Twitter awash with claims of impending damage to British industry
With the negotiations over a trade deal between the UK and the EU now reaching their final stages, there still seems to be a massive gap between what Brussels wants and our negotiation team are prepared to give.
Those in charge on the EU side of the negotiations still fail to grasp that we are now an independent nation and, as such, can choose whether we align with their standards, give access to our fishing grounds and listen to the European Court of Justice (ECJ) – To most supporters of Brexit, all three would be a disaster and a failure to implement the wishes of the majority who voted to Leave in the 2016 Referendum.
However, the usual suspects have come out of the woodwork on social media such as Twitter to claim that we are ‘not playing by the rules’ and that failure to capitulate and get a trade deal will be a disaster for our country and trigger carnage amongst our industries – the likes of AC Grayling, Femi Oluwale and Steve Bray are going in to overdrive.
Food standards have also been quoted, with that old chestnut of US chlorinated chicken being thrown around again. Strangely, they have never once queried the use of chlorine to wash salad coming from EU states which is fully allowed under their rules – They have also been noticeably quiet about horsemeat entering the food chain in burgers, Fipronil insecticide poisoning eggs or TB infected animal carcasses ending up processed in to the products we eat, all whilst being subject to these amazing standards that they claim we will lose post Brexit.
Strangely, the GFSI (Global Food Security index) listed the USA as the 3rd best country in the world for food safety last year (2019), beaten only by Singapore and Ireland – so doing a deal with a country that ranks above us in food safety would do damage to our health according to supporters of a regime that fares worse despite all these standards that they claim we need to retain! Dare I suggest that having full control of our own regulations will allow us to improve on what is currently in place as we can hold our own people to account?
In a similar vein, British industry need not be damaged by a WTO rules Brexit should the negotiations fail. The much vaunted ‘single market’ and it’s rules and regulations have not always necessarily helped, despite what the Remainers on Twitter will tell you. To give you an idea, here are two cases from personal experience where the additional red tape and bureaucracy of the EU have actually hindered growth in areas where we have excelled.
1 – The rise of the E-Cigarette market
One of the big growth industries in recent years has been that of the Electronic cigarette, known as ‘vaping’. According to the BMA (British Medical Association), vaping is 95% less harmful than smoking tobacco. It can also be a gateway for those smoking cigarettes to wean themselves off, immediately lowering risk by switching and then gradually decreasing the strength of the liquid used in the product so the nicotine withdrawal is fairly easy.
This explosion in a new market was driven by a lot of small start ups who took the risk and then saw their businesses grow as the idea caught on – The entrepreneurs that the UK is so famous for grabbed the bull by the horns and started employing people in their areas, giving a boost to local economies.
This obviously didn’t go unnoticed by the big multinational tobacco companies who started to see a new competitor in their lucrative marketplace. Cue a lot of lobbying in Brussels and, lo and behold, a raft of new regulation was proposed to put these upstarts in their place.
In 2016, I was working as a researcher for an MEP (Member of the European Parliament). One of his constituents approached the office about this legislation and laid out what it would do to his business, which had started up two years previously and now employed 20 people as they rapidly expanded.
He had no issue with safety certification – indeed, he welcomed it as the market had not had any safeguards put in place at that time. However, the EU was proposing that for each flavour of vaping fluid that he produced, he would need an individual license costing £8000 – with over 50 different flavours in his range, it would put him out of business. Each one of those flavours had the same ingredients bar one, the flavouring itself. Every ingredient, including the flavouring, already had EU certification as being safe as a standalone product.
The size of container was also limited – any product containing nicotine had to be in a maximum bottle size of 10ml (Putting up production costs) and strength of nicotine had to be under 20mg unless sold in a pharmacy (Making the switch from high strength cigarettes to vaping for health reasons more difficult for the end user)
Fast forward to 2019 and I was working for a major soft drinks retailer as a sales rep in Central London where I would bump in to reps from the big tobacco companies on a regular basis. All of them had vaping fluid as a standard product for sale, in many cases where these firms had been pushed to the wall and then picked up in cheap buyouts where the legislation had made them no longer viable. Is it any wonder that the multinationals love the EU?
2 – The Mobile Phone industry
Probably the most meteoric rise of any market globally over the last 30 years has been that of the mobile phone industry – From being the stuff of science fiction and then a plaything for the rich, today we see almost all adults across Europe having a high tech communications device in their pocket.
The first generation of devices, launched in the 1980’s, used an analogue system and were cumbersome units with limited functionality and battery life. The market leaders in the field were Motorola from the USA and the Japanese tech giants, NEC and Panasonic.
But the capacity of the networks was limited – as handset costs came down, those limits were going to be reached and a new solution needed to be found to handle the demand. That solution was the digital ‘GSM’ network that not only gave extra network capacity but the ability to use your phone overseas, a very big draw for companies that traded cross border. New handsets needed to be designed to go with the networks and the market leaders became European based companies that took up the challenge quickly – Orbitel (A joint venture between Vodafone and Ericsson that produced the world’s first digital phone, the 901), Nokia and Ericsson themselves. Motorola caught on quickly and had the world’s largest mobile phone production plant at Easter Inch in Scotland which subsequently churned out digital versions of their flip phones and the iconic ‘StarTac’ before relinquishing their no 1 market status to Nokia.
Nokia built huge production plants in their native Finland, in Germany and also Hungary – Ericsson too expanded from Sweden to manufacture in other European countries.
By the early 2000’s, Nokia were the dominant market force with over 60% market share, driven by both ease of use and bulletproof reliability through such iconic models as the 3310 and 6310i.
During this time, I spent 5 years overseeing a mobile phone retailer owned by a good friend – we had Nokia service centre status for the final 3 years of my stint there. The failure rate of the handsets within the 24 months of the warranty was less than 2% but there were so many Nokia handsets out there that it was a decent revenue stream for us and the service we provided maintained the great reputation of the manufacturer – if your handset went down, we could usually have you up and running within half an hour of entry to the store or in extreme cases let you have a loan unit whilst we sent off your faulty device to the factory for repair.
Cue the ‘single market’ coming in to play. We noticed that the amount of faulty units coming in had started to rise – on inspection, we were getting a lot of handsets that had serial numbers that related to phones supplied to Eastern and Southern European countries. The market in the UK was set up to a different model to these countries – we had the contract system where the phone was subsidised by the mobile phone network so you got it for free and they made their money back in line rental over the duration of a 12 or 24 month contract so that the main priority for the manufacturer was making the unit durable enough to last for the length of the customer commitment, manufacturing cost being secondary. The handsets coming in from abroad had cheaper components as they did not have this system, the clients having lower wages and disposable income to spend on a handset that they had to buy up front. Not surprisingly, the failure rate was higher.
Some distribution companies had cottoned on to the fact that they could increase profits by importing these handsets which essentially looked the same but they could sell at below market rate to boost their margins – under EU free movement rules, there was nothing the manufacturer could do to stop it. An instruction went out to us at the service centres that we could not repair these handsets and would have to send them back to the outlets that they had been purchased from for return to the country of origin to be sorted out – this raised the ire of the EU who stated that all units purchased in an EU country had to have a warranty across the bloc so we couldn’t turn them away.
In order to standardise and not hit sales, the manufacturer started to produce units to the cheaper standard – at the same time, they were also hit with ‘Green’ regulations around recycling such as the WEE initiative and saw overheads per unit rise.
Hence, reliability and reputation suffered, especially when smartphones started to penetrate the market which had more complicated parts and a higher spec. When Nokia made a fatal mistake on choice of operating system, we ended up deluged with handsets that suffered mechanical faults and also needed frequent software upgrades to stop them ‘locking up’. The service centres, whilst making a lot of money in the short term charging for repairs under warranty, became a massive expense for the manufacturer as the failure rate rose which led to Nokia taking repairs ‘in house’ and shutting down the service centre network. Where a warranty repair could previously be done locally and quickly, it now took weeks on handsets that were increasingly likely to fail. They quickly lost their customer base as previously loyal clients switched to newcomers Apple and Samsung who had more reliable units.
Today, the hundreds of thousands of jobs supported in Europe by a vibrant tech industry are gone. A combination of regulations and the rise of cheap manufacturing unencumbered by their diktats has led to production switching to the Far East. Nokia itself sold their mobile phone business to Microsoft who used it to promote their Windows mobile platform – when that failed in the face of the superior Google Android system, they sold the intellectual rights to the Chinese who have now reintroduced the brand, ironically garnering huge sales from updating and reintroducing such models as the 3310 and 8110 ‘Matrix’ phone.
Warranty failure rates, so low during the time of European manufacture, now hover at just over 20% on today’s smartphones which are predominantly built in China. Questions have also been asked about the treatment and pay of workers in the plants, making a mockery of the EU commitment to human rights.
The EU commitment to standardisation across all member states has not taken in to account the disparity in wages and living standards across diverse communities. Instead of increasing standards, it has driven down quality to the lowest common denominator which has cost Europe the lead in the manufacturing part of the tech sector. It has also disadvantaged small businesses in the face of lobbying from the multinationals, throttling innovation and stifling growth. Free of the EU, it is time for the UK to once again become an outward looking, globally trading and independent country – don’t let the Twitterati Remainers convince you otherwise