Lets take a look at the facts behind the takeover.
Cadburys is a great symbol of British manufacturing. It is an iconic, well run British firm, which has recorded very strong profits in recent years. From the beginnings of the 'model village', through to the fact that Cadburys is renowned for providing highly skilled manufacturing jobs, with good terms and conditions, Cadburys has always been a good employer and a very well managed firm. In the past four years, organic growth has averaged 6%. It is a real British manufacturing success story.
Kraft, on the other hand, is an American conglomerate struggling under a huge amount of debt. Long-term debt at Kraft has increased from 7.08 billion in 2006 to 18.58 billion in 2009. The suggested takeover of Cadbury is also to be debt financed. By any standards, Kraft is a less well run and less vibrant company than Cadburys. A takeover will shift control and direction of the firm from the UK to Illinois and will, alomst inevitably, have a detrimental impact upon Cadburys and British jobs. When Kraft has taken over American companies in recent years, it has re-located jobs to Mexico. I fear that this takeover will result in Cadburys workers in the UK losing their jobs.
The power of institutional shareholders is also reflected in this takeover bid. Having a great British manufacturing name fall victim to a hostile takeover is symbolic of an unbalanced economy in which institutional interests in the city can weaken a great manufacturing name.
That is why, in the words of Churchill, we need to make "finance less content, and industry more proud." Other major manufacturing nations would be fighting tooth and nail to save their major, iconic manufacturing companies. We should be fighting tooth and nail to keep Cadburys under British and independent control. We should not just stand meekly aside and let another British manufacturing giant fall into foreign hands. This should be done for the sake of British manufacturing, our long term economic health and viability, and jobs in the Cadburys plants in the UK.
What does Gordon Brown care if an English company becomes American?
ReplyDeleteProtectionism has failed time and time again, and we would be foolish to return to it. The simple fact is that British firms get bought by foreign firms, and foreign firms get bought by British firms. The UK is in fact the second largest global overseas investor in the World - if we go around blocking deals because we don't want foreign ownership of British names then they will do the same to us!
ReplyDeleteIn the end you are wrong to consider Cadbury to be a British firm and Kraft an American firm; primarily they are private firms with shareholders all over the World. Finance, business and ownership cannot be defined by national boundaries.
Oh dear - Keep Cadbury British? So you would it be fine for other countries to object to UK success stories like Vodafone, Shell, BP, Tesco not buying businesses abroad in order to expand?I would have thought a Conservative representative would be the first to complain about this?
ReplyDeleteI worked for Boots another iconic manufacturer and Chemist to the nation when it merged and then was taken over. Have you noticed a difference? Has it been terrible for the workers?
BA is just as iconic - I think some of their workers may not like their current British owners and management. Protecting something because it is "British owned" is a concept from the 70s.
Kraft is just as likely to open up new markets to Cadbury that it never successfully broke into.
Are you sure you are a Tory?
ReplyDeleteWhat utter tosh
The simple truth is that our economy has become badly unbalanced in the past few years and we saw the devastating impact of an over-reliance on finance last year.
ReplyDeleteWe should be serious about being an economy that makes things again. That means building up our manufacturing capacity again, rather than letting the power of finance weaken it. We shouldn't be 'celebrating' badly run debt laden US companies taking over well run, profitable British companies, with the inevitable job losses that follow.
Most of our competitors wouldn't have allowed this to happen to such an iconic firm faced with such a hostile bid. Yes - the nationality of ownership is important. Read 'Where There's A Will' by Michael Heseltine for a good explanation of why.
Some of the commenters seem wedded to a dogma. I am still unclear why letting a successful UK economy fall into hostile hands will be at all beneficial for the British economy, British manufacturing or jobs.
FYI I sent this to FB too: The article isn't appalling in my view, it's sentimental. I would like Cadbury to stay a British company, but this is a free market economy and there's nothing to say that jobs wouldn't be cut if it stayed as such in future. In my opnion the PPC is quite genuine in reflecting the national dissatisfaction with losing yet another business which is part of the British psyche. This needs to be addressed more than the fact that we love choccies done our way and hopefully by our workers. The electorate are sensing a loss which is just the tip of the iceberg and do not sense any one rescuing the nation or its institutions
ReplyDeleteBut we are in danger of missing the point. David, please correct me if I'm wrong. The point I think that you appear to be making is that the real problem is not that this is a foreign takeover, but that it's yet another example of a foreign debt-financed takeover.
ReplyDeleteThus, the cash-flow of a healthy company is diverted to pay interest on the debt with which it was purchased. Cost cutting is a prerequisite rather than a strategic business oriented decision. Cadburys may have needed to cut jobs in the future, but this would have been necessitated by the performance of the business, not simply as a result of a need to finance Kraft's debt.
That is why so many see this takeover as a recipe for disaster.
We seem to have rather short memories; how about the leveraged buy-out of RJR Nabisco by Kravis, Kohlberg and Roberts in 1988, which was recognised as an appalling example of corporate greed in the free market. The company was later split. Surprise, surprise; Kraft currently owns Nabisco.
These deals are done with absolutely no regard for communities, employees or anyone else, save for the immediate short-term gain of the minority working in the City who will undoubtedly be salivating at the prospect of another set of whopping fees.
Obviously, in a free market we cannot prevent shareholders from selling their interest in a company - but we need to act swiftly to ensure that the short-termism of debt-financed deals is severely restricted.