That Twitch Is Back

In 1986 I started working for a Freight Forwarding company, it is a service industry that you can really take as being a gauge on a nations manufacturing health.  Everything that companies in Scotland manufacture for export have to get to their final destination. It is our job to get that cargo to the consignee at the cheapest price to help ensure that the manufacturer remains competitive.

I started off in the European Road Freight department, this was prior to the formation of the EU Customs union and back then every shipment had to be accompanied by a SAD (C88) Document that contained 54 boxes of information required by UK Customs.  Not every box needed to be completed it was dependent on the type of cargo and its relevant customs control, but it took time.  The company I worked for was a mid sized freight forwarder moving about 10 – 12 trailers of groupage cargo (small shipments of a pallet or box to 10 – 12 pallets, shipments where the costs of a full trailer aren’t warranted).

Due to the time taken to collect all these small shipments, calculate the most economical load and then prepare the customs documents & trailer manifest. Most of the loads left our depot on a Friday.  I hated Fridays! For the 1st 7 years of my working life a Friday meant an 8 am start and a god known when finish.  9 or even 10 pm finish was not unknown. However it did mean that by the time you got home you were too knackered to go out with your mates. So yes the job did rob me of a large part of my early working years.  That said the wages were absolutely terrible and compared to my friends I was on a pittance.

Since then I have moved on to work on many different types of shipping and currently a majority of that is Seafreight.  Moving containers and chartering ships for project cargo that move all over the world.  You could say the trade that happens because of the EU agreements with other countries.  People don’t realise that every week we have vessels leaving the UK with containers to every major nation in the world.  Every week there are 1000’s of of containers leaving for China, India, Brazil, Philippines, Mexico, Cameroon etc.. You get the point.

Right now we have no restrictions on our trade just now, the only thing holding us back is the fact that manufacturing in this country has been shrinking for decades.  In Scotland the amount of exporting companies I have seen disappear is spine chilling. The list is too long to mention but here is some..

British Alcan, Craig Nichol, Tullis Russell, Inveresk Paper, Cape Industrial Panels, Flexible Ducting, McLellan Rubber, Carron Ironworks …

The list is a very long one, in fact if The Proclaimers had bothered their collective arses their song Letter From America would be at least 500 verses long!  In truth I have forgotten far more names than I can remember, I’m sure readers could add to this list 100 times over.

What I can say is that much of Scotland’s manufacturing has been to feed into the UK. Products we make are shipped down south and incorporated or used in the production of other goods.  Or the goods are sold internationally by headquarters down south and dispatched from the factory in Scotland.  We have been the industrial heart but never what we should have been.  Orders would have been received in from head office, it was only our job to make and pack the stuff.  An other consequence we have suffered from due to the declining nature of manufacturing is companies that have several plants throughout the UK consolidate jobs down south where the head office and manufacturing is, the Scottish plant is only a production facility and expendable.  Of course these plants never re-open.

This industrial decline has been on going for the last 40 years, since the days when Thatcher decided that the Industrialists of the UK should become Finalcialists (I know its not a proper word!) But my point is that 2nd & 3rd generation business owners were convinced that it was easier to close a plant, offshore the production and take their wealth to the city. As a result much of the technical innovation and invention that Scots companies achieved was bought up, shut down and licensed off. All that wealth of knowledge lost.

We still manufacture, we still produce unfortunately much of that is controlled by global companies.. Whisky is controlled by Diageo, a lot of the oil & gas engineering by big US corporations such as Halliburton, GE etc.. The sad thing I see is that these companies use big global freight forwarders and in my industry the small guys are squeezed out. That is an argument for another day. What I’m trying to say is that in Scotland we need to end the rot now while we still have a base we can capitalise on.

As the UK is looking at a hard Brexit which means that we will be outside the customs union.  Yes, my right eye is twitching like Chief Inspector Dreyfus at the mere mention of Clouseau. We are heading back to a system where every single shipment to the EU will need to be cleared for export.  It may be fully computerised now but we are still looking to add £30 – £50 per shipment in administration costs. The UK Government have closed most of its customs offices and trying to get anything resolved is like phoning a BT call centre in Mumbai.  You speak to someone at a central hub who will tell you that the computer says No and the shipment needs to be delayed.  When you add a layer of bureaucratic control they only guarantee is delay and cost making our products less competitive. As an example small online retailers selling goods under £200 to the EU will now have lost their market.

What can we do?  There is no panacea for the Scottish manufacturing and as a result the Scottish Economy.  We don’t control any levers at the moment to be anything other than a feeder region of the UK and we never will.  Scotland doesn’t have car plants or any other major manufacturing plants and it never will.  It is not in the UK Governments interests to see a new Train manufacturing facility in somewhere like Fife. What we have is due to our natural resources, Whisky, Renewables & Oil.

Our only option left is to stay in the EU and gain our own access to the world on the back of their trade deals. We can then start to invest in our technology to advance our production and export them to the world.  We need to look at what the world will need, clean energy, clean water, food and get prepared.  We can’t continue to wait on England deciding what it wants to do and make the bits they don’t want to make themselves.  In 10 years time we could be like Denmark, Belgium, Holland and many other small, green manufacturing countries of we can be on a Brexit decline that has no silver lining. If we can’t trade with the world with the preferential conditions we already have thanks to the EU, we never will.  Brexit is nothing but a sham to cover up the absolute failure of Thatcher’s policies that the Tories have perpetually pushed.

I am going to leave you with a thought.  Right now the UK exports about 75,000 tonnes of lamb to the EU. Much of this is from Scotland.  If the UK has to trade under WTO rules that drops to a quota system with a cap of 200 tonnes.  The UK is planning to replace EU trade with former common wealth countries such as New Zealand and Australia. 2 Countries that have more lamb than we have.  Not exactly a great start.  OK. So they will look to replace the EU with other markets such as the Middle East or West Africa or maybe USA. Here is another problem.  There are virtually no vessels capable of carrying live cattle. In the middle east there are a few but they are inhumane & disease ridden.  I’m pretty sure that Scottish farmers won’t want their produce’s reputation to be tainted by 20+ days at sea, deaths in transit and sick animals arriving at the destination only to be rejected by port health officials.

So that leaves the option of slaughtering the animals in the UK and exporting them to various destinations by means of refrigerated containers.  The problem here is logistics. There is not enough refrigerated equipment available and for everyone you export you need one in return.  The Middle East and West Africa cant return these with product so a large proportion would have to be returned empty. To do this most or all of the costs will be borne against the export produce making it uncompetitive against local produce.  If I was a pro Brexit farmer I would be worried that the value of my livestock is going to drop and after Brexit farmers may soon have to think about culling instead of feeding animals that they wont be able to sell.

If we continue on the Brexit road you may see cheap meat for a few months as farmers dump their stock but could that be the feast before the famine?

 

 

 

 

 

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