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Friday, 30 December 2011

A different approach to company ownership ...

A report in today's newspaper got me thinking. The report itself concerned the change of Chairmanship of a large German company which produces a wide range of frozen foods, packaged food, baking materials and considerably more in related goods. The firm started out as an Apothecary business in the 1890's and was founded by one Dr. August Oetker. The remarkable thing is this, that it survived two world wars - after the second having to be almost rebuilt from scratch - and is now one of Germany's largest manufacturers and suppliers of food, but it is not a "public company" and doesn't trade on the stock exchanges. It is family owned and run ...

This seems to me to be one of the major differences between the UK and US approach to business. Where the German's start one they start out small and grow it. They keep control of it and develop it for their own and their workers benefit. Germany requires worker representation at Board level so the workers also have a stake in the business and the decisions. Where a company does sell shares, it is never more than 40% of the capital and that is monitored carefully. A "Trust" usually manages a small 'share' holding for the employees where one is set up and the 'family' own and run the majority of holdings. Another good example is BMW, but others include Ziegler Fire Equipment, Steiff (the Teddy Bear makers) and the Aldi chains.

As various founders have discovered, the UK and US models are very different and a company is very unlikely to remain under the control of the founder and his or her family. Examples include Body Shop and Eddie Stobart, both taken over in Boardroom coups after going public and finding themselves the target of asset strippers and the money men. Eddie Stobart in particular was a nasty affair, the founder having built a large haulage company, run on tight lines with hands on from the man himself. His drivers were hand picked, always neatly dressed and treated extremely well. Post being persuaded to sell a stake in his company, Mr. Stobart found himself being told how to manage and what he could do by a bunch of smart 'suits' with no knowledge of the trucking business. Eventually he was pushed out and off the Board - and died of heart problems shortly after. The company name survives, but it isn't the same efficient and caring organisation it was - and its had several changes of ownership and board members since. Eddie must be rolling in his grave since the "new" owners are an "offshore" holding company and Eddie was nothing if not patriotic.

While the US and UK seem to think that selling off everything including their staff and families is perfectly acceptable, the German view is very different. Here there is a deep pride in the part these companies play in the economic health of the nation. Suggesting to Dr Oetker's family that they should sell their controlling stake in the company would be likely to get you shown the door assisted by a pair of burly security men. They'd rather sell the family silver!

Does this system work? I'd have to say that in my view it certainly does. These family owned and run businesses don't have the staff turnover or industrial relations problems their "multi-national" competitors experience. That alone has to be saying something. There are industrial problems of course, it would be totally misleading to suggest there were not, but they tend to get resolved much more speedily and much more amicably than those I encountered in the UK. For one thing there is far less of the "them" and "us" at work here in trade union activity and again, it tends to be strongest in those industries where the "shareholders" are remote and have only a financial interest in the business.

I can't escape the feeling that if the UK and the US want to survive as major economic powers they need to rethink both management and ownership of their assets. Speculative buying and selling of commodities is one thing, but when it comes to speculating with hard assets such as jobs, manufacturing premises and the like, it becomes a very different ball game. It is this sort of speculation - encouraged by Whitehall and Westminster to a very large degree - that has seen almost all of Britain's major industries exported to "developing nations" and of course, the jobs went with the hardware - but not the workers.

Dare one, in the face of the hysterical reporting of the Daily Mail and others of the purported "recreation of Charlemagne's Empire" or "the Fourth Reich," suggest that a little less hysteria, a lot more calm thought and a good hard look at the manner in which the nations assets are traded, stripped and exported might be in order? Certainly the German model may not be perfect, but it certainly has a great deal to commend it!

1 comment:

  1. I'm sorry I missed this one from last year. I wonder what it would take for us to switch back to family-owned? Is the genie out of the bottle?