The disposal of Cadbury is some kind of a marker. It was still a successful company and could have continued independently with no problem. It had a proud history which doesn’t need to be repeated here, but it also had a price. And that price was agreed by its board of directors who gained prodigiously from the sale. Cadbury’s loss of autonomy is surely the precursor of many cost reducing decisions taken at its new American headquarters without regard to the old Cadbury stakeholders, notably including its employees. Doubtless, in the end, Cadbury’s Bournville heritage will be preserved merely as yet another industrial museum, the dead remains of the once thriving industrial community. Such relics are strewn across the British landscape, commemorating our once pioneering roles in wool, cotton and silk textiles, machine tools, iron and steel, cycles, motor cycles, motor cars, trucks and buses, china and pottery and hundreds of other sectors where Britain was successful and achieved a strong position but then sold it off for the financial gain of the few and the bitter disadvantage of the many.
The juxtaposition of two editorials in a mainstream broadsheet makes interesting reading. The one argues that Gordon Brown’s advocacy of a tax on global financial transactions, the so called Tobin tax, suggests that the British government has, at long last, given up its slavish adherence to ‘the ideology that believes in deregulated, untaxed, ever-expanding global capital markets as an end in themselves’. The other argues that ‘China must be held to account for its political repression’. The connection between these two lies deep within the aforementioned ideology.
Justification of bank bonus payments proceeds apace. Despite having in effect gone bust last year, and being only rescued as a publicly quoted company because the Labour Government was so paranoid about nationalisation, the directors of the Royal Bank of Scotland now wish to set aside £1.5Bn of tax payers’ money for next year’s bonus payments. Their argument is that unless the bonuses are paid, their most talented people will leave and they won’t be able to recruit in this highly competitive field. But it’s been said before that it was precisely these individuals who broke the bank. So why should the tax payer worry if they leave and aren’t replaced?
The Financial Reporting Council (FRC)’s latest publication, “Proposed Reforms to the UK Corporate Governance Code”, is rather a waste of time. Changing an ineffectual and irrelevant code, even though at considerable expense to the tax payer, is hardly a matter of huge importance. And when the changes themselves are so slight they will have no impact at all on what is done, the significance is disappearingly small. But perhaps that was the intention.
Cadbury’s future as a British owned confectionery manufacturer seems doomed, for reasons discussed in ‘The Rise and Fall of Management’. Cadbury’s management may well have sought to fulfill their legal corporate duty, as defined in the 2006 Companies Act, to have regard to the company’s long term future and to the interests of employees and other stakeholders rather than just the shareholders. But, despite the law, shareholders’ interests are widely held to be paramount, and in the face of a hostile takeover bid, management are driven to simply maximizing the price that can be obtained for Cadbury shareholders. In the frenzy of this battle to the death, they most probably have little time for anything else, least of all making chocolate.
The announcement of around 1400 job losses at the Bombardier rail works in Derby signals the beginning of the end-of-life stage for another great British manufacturing industry, resulting more or less entirely from the incompetence and stupidity of the ‘madmen in authority’. Their latest incarnation, Transport Secretary Philip Hammond, was interviewed this morning on BBC Radio 4’s Today programme to explain why it was ‘correct’ to award the £1.4 billion Thameslink contract to the German company, Siemens, rather than to Bombardier, UK’s last rail producer. His explanation was based on his belief in ‘free trade and open markets’, although, to do him credit, he had noticed that ‘the Germans award contracts for trains to German builders’, and ‘the French routinely award contracts for trains to French train builders’. He described their approach as looking ‘more strategically at the support of the domestic supply chain’. Well what does he think the British government’s role is supposed to be? Is it to be looking after strategic British interests, or to promote an outmoded ideology that has proved time and again to be disastrous, in particular, to British manufacturing? Well, he and Vince Cable have written a letter about it to the Prime Minister! Good for them!
Continue reading The Bombardier Fiasco