What with Euro-sceptics, federalists and a whole party committed to the single issue of a referendum, Europe – and particularly the question of monetary union – will undoubtedly be at the forefront of the election debate.
Some commentators will claim that a single currency will result in the British Government relinquishing control over fiscal policy, others will view it as the thin edge of the wedge towards further surrender of sovereignty to Brussels. Some will even complain that by not openly embracing monetary union, Britain risks losing ground to its European partners, perhaps irrevocably.
But the politics and the clash of ideologies reveal only one part of the argument. They do not necessarily reflect the day-to-day experience of those who already trade on a pan-European basis. As manufacturing director of a £100m, privately-owned British engineering group which manufactures in three European countries – the UK, Netherlands and Germany – the benefits which a single European currency would offer are apparent.
Colt has been developing a new European manufacturing strategy, to maximise facilities available to us to make our products as competitive as possible. We have examined closely how our products comply with individual national standards as well as the harmonised CEN standards. This has prompted us to consider rationalisting certain ranges to enable us to produce products suitable for application across the European Union rather than territory by territory. It is a major exercise for a company of our size, and implementing it is not helped by unpredictable external factors.
Take, for example, the production of one of Colt’s mainstay products – the louvre, the natural smoke ventilator – and the maze which manufacturers have to negotiate when trading in European currencies becomes self-evident.
The louvre is made from aluminium extrusion, aluminium sheet and polycarbonate. Colt purchases the polycarbonate in guilders from a Dutch distributor, which in turn, purchases it from a supplier in Germany, selling in marks. The aluminium extrusion is purchased in the UK in sterling against ingot which is traded in US dollars. The louvre ear is made in aluminium sheet, bought in the UK in sterling.
These elements are fabricated and put together to produce an assembly which is sold in sterling to Colt’s Dutch plant at Cuijk, near Nijmegen. There the louvre assemblies are incorporated into complete ventilators which are sold throughout Europe, priced in guilders.
In addition to the sheer administrative complexity of managing such a process, fluctuations between the currencies, of up to 15% in some cases, can have serious implications for the business and can affect factory gate prices which the manufacturer has to either swallow, affecting margins and profitability, or pass on, affecting competitiveness.
Speculation on currencies or commodities can be even more damaging. Last year, speculation on the London Metal Exchange created false shortages of aluminium, forcing prices up from £1,200 per tonne to £2,050 per tonne within a very short period. Such vagaries shackle business and do little to improve our competitiveness, not only with our European partners but also in the Far East and the Pacific Rim.
Manufacturers look for stability and equal treatment. Both underpin effective planning.
Stability only comes by eliminating uncertainty. One would hope that whatever the result of the general election, the present uncertainty over Britain’s position on a single currency will be resolved, to the point that industry can plan with greater confidence.
Ultimately, of course, the decision of whether Britain should or should not countenance European monetary union will be played out on a bigger stage than ours. The debate will revolve as much around emotive issues as it will the practical benefits or disadvantages. Politics rather than industry will be the determining factor. But if the debate is to be an informed one, those of us who have a working interest have a duty to ensure that our experience forms an important part of the argument.