August 30, 2017
Derek Miller, co-owner of Glasgow-based Scope Bathrooms, shares his view on the possible consequences of our exit from the EU
Anyone who is familiar with my columns will be aware that I am not slow to comment on current affairs and the impact of political decisions on industry in general, and the KBB sector in particular.
I have always been very interested in politics. Amazingly, my first political leanings were well to the left and my Eighties student days saw me take to the streets in support of numerous right-on causes.
On leaving university, I chased the yuppie ideal, had a Damascene conversion, and became a robust supporter of Margaret Thatcher which, in Scotland at that time, could have seen me burnt at the stake.
In the three decades since, my outlook has softened and settled into a sort of centre-right liberal conservatism. Indeed, I was almost certainly the only Tory hanging around the mosh pit at the recent Green Day gig at Hyde Park.
Unlike many Conservatives, I voted to remain in the EU. Not out of a love of all things European, but as someone who was sick and tired of unnecessary change and who simply craved economic stability. I also believe that European immigrants have played a major role in the UK’s economic revival, and would welcome more of them, not fewer.
I am in no doubt whatsoever that we have shot ourselves in the economic foot by choosing Brexit. The resulting shambles has cost us a good Prime Minister and Chancellor (Cameron and Osborne) and replaced them with weaker individuals in May and Hammond (Theresa and Philip that is, not James and Richard!).
The Brexit process, led by the hopelessly-out-of-his-depth David Davis, has debacle written all over it. Boris the Joker is our representative on the international stage, and worst of all, an unnecessary general election has left Theresa May looking like yesterday’s woman, with no real mandate to govern, far less lead us into a bright, post-EU dawn.
We now have the faintly ridiculous situation whereby lifelong Lefty protestor Jeremy Corbyn could be just one emergency election away from swapping his Islington council flat for Number 10. Mr Corbyn, who undoubtedly comes over as a rather nice chap, has played a blindingly clever hand in developing a compassionate image just at the time when Mrs May appears to have lost touch with the needs of our troubled nation.
However, his avuncular populism masks the harsh reality of his hard left credentials, and his Chancellor-in-waiting, John McDonnell, is a genuine old-school Marxist, who would renationalise everything and look to become a modern-day Robin Hood. Jezza may well have become the darling of the nation’s youth, dazzling them at Glastonbury, but as Prime Minister, would surely be an unmitigated disaster for UK business.
So, what has all this to do with the bathroom industry, I hear you all ask? The answer is simple: everything! Our industry is being buffeted by outside factors over which it has no control.
The first major impact of the current political calamity was the 7.5 to 10% price increases after the pound crashed against both the euro and the dollar. All our prices escalated in January, with every likelihood of similar increases at the end of 2017, and surely worse to come.
The chances of David Davis securing a trade deal with the EU are becoming slimmer by the day. Brexiteer friends of mine (yes, I do have some) told me that EU countries would roll over to give Britain a deal, as the needs of big business would take precedence. I thought that was nonsense before the referendum and nothing has happened to change my mind since. It is inconceivable that all 27 EU states will find common ground over the next two years. Indeed, the first six months are being devoted to calculating how much we will be made to pay as a ‘divorce settlement’, only after which will we get to discuss a trade deal.
With Theresa May threatening to play hard ball and walk out of such negotiations, we face the very likely prospect of the application of trade tariffs to do business with our major market. Given the number of European bathroom and kitchen brands operating in the UK through British subsidiaries, the possibility of tariffs being applied to bathroom imports to the UK is an unedifying prospect.
I have spoken privately to a few UK MDs and they advise that while the issue hasn’t yet been raised at European board level, they believe that some internal solutions may be found to spread the burden.
I would urge all UK subsidiary MDs to now push their European boards to place the UK situation at the top of their agendas. Our politicians can choose to self-destruct if they wish, but they can’t be allowed to take the KBB industry with them.
In terms of the current UK situation, my understanding is that the colossal London market for KBB brands has taken something of a dent. The capital has been in such a bubble, with the massive construction sector buoyed by international inward investment. If this is indeed slowing down, it is thanks 100% to the unsettled political and economic position in which we find ourselves. The rest of the UK may not be quite as adversely affected, but only time will tell.
The bathroom sector is robust. Our retailers are a fiercely independent bunch and are great survivors. Our brands, whatever their manufacturing or sourcing models, have much to think about but will not, I am sure, bury their heads in the sand.
Everyone involved in KBB land will need to work together, in spite of the politicians’ best efforts to trip us up at every turn.
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