Steve Winder, regional vice president at Epicor in the UK and Ireland, discusses the implications for manufacturing around the impending vote on Scotland’s independence.
As the people of Scotland head to the ballot boxes today to decide whether their country will gain independence or not, Scotland is certainly taking the international centre-stage with both politicians and economists. Whatever the outcome of the vote there will be a much longer term effect on both its people and of course the businesses that operate there – including local manufacturers.
Regardless of opinion for and against, you can’t argue with the fact that manufacturing still remains a major export from Scotland. Whilst the dominance of the textiles industry in the 19th century and its position as the world’s pre-eminent shipbuilding centre on the River Clyde in the 20th century have come and gone, Scottish manufacturing in today’s world still holds true. Indeed the total value of international exports (excluding oil and gas) from Scotland in 2012 was estimated at £26 billion, of which £15.4 billion was from the manufacturing sector, with a staggering 82% of these exports going to the rest of the UK. The challenging question is whether this dominance in manufacturing will continue if the borders are redefined?
Whilst the country claims to be diversifying to build an economy that is focused on services and the likes of software development, it will be some time before this rings true in economic terms. So protecting the manufacturing industry will be key to any future financial strength as a stand-alone country. Therein lies the reality of any yes/no vote.
Only this week, and as reported by The Manufacturer, Terry Scuoler, the EEF’s chief executive (and incidentally a Glaswegian no less), has indicated that a ‘Yes’ vote could turn Scotland into an “economic wasteland”. Yet companies like Diageo, which owns familiar Scotch whisky brands such as Johnnie Walker and J&B, has confirmed that it will stay in Scotland regardless of the decision. The likes of The Scottish Whisky Association also claims that the industry will succeed “no matter what the result”. What is apparent from all viewpoints is that no-one holds a crystal ball to determine what the future holds and whilst businesses will adapt accordingly, the imminent uncertainty will undoubtedly have an impact on now-stabilised economies on both sides of the border.
But again what about the practicalities of independence on doing business? Clearly, the factors weighing heavily on all those voting is that of political, social and economic stability. With the potential creation of a new currency, Scotland’s role in Europe as an independent market and the issue of taxes and cross-border trade, the option for independence certainly isn’t risk-free. Nevertheless, for those organisations that already operate internationally, it will simply be another border to cross and another tax system to deal with. Whilst businesses may have a voice on the issue, it will clearly be the politicians that will decide the rules in which they operate.
It is by no surprise either, that the underlying sub-theme of debate around the Scottish referendum is that it paves the way for political campaigning for the next UK general election in May 2015. Whilst George Osborne cited early on in the coalition campaign that manufacturing has a key role to play in increasing productivity and pay, more is still to be done. Data from the EEF this week revealed that more than four out of five voters – 85% – want the next government to promote a stronger UK manufacturing base, with 62% believing it will give the country more economic security. Manufacturing has to be front and centre of any economic strategies for the UK, be that with Scotland or without.
No matter what the results bring on Friday this week, the only certainty is that the Scottish manufacturing industry faces some uncertainty and tough times ahead as the dust settles long after the votes have been counted. Apart or together, the voice of the industry (almost 20,000 Scottish enterprises) needs to be front and foremost on the agenda with the people of Scotland having their say on the best outcome.