 in all, were somehow spirited away by a flotilla of Navy vessels and best of all pleasure boats and cabin cruisers from the River Thames! All the while German Stuka dive bombers attacked and trashed Dunkirk. What was a massive defeat was somehow turned into victory by the British news services, survivors were welcomed home as heroes. And in almost the darkest hour the average Briton celebrated, not just the deliverance of our men, but the exit of the French from WW2.That was the origin of the 'Dunkirk Spirit.'



By the 1950's and into the 60's and 70's  trade unions run by old communists paralysed British industry with wave after wave of strikes, low productivity, under investment, over staffing and general industrial malaise. Eventually Ted Heath the UK  negotiator who carried on negotiating when everyone else had lost interest, signed the UK up to the Common Market. Stripped of major natural assets  such as the fish rich North Sea [oil and gas too it turned out later] , compelled to support inefficient European farmers, to introduce decimal money and adopt a huge raft of largely needless legislation it soon became apparent that this was a club we should never have joined. But around this time, cheap package holidays to Spain began to replace the dubious delights of Blackpool in August for the typical British worker. Cheap booze and fags, all day and all night drinking and better still - sunshine - proved more of a lure than the decaying former grandness of Britain's victorian resorts. Even better you could get a British Visitors Passport from the Post Office for a mere seven shillings and sixpence and collect 200 fags and a couple of bottles of spirits as you passed 'go' in the duty free shops. The Spanish resorts quickly adapted to the British preference for all day fried breakfasts, tea like mother makes and four ale bars. Sod the piers and Punch and Judy and the half built hotels when you could get drunk and sun burned for a few a Pesatas.

But by the time Margaret Thatcher swept into power, Britain had become the 'basket case' of Europe. Being members of what was becoming the EU, or European Project seemed to have done nothing to improve the decline. It took another war, this time in the remote Falkland Islands miles away in the South Atlantic which had been invaded by another soldier in fancy uniform, this time an Argentine. On the back of this offshore and even unlikely military success, the unions were taken on and defeated on the home front, lack lustre state businesses were privatised, restrictions were swept away, the economy turned round and the 'Iron Lady' turned her sights next on Brussels and the bureaucratic EU. She simply banged her handbag on a desk and demanded 'her money back' - well the British people's actually. It was probably the last good deal anyone from Britain ever did.