Kanes Foods

A Message from Lord Pickles and Lord Blunkett, followed by Kanes Foods's best practice article

The ability to listen and learn from one another has always been vital in parliament, in business and in most aspects of daily life. But at this particular moment in time, as national and global events continue to reiterate, it is uncommonly crucial that we forge new channels of communication and reinforce existing ones. The following article from Kanes Foods is an attempt to do just that. We would welcome your thoughts on this or any other Parliamentary Review article.

Blunkett signature Rt Hon The Lord David Blunkett
Pickles signature Rt Hon The Lord Eric Pickles

www.kanesfoods.co.uk

37KANES FOODS |
BEST PRACTICE REPRESENTATIVE 2018
Steve Corby, CEO
Kanes Foods’ state-of-the-art
salad production facility
Great British businesses face increasing obstacles as we strive
to supply the nation with fresh salads and vegetables,
prepared for consumers’ ready-to-eat and ready-to-cook
convenience. Without a sharp change in government policy
many businesses in this sector will fail. That means that the
prices Britain’s shoppers pay for healthy, natural foods like those
supplied by Kanes will rise sharply. This, in turn, will lead to
reduced consumption of fruit and vegetables and the associated
damage to the nation’s diet and general wellbeing. Steve Corby,
CEO, explains how the company has adapted to change in the
sector.
We are the largest private employer in Worcestershire. Based near Evesham, we are
a second-generation, family-owned company. We employ 1,550 people, producing
washed and ready-to-eat bags and bowls of salad, fresh stir-fry vegetables, noodles
and sauces, fresh salad dressings and ready-to-cook prepared vegetables. Last year,
we supplied 150 million units to grocery and food-service customers.
Founded by Dr John Randall in 1990, Kanes enjoyed two decades of great success,
becoming a leader in the food industry and growing turnover to over £100 million.
Since his death in 2011, the sector has experienced considerable and rapid change
and our business struggled to keep pace with best practice and business process
developments. Two of Dr Randall’s sons, who now own the business, recognised
this, and in 2016 appointed me as CEO, with a mandate to reshape the company.
We now have a clear strategic plan and a new leadership team, which combines
retained skills with external experience to breathe new life into the company.
FACTS ABOUT
KANES FOODS
»CEO: Steve Corby
»Established in 1990
»Based near Evesham,
Worcestershire
»Services: Production of
washed and ready-to-eat bags
and bowls of salad, fresh stir-
fry vegetables, noodles and
sauces, fresh salad dressings,
and ready-to-cook prepared
vegetables
»No. of employees: 1,550
Kanes Foods
THE PARLIAMENTARY REVIEW
Highlighting best practice
38 | KANES FOODS
In 12 months we have diversified
our customer base from two major
customers to a balanced blend, split
across multiple retail channels. Beyond
this, we have implemented several
other initiatives that have contributed
to our successful turnaround,
including:
»Outsourcing auxiliary activities such
as on-site catering, cleaning and
laboratory testing to third-party
specialists, helping these businesses
to grow while simplifying our own
operations and enabling us to focus
on what we’re best at;
»Recognising the fundamental
need to attract, train and retain
higher-calibre job applicants and
reorganising our employee structure
into a model with fewer, more
capable and better-paid colleagues;
»Formation of strategic partnerships
with suppliers of choice and
recruitment of sourcing experts
for both the UK summer season
and across Europe for winter
seasonimports;
»Maintaining our commitment to
deliver the best quality and the
longest product life for consumers,
at best value, by continuing to
operate at the highest technical
standards and with integrity, earning
recognition through Asda’s Technical
Awards 2017 and our British Retail
Consortium (BRC) A* rating;
»Removal of 20 per cent of loss-
making volume and reducing our
four factories to three, while adding
a net 20 per cent to overall turnover
and redeploying factory staff.
Each of these initiatives has been
necessary for our business to survive
in an exceptionally aggressive and
competitive marketplace. Total
produce sales in UK grocery retail are
reportedly growing +1.5 per cent but
this sales growth is only evident in the
discounter retailers, Aldi and Lidl. The
impact on the country’s mainstream
grocery retailers, disadvantaged by
more complex and costly business
models, means they are having to
force down their own prices in order
to compete. This is good for the UK’s
shoppers, but it makes it impossible
for the supply base to pass on genuine
increases in commodity prices, the cost
of labour and the impact of foreign
exchange rates. Consequently, the
UK’s grocery suppliers are having to
absorb cost increases and the pressure
is threatening the existence of many
UKSMEs.
In addition, we have to cope with
the damaging effects of several
inflationary government policies. In
the past two years four unconditional
increases in the National Living
Wage (NLW) have inflated our cost
of labour, both directly and through
the knock-on effect throughout the
pay scale. Without being able to
make such increases conditional on
improvements in productivity, the NLW
is unaffordable as a long-term policy.
At the same time, we’ve incurred
further inflation of close to 2 per cent
on our direct labour cost through the
implementation of automatic pension
enrolment across our 1,550-strong
workforce, with a further 1 per cent
already mandated in the next financial
Kanes Foods makes healthy,
tasty and convenient meal
solutions for everyone
The UK’s
grocery
suppliers are
having to
absorb cost
increases and
the pressure is
threatening
the existence
of many
UKSMEs
39KANES FOODS |
BEST PRACTICE REPRESENTATIVE 2018
year. Furthermore, we have been
challenged by HMRC’s reinterpretation
of NLW to move clocking-in points
in our factories, which will reduce
productivity (time taken to change into
working clothes is now counted as part
of the shift), and of benefits such as
staff bus services, making them non-
viable and forcing more traffic onto
our local roadnetwork.
Labour challenge
Half of the raw materials we process
come from the UK, but to supply
all year round we must import crop
from the continent. The fall in the
value of sterling has unavoidably
added £3million to our cost of
manufacturing. More alarming is its
impact on the UK labour market.
Anecdotally, we understand the pound
is no longer worth enough to justify
travelling to Britain to work. Coupled
with this we hear many Europeans
simply feel less welcome in our country
in the wake of Brexit – feedback that
is as dismaying as it is difficult. The
resulting vacancies in our factories
(people from 21 countries work in our
company) aren’t being filled by UK
citizens, creating a shortage of labour
despite our pay rates now being up
to 8.5 per cent higher than NLW. We
cannot get the labour to keep all our
lines busy and almost 30 per cent of
our labour bill is due to overtime and
the hire of agencyworkers.
Our industry is dependent on imported
labour, which the government is
seeking to restrict: labour which
doesn’t meet the narrow, high-
tech, super-skilled criteria which
the government is trying to
set as the parameter for future
acceptablemigrants.
The government needs to answer
some basic questions:
»How does it respond to the need
for imported labour in the grocery
supply chain?
»How does it reconcile its anti-
inflationary rhetoric and fiscal
policies with labour policies which,
due to the lowest unemployment
figures since 1975 and the further
reductions in labour availability due
to Brexit, can only cause an upward
spiral in wage rates?
»What support can be given to UK
businesses that currently rely on
imported labour as they try to recruit
domestic labour in the wake of the
country’s withdrawal from the EU?
»Can it champion the supply and
consumption of fresh, healthy and
natural produce by offering relief
to companies in the sector and
preventing wholesale failure in the
face of seemingly insurmountable
obstacles?
Our mission is to create sustainable
value, supplying healthy, tasty and
convenient choices for everyone.
The government must act now to
give clear and decisive support on
the labour challenges it is causing
to prevent a crisis in the UK’s fresh
produceindustry.
Our industry is
dependent on
imported
labour, which
the
government is
seeking to
restrict
Stir-fry vegetables
production line

www.kanesfoods.co.uk

This article was sponsored by Kanes Foods. The Parliamentary Review is wholly funded by the representatives who write for it. The publication in which this article originally appeared contained the following foreword from Rt Hon Kwasi Kwarteng.

Rt Hon Kwasi Kwarteng's Foreword For The Parliamentary Review

By Rt Hon Kwasi Kwarteng

This year’s Parliamentary Review reflects on a tumultuous and extraordinary year, globally and nationally. As well as being an MP, I am a keen student of history, and I am conscious that 2020 would mark the end of an era. It will be remembered as the year in which we concluded Brexit negotiations and finally left the European Union. Above all, it will be remembered as the year of Covid-19.

In our fight against the pandemic, I am delighted that our vaccination programme is beginning to turn the tide – and I pay tribute to the British businesses, scientists and all those who have helped us to achieve this. But the virus has dealt enormous damage, and we now have a duty to rebuild our economy.

We must ensure that businesses are protected. We have made more than £350 billion available to that end, with grants, business rates relief and our furlough scheme supporting more than 11 million people and jobs in every corner of the country, maintaining livelihoods while easing the pressure on employers. The next step is to work with business to build back better and greener, putting the net zero carbon challenge at the heart of our recovery. This is a complex undertaking, but one which I hope will be recognised as a once in a lifetime opportunity.

Through the prime minister’s ten point plan for a green industrial revolution, we can level up every region of the UK, supporting 250,000 green jobs while we accelerate our progress towards net zero carbon emissions.

With our commitment to raise R&D spending to 2.4% of GDP and the creation of the Advanced Research & Invention Agency, we are empowering our fantastic researchers to take on groundbreaking research, delivering funding with flexibility and speed. With this approach, innovators will be able to work with our traditional industrial heartlands to explore new technologies, and design and manufacture the products on which the future will be built – ready for export around the globe.

And I believe trade will flourish. We are a leading nation in the fight against climate change. As the host of COP26 this year, we have an incredible opportunity to market our low-carbon products and expertise. Our departure from the EU gives us the chance to be a champion of truly global free trade; we have already signed trade deals with more than 60 countries around the world.

As we turn the page and leave 2020 behind, I am excited about the new chapter which Britain is now writing for itself, and for the opportunities which lie ahead of us.
Rt Hon Kwasi Kwarteng
Secretary of State for Business, Energy and Industrial Strategy