I am not trying to make political capital out of this report, and would genuinely be interested in hearing what SH knows, and if he could throw any light on it. I had pointed out in an earlier post how the contract had been moved on to a French company, having started with a German one, before the USA became involved. From my perspective far too often governments hand out contracts, then forget about them, and there is little regular checking. I might ask how a company that has a dodgy balance sheet get awarded these contracts, something that has cropped up with many such situations when things go wrong. https://www.theguardian.com/world/2...uk-privately-run-ppe-stockpile-chaos-movianto
Not having been involved in the PPE business for many years I know absolutely nothing about this company. It sounds unfit for purpose. The normal supply route for the NHS is through specialist private companies who deliver to NHS supply chain hubs around the country. These hold quite a lot of stock but obviously not enough to deal with a pandemic. Buying methods have changed over the years from individual hospitals to trusts and now to national contracts. This dodgy company seems to have been hired just to maintain a pandemic reserve stock, I doubt they will keep the contract for long. As I previously suggested there should be a tie-up with with the normal NHS supply chain so the reserve stock is amalgamated with the regular supply on a rolling basis so stock cannot go out of date. It sounds as if commercial expertise is urgently required at some senior NHS levels. There must have been quite a breakdown because my daughter is now dealing directly with cabinet ministers to source huge amounts of PPE. To maintain a regular supply of PPE from the usual highly competent Chinese manufacturers it has been necessary to commit to very large monthly volumes stretching well into next year. This commitment has been necessary to avoid a repeat of the Chinese selling UK bound stock to others for a higher price. The medical devices market is very highly regulated and no stock is allowed be used until it passes several strict tests to gain its CE mark, or the UK equivalent after Brexit. I suspect these quality rules may have been temporarily relaxed, just my guess. There is lots of substandard stock being produced around the world, sometimes it is rejected, as in the highlighted recent batch from Turkey. Strangely some surgical face masks have even been packed individually and sterilised without any medical reason, adding to delay and cost.
Thanks for that SH. You have told us that your company had or has large storage facilities. Would they have been temperature controlled? Were these warehouses NHS supply chain hubs that you talk about? Who actually carried out the delivery from your storage to wherever it was required? Did you have your own transport or was a contractor hired in? My experience had more to do with exporting, and I knew that delivery to the Middle East involved far more middle men, freight forwarders etc who were all taking a cut, than me doing my own paperwork, using my own lorry and delivering the next day to an oil facility in Lyon. It is all to do with supply chains.
My old stomping ground around Toulouse will be seriously hit with the news of up to 10,000 redundancies. Some of those will be in other places, including the UK. I still have several friends who work for Airbus or dependent companies. The International school of Toulouse is owned by Airbus, hopefully it will remain viable. Returning UK workers may face a double whammy as local house prices and demand will be affected. There will also be a dearth of jobs in the industry back in the UK, so will probably need to retrain.
One of my friends works for Airbus having got fed up with travelling around the world with F1 teams. He had built up a nice little business down there which is still going as he employs locals before taking on a consultancy role with Airbus. There is little chance that he will be returning to the UK. His three children all have decent jobs here that will not be affected, and given the choice of which country to live in none of them will be going back to start again.
We have a modern 35,000 sq ft warehouse, enough for 5,000 pallets, plus offices. I don't remember temperature control being an issue, back then our core business was drapes and gowns. I cannot imagine respirators or surgical masks needing a narrow storage temperature. Much of the stock had been sterilised. In the early days I sometimes did the odd emergency late night delivery to London hospitals but we had a couple of full time drivers plus courier contracts. We used 2 long wheel based transits and a 7 ton truck. The truck was a waste of money, it seemed to be always off the road being inspected. As the business changed to deliver to NHS trust hubs we just used transport companies. I found the freight forwarders invaluable, we had hundreds of lines many with different rates of import duty. They had a bible of all WHO agreed rates for each product on their computers. Looking back I'm sure their charge for liaising with shipping contacts in the Far East, processing all paperwork plus arranging road haulage was only a couple of hundred pounds on stock worth £50k in a 40ft container. As the Chinese were making stock to our designs and specification, we were classed as the manufacturers with all the legal responsibilities that entails. There were no middle men to deal with. We have always employed staff based in either China or Taiwan to deal with any issues and check standards of manufacture locally. The Chinese can produce excellent products regularly, we very rarely had any issues of quality.
I only mentioned temperature controls because from the report it clearly was an issue. One of my experiences was setting up modern handling systems, most of the time using Demag a German company who at the time led the way in automated goods picking, and if you look around the huge depots that exist now are still doing very well. To read some of the descriptions of stuff being left in aisles, they really were inept. Which of course leads you to ask how in hell's name they got the contract? The companies German, American and now French are simply buying on contracts, they don't own the property. This is what is called inward investment, but of course it isn't. To say that three different companies have all added to the economy, when you still have the same warehouse with the ever decreasing stock, is little more than creative accounting.
In the early days we used one of my small units as the office and outsourced the storage and picking with a company based in Leighton Buzzard. As they also picked for many other businesses the service was pretty ropey. In those days individual hospitals ordered separately and kept very limited stock onsite. Imagine the hassle we had if operations were held up because a particular box of surgical drapes was delivered late. I used to have almighty rows with this storage company as they charged the same weekly rate for a pallet if it had 25 or 1 carton on it. When that company closed in the recession of 2008 we moved to a company in Hemel that were even worse. They managed to mix up duty paid stock with export duty deferred stock, a real no no. They also cocked up the import duty rates. Without mentioning the B word I do think it could simplify things if the need to offer all government contracts to 28 countries is removed. There does seem a massive lack of common sense. The NHS / government should employ somebody that has run their own business having previously learnt from mistakes made over a large number of years. When it is your own money being wasted you tend to not make the same mistake again.
"A healthcare firm which employs the prominent Conservative politician Owen Paterson as a paid consultant has been awarded a £133m contract without any other firms being given the opportunity to bid for the work. The firm has employed Owen Paterson, a former Conservative cabinet minister , as a consultant since 2015. He is currently paid £100,000 a year at the rate of £500 an hour." Now I accept that in these strange times there might be good reason to award contracts without going through the normal processes, but this is how poor contracts do happen. I have dealt with government and it can be extremely slow and painful, but it can actually be quicker to deal with Brussels than it is with Westminster. They may have rules and structures that are written down and followed, but there are many more different influences at work in London, some of which make little sense until you find out that someone has an interest.
Without accurately knowing all the details of this particular contract I would not wish to comment further. I can see the many benefits for the UK if the government had a policy, when dishing out contracts, of favouring businesses based in the UK where possible. This will increase employment opportunities and ensure taxes are paid in this country. Certainly the many experiences gained during the pandemic will shape the future of procurement. Security of supply will be better balanced against price, I suspect a mix and match approach will be used. More home production with greater stock storage of labour intensive produced PPE.
You have just dished the whole argument for inward investment. Why is there no UK car production? All owned by foreign companies. Why is so much of the financial part of the economy that the UK relies upon for 80% of its GDP foreign owned? The list is endless. What you are advocating, and there are merits in it, is going back pre- Thatcher years when the country actually made things. We know that we cannot pay people a decent living wage and still compete with the cheap imports, but then of course without the cheap labour there will be no trade deals with countries that are still looking for cheap options. Most research monies have come into the country from the EU over the past ten years. It need not have been like that if governments had wanted to build the very best products that the world wanted at a higher cost price, but investment centrally played second fiddle from getting it from abroad.
The NHS as it currently operates is not as effective as it could be, it requires much greater accountability over expenditure to extract better value for the vast sums poured into it every year. The problem for the UK as a member of the EU is that we were far too honest about state subsidies. The UK played by the rules. I think the UK was found guilty of breaking the rules 4 times, France 20 times and Germany a massive 46 times. State subsidy rules are now conveniently dropped to allow member states to concentrate on protecting their own economies without any interference from Brussels. It should be easy to come up with a fair system of awarding UK government contracts. I see nothing wrong in dishing out, where possible, contracts to smaller companies with decent, short payment terms. The housebuilding industry is dominated by a few large builders, this is a good time to encourage the smaller building firms by splitting up larger housing projects.
How do you propose to split up the large building groups when they have already bought the land, sometimes from the NHS? Are you proposing going against free enterprise and saying that the government should take greater control? What you are suggesting fits more into the model that cologne would suggest. I have often asked him to say how do you get from where we are now to what he would like to see. It comes down to details, so I would like to see yours.
There is no problem some UK companies being foreign owned when the benefits of almost full employment (pre coronavirus) is accompanied with investment and taxes being paid by the company in the UK. The research money coming back from Brussels is a small percentage of what we send the other way. It is not difficult to work out there will be more more to invest in UK R&D when we are not financing many Eastern European countries. If I was you I would be more concerned about why France is seen as a place to avoid for outside investors. Macron's modernisation of French industrial relations and outdated employment laws has hit the buffers. Unemployment in France, already high, will rocket towards 20% but with little chance of bringing this down based on the last few years. I am much more confident of the UK's chances than many other EU countries. We have proved lots of jobs and businesses can be created really quickly. On the continent Germany is set to ignore the begging bowls presented by France, Spain Italy and Greece. The gap between the haves and have nots will increase. Germany will continue to simply look after itself.
You were arguing above for contracts being given to UK companies at the expense of foreign companies. Now you want foreign companies to invest, seen to be a dodgy term when you see contracts being bought and sold, if they pay tax. Which do you actually want? Our discussion has been about the UK economy, the strange way that contracts get awarded, so to try and move the discussion away from this is rather poor. Sort out what you do want to see. Free enterprise or an economy with lots of state involvement to control land sales etc.
If the government released much of its own land, in collaboration with local authorities, to supply serviced sites to small builders and self builders it would decrease the value of the land banks held by the large builders. There would be less incentive for them to buy more land. Government backed secure loans to assist in financing the builds would also help. There are other positive moves available without draconian methods which could damage the build totals.
That sounds fine SH, but my District Council tried to do just that, and found that they owned next to no land. Three houses have been built in my village as a result. Go up the road to Bicester and you will find a large shopping centre built on council owned land. The land was sold off to an American company who put in the highest bid for it. If you want to build houses on that piece of land you will have to stop councils from selling it off to the highest bidder. Free enterprise takes another knock.
I understand you want to keep away from the car crash in the EU at the moment. You know quite well Western countries have a mixture of free enterprise which is subject to rules and taxes by the respective governments. It is quite possible to favour home businesses, as clearly Germany and France have been taking to the extreme, without stopping inward investment. I have no problem foreign owned UK businesses being awarded contracts, if much of the benefit remains in the UK. Being topical, why would the UK government award a long term PPE contract to 3M who just ship stock from Germany, then artificially reduce paper profits in the UK making sure it pays little or no tax. There is also the potential for political interference by the German government as seen recently. Choosing a UK company would ensure employment in the UK, and work for support businesses. The proper taxes would be paid in the UK. If 3M set up production in the UK, employing staff and paying the full tax due to the UK then I can see no problem with that. Competition is good to keep companies competitive and the end user, the NHS, obtaining value for money. At least the system would not be rigged against the UK anymore.
Your final paragraph sums it up quite nicely. If 3M set up production.... 3M is a global company as my friend who worked for them will tell you. They have their operations in the States and Europe, China and India, the largest markets. The small operation by comparison they have in the UK reflects the size of the country, and much of what they do do in the UK is destined to go abroad. Why would they set up production in a high wage small market? It makes no sense.
Exactly, multinational companies like 3M just store and sell their products in the UK. I used to buy my printing plates from them in the old days. This is why there is now an opportunity for the UK government to extract maximum value by supporting viable UK alternatives if possible. It is not that difficult to strip multinationals of market share in particular stock lines when you have the expertise, manufacture and price advantage. They are like ocean tankers, very slow to adapt to a change in direction. After Brexit the UK will still remain a large and lucrative market for outside investors. With our business friendly environment, flexible workforce plus a world leading legal framework, you can see why the UK attracts the lion's share of inward investment.
