Family businesses think long term, but much of the non-family business corporate world tend to think short term, whether profits and revenues. Family businesses like mine are less interested in annual profits, we’re interested in the long-term sustainability of the business. We think from one generation to the next.
These factors guide my thinking on Brexit and the European Union. And I think many family businesses feel differently on Brexit to the view shared by bigger non-family corporations.
From my perspective, I don’t look at my business when I consider Brexit. Maybe my salmon smoking business, H.Forman & Son, would be better in the short-term if the UK stays in Europe. We employ many staff from Eastern Europe, for example, but I take a much more long-term view on the issue because that’s how I as the owner of a fourth generation family business considers things when it comes to business and the economy.
Also, the reason I was a leaver wasn’t just about the effect Brexit would have on the UK economy, but I believe the UK leaving the EU will be better for the whole of Europe. For a long time, I’ve felt Europe is in a dangerous place and becoming increasingly unstable. Economics always trumps politics and what I’ve seen in Europe in the last 15 years is that the single currency is harming and will ultimately destroy the economies of Europe.
High levels of unemployment in Spain, Greece and Italy are because these countries can’t devalue their currencies. Of course, Germany loves the euro. Its goods and services are selling by as much as 80% less than their value in international markets because of the euro. It gives German companies a big leg up globally.
You can transfer wealth to the poorer parts of the EU, but the problem with doing this is that you build a dependency culture. When the donor countries aren’t doing so well economically then they start to ask questions about why workers in the recipient countries aren’t working harder. This builds resentment, leading to extremism.
And we’ve had more extremism on the left and right in Europe than at any time since World War II. Who knows where this might lead? My ‘remain’ friends say we need to remain in the EU to protect against the threat of extremism. But I believe the EU is the cause of that extremism. The currency is flawed and people resist being in a straight jacket. If Europe goes down, the UK is going to be in the gravitational pull of that disaster – whether we’re in the EU or not.
Opportunities from challenges
For a family business owner, it’s not just about looking at the dangers, but also the opportunities that something like Brexit provides. One of the things I've learnt from my own business is that every crisis provides opportunities. Our business had to deal with a number of catastrophes in recent years. We had a compulsory purchase as a result of the Olympics. Just prior to that, we had a flood in our factory when the local river overflowed, and a year before that, we had a fire that burnt down most of our factory, where we had been located for forty years.
So we had these three major catastrophes. Each one of them could have destroyed us, but instead what we’ve learnt from them is that huge change provides opportunities. And that’s the thing people don’t appreciate. These type of events force you into a situation where you have to reevaluate everything. It often turns out to be much better than you ever thought it would be - and that’s the opportunity of Brexit. Rather than fearing change and remaining on the treadmill, the huge change allows you to step back, reevaluate, seize the good stuff and shed the bad.
Also, the nature of trade is changing. We don’t need to have a trade deal to trade. Forty years ago trade was much more about geography, but the internet has changed everything. And shipping costs have fallen; the biggest cost of shipping goods is the loading and unloading of them, not the travel from one point to the next. The nature of trade has changed and the EU is following a system that frankly is outdated. 3D printing and artificial intelligence, for example, will have a far greater effect on our economy than whether we are in or out of a trading club. That’s where we should be focussing.
Why does much of the corporate world love the EU? It comes back to the question of bureaucracy. For the most part, small businesses like to be nimble and hate rules and regulations, whereas big business will lobby governments for them to come up with rules and regulations that benefit them.
I looked into how big business benefits from bureaucracy in the run up to the Brexit vote. Back in April 2016, three months before the referendum on the UK’s membership of the EU, 36 CEOs of FTSE100 companies sent a letter to the Times on why the UK needed to stay in the EU and why to leave it would be a disaster. I found out that those 36 companies between them had spent €20 million lobbying Brussels bureaucrats in the previous year, and in that same period had received €120 million in grants back from the EU. Of course, they like the EU with a return on investment like that!
It all sounds like a bit of a racket to me. And quite frankly I think it’s disgraceful that when taxpayers across the EU are struggling with austerity and trying to make ends meet, 36 of the world’s most successful businesses are getting handouts funded by the hard-pressed taxpayer. We complain about multinationals avoiding tax – this is even worse. We’re not dealing with companies here refusing to pay into the pot, these ones are actually dipping their hands in and taking out of the pot. That’s the EU folks!
Lance Forman is the owner and chairman of fourth generation smokehouse H Forman & Son, based in the East End of London