Is English Glory Foreign-Made?

Exploring parallels between English football and the economic and political landscape of the country.

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This article was published in The Globalist on 5 July 2016

England has without doubt the most expensive and internationally most followed football league in the world. Many Premiership clubs are owned by Americans, Russians, Saudis, Iranians, Thais and Chinese.

The global element shaping the sport in England doesn’t end there: Out of the top 12 clubs in the 2015/16 season, 11 were trained by Italians, Spanish, French, Dutch, a Chilean, a Croat and a German.

In the pool of players signed by all Premiership teams, 59 foreign nationalities are represented, accounting for 67% of all players in the league. Of the remaining 33% — the English players — not even half get to play every weekend.

The English press regularly proudly reports the Barclays Premier League as the richest, best and most successful league in the world.

It also elevates the English team before every international tournament like the World Cup in Brazil in 2014 and the current European championship to semi-favourite status.

Soccer, just like the economy

The English are without doubt the champions in self-promotion. The meeting with reality is quite harsh, though. Consider that Spanish club teams made a clean sweep of trophies in European club competitions this season, with the English clubs all knocked out early.

The early exit of the national team in Brazil in 2014 and now in 2016 against Iceland shows up the fundamental weaknesses of the overall approach.

The sport is played for profit only, with little regard for the development of home grown talent on or off the field. That money-based approach has an obvious impact on the national team, which has underperformed badly yet again.

This soccer saga has all the hallmarks of the overall British economic and political malaise. In politics, the bragging about the greatest league translates into “We are the fifth-largest economy in the world” and “We are the fastest growing country in the G8.”

This self-boosting rhetoric has been peddled by Cameron and Osborne over the last few years and featured hugely in the British press. However, once the pair decided to campaign for remaining in the EU, it came to haunt them.

Harsh economic reality

The two slogans were effectively used by the Leave campaign by simply claiming, “we can stand alone, we don’t need Europe.” Neither Cameron nor Osborne could admit that both claims were untrue for fear of being accused of “talking the country down.

As David Smith, the Economics Editor of the Sunday Times, pointed out, economic reality is not as kind. The UK, by Purchasing Power Parity (PPP), is the tenth largest economy.

And in the first quarter of 2016, Britain’s economy grew at less than half the pace of the Eurozone – 0.3% versus 0.7%. Moreover, it was forecast to lag behind for the full year without the Brexit disaster.

But not only that – the country’s fiscal deficit is also going up. The current account deficit is at record high with 7% of GDP, this under a presumably strict Conservative government.

Private household debt hit a new record way above the pre-crisis level of 2008, with credit card debt rising at double-digit rates. The much talked about National Health Service is under water, to the tune of £2.5b billion.

The underfunded company pension schemes – like those of Tata Steel and BHS – amount to £92 billion, much of that shortfall will have to be covered through the government guarantee scheme.

Public pension deficits look even worse.

Sterling under pressure

All of it is totally unsustainable, even without the shock of Brexit. Theresa May, the leading contender for the prime ministership, announced simultaneously with Chancellor Osborne the abandonment of the fiscal target for this parliament. It makes sense, but doesn’t solve the problem.

Britain’s current account deficit is of particular concern. The trade balance has always been negative, but services made up for the gap in the past.

No longer so. Britain has lived for decades on the proceeds of selling assets to shore up the current account deficit and the exchange rate. Ports, airports, the energy sector, huge numbers of industrial businesses have been sold to foreign investors.

Unsurprisingly, the UK’s once considerable earnings flow from overseas investment has reversed. It means that Sterling would have come under pressure before any Brexit-related effects.

Overseas investment

The car industry, once the perpetual laggard, is now thriving. It is almost completely under foreign ownership and management. These firms have trained their workforce well, for example, by re-introducing German-style apprenticeship systems and taking a long view.

The Brits treat this as a great success story. But working for so many foreign employers has another side to it. There is a deep psychological problem here, too.

Having foreign bosses and even being paid well by them is one thing. Liking that situation is quite another matter altogether.

Accordingly, there is a growing feeling of alienation in the country because of these developments. The migration crisis, which made the timing of the referendum so awful, has of course magnified this feeling.

We want our country back” seems also a cry of despair about what has happened – and blaming others like Brussels was just so easy to exploit by the populists on the right and left.

Need for home-grown talent

What gets lost amidst all this is that what still makes Britain great these days is that it attracts so many skilled professionals in all sorts of fields, not just soccer; however, more home reliance is clearly necessary.

German and many other clubs on the European continent are owned by their members. Of course, German clubs also import players, but they are serious about developing their own young players – always with an eye on the national game, too.

Unless Britain develops more home-grown talent in all walks of life, changes the overall approach from short to long-term thinking and stops kidding, if not deluding itself, it will not succeed — on or off the field.

Do Not Blame Regulation

If the government is serious about training it has to find ways of retaining skilled people in downturns

This letter appeared in the Financial Times May 29 2015

Bob Bischof Letter in the FT May 2015

 

Germany Recruits Young Brits to Fill Future Profession Gaps

Waged training in Germany
Well supported vocational training is on offer to young recruits

The German government is running a scheme to tempt ‘A’ level qualified people aged 18 to 35 to Germany to serve an apprenticeship during a three year period all expenses paid – a new  “Auf Wiedersehen Pet” story.

British companies needing to recruit talented young people have some competition now: the government of the Federal Republic of Germany is paying to recruit young people from Britain to receive full training in up to 300 occupations.

The International Business Academy (IBA) in London, which was appointed to administer the scheme in the UK, aims to provide hundreds of young people from UK to Germany for apprenticeship placements and work in specific areas.

The scheme is recruiting people aged 18 to 35 years for both vocational training and jobs for young professionals in fields like engineering and healthcare. The latter requires ready-trained professionals.

The recruitment drive is evidence that Germany is planning for the fall in its domestic workforce in 10-20 years time when low birth rates will be felt.

Eligibility

To be eligible for vocational training courses, candidates must have ‘A’ levels or a Baccalaureate but a degree is not required. Knowledge of some basic German is needed in particular for apprentices, who need to go to college once a week under the dual training system.

Successful candidates receive a full package of benefits designed to tempt people to relocate to Germany, including 170-hours of German language lessons in England or Germany before the final placement in a German company, a minimum net salary of Euro 818 per month during training, which lasts approximately three years.

Travel costs for the interview in Germany are covered, as are relocation costs to Germany if the person takes the placement or job and two free flights home every year.

The German government has capped funding for the programme to Eu139 million. “There is no allocation to the individual nations, it is a first come, first served basis,” says Wulf Schroeter who runs the IBA in London.

Shortage of Recruits

Germany has a shortage of occupations for which there are numerous job opportunities, especially for technicians and engineers, hotel and catering jobs and doctors and healthcare professionals.

“For these occupations, trained specialists are needed. In these and in more than 300 other professions, apprenticeships can be offered,” says Mr Schroeter.

IBA is part of the FuU Group, a training institute based in Heidelberg appointed to run the UK scheme within an  EU-wide framework called Mobi-Pro EU that promotes young and unemployed professionals within Europe. “Only organisations that are recognised by the German Federal Ministry of Social Affairs may place young professionals in to German companies,” Mr Schroeter adds.

Press Coverage

In The Telegraph: http://www.telegraph.co.uk/finance/jobs/10097363/Come-to-Germany-to-work-and-find-love-British-are-told.html

In the Mail: http://www.dailymail.co.uk/news/article-2335479/Germany-recruit-British-apprentices-Work-study-offer-lure-brightest-youngsters.html

More Info

Full details of the scheme and how to apply are at http://www.international-business-academy.co.uk/

Britain Has Much to Learn from German Firms

Daily Mail March 2013A new German word has entered the English language after ‘Rucksack’, ‘Kindergarten’ and the phrase ‘Vorsprung durch Technik’, namely Mittelstand.

It means different, yet related things – it describes a medium-sized company, but it also means doing business in a very German way.

Mittelstand companies are family owned, in 95 per cent of cases, and 85 per cent are owner-managed. They are oriented towards customers, employees and communities rather than just obsessed with shareholder value.

They are typically embedded into a region, where they take their responsibilities seriously. Often, they are strong exporters, world leaders in their chosen field of operation like Brita Water Filters, which has raked up around £7billion annual turnover in 2012 from very humble beginnings.

Although the official definition of a Mittelstand company is up to €50million turnover and 500 employees, many have outgrown these numbers by far – including my former company, the €2.2billion turnover fork-lift truck maker Jungheinrich AG. But culturally, they retain the Mittelstand outlook.

Staying with the narrower definition, Germany has 3.5 million Mittelstand companies, representing 52 per cent of total economic output, 61 per cent of employment and €200billion of exports from Germany. Of these, 1,300 rank as so-called ‘hidden champions’ – world market leaders in their niche, against 67 in the UK and 366 in the US.

These companies are regarded as the backbone of German manufacturing, giving it a resilience that has stood the economy in good stead in the economic turmoil.

That leads to an inevitable question. Why can’t the UK create a Mittelstand of its own? Britain has brilliant inventors and entrepreneurs, but is not so successful at evolving their ideas into the creation of sustainable businesses, which can grow in to the world-leaders of tomorrow. The likes of Sir James Dyson and the Bamford family of JCB fame are the exception, not the rule.

The talent is there, but it seems to be driven too early into the wrong direction. 
Entrepreneurs cash in, either through a trade sale, to private equity, or by floating on the stock market. It may bring personal rewards, but getting into the short-term profit race can be detrimental to developing new products and markets.

I believe that the key difference between our two countries lies largely in the financing of these companies, and the role of banks.

Typically, Mittelstand firms finance themselves from retained profits, with bank debt and equity funding playing a smaller role. Germany has around 3,000 independent banks with excellent regional coverage, while the UK has not even a dozen business banks. Although they have many branches, they no longer have bank managers who can make local lending decisions based on a thorough knowledge of customers.

The manager of a small or medium-sized regional Sparkasse, Volksbank or Raiffeisenbank in Bavaria or Lower Saxony knows the businesses in his area and probably plays tennis or golf with the owners. Their kids attend the same school. During their last few years at school children make frequent trips to companies in the area and the companies make presentations to get the best candidates for apprenticeships.

Universities and colleges also work closely with the companies in their region.

Here, we have an opportunity right under our nose. Around 1,000 branches of Lloyds and RBS are up for sale. Rather than selling them to a City conglomerate which no doubt would offer a similar centralised structure, they should be offered in small clusters to regional institutions or individuals with the right background.

In co-operation with the Local Enterprise Partnerships they could be part of the ‘business bank’ structure for small and medium firms, which the Government is trying to get off the ground. Lord Heseltine has pointed the way in this direction.

The UK could make a start in following this model and building a unique and successful Brit-elstand right now.

This article was published in the Daily Mail, 24 March 2013