Brexit Supply Chain Collapse: What Should Sarah Do?

Sarah Carruthers was fit to be tied. She watched with horror the way that the members of the British government argued and debated with each other, but were unable to come up with a plan to harmonize with the European Union. That mean that all imports and exports from the European Union would hit a wall of red tape, not only tariffs but of documentation, which could amount to, in some cases, upwards of a hundred documents required for a single export into the European Union.

"Don't worry! We're going to replace the European Union market with our old standby, the Commonwealth!" crowed a 20-something Brexit-er on his YouTube channel.

Sarah watched him with mounting animus. "I hope you get deplatformed!" she glowered to herself.

She thought of her own business. She had a small restaurant in the cathedral town of Bury St. Edmunds and she catered to Londoners who liked to go to farmer's markets on the weekends, and also to walk through some of Britain's most historic reaches, where assiduous treasure hunters had found hoards of Roman silver, Anglo-Saxon cloisonne and intricate braid-patterned knife hilts, hidden Catholic abbey chalices during Henry VIII's rampages, and then Georgian and Victorian knick-knacks. There were walking and biking paths, and it was altogether a historical gold mine.

"I should expand into a boutique hotel," she told herself. But with the impending Brexit shock, Londoners were scared. They were not in a mood to explore history, charming walks in nature, and fascinating churchyards immortalized by novelists and poets.

Sarah went into survival mode.

1.  She looked at what it would take to keep up her sales to Germany and France of English Shortbread and Peter Rabbit Chocolates. Most of her sales were around Easter and Christmas. Perhaps she could work with a broker.  At least she understood the anatomy of the demand.

2.  She looked at how complicated it would be to import the packaging, and other elements she used to create her hand-crafted shortbread cookies and chocolate rabbits.

Then, Phase II. She looked at how she could replace lost sales to the Commonwealth. Here were her first thoughts.  The biggest markets in the Commonwealth were India, Australia, New Zealand, Pakistan, Bangladesh, and South Africa.

1.  Peter Rabbit chocolates for Easter.  Sarah had to smile (albeit through tears) at this one. Easter?  in India? Pakistan? Peter Rabbit may seem exotic, but it's not going to capture the Hindi, Muslim, or Buddhist populations.

2.  Christmas shortbread. Same problem as Peter Rabbit in South Asia.

3.  There's always Australia, South Africa, and New Zealand, right??  Sarah's heart sank. They celebrated Easter and Christmas, but the seasons were opposite, and she did not know how chocolates and shortcake were viewed.  Plus, there was the distance, and the costs of transportation.

Also, there were complications with logistics: transportation, warehousing..

And, there was the pesky issue of brand recognition and marketing -- Sarah's products were well-known in France and Germany, and, thanks to quirky and cute advertising, their jingles were a part of the culture at large.  With the Commonwealth, they'd be starting from ZERO.

Challenge: You've been hired to give Sarah advice. What should she do to keep her sales high and profitable?

William Hogarth and the “Social Media” of 18th Century England: What Would Hogarth Say About Brexit?

Starting around 1711, with the launching of the one-page news and gossip sheet, The Tatler, London suddenly had an explosion of daily information that was liked, shared, trolled, and sometimes even “demonetized” in ways that profoundly parallel today’s social media. The Tatler, The Spectator, and The Guardian were the most influential, but there were many competitors and upstarts, all competing in a London hungry for outlets to protest conditions, rail against the leaders, and promote the theatre, arts, and literature. https://www.impmedia.co.uk/single-post/2017/03/11/New-age-of-journalism-The-Tatler-The-Spectator-and-The-Guardian

Much of the content was social and political commentary – and disinformation was as popular as truth, and more so if the truth was not very interesting.

In addition to stories and journalism, ink prints, often hand-colored, were extremely popular, and of all the artists, William Hogarth (1697 - 1764) was by far the most the most popular with his satiric and moralizing visual narratives.

Hogarth Self-Portrait with Pug (17457)

The most popular were lurid cautionary tales: A Harlot’s Progress and A Rake’s Progress (1733) were sold, and virtually all of London was encompassed in the expansive den of sin:

http://www.bbc.com/culture/story/20150610-london-city-of-sin

Hogarth Rake's Progress:  Part I 

Hogarth’s depictions of society and the kinds of characters people knew in their own society told biting stories that were built on truth. They illustrated much of what one would see in the novels and theatre of the time as well, in such classics as Oliver Goldsmith’s She Stoops to Conquer.  In his paintings, Hogarth shows a great deal of admiration for the Dutch and Flemish realist traditions, with small details showing the humanity of the subjects, such as children teaching their dogs to shake hands, as in the case of Hogarth’s oil sketch of the family of George II. https://www.rct.uk/collection/401358/the-family-of-george-ii-0

As in the social media of the 21st century, Hogarth’s prints had an immediate impact on public opinion.  They were reproduced, shared, and commented upon in the news and widely circulated daily broadsides. They had the ability to influence public opinion of public figures, as well as to openly acknowledge the darker aspects of a modernizing, industrializing center of an emerging empire.

The Role of Technology and Free Speech

As almost always is the case, technology made the breakthrough in communication possible.  New hydraulically-powered milling technology made cheap paper possible, along with printing presses, good ink, and distribution systems.

And, also there was the willingness of the government to tolerate a free press, and even though libel and slander laws were in place, the overall atmosphere was one of freedom of expression. The public loved the lurid depictions of their own society, and they had more disposable income than ever.

The Spectator

Part of the willingness to tolerate a free press could have to do with the fact that the new Hanoverian king, George I, did not speak English very well, and in fact, did not even feel comfortable in England. He was king by a trick of fate. The previous monarch had no living offspring, despite his wife’s 14 pregnancies.   The King was willing to delegate authority and take more of a hands-off approach, recognizing the role of parliament in day-to-day government. Hogarth depicted Georgian society with satire, which may have displeased the Hanoverian monarchs. https://www.bbc.co.uk/programmes/articles/glJQ3M6dRg8D7JhH03dR4k/hogarth-and-the-hanoverians

King George II (source: Wikipedia)

Under the Hanoverians, England grew, but not without controversy. With the new social media, aspects of society that could have been kept under wraps were free to be exposed, and an entire population could be awakened to what really transpired in their midst.  Hogarth’s Gin Lane and The Marriage Transaction were hard, honest, and humorous looks at the realities of London:

Gin Lane (1752): https://www.tate.org.uk/art/artworks/hogarth-gin-lane-t01799

Marriage a la Mode: The Marriage Settlement (1745): https://www.tate.org.uk/whats-on/tate-britain/exhibition/hogarth/hogarth-hogarths-modern-moral-series/hogarth-hogarths-2

Jump-start to Brexit: What would William Hogarth do?

England is on the cusp of a dramatic change, but instead of growth and expanding influence, the change involves a rather startling potential shrinkage. Brexit could open new trading relationships. In 2016, trade with the European Union constituted 48% of UK’s total exports (https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/whodoestheuktradewith/2017-02-21).  In 2016, trade with the 52 nations of the British Commonwealth constituted only 9% of total exports. (https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/commonwealthtradeinfocusasukpreparesforbrexit/2017-03-0)

Brexit does not mean that there will no longer be trade with the nations of the European Union.  However, it does mean that trade will be slower, more complicated, and subject to protectionism without the hard-won trade partners bloc harmonization protocols that are not easily replicated individual countries on a piecemeal basis. So, even if the U.K. maintains a 48% percentage of exports to the U.K., the profits are likely to be much lower.  Most economists predict that a Brexit without any sort of trade harmonization with the E.U. will result in an immediate collapse of exports to the E.U. as tariff and import ambiguities constitute a powerful barrier.

With such disastrous potential consequences, what was it that induced members of the U.K. to vote to leave the European Union?  Two factors were portrayed by social media, and they had a measurable impact on popular opinion: first, fear of immigration, and second, the resentment of external standards that resulted in very high production cost, especially in food and agricultural sectors.

One can imagine Hogarth’s depiction of U.K. farmers, shopkeepers, city-dwellers terrified by violence, and then also of immigrants and the E.U. as seen through the eyes of English nationalists.

Background Readings

Bury, Stephen. (2015) “British Visual Satire in the 18th-20th Centuries” Oxford Art Online. http://www.oxfordartonline.com/page/british-visual-satire-18th-20th-centuries

Office for National Statistics (3 March 2017) Commonwealth Trade in Focus as the U.K. Prepares for Brexit. https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/commonwealthtradeinfocusasukpreparesforbrexit/2017-03-09

Office for National Statistics (2 Feb 2017) Who does the U.K. Trade With? https://www.ons.gov.uk/businessindustryandtrade/internationaltrade/articles/whodoestheuktradewith/2017-02-21

William Hogarth. (n.d.) National Gallery.  https://www.nationalgallery.org.uk/artists/william-hogarth

William Hogarth.  (n.d.) New World Encyclopedia. http://www.newworldencyclopedia.org/entry/William_Hogarth