Karan Bilimoria is someone who knows how bad things can turn during a recession, Jonny Williamson caught up with the Founder of Cobra Beer to discuss getting ahead.
Dissatisfied with the gassy lagers that were traditionally being served in Indian restaurants in the UK, he launched Cobra Beer in 1989 aged just 27 with little more than £20,000 and a determination to succeed.
In the 40 years since, the brand has narrowly avoided a hangover from two major financial crashes and endures as one of the most awarded beers in the world.
Now, as Lord Bilimoria, the Chairman of Cobra Beer is a politically active crossbench member of the House of Lords, President of the CBI, Chancellor of the University of Birmingham and a passionate advocate for entrepreneurship and business being seen as a force for good.
How has 2020 been for you as a manufacturer?
Lord Bilimoria: We supply 7,000 restaurants and gastropubs in the UK and our on-trade [hospitality] sales came to an absolute standstill from lockdown until July. When faced with such a crisis, you have to adapt.
We also had to shield quite a number of our brewery workers meaning we couldn’t produce our full range of products for the off-trade [retail]. In fact, we could only produce one SKU, our double size [620ml] bottle. We made sure production of that one SKU was maintained and that’s how we survived.
That shows the importance of constant adaptability and resilience. Everything may go against you, you may lose – in our case – two-thirds of your market overnight, but you make the most of what you do have, and you survive.
But you also need government support, and the UK government has acted quickly and decisively in regard to taking the large measures. Some £300bn worth of quantitative easing, for example; taking interest rates down to 0.1% – the lowest since the Bank of England was established in 1694 – mustn’t be taken for granted.
Lord Bilimoria will be giving the keynote address at The Manufacturer’s forthcoming Digital Manufacturing Week where he will be exploring the importance of collaboration, reskilling and international partnerships in more detail.
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The government’s Coronavirus Job Retention Scheme has helped more than 9 million workers and 2.5 million self-employed people. Initially due to end on 31 May, the scheme was first extended until 30 June, and currently it’s due to end on 31 October.
There are many businesses, however, that haven’t come close to opening at scale, social distancing is still in effect, the health crisis is still very much present, and winter is almost here. So, that’s why we put forward proposals from the CBI to the government requesting the scheme become more flexible and is extended.
What lessons have been learnt over the past nine months?
I just don’t think that people appreciate the importance of manufacturing, and by people, I mean the general public, government and business at large. We all know that services are the largest part of our economy, but manufacturing makes up 10% of our economy, a substantial amount.
Our world has become so integrated and interconnected that when you have a crisis such as this, it demonstrates how the shockwaves can reverberate around the world. It also makes you appreciate your manufacturing sector even more.
The global shortage of PPE led to a desperate race and it all boiled down to manufacturing. If we had that manufacturing capability onshore, of course, we would have had access to it; but this is the way the world has evolved.
Countries are now working together, systems are collaborative and interdependent, and it works; yet we have to be practical. No-one is suggesting we onshore everything again, but we should have that domestic manufacturing capability, we need to have it. We also need an industrial base that can adapt with fast moving times and during a crisis British manufacturers have shown that ability.
What has not worked is top-down government trying to do things on their own, we’ve seen that has failed.
When it came to critical bed capacity, we were worried we wouldn’t have enough. What did we do? We watched the Chinese build a hospital in days and we said; “Only the Chinese can do that.” Well, we did it and we did it quicker.
We built the 4,000-bed Nightingale critical care hospital in just nine days through private sector collaboration, with the Excel centre, the NHS, the Armed Forces including the Ghurkhas, Armed Forces engineers, and the University of East London coming together and demonstrating our ability to work at speed and the power of collaboration.
The same was seen for testing. Six months ago, in March, we were conducting 2,000 tests a day. Today, we have a testing capacity of more than 370,000. Now, the Prime Minister has set a ‘moonshot’ target of 10 million tests a day by early 2021.
Image courtesy of Depositphotos
It’s a question of everyone – laboratories, the NHS, universities, pharmaceutical manufacturers – working together to ramp up testing from 2,000 to 370,000 to 10 million, soon. But it can only happen with collaboration. That’s a big lesson learned in this crisis.
The right attitude has also proven key to that rapid acceleration. I’ve long championed that in order to keep on top of this health crisis and to get the economy firing on all cylinders we need mass testing, with instant results, available at scale in homes, offices, factories, airports, universities and schools.
That is now a reality thanks to the BinaxNOW COVID-19 antigen test developed by the American headquartered multinational Abbott Laboratories. The test is about the size of a credit card, takes about 15 minutes, has an accuracy of 97% -98% and is priced at $5. It’s already affordable but the price is only going to do down.
The US Food and Drug Administration [FDA] approved BinaxNOW straightaway and Abbott is producing 10 million of these tests this month [September] and 50 million next month. We should be doing that. That’s how 10 million tests a day becomes a reality, but more importantly, regular testing is how life can carry on as normal.
You chair the Manufacturing Commission [the research arm of the All-Party Parliamentary Manufacturing Group] and its next inquiry will explore ways of building back better in the wake of COVID-19.
‘Building back better’ is a phrase that means different things to different people. What does it mean to you?
It’s about how can we become more productive, resilient and sustainable as we rebuild the economy postCOVID-19. It’s about taking what we’ve seen work during this crisis, what we’ve learnt over the past several months regarding what needs to be done to get ahead and acting on it and applying it to our everyday thinking.
Image courtesy of Depositphotos
I’ve just chaired the CBI and University of Birmingham Heat Commission, with various industry leaders, to assist the government in shaping the policy framework and to raise the awareness and benefits of decarbonising heat.
The resulting report, published right in the midst of this crisis, highlighted that heat is the largest single source of UK carbon emissions, accounting for more than one-third. Half of this comes from domestic buildings, the majority of which are heated by natural gas boilers.
Of the 29 million houses in this country, only 1 million are to the required green standard. That means we’ve got to address 28 million houses, or we’ll never hit the 2050 target to become net-zero.
How do we achieve that? Hydrogen, heat pumps and either reskilling or training somewhere in the region of 750,000 people. So, huge job creation, as well as becoming more efficient and more environmentally sustainable.
That’s building back better, and we lead the way globally by showing how Britain is doing this ahead of everyone else in the world.
The other component of the Commission’s upcoming inquiry is how to make UK manufacturing’s place in the global league table more secure and ensuring that when a large corporation decides to open a new facility, the UK is at the forefront of that investment decision.
This goes to the point, again, that manufacturing needs to be a priority for government.
The government has to champion manufacturing domestically and globally, and the message has to go out that manufacturing is something we’re proud of, something we excel at, that manufacturing is a key part of our economy and something that we want to grow.
With that in mind, what do you think of the government’s target of increasing total R&D expenditure to 2.4% of GDP by 2027, up from 1.7% in 2016.
This is absolutely crucial, and again something I’ve been saying for a long time. At 1.7% of GDP, our R&D spend is significantly lower than America’s at 2.8%, Germany’s at 3.1% and Israel’s at 4%.
However, we make that 1.7% go an awfully long way, we do so much with it. But if we increased that to 2.4%, if we put an extra £20bn a year into R&D and innovation, just imagine how much more that will power our competitiveness and productivity. And a lot of that will go through manufacturing.
This is something that we really have got to push, and it requires investment from government and business, and it also requires inward investment.
We’re one of the three largest recipients of inward investment in the world, the main reasons are that we’re an open economy with a competitive environment, we’re entrepreneur friendly and it’s easy to set up a business here. In fact, the best place to set up a world headquarters for your business is the UK. We need to maintain that.
On the subject of small businesses, when appointed as president of the CBI, you said you had four priorities, one of which was to make the CBI the home for all businesses, of any size, and not just a voice for big business.
How are you hoping to achieve that?
The CBI is the largest and most premier business organisation in the country, and I’m trying to change people’s perception that the CBI exists for big business.
Of course, the vast majority of FTSE 100 and 250 companies are members of the CBI, but what people don’t realise is that the CBI speaks for more than 190,000 businesses employing around 7 million people, that’s one third of the private sector workforce in this country and includes many SMEs.
The other factor people don’t appreciate is the CBI’s national and international reach. We have offices across all UK nations and regions of England, Wales, Northern Ireland and Scotland. We have regional directors and regional councils providing constant grassroots opinions and concerns that we pass on to government at the highest level to ensure those voices are heard.
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The CBI has incredibly strong relationships across many government departments, which is a very real strength of the organisation. We can also draw on our incredible capabilities in policy terms, whether it’s in manufacturing, education, energy, the economy, the European Union, we’ve got unparalleled policy and economic forecasting expertise to bring to bear. That benefits businesses, the government and the economy.
Our global reach is also often overlooked; we have offices in Beijing, Delhi, Brussels, Washington. We speak for British business on the global stage. For example, our Brussels office and the expertise located there means we get insights from the ground, insights which are strengthened by our membership of Business Europe, meaning we’re allied with our counterpart business organisations in every part of Europe. It’s an unparalleled network of expertise, access and insight.
My other three priorities are to enable business and universities to work more closely together, to champion entrepreneurship and SMEs, and – as the first ethnic minority president of the CBI in its 60 year history – to champion diversity and inclusion.
Given everything that’s happened so far in 2020, what do you think the future holds?
I’ve learned in business that to stay competitive, you can never stand still. That is where we’ve got to leverage what this country has always been so good at – world-leading, cutting-edge innovation.
When you look back historically, so many of the world’s innovations have emanated from this country, whether in manufacturing, medicine, infrastructure, whatever it is, we are at the heart of it. It’s that spirit of creativity and innovation that we’ve got to continue to encourage in every aspect of business, in particular manufacturing.
It’s the companies that are looking ahead with the right attitude and can be continually innovative, even in the toughest times, that will succeed. The true test of leadership is not in the good times but during times of adversity.
If you’re proactive and you have that attitude in the midst of a crisis, imagine what you can do in the good times. We’ve had the resilience to survive the most challenging time in history, just think what we can do now.
*Header image courtesy of Shutterstock; all images of Lord Karan Bilimoria courtesy of the CBI and Molson Coors Cobra Beer