Business

Post-Brexit Britain will be no place for fat lazy management

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It is a significant development in the Brexit transition deal, agreed between David Davis and Michel Barnier this week, that the UK will be able to negotiate, sign, and ratify bilateral free trade agreements, to become effective the day that transition is over.

Although FTAs are not a prerequisite to mutually bountiful trade, they can act as a catalyst and ensure a smoother path, and are to therefore be encouraged.

Undoubtedly Britain can benefit from a Brexit bonus by winning all those tantalising export orders from willing customers around the globe that we hear about.

Only it will not be that easy. Being British is not enough – it never really was. Simply looking to our own markets will ultimately lead to little Britain, not Global Britain.

Having a business with a household name, even in different climes and far away places, will not cut it. Wrapping our services and products in the Union flag will not be good enough, and we are fooling ourselves if we think that’s all it takes.

Our businesses have to get smarter, more competitive, more intuitive, and become not just domestic market goddesses or European market champions, but true world-beaters.

That means great ideas and great products, with great design and reliable build quality. It means unique tailor-made services, insightful intelligence of customer needs, and keen pricing and punctual delivery.

And that’s just for starters.

To achieve this, our businesses will need the best management with the right skills, openness to fresh ideas, the perseverance to see the job through, and the cunning to deal legally with competitors that might not have too many scruples.

Trade secretary Liam Fox was not wrong when he said there would be no place for British management being lazy, fat and complacent.

If ever there was an example of what we need to learn, it is right before us now in the bid for ownership of British engineering firm GKN proposed by Melrose, the UK-listed company known as transformation experts.

This has been branded a hostile bid by the GKN management – but hostile to whom?

There is no doubt that GKN is a good company, one we can all be proud of. But is it a great company? Is it a world beater fit for purpose in the Brexit new world? The fact that GKN’s current management posted two profit warnings in 2017 suggests that the answer is no.

I don’t need to be an expert in every detail of GKN’s operations to work out that, if it has taken a bid by Melrose for GKN’s management to wake up and come forward with some face-saving ideas to stave off the bid, then the company’s current performance is clearly sub-optimal.

Why does it require a bid from Melrose to put £1bn towards tackling the pension liabilities, put at between £0.7-32.2bn?

Why did it take this crisis for GKN to think of selling its Driveline division to Dana, a direct US competitor, to prevent the Melrose bid? GKN has shouted about its e-vehicle technology, an area the UK government is keen to focus on, and one that Melrose is keen to invest in. It’s a technology we can export. And why now at a price of £800m – far below the management’s previous valuation of £2bn?

Surely if we are to achieve that Brexit bonus we all hear about, we need to add value in the UK – not sell to an overseas bidder?

There have been critics of the Melrose bid. Strangely they have waved the Union flag and talked about protecting British jobs, but Melrose is a British company, with a British board owned largely by British institutions.

What I’m looking to see is British businesses realise their international potential, and Melrose has a good track record of improving companies. If I know one thing that we can bank on after Brexit happens, it is that we shall need far more bids for the management of even average and well-respected companies to improve.

Being average and well-respected is not going to hack it in future.

If we are to prosper, we need more world-beaters. You can make your own mind up if GKN is currently world-beating or not – but what is certain is that our businesses, be they in financial services or manufacturing, need to get real to how challenging life is about to become.

We need more transformative managements, more shaking up of the past certainties, more enthusiasm to build companies that bring prosperity to Britain because they strive to be the best beyond Britain.

If Brexit does not raise our game internationally, Brexit will not mean Brexit.

Original Article

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