Blackfriar: Patience wearing thin as the downturn goes on and on

The clamour for Government action to lift the economy out of the quagmire has reached a crescendo. The Institute of Directors’ latest call heaps pressure on Chancellor George Osborne to take swift action and grow Britain out of recession.

Yorkshire firms are having their say too. Thirsk-based structural steel giant Severfield-Rowen, which supplied the metal spine for buildings including London’s Shard skyscraper and Arsenal’s Emirates Stadium, this week called for coherent energy policy to boost construction.

“We would like to see clarity on the balance of how we are going to obtain our power in the medium and longer term,” said chief executive Tom Haughey. “At the moment we seem to be frozen in the headlights.” The lean years have dragged on so long that Severfield-Rowen has been forced to restructure again. Back in 2009 it cut more than 10 per cent of its workforce, with survivors accepting wage cuts. Now it’s having to merge three businesses into one, with more job cuts likely.

Haughey insists Severfield “did not restructure in 2009”, but simply took capacity out. “This is a reorganisation,” he said.

But semantics aside, if sustained growth had returned to the UK economy, chances are we wouldn’t have been having the conversation.

Huddersfield-based paving specialist Marshalls was also forced to implement contingency measures in July, cutting inventories, jobs and production. Rewind to 2008 and 2009 and it closed four sites, reducing capacity by 21 per cent with the loss of hundreds of jobs.

The fact these two firms are having to reshape their businesses once again reflects the stifling effect this prolonged downturn is having on sound companies. The Chancellor needs to heed companies’ cry. You can only cut so deep before you hit bone.

You cannot accuse Straight Plc of being boring.

From its flamboyant chief executive to its rollercoaster journey on the stock market, the Leeds-based wheelie bin maker provides more than its fair share of excitement.

Yesterday’s profits warning was the latest dose of bad news to follow its move into manufacturing in the summer of 2010.

Straight warned it will miss the £0.9m 2012 profits’ forecast pencilled in by broker Cenkos because of delays in cutting jobs in its Hull factory.

Straight has endured a steep learning curve in its transition to manufacturer. Two years on and Powell Plastics is still causing Straight problems.

CEO Jonathan Straight interrupted his holiday in the Algarve to insist buying Powell was a smart move.

“It’s fair to say it’s caused us no end of problems, but it was definitely the right thing to do,” he said. “A lot of the things we’re doing now we would not have been able to do had the factory not been in our possession.”

He said these include developments such as running the business off renewable power and upping the recycled plastics content in its bins from 50 per cent to 90 per cent – removing a good chunk of commodity price volatility.

He’s previously said that without its intervention and acquisition, Powell would have gone bust, leaving Straight without a major supplier.

Yesterday he said union activism prevented cutting 45 jobs from the Hull plant as quickly as Straight wanted.

By his own admission, Powell was “in a bit of a state” when he agreed to buy it for up to £2.9m. Fortunately Straight has so far shelled out just £910,000 of that.

But the repeated problems with Powell cast doubts over Straight’s due diligence back in 2010.

This is the third profits warning the company has had to make over the past year or so.

Investors must be wondering when it will get a firm grip on its factory, and how many more excuses it has.

When is local really local?

It’s been a perennial question for Yorkshire Bank since its takeover by National Australia Bank in 1990 and subsequent merger with Clydesdale Bank.

Now the bank has even had to answer to the advertising watchdog over its use of ‘local’ in TV adverts.

A viewer complained that Yorkshire Bank’s claim to be “your local bank” was misleading, because it was “part of the National Australia Bank Group and was based in Glasgow”.

Fortunately for the bank, the Advertising Standards Authority did not uphold the complaint, and said most customers would understand the reference to local in the context of their nearest branch and its community involvement.

Forced into deep cost-cutting mode, Yorkshire Bank is in fact retreating to its Northern heartland. Almost 30 business banking centres in the South are closing after an ill-fated expansion, leaving Yorkshire and its sister bank Clydesdale to regroup in their respective patches.

If anything, Yorkshire Bank is becoming more local.