Blog – Localise WM

FT: American executives turn away from globalisation towards a more localised world

June 7, 2017June 7, 2017localise2

Last month the Financial Times’ Gillian Tett met Inge Thulin, the Swedish-born chief executive of 3M, an American conglomerate at the Council on Foreign Relations in New York (below).

She reports that – though 60% of its revenues and 40% of 3M’s workforce are outside American shores – Mr Thulin, when discussing corporate strategy, prefers to talk about “localisation”:

“Our strategy has changed. If you go back [several] years, there was a strategy of producing at huge facilities at certain places around the world, and shipping it to other countries. But now we have a strategy of localisation and regionalisation. We think you should invest in your domestic market as much as you can.”

Instead of “free” trade, American executives are now calling for “fair” trade, along with “reciprocity” and “equalisation” of trade deals.

When Donald Trump started talking about restoring US manufacturing last year, he tapped into a subtle trend that was already emerging. As the West Midlands Producers’ site noted, the reshoring trend, successes and possible pinch points, have been systematically explored and publicised by Aston University’s Professor David Bailey since 2013; two years it quoted Professor Dr Michael D. Johnson, Department of Engineering Technology and Industrial Distribution, Texas A&M University, briefly in the FT:

“My colleagues and I have found that importing goods from China to developed countries (for example, the US) entails numerous increased costs: transportation, inventory carrying, and production and logistics oversight. The combination of these increased costs, just-in-time manufacturing needs, and increased developing country labour rates contribute to the economic viability of localised flexible manufacturing facilities serving developed country markets”.

Ms Tett recommends a survey of US companies conducted by the Boston Consulting Group which showed that as recently as 2012 American companies were busy building cross-border supply chains, 30% with China – but 31% in 2015 planned to boost production in America and only 20% in China.

One reason for this shift is a rise in relative wage costs in China.
Another is that production costs in the US have fallen because of automation and cheap energy.
However, a third point is that chief executives have realised that long supply chains create political and logistical risks.

“The days of outsourcing are declining,” Jeff Immelt, General Electric chief executive, observed late last year. “Chasing the lowest labour costs is yesterday’s model.” even before Mr Trump arrived in office, the C-suite (slang: important senior executives) was losing its blind faith in globalisation. For better or worse, we face a more localised world”.

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A regenerative ‘Circular Economy’ includes more localisation of economic activity

May 20, 2017June 7, 2017localise2

The Circular Economy is advocated to replace and address the social and environmental damage done by the current ‘Linear Economy’ with its ‘take, make, dispose’ model, depleting finite reserves to create products that end up in landfill or in incinerators. It achieves its objectives through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling – reducing waste to zero. Some examples of such practice are presented on the website of the World Economic Forum.

The idea of circular material flows as a model for the economy was presented in 1966 by an economist, Professor Kenneth Boulding, in his paper The Economics of the Coming Spaceship Earth.

In the 70s, Walter R. Stahel, architect, economist and a founding father of industrial sustainability, worked on developing a “closed loop” approach to production processes. He co-founded the Product-Life Institute in Geneva; its main goals are product-life extension, long-life goods, reconditioning activities, waste prevention, advocating “more localisation of economic activity”.

With Genevieve Reday, he outlined the vision of an economy in loops (or circular economy) and its impact on job creation, economic competitiveness, resource savings, and waste prevention. Their Hannah Reekman research report to the European Commission, “The Potential for Substituting Manpower for Energy” (1976) was published in 1982 as a book (left) Jobs for Tomorrow: The Potential for Substituting Manpower for Energy.

The Waste & Resources Action Programme (WRAP) a charity, which receives funding from the Department for Environment, Food and Rural Affairs, the Northern Ireland Executive, Zero Waste Scotland, the Welsh Government and the European Union was set up in 2000. From its headquarters in Banbury it works with businesses, individuals and communities to achieve a circular economy through helping them to reduce waste, develop sustainable products and use resources in an efficient way. Below: the header for its March report:

On 17 December 2012, the European Commission published a document entitled Manifesto for a Resource Efficient Europe. This manifesto clearly stated that “In a world with growing pressures on resources and the environment, the EU has no choice but to go for the transition to a resource-efficient and ultimately regenerative circular economy” and outlined potential pathways to a circular economy, in innovation and investment, regulation, tackling harmful subsidies, increasing opportunities for new business models, and setting clear targets.

‘Resource’, the first large scale event for the circular economy was held In March 2014 and Walter Stahel joined the programme of 100 business leaders and experts. Many major stakeholders and visitors from across the globe attended. An annual large scale event is now increasing the uptake of circular economy principles. Circular Economy Examples may be seen on the website of the World Economic Forum and there are indications that some multinational companies may be cherry-picking related ideas which cut costs and increase profits.

Some will have reservations about the involvement of McKinsey & Company, which has issued two reports on the subject – one commissioned by the Ellen MacArthur Foundation.

Peter Day explored the work of the Ellen MacArthur Foundation and its associates on radio (In Business) on 23rd April 2015 – listen again here.

Ellen established this independent charity in 2010 and eloquently outlines the economic opportunity of a circular economy, giving the concept wide exposure and appeal.

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Localising moves in four Eastern European countries

May 3, 2017localise2

The Romanian parliament has passed a law requiring large retailers with a turnover of 2m euros to allocate a minimum of 51% of existing space for fresh produce to products sourced locally, from a short supply chain.

The law, which came into effect last month, initially stated that products should come only from Romania but had to be amended after Brussels warned that this would be a breach of EU regulation. Under the amended text, Bulgarian and Hungarian products would also qualify as part of a short supply chain.

French retailer Carrefour has founded an agricultural co-operative in a Romanian village to bring local fresh produce to its shelves. It includes 80 families of producers who own 60 hectares of agricultural land. Carrefour will source 5,000 tonnes of fruit and veg from the local co-op in the village of Varasti.

Through the co-op, which officially launches this month, farmers will be able to scale up production and have a single collection centre. The partnership with Carrefour guarantees them a production plan and price, and means they will receive fast payments for their products.

RetailEU described the legislation as protectionist but added that Romania is not the only country concerned about its local manufacturers; Slovakia wanted to force supermarkets to inform customers at the entrance of the number of Slovakian products in the store and recently the Polish government introduced a “supermarket tax” on all major (and therefore foreign) retailers, as Hungary has already done.

Are the region’s schools and hospitals sourcing food locally?

April 2, 2017April 3, 2017localise2

BBC Scotland made freedom of information requests to all 32 Scottish councils about the sourcing of food products bought last year.

Despite campaigns by the Scottish Government to buy local produce. Of the 28 authorities which responded, it was found £1.3 million was spent on chicken products from Thailand, more than £125,000 on carrots from Belgium, £125,000 on mashed potato from France and almost £12,000 on raspberries from Serbia.

Read more about Scottish food here: http://www.taste-of-scotland.com/foodproducers.html

Farmers said they want to see more done by councils to source local produce and the Scottish Greens first raised the issue of councils buying chicken from Thailand in 2013.The party’s health spokeswoman Alison Johnstone said:

“It’s disappointing that, three years on from our investigation, this remains a problem. Our economy is losing out. Government food policy remains too focused on exports rather than supporting local procurement. Councils need support so they can buy Scottish more often.”

A review of food and drink nutrition in schools is now under way. John Swinney, the education secretary, said that he wants school food to be “sourced as locally as possible” and has asked experts from Food Standards Scotland, NHS Health Scotland and Education Scotland where provision can be improved.

LWM is working with a number of partners to promote this agenda. While the Carter Review of 2015 put obstacles in the way of localising NHS procurement, with its insistence on frameworks and catalogues, it recognised the value of locally sourced food. County Hospital, Stafford was one of the first to gain a gold Food for Life Catering Mark, an initiative of the Soil Association recognised by NHS England. This experience is being passed on through the West Midlands NHS Sustainability Network.

The fragmentation of the schools system means it’s less clear how many schools are following this approach, though many are growing their own salads and fruit as part of healthy eating projects. In Smethwick, Victoria Park Academy has its own social enterprise, Ballot Street Spice, and it’s hoped they will sell their spice mixes at the Midland Met Hospital food market when it opens. The Department for Education has recognised the Food for Life Catering Mark, and the government plan for Procurement cites it as a best practice tool.

Event: launch of post Brexit & Trump report commissioned by MEP

March 15, 2017March 15, 2017localise2

The Brexit vote and the election of Trump have been hailed as marking the reversal of the long trend towards increased globalisation.

These changes possibly also mark the end of neoliberalism as the dominant ideology of our times. For opponents of what globalisation and neoliberalism have meant in practice these developments might be seen as welcome. Yet at the same time Brexit and Trump seem highly problematic for anyone concerned with social justice and ecological sustainability.

A new report by Green House authors Victor Anderson and Rupert Read, commissioned by MEP Molly Scott Cato will be launched on Tuesday 28 March from 14.00 – 16.30 at Europe House in central London.

The report considers the impact of the UK’s withdrawal from the EU on trading practices and the opportunity to move to a less globalised and more localised economy. It emphasises that there are many different versions of Brexit, and aims to put a green version firmly on the political agenda.

Note: Panel discussion with Nick Dearden (Global Justice Now) and Helena Norberg-Hodge (Local Futures and International Alliance for Localisation of which Localise West Midlands is a member). Helena’s contribution will be by pre-recorded video due to prior commitments.

Register and get full details here.

Changing local economies to work for people who feel excluded

March 2, 2017March 2, 2017localise2

A link has been received to a Guardian report about the ‘Preston model’ – for background information see Clifford Singer’s interesting article on the Next System Project’s website.

Councillor Matthew Brown, Preston city council cabinet member for social justice, inclusion and community engagement, devised this model. 12 of the city’s key employers were helped to reorganise their supply chains and identify where they could buy goods and services locally, stopping 61% of their procurement budget being spent outside the Lancashire economy. The employers included ‘anchor institutions’ such as:

the county constabulary,
a public sector housing association,
colleges
and hospitals

Since 2011, Lancashire council’s central government grant had been reduced from £30m to £18m, leading to cuts in everything from community engagement to parks and the leisure centre. “The intention was to devolve cuts and blame it on us,” Brown says. “But you can become more self-sufficient.”

The Public Services (Social Value) Act 2013 now allows public bodies in England to take into account the social, environmental and economic impact of their commissioning. A key step was to redirect lucrative contracts, such as printing services for the police and food for council buildings, towards local business and the city council doubled its procurement spending with Preston companies from 14% in 2012-13 to 28% in 2014-15.

Brown and his colleagues want to build a city where workers are in control of wealth, improving people’s sense of citizenship. “We’ve got the public pension fund to invest in student housing, we’re looking at setting up a local bank to give business loans and for the local authority to become an energy provider,” he says. “You put all that together and you can see how we are developing the infrastructure for a new economy.”

The model was inspired by cooperatively run communities in Cleveland, Ohio and the world’s largest co-operative group, Mondragón, in the Basque region of Spain, and has been cited in speeches by the shadow chancellor John McDonnell and other councils, including Birmingham, Rochdale and Sheffield have taken an interest in the initiative.

Matthew Brown has worked with the Centre for Local Economic Strategies, a Manchester-based think tank with considerable experience of working collaboratively with local authorities and other institutions to boost local economies.

CLES is working in Birmingham with Localise West Midlands because for many years LWM has made the case for more inclusive, ‘locally grown’ economies – see its ground-breaking report, Mainstreaming Community Economic Development. The focus is on those ‘anchor institutions’ which have a major impact on the city. As part of a separate initiative, LWM is working with the New Economics Foundation, CLES and New Start. They have brought together a group of local practitioners from the region which has suggested a focus on health and social care. Read on here.

Brown believes that as a result of the financial crisis and its aftermath people are ready to hear a radically different way of thinking about politics and that Corbyn can win a Labour party victory in 2020. Until then, Preston is backing the northern powerhouse initiative to secure devolution, allowing it to build what Brown believes are the foundations of a new economy away from the City and Westminster.

“The days of getting huge inward investments are over, so the sensible way is looking at how you can do that through your local area to make something new,” he says. “This is it.”

Storing food in a localised low carbon system

February 22, 2017February 22, 2017localise2

Traditional methods of storing food include preservation of food in ice brought from the mountains and kept inside caves & icehouses, low-tech bottling and jam-making, drying of meat & fruit and underground storage at lower temperatures in hot countries.

On Monday Mark Shapiro, a Californian reader, sent this link to information about another method: fermentation, a localised probiotic food system which has significant economic, social and health benefits.

Aaron Vansintjan reflects that it’s easy to get the impression that we live in a world of scarcity, where there just isn’t enough food to go around, and food production all around the world is limited by technological backwardness.

On the other hand, there is an increasing problem of food waste in Western food systems. Though a range of expensive and complex technologies protects our fresh food supply against spoilage, a large proportion food produced is thrown away.

Aaron has a background in Natural Resource Sciences and is currently conducting research into food related issues, including marginalized communities access to food. He has observed the Vietnamese practice of fermentation, embedded within people’s livelihoods, local agricultural systems, food safety practices, forming a fundamental component of a sustainable food system. With the rise of the local food and food sovereignty movements, many are realising that we need food systems that could support everyone: from small farmers to low-income families. In a localised food system food needs to be stored for long periods. Fermentation makes that possible. He comments:

“Unlike many high-tech proposals like ‘smart’ food recycling apps, highly efficient logistics systems, and food packaging innovations, fermentation is both low-tech and democratic—anyone can do it. It has low energy inputs, brings people together, is hygienic and healthy, and can reduce food waste”.

In Vietnam there are wholesale night markets, mobile street vendors, covered markets, food baskets organized by office workers with family connections to farmers, guerilla gardening on vacant land. Food is grown, sold, and bought all over the place, and supermarkets are just a small (albeit growing) node in the complex latticework. Most people still get food at the market, but many also source their food from family connections. With this easy access to wholesale produce, many can turn to small-scale fermentation to complement their income—or spend less on food at the market.

The article goes into great detail about various recipes for fermented food Some call for water and salt: “At just a 1:50 ratio (2%) of salt to food, an environment is created in which bad bacteria doesn’t flourish and good bacteria is encouraged”.

From left to right: Nem chua (fermented sausage), Thịt lợn chua (sour fermented pork), Com me (sour rice with fermented paste), Dưa chua/dưa muối (fermented fruit or vegetable), Mắm chua (sour fermented fish paste),Tôm chua (fermented shrimp), Nước mắm or Nước chấm (fish sauce),Tương (fermented soybean paste)

Vietnamese street vendors know the rules of hygiene and food safety, and, because they have to be careful with their money, they know exactly what kinds of food will go bad, and what kinds of food can be preserved. In doing so, they practice a food culture that has been passed down through generations—to a time before fridges, a global food system powered by container shipping, factory trawlers, and produce delivered to far-off markets by airplane.

Because of its low investment costs, fermentation lends itself well to supporting small businesses, allowing them to take advantage of seasonality while practicing a time-tested low-tech method of food preparation. Fermented food doesn’t depend on high inputs of fossil fuel energy to preserve food, high waste, and high-tech. It has to be produced locally: transporting it will risk explosions on the high seas

Aaron ends; “With increasing concern over the health side effects of common chemicals such as BPA (Bisphenol A, a polycarbonate plastic) found in almost all cans and pasta sauce jars, people are looking to safer kinds of preservation, which aren’t killing them and their families slowly. In a world facing climate change, we need a low-impact food system, and fast”.

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(Ed: some links and pictures added)

Doncaster leads on local sourcing

February 12, 2017February 12, 2017localise2

As local sourcing where appropriate is central to relocalising and strengthening regional economies, many will welcome news of a pledge made by Doncaster’s Mayor Ros Jones to ‘buy local’.

Business Desk reports that when Ros Jones became Mayor in 2013, the council spent more money with firms located outside of borough, but now the vast majority of work goes to local firms, supporting the local economy and helping to stimulate jobs and growth.

Mayor Jones said: “I was determined Doncaster firms could bid for suitable contracts and by understanding what is involved in the procurement process have every opportunity to win work. We have put on workshops, organised events and provided support for business owners so they understand the rules, can find available contracts and know how to prepare their tender bids. This work is certainly paying off with amount of work being won by local firms increasing by a staggering 34% in the last four years”.

Doncaster Council’s procurement team has trained about 130 businesses on how to do business with the public sector and procurement rules have been changed to include local suppliers.

Working with the Business Doncaster team, supplier engagement events have enabled firms to meet public sector buyers, while other public sector agencies in Doncaster have also been encouraged to ‘buy local’.

Dan Fell, the innovative chief executive of Doncaster Chamber, added: “Doncaster Chamber believes that it is important for local organisations in the public and private sectors to do business with each other to generate new supply chains and keep work local where possible. For many years the Chamber has encouraged partners to ‘Buy Doncaster’ and, as such, is delighted that Doncaster Council has such a high percentage of its good and services locally.”

Because of Mayor Ros Jones’ pledge to ‘buy local’ – and despite reduced council budgets – the amount of work awarded to firms in the borough increased by over £27m since 2013/14 and now represents 68% of all council spend. In 2016/17, Doncaster based companies are projected to win over £108m of council work.

Endnote: see news of the Birmingham Pound which encourages sourcing of local goods and services: https://brumpound.wordpress.com/

The global economy undermines our most universal aspirations — clean air, clean water, a stable climate, happiness”

February 6, 2017February 6, 2017localise2

Localise West Midlands is a member of the International Alliance for Localization together with individuals, groups, NGOs, trade unions and local businesses from 58 different countries, showing the broad interest in localization worldwide. More than 70 member groups are working on issues ranging from social and environmental justice to sustainable farming, from workers’ rights to indigenous knowledge, from holistic education to policy change and beyond.

A recent update from the International Alliance for Localization, in addition to giving news of its activities in different parts of the world, says that in line with its education for action mission, it is branching out into a new medium of communication: animation. A simple two-minute animated film summarizes the global-to-local vision in less than 5 minutes, it presents the case for a 180-degree turn from global to local, engaging those who are familiar with the message as much as newcomers.

Going Local: the solution multiplier spells out the essence of what’s wrong with the global economy and the multiple benefits of localisation.

Using whimsical drawings and narration, the film emphasizes how the global economy undermines our most universal of aspirations — clean air, clean water, a stable climate, happiness — and illustrates the key ways in which localization can turn things around. One comment: “People really seem to like it and it’s a message that will inevitably win the day — it’s just a question of when”

Anja Lyngbaek, IAL’s Associate Programs Director writes:

“The purpose of the IAL is to serve as an information- and strategy-sharing network for the many groups and individuals around the world working on a global-to-local shift, and to provide the localization movement with a clear and powerful collective voice.

“Localization is not yet widely recognized as a systemic strategy for change. The IAL is a step towards addressing this . . . Through the IAL, we share information about inspiring localization initiatives and strategies, and about campaigns to resist the corporate growth economy. Our Global-to-Local Webinar Series, free for IAL members, addresses key issues on a monthly basis, while our Planet Local series regularly showcases inspiring initiatives, many of them part of the IAL network.

“But a multitude of localization initiatives are already underway worldwide, from local food and community-owned renewable energy projects to local businesses alliances. These initiatives are resulting in multiple benefits: lower carbon footprints; healthier food; more dignified livelihoods; closer community ties, and more”.

The Exeter Pound

January 22, 2017localise2

The Exeter Pound is one of the many local currencies on the “transition currency” model, like Bristol Pound and our own proposed Birmingham Pound. It is a local currency run by the people of Exeter (voluntary directors) for the people of Exeter.

It was launched in 2015 with speakers including the region’s MEP, Molly Scott Cato and MP Ben Bradshaw. It is designed to make sure that money spent in Exeter stays in Exeter. The project, a joint initiative between Transition Exeter and Exeter City Council to develop and issue a community currency for the city, has attracted widespread support from local individuals, communities and businesses, in particular the Federation of Small Businesses.

Like our proposed Birmingham Pound, the Exeter Pound is equal in value to sterling but can only be spent in local independent businesses. People buy £E1, £E5, £E10 & £E20 Exeter Pound notes at exchange points across the city. Its website said that businesses have digital accounts to manage the paper money – interesting . . .

Exeter Pound timed their launch to coincide with the city’s hosting of the Rugby World Cup in 2015, and issued a number of commemorative notes which helped fund its start-up costs and boosted its profile.

The Exeter Pound notes are created by Orion Security Print with nine security features to pre-empt forgery, described here.

Traders can:

Pay suppliers who are also Trader Members of the scheme
Pay business rates
Pay staff as part of a voluntary salary scheme, or ad hoc incentive scheme (eg. Cartridges Law gave their Christmas bonus in Exeter Pounds)
Offer as change to customers*Deposit at exchange points and have the balance transferred to your online Exeter Pound account
Exchange back to sterling via your online Exeter Pound account

Many of these features are also being considered for the Birmingham Pound.

In addition to a large and varied range of ‘eateries’ and therapists in the Exeter Pound’s directory it was good to see the blend of mainstream venues taking part – the cathedral café (below),

Go-Cars (car and electric-bike hire), Exeter City Football Club, tuition, bike repairs, accounting services, chimney sweep, Dunns Motors (petrol station) , architect jeweller, vineyard and Exeter motor works (auto repair).

What is happening with the Birmingham proposals?

We’re still working behind the scenes on this, as we are keen to ensure that we have the right financial model for making the currency sustainable before we launch, and on our largely voluntary resources this takes time. We are learning from the Exeter Pound and others as we go.

We’re particularly keen to emphasise the business-to-business nature of the currency so that it is clear it isn’t just a local shop loyalty scheme.

You can sign up at http://brumpound.wordpress.com for further updates.