British Steel’s &£695m all-paper agreed takeover bid for Dutch metals producer Hoogovens is less remarkable in itself than for what it says about Britishness. And, with European Parliament elections this week, it’s fairly important that we have some understanding of what Britishness is, since politicians are telling us what they think it is.
The British Steel deal, which will deliver the British combine a 62 per cent controlling share of the combined group, is illustrative because it appears that it is accompanied by an almost hand-wringingly apologetic attitude to Britishness.
It is widely acknowledged that, when the deal has gone through, the combined company will drop British from its name. On cursory inspection of the statistics, there is a clear industrial logic to this decision. The deal is being portrayed as a merger of equals, rather than a takeover by British Steel, and a new name must reflect that intention.
Nor is the attempted parity entirely cosmetic or illusory. British Steel will return nearly &£700m to its shareholders by effectively buying its own shares ahead of the deal, in order to shrink its equity so as to give Hoogovens more equity. As a result, Hoogovens will hold nearly 40 per cent of the new entity, through striking a deal with a company three times its size. British Steel will enjoy the additional benefit of pleasing shareholders that have tolerated years of under-performance.
Nevertheless, British Steel’s diplomatic efforts towards its shareholders and towards the Dutch are a far cry from the attitudes that drove those who named it in the first place. Socialist politicians who supported nationalisation of the industry and the Tories who privatised it have had one thing in common – a pride in the national identity of British industry.
The motives that drove this pride will have varied. They may have included international competitiveness, qualitative heritage and downright post-imperial jingoism. Whatever the motives, we can be sure that they are absent now. Otherwise British Steel would be hoisting the Union Flag in Holland.
There are brand identity issues here that need to be addressed. If Britain is a brand in world trade and if it has in the past been acknowledged to carry a value, then it should be abandoned consciously and deliberately for identified reasons, rather than frittered away through a process of attrition. The British Steel deal may form part of such an attrition.
I could be accused of over-reacting. This is but one, good opportunity for a great British industry to develop on the international stage against a background of consolidation. So why get hung up on the British label? Is it not indicative of my own latent xenophobia?
Possibly, were it not for the fact that the attitude displayed in the British Steel affair is part of a recent trend jettisoning Britishness as a brand quality. This is particularly true of the privatised utility conglomerates and, again, could be interpreted as a deliberate policy, were it not for some evidence of confused thinking.
British Telecom has long been BT for purposes of global expansion, British Gas was domestically regulated into a starburst that constitutes names such as Centrica, Transco and BG Group. Now British Steel casually lets it be known that it may drop its name in the Hoogovens deal.
The confused thinking is illustrated by the recent, wretched experience of British Airways which, like the others, has these days to be known as BA. Two years ago, BA embarked on what I thought was a brave and visionary exercise in corporate identity, by abandoning traditional flag-flying tail-fins in favour of progressive art from the world markets in which it operates.
This was an exciting attempt to develop from national to global branding. But it has foundered on the disapproval of passengers in the front of the plane, in the portly shapes of First and Business Class passengers. Chief executive Bob Ayling has been forced, under pressure of a 61 per cent annual pre-tax profits collapse to &£225m, to announce that the BA fleet will increasingly revert to a national flag design. Maybe it will also revert to being called British Airways. And perhaps it will have to wait for a Cool Britannia generation in Economy to graduate to the front of the plane before attempting anything so radical again. But it is worth noting that the retreat to traditional nationalism came from the passengers in the premium classes, the overwhelming majority of whom will have had their tickets paid for by corporate Britain. Business Class is where the market growth lies. I gather that Ayling received xenophobic and racist correspondence about his corporate identity from some of these people.
I don’t know whether British Steel or BA is operating the right corporate identity strategy. But in a week when the Conservative Party is seeking to exploit the collapse of the value of the euro for party political purposes and when the UK Independence Party is seeking to capitalise on a low turn-out in the European elections for Little England purposes, British industry had better know where it stands on Britishness.
Or an important element of global branding will be squandered in politics and muddled corporate policy.
George Pitcher is a partner of issue management consultancy Luther Pendragon