If ever there were a telling example of the volatile nature of business – and the effect of globalisation on the corporate world – it was in the marking of two significant anniversaries in the West Midlands this month.
Five years ago, on February 3, 2009, the Birmingham Post organised an automotive summit at the ICC to highlight the critical state of the car industry as the worst downturn in living memory threatened to push Jaguar Land Rover over the edge of the cliff.
Then chief executive David Smith told the ICC summit: “In 25 years in the car industry, I have never experienced a time quite like this. Banks aren’t lending and consumers aren’t spending. We have suppliers going into bankruptcy every one or two days.”
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Professor David Bailey, then of Birmingham Business School, said: “We are facing an unprecedented situation. Without further action, we will see another 30,000 to 40,000 job losses.”
Contrast those words with today. Jaguar Land Rover is piling up profits at the rate of a remarkable £9.3 million a day, amassing earnings of £842 million alone in the third quarter of last year. It has created thousands of new jobs and a range of new models which seem to win awards on a virtually daily basis.
Four years ago, on February 2, 2010, the hostile multi billion-pound takeover of Cadbury’s was completed by Kraft, amid much wailing and gnashing of teeth by virtually everyone beyond the confines of the American processed cheese maker’s boardroom.
During the negotiations, while rivals Hershey waited in the wings, London Mayor Boris Johnson lambasted the sale of a world-famous British institution in typically florid style. “We face an appalling choice of succumbing either to Kraft, makers of the plastic flaps of orange cheese, or to Hershey, whose Hershey bars have been likened in flavour by independent experts to a mixture of soap powder and baby vomit,” harrumphed Boris.
The Boris vision proved a little premature in its doomsday scenario. Cadbury’s – or Mondelez International as they like to be known these days over at Bournville – recently announced a £75 million investment programme in the Birmingham chocolate factory, effectively securing the future of the plant for years to come.
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Jaguar Land Rover and Cadbury’s are two of the bigger examples of West Midland companies which have been forced to reinvent themselves against the backdrop of the most alarming economic downturn across the economy for decades. But they are hardly alone.
Over at Coleshill, presswork firm Sertec has doubled its turnover since 2009, created 150 new jobs and won Jaguar Land Rover’s top supplier award from around 1,200 worldwide.
But five years ago the firm made 170 jobs cuts, reduced wages across the board by 16 per cent and introduced short-time working and job-sharing to dig its way out of the recession.
By Christmas 2009, Aston-based Hills Numberplates had run up losses of £800,000, bank debts had piled up and the firm was struggling to stay afloat.
Managing director Richard Taffinder said: “The accountants called us a basket case. We had debts up to our eyeballs in a declining market.”
The firm launched a cost-cutting exercise which involved 24 redundancies and went back to basics, making numberplates rather than investing in hi-tech solutions.
Hills turned near £1 million losses into a £1 million profit and paid off £1.8 million of debt over a four-year period. Today, the firm is back to a 76-strong workforce and turnover has risen to £13 million.
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Jaguar Land Rover, Cadbury’s, Sertec and Hills are just four examples of West Midland businesses which successfully worked their way out of a recession which had rocked them to their very foundations. Their stories have made it into the public domain – many other companies simply got on with the task of survival without headlines or broadcast time.
In the case of JLR, Indian expertise and resources, courtesy of owners Tata, has oiled the wheels for the vehicle maker’s recovery from recession. In the case of Cadbury’s, Anerican-backed support has helped secure Birmingham jobs, for all the initial opposition to the Kraft takeover.
In the case of Sertec and Hills, local management took hard decisions to ensure that there was still a business standing once the recessionary clouds had dispersed.
The four are classic examples of firms which have come out of the downturn in much better shape than when they entered it, largely because they hit on the right formula for survival.
We can all get a little dewy-eyed and nostalgic about the days when Birmingham industry was run and owned by Birmingham industrialists. But those days are over at many firms – including JLR and Cadbury’s – and there’s no room for xenophobes or Little Englanders to mourn their passing.
Meanwhile, the likes of Sertec and Hills highlight the simple truth that he who dares wins, even if that daring involved unpleasant decisions and making difficult cutbacks.
Ultimately, the world never stays still, and that applies as much to the business sector as it does to any other walk of life. You are only ever as good as your last order if you’re a manufacturer, your last victory if you’re a football manager or your last story if you’re a journalist. To forget that principle is to invite disaster.