30 December 2016

2016 - A Truly Weird Year

2016 - A Truly Weird Year

2016 has been a strange year, with political events intruding on our best efforts at Steenbergs.  These external factors will impact the business for many years to come, and will make everything trickier and riskier.  However, they will not deflect us from our values – good spices, herbs and teas from good suppliers, where good reflects both quality and ethics.  That’s something to cling to when the economics become ever more unpredictable.

We’ve stuck with our quality, social and environmental values, and are getting these increasingly checked by external auditors.  Once again, we’ve been audited by Organic Food Federation (organic), SALSA (food quality), The Fairtrade Foundation (social), and have kept Steenbergs’ details on SEDEX (social) current, if unaudited.  During 2016, we had our first kosher audit with Kosher London Beth Din and are ongoing with our first halal audit with Halal Certification Europe, slated for January 2017.  Also, for 2017, we’re looking at vegan accreditation.

As for our additional premises, we’ve got to where we intended even if several months later than planned.  The phone system is finally in at 11 Hallikeld Close and the IT systems and offices moved over, with our spice factory at 6 Hallikeld Close connected by phone and to our servers via a VPN.  The tea packing facility and machinery is now installed at 11 Hallikeld Close, with a mezzanine floor for tea storage, and will, be fully functional in January 2017.  Shifting the tea and then the small orders picking and packing from 6 Hallikeld Close will free up space for labelling and finishing of Steenbergs spices and flavourings lines.

So operationally, we’ve got to where we intended despite the twists and turns in the road.

But, in 2016, you simply cannot get away from the politics.  The list of issues is long and includes:

  • Brexit has affected our raw materials’ and packaging costs unilaterally by about 15%, with the weakened pound. We’ll live it by increasing prices – our own Marmite moment that all businesses must face.
  • Some of our staff are from within the EU, and we’ve been working with them to get their residencies in order in while the politicians argue over what Brexit means in practice.
  • The Living Wage and Autoenrolment have directly affected staffing costs definitely for the better in the short term. Everyone is now paid the same rate – from director to new recruit – so we’re our own small socialist republic.
  • The problems in the Middle East has made trading with the Lebanon harder, and for Persian saffron impossible.  Whereas politically possible and there is a Fairtrade-certified chain of custody from saffron co-operative through to the EU, British banks refuse to permit any transactions, because of prohibitive US sanctions.  This is not only embarrassing in that Fairtrade cannot deliver on its commitments, but also prevents poor farmers from earning a living wage or making a return on their investments in becoming Fairtrade-certified and food-safe.

But I worry that wages will become a political football that will, over the medium term, prevent flexibility in wage rates and so affect the competitive ability of businesses.  Over time this could result in increased automation and more jobs to shift from the north of England to the south-east…because if it’s no cheaper to work outside the south-east it will suck more people away from the north to the south-east – just like HS2 will, also, probably do.

Higher wage rates are usually initially good for local economies, but the consequent inability to compete in national and international markets over the longer is a long term threat [note: no-one will actually think about this until years later].  This inflexibility in EU labour markets in contrast to the USA is one of the many reasons why the EU does not work, Southern European states are economically broken and provides the pull that brings economic migrants into the UK that was one of the factors in the Brexit result.

But we'll stick to our course and stick to our values whatever the world throws at us.