Close to one in three British businesses plan to relocate some or all of their operations abroad, according to the Institute of Directors. The Dutch government reports that it is in talks with over 250 companies about moving their operations to the Netherlands over the coming months. The front-page headline of one newspaper, pro-European, asks “Will the last business to leave the UK please turn out the lights?”
Owned by and run for millions of people in the UK, co-operatives are the most rooted of business and least likely to cut and run. Co-ops have made a virtue of their ties, promoting fair tax compared to companies who move off shore to avoid tax and building more local supply chains. The decision of the Co-op Group in 2017 to source 100% British fresh meat put it at a commercial advantage to its competitors scrambling now to secure their own domestic supply chains.
In our contact with members, we recognise that there are important international trade links for co-operatives, within the EU and beyond. The commercial challenges of Brexit are no less for co-operatives than for any other form of business. Even so, co-ops are here to stay.
Co-operatives are sometimes classed in economic language as a ‘commitment device’ – a way to benefit over time through a shared pledge. Dairy farmers might get a better deal for their milk at auction on a Monday. Consumers might get a better price for their energy on a switching site on a Tuesday. But by being committed to the co-operative as a member and as the business is committed to operate for the benefit of its members, both gain over time through better deals and better service.
Related: How did the UK co-op movement feel about joining in 1973?
So, if co-ops are committed to the UK because they are committed to its members, what should be done in the context of Brexit?
The first is to identify the risks ahead. Brexit is a time of extraordinary uncertainty and that means that boards have a unique role. Get out of the everyday and into strategic risk.
Boards typically know how to map risks and put controls in place to monitor and mitigate them. Strategic risk focuses instead on the critical matters for the period ahead. Trevor Llanwarne, former government actuary, has helped to overhaul risk governance in the public sector, criticising as distracting the 30 or 50 page risk registers used before. He points to the end of the film The Italian Job, where the bus is perched perilously on the top of the cliff and asks: why would you be worried about whether the headlights work when you’re in this position?’ Put another way, he asks, why is so much time spent on hundreds of little risks that probably don’t matter?
The second is to secure the business on behalf of members. A struggling or insolvent co-op can serve no-one.
Looking through each part of the business, there may be impacts. Brexit planning implies looking at sales, marketing, logistics, legal, tax, HR and more. If you are engaged in cross-border payments, there will be implications. If you recruit or employ EU nationals, there are implications. If you are engaged in cross-border trade with EU countries, in your supply chain or in sales, you are of course high up the list of those affected.
The headline is to prepare for a short- or medium-term disruption both to supply chains AND to revenues. The challenges will be greater, possibly terminal, for businesses with a weak cash position. No one knows how banks will respond, so for now, cash is king. So what preparation can be made for access to credit or to free up cash flow?
Related: UK retailers urge parliament to avoid a no-deal Brexit
The third is to act in ways that draw on co-operative values.
When it comes to economic shocks, the only way out is through collaboration. This may mean being ready in terms of marketing to communicate why products or prices may be changing, or prepared to help with payment terms or special offers to vulnerable customers who face their own lean period. The more that co-ops increase their diversity, the more likely they are to spot innovations and new ways to serve their communities.
If there is an economic shock, businesses will need to work together in towns and regions. Italian co-ops have shown how businesses can come together to improve creditworthiness and gain access to capital. Through our own work with partners, such as Locality, Plunkett Foundation and Power to Change, we have shown how co-ops can be at the heart of community economic development, turning round neighbourhoods written off by others through self-help and mutual aid.
At a time in which the bandwidth of co-operatives are stretched, with a need to focus on business essentials, there is also an opportunity for cooperative leadership that could be the making of the UK movement. We are different. And we are at our best when we act for the common good.
