Talking about the global market

The global market which has evolved particularly since the widespread adoption of the Internet has created a paradigm shift in how products are designed, built and delivered.

In the early 1970's  about the time Britain joined the EEC, I was a Product Manager working for what was then the leading British lighting company.  Our world view could be simply put as  being divided into the UK market and the export market.The UK market had a massive sales team organised on a regional basis with offices and warehousing in most  major UK cities and in addition special sales teams for government contracts, major OEM customers, big companies and no doubt a few more. Not surprisingly  lot of attention was placed on designing competitive products for the home market, big launch programmes, advertising,  the works. By comparison export markets were managed by a small group who had office space on the 4th floor. Unlike our frequent trips to UK  sales offices we rarely wandered into their territory a couple of floors above us. It was a somewhat murky world inhabited by a small team of export managers who somehow divided the world up in a similar way that the UK  assigned cities and counties into 'sales patches.' Export managers were a varied lot. Some dealt with what was in effect the old  British Empire and the English speaking world in  general, where 'Made in Britain' stamped on the product was sufficient proof of quality and the only matter to discuss was the price and terms in general. It was boom time in most places then, particularly in the Middle East and securing production capacity in the scheduling was a major issue. Salesmen whispered to favoured customers things like. "I  can let you have 10,000 fittings in 3 months time." Europe was a different cup of tea. Export managers rarely spoke a second language, but there was one chap who seemed to have been recruited in error as he was alleged to be fluent in at least two European languages. The main drawback being he had no flair for selling and hated foreigners!

 When Britain joined the then EEC, to my knowledge neither I, nor any of my fellow product managers had been allowed to go abroad to get some sort of insight into the market. This was reserved for the export managers who enjoyed the perks of duty free booze and fags on their return from the continent and wanted to keep this to themselves thanks very much. The was also a quasi technical guy who was charged with getting our products approved by the proliferation of European Test Houses and spent a lot of time designing product labels to adorn our products. The absence of Test House approval was at that time given as the reason why sales to Europe were so feeble. The bad news was that the eventual award of such approval had little impact on improving sales, so new reasons were discovered. These came down to two main issues - they didn't look like European products and they cost too much.

The export sales managers had juniors who brought pretty well every foreign tender down to the product manager team to sort out. There was a clash of personalities between the technically oriented product managers who generally considered themselves superior to the export 'runners' which  created tension and led to all kinds of bad relations between marketing and export departments. Unsurprisingly the product managers were not well motivated to get involved in designing products for Europe.

As product managers we worked with designers, development engineers, in-house test engineers, production engineers and with much shuttling between the laboratories, drawing office, test department and factories to get our products produced. We also calculated the 'Cost to Sales' - an absolutely key figure which ensured factory overheads were recovered, tooling investment fully amortised and the sales mark up sufficient to provide discounts for wholesalers and contractors, could be sold at a competitive price and achieve a return  Gross Margin [GM] at company set target figures. We PMs assiduously studied reams of computer print outs each month, avidly checking GM s for our product portfolios. One of my product portfolios was 'Outdoor Lighting . In this product  category was one of our best sellers; a 500 W tungsten halogen floodlight which sold several million during  the product's lifetime and typically sold back in 1970s Britain for round about ten pounds. I  have just Googled a floodlight of the same sort and turned up a price of £4.95! That's undoubtably offered for sale at less than I  could get the same sort of product made for, 40 years ago. A pound in  1973 is apparently worth £11.90 in 2016, so the £10 fitting in 1973 would be £119.00 now. Amazing.

From time to time we tried to open up a market opportunity for domestic garden lighting but always came up against a major problem. Hardly anyone had an outside electrical supply and didn't fancy spending a £100 or so to get an electrician in to light up some roses. Last weekend we bought a pack of 8, for what was described as 'Smart Yard, LED  large solar lights'  all for under £40, or put another way, approximately £5 a fitting. The LEDs neatly solve the need for a mains electrical supply - a technology not available to us 40 years ago - but what was interesting was the pricing and by inference, the cost and the journey from manufacturer to end buyer.  The units contained LEDs, associated electronic driver circuitry a photocell, a waterproof housing  with windows and  mounting spike plus packaging, probably at a cost to sales of £2 to £3! But wait a moment, country of manufacture was shown as Taiwan, imported to California, USA and shipped to Costco in Milton Keynes, England. In short made on the other side of the world, shipped via America to England , sold by an American outlet all for a few pounds. I am left wondering how much cheaper would it be without any import duty to the EU [averaged duty for this class of product is over 15%] and this is not an isolated example either.

So what would change if Britain leaves the EU. In this scenario just the import duty would go, we could pick this sort of stuff even cheaper.