50 DEBATE
Shelley Audis-Riddell Continued from page 49
LW: We operate in manufacturing, recycling and construction. On the manufacturing side one of our raw materials, an oil-based product, increased by 35 per cent from March to April. Aggregates have gone up by 40 per cent over the last year and in the steel sector we’ve had increases of 35 per cent.
Recycling is being battered as well because of fuel increases and legislation change. And then there’s the issue of rising wages as well.
ZK: We retrofit homes to make them more energy efficient. Costs have massively increased for us, fuel, material and in recruitment. There is the price of the products but also the installation because we use a lot of subcontractors, and they are demanding more.
There’s also the rising cost of the people we employ as we went from three employees to 20. The recruitment market is difficult, it becomes a bidding war and because we’re a relatively new start-up other businesses can outbid us.
I don’t want to be a company that makes people worse off, I want to make them better off and make them warmer and healthier, so we can’t often pass rising costs onto the customer, but then where else do we get it? I’m now looking at what’s of value, what can we strip out of the company, and the bad decisions that we’ve made that you do as a start-up.
NM: We’ve had a ripple effect from Brexit, then we’ve had the pandemic and then we’ve had the war in Ukraine. There’s also global demand concerns and the issue of whether we have the national infrastructure or resources to actually keep up with that demand.
Brexit issues have gone under the radar a lot. To put it in perspective, there’s seven to ten per cent extra cost just for exporting goods to mainland Europe. We’ve had to sustain that cost just to be competitive in the marketplace and that is a hit to margins and investments back into the company. It’s also hit profits.
LW: Before Brexit, because we export to other countries as well, we were being quoted around £400 a container, then after Brexit it jumped to around £3,500 a container and you just think ‘Wow’.
NM: Pre-Brexit we had a competitive market here in terms of distribution. Now we have to deal with the European distribution agents and they’re not as competitive, because it’s not a big market for them and, therefore, they can charge what they want. That’s had a ripple effect in terms of costs and margin and has affected profits. Going on from there, to keep the lights on, for every pound we gain in revenue, it’s costing us about 25 to 30 per cent in overhead costs.
Jane Parry
JP: The import / export situation we’re seeing from clients is driving changes in behaviour. So, if you know that it’s going to cost you more in freight and you know that there’s going to be loads of people looking to buy more in bulk, that has a knock-on effect to your cash flow because you’ve got to pay for a lot of that upfront. It’s creating different pressure points.
AW: The other issue is, of course, that firms are now having to repay their Covid loans at a time of rising costs.
SB: Covid brought asking the right questions to the forefront more. We’re seeing a lot more silent innovation. The organisations who have gone through the fight with Covid and are surviving are the ones looking at the data, regularly reviewing, reflecting and reacting.
We’re seeing a lot more improved innovation, process innovation, in a consistent manner, which we’d never seen over the last 20 years.
AW: It’s not just the innovation, which is happening at pace now, it’s collaboration and I think Covid has engendered that ‘in it together’ feeling and we’re all a lot better at collaborating than we were.
ZK: Innovation is massively important and its making sure you give yourself allocated time to look at how you innovate the business and to look at the data.
NM: We’re so bogged down in the day-to-day. Business leaders need to take a step back and reflect on where the business is and how it is operating. From there you can make decisions based on adding value.
SB: Value is the key message. It’s whether you value your people. People who maximise profit through cheap labour are getting their comeuppance now because people don’t want to work for them.
JP: Two years of the pandemic and people are seeing whether you really have lived those values as an employer or not, and it’s coming home to roost. We have core values. Quality,
Luke Wilkinson
achievement, fun, doing the right thing. We talk about those every day. They’re on the wall, and we genuinely sit round the partner table and ask, ‘Is that in accordance with our values?’
AW: During the first lockdown we formed a manufacturing cluster, we got around 90 member companies across Lancashire, and we turned that into a power house of supply into the NHS. We were manufacturing stuff within about a fortnight.
What was achieved through that collaborative endeavour was just astounding. When you look at what we can do as a county when we come together like that, it was impressive.
AR: Everybody got very excited when the price of a shipping container from China went up. Suddenly people were saying, ‘Maybe we shouldn’t be buying this from China, maybe we should be making it here,’ and everybody went, ‘Yes’ and the public also got behind us making things here.
A lot of small manufacturers went, ‘We may have a future now, we may be able to increase our wages,’ particularly in engineering. They got excited because suddenly they could see long term growth.
Then came the rising costs. Last year I had a quote for a piece of a machine that I was designing. The company wanted £4,500; the customer didn’t want to buy it. They came back to us in February and said, ‘We want to buy it now’.
Nadeem Memon
Zak Khan
Alan Reid
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