279. Why SMEs want more than verbal enthusiasm from politicians

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24:30Steph McGovern:We've talked about this on the podcast before, where businesses, particularly small ones, seem to be able to do quite well on a local level. And it sounds like that's exactly the situation you've had with Buffalo. It becomes much more difficult when it's that big centralized system. Is that what you're saying is the problem then? I guess it's also slightly different. We supply most of the police forces. Right. And is that local contracts with each? Each individual team. Yeah. Or police force can purchase separately. So it's not a centralized system for uniforms and things. Some are centralized.

25:04So the army would be largely centralized contracts. The police are buying through individual police forces or they'll use like a centralized purchasing body that will buy from us and then sell into the police. So on the police, there's two different routes. For the military example, a naval warship bought from us directly where the crew of the ship paid for 50 % and the ship's own funds paid for the other 50%.

25:31Steph McGovern:So hang on a minute. The crew themselves paid half the cost for essentially their uniform. That's how much they love the jacket, Steph. Stop it, me, are you? I wish you'd sell to customers. They need you on the shop floor, don't they? So, okay, then you said the other half was paid for out of the funds from the ship, which is essentially MOD money then. So what's the problem with getting the, because you want a bigger contract, as I'm sure there are lots of businesses in the UK desperate for. What's stopping you getting it then? I think there's barriers to scalability. You know, if we were to, let's say, every single member of the armed forces receive a Buffalo, which would be the dream, we would need to have also in place things like a digitized cutting machine.

26:17That's a capital expenditure of the business that would say cost us£250 ,000. So those sorts of things, you know, that one machine, we're reliant on having the order. So some of it's chicken and egg.

26:28Steph McGovern:Yeah. Do we buy a machine? So as things stand, you couldn't meet. If an order came in tomorrow saying every single soldier, we want them in this kit, you couldn't do it. Where there's a will, there's a way. Where there's a will, there's a way. But everything is a calculated risk. Do we buy that machine on spec? Or do we try and get the contract and then we can get the machine delivered pretty quickly and put in pretty quickly. But we have to choose where we're spending our pounds and our pennies and where we think we're going to receive the most realistic growth. We'd love one of those big centralized contracts.

26:58We are currently working, as Ben said, with Jonathan Healy's department to try and secure those.

27:05Steph McGovern:Yeah, because he's talked very positively about you, hasn't he? He's been quite a publicanist. And it's very fortunate because he also is a massive champion of South Yorkshire and recognises the value that businesses like ours bring to the city of Sheffield and the Yorkshire diaspora generally. And he has, he's spoken, I mean, it was great when he came up, but all his close protection officers were all wearing our jackets anyway because they got it. So in some ways we're preaching to the converted, but still when it comes to the procurement process for us, for a relatively small company, it's not easy.

27:39I mean, it's bamboozling when you see the size of these. Sometimes it's easier to go to a centralized sourcing body and they source you the jackets, the shoes, the boots, the socks. We're providing...

27:50Steph McGovern:Just one element of it. We make other things other than jackets and shirts and trousers and all these sorts of things. But, you know, sometimes they'll just go to a centralised body that will provide everything. So what are they saying to you when you're saying, give us a contract? The signs are good. As in we have verbal enthusiasm. That's not good though, is it? Well, there you go. I feel like everyone gets verbal enthusiasm from politicians. Yes. Because they're not going to say, no, your business is rubbish. We don't want to help you, are they? Yeah, exactly. And so we get verbal enthusiasm.

28:22and you and I will know, you know, there's a lot of, especially, you know, a lot of people say what they think you want to hear when they're in the room. I believe they want to keep the pounds in this country. But to do so would be great to have, not an envoy from them, but for someone to sort of sit down with us and say, right, these are the metrics, these are the things that we need to get in place to do because we can do it. And by the way, I'm just thinking about your comment you said earlier, you know, if they're spending 25 % less on a jacket, that gives them an extra 25 % to spend on other, things well actually i i kind of disagree a little bit because i i think we owe our armed forces the very best kit that they can have and if they're willing to actually come and buy our jackets out of their own pocket yeah from very minimal salaries anyway that they're getting something's going wrong there because they feel they need extra protection they're not getting i'm not going to go into the whole detail but that's a general sentiment is that i mean but you would

29:19Steph McGovern:say that wouldn't you as the owner of the brand no you're right it's the best you're right else but do we need it to be the best or we do we need it to just be well i don't know if you're asking life in on the line i think you've got it you've got to provide you know we're talking about fighting in arctic yeah the clothing of you know our military no you're and you're quite right i could sound like i'm just a you know i'm hungry for publicity now by bigging up the jacket but i I think our customers speak for themselves. Just, you know, the fact that we are the chosen jacket for most of the mountain rescuers, not all of them, lots of them do choose other jackets, because we really are fit for, we are unique.

29:58It's not just about choosing the brand, it's a totally different system. And I personally, as a proud taxpayer in this country, I want my money to go towards giving the very best products that we can to our military and training them up to the very best of their abilities. And if our jackets allow that to happen, then I think it should be part of regular kit.

30:24Steph McGovern:So as things stand, you've got this verbal enthusiasm, as you call it. Sounds really terrible when you describe it like that. How long have you had that verbal enthusiasm for? What's the next step? Because I think this is the... end of the documentary was about four or five weeks ago at the same time as you've got this going on it's also we're hearing from you know from the labor government that they have got this task force now around small businesses in defense obviously we've all heard about the extra money that's going into defense like this is the time to be a business in defense i think and you know when we've spoken to the mod they've talked about uh since 2024 how they've given nearly 1 ,200 contracts to small businesses in the UK.

31:10Steph McGovern:They say 93%, I think, of the spend over the next 10 years is going to be UK companies. Do you believe them? You want to believe. Take it out of our sphere, right? If we have a boat built in France, that's making French jobs. That's putting money into the French economy. We need to maintain that in the UK. So all we can do is play some belief. Hopefully it's not foolhardy belief. And our side of that bargain is we have to sort of keep banging that drum. But, you know, it would have been great if, you know, there'd been more follow-up. We could be guilty of not following up enough perhaps. But, you know, we need that task force to be going out to all these British businesses, not just Buffalo, but to go out to, I met with a bag supplier that's making bag kits for drone operators, to go out to all of these companies to keep these skills in the UK, to keep these businesses, these small, medium enterprise businesses are the backbone, I believe, of the British economy.

32:10I used to be a banker in a previous life and I'm a manufacturer and that's where I want to be spending my time and beliefs.

32:18Steph McGovern:So how do you, because the way you describe your business, I love the passion and the heart and everything else that's going into it, the fact you're not taking money out of it yet and stuff, But how do you make it look that it's a legitimate business that's good and efficient for the UK economy and not a social enterprise and you guys doing this to, I don't know. I mean, don't confuse it with charity. Yes, that's what my point is. Because it's got to be legitimate because there's not many people like you guys doing this. The business has to be a going concern. The business has to make money. And Ben and I have invested our own money in this.

32:53And at some point, obviously, we need to have some return on that, whether that's the intrinsic value of the business or that in 12 months time or 24 months time, three years, five years, tell Marina the bad news that we're going to get something back out of it. We're not being sort of hubristic and too charitable. Of course, we want to have the ability just to do things in the right way. And some of that is the support from government to have centralized contracts. And some of that's us educating the consumer as to why they should buy brand Britain, why you should want to buy a jacket made in the UK.

33:30Steph McGovern:And what's your kind of split in terms of what you export and what you sell here? Most of it's still for the UK market. There's a huge amount of demand, though, from Japan, from the US, from some other military teams around the world. Those other countries I mentioned were individuals buying. We're actually very governed by the amount we can produce. If you went on our website two weeks ago, we had very little in stock because the demand since we bought the business, since we turned the website on, has sort of taken us by surprise. So now we're sort of going back into, guys, we need to be more productive.

34:08We need to produce more and asking more of the team.

34:11Steph McGovern:So what's going to solve that? Is that going to be technology? Technology is a huge thing. As I said, I'm a Sabre Taylor. and you think, well, that's devoid of all technology. One of the first things I did in my bespoke tailoring company was use technology. And that was one of the things that hadn't been... In some ways, Buffalo, when we bought the business, was set up more like a bespoke tailor than a traditional factory. So by putting in technology, you know, digital pattern making and digital pattern laying, and we can buy digital cutting machines and all these things, technology can give us a lot of those unlocks.

34:47you can't remove you know there's only a certain amount of hours that you that one person can give and a jacket takes x amount of hours we can't necessarily speed up that part of the production but we can where we can remove the burden time frame of you know physically chalking around a pattern and we can we can have it already printed out that's that that's the unlock for for

35:08Steph McGovern:productivity so your ambition is greater productivity then i imagine yeah um what else What's the plan? What's the ambition? And how are you going to do it? Here you go, Ben. Okay, just put that. Well, for me, I would love to unlock the full potential of a brand that shared an office with... What does that mean? Well, James sort of started that. We shared an office with Rab. And Rab is now£120 million business recognized in every outdoor shop. If you go out on the street, you will see someone wearing a Rab. it would make me on the social enterprise side of things it would make me very proud to see buffalo worn just as with just as much pride as people are willing to buy falravan or patagonia all of these other brands that are available out there i would love to see people wearing a sheffield south yorkshire made brand with great pride here in the uk and for me my dream in five years is that we have a factory five times the size still within Sheffield, that we have employed hundreds of people, that we have dozens of apprentices all learning the art, that our legacy staff that we've inherited as such are teaching the craft to hungry youngsters and that we've got big military contracts and that we have firmly made Buffalo what Falraven or Patagonia has done for Sweden or for the United States.

36:41Steph McGovern:Yeah. And can I just ask you before I wrap things up? Obviously, there's a lot of pressure in terms of energy prices and we've mentioned as well employment costs. How much are you seeing your costs go up then in manufacturing? Yeah. I mean, energy costs are off the scale. I forget what percentage we're up in the last five years, but there is no cap for business. And it's all of these things you have to weigh it up. And we increase our prices once a year, traditionally is what most manufacturers would do. And we're maybe getting into a situation where this has to be a bit more dynamic. And I'm not saying we're going to be like a fuel forecourt, but where we actually need to think about, is there a quarterly adjustment?

37:23Steph McGovern:And is it inflation you're putting it up by each year or is it just a… Traditionally, we've done – it will be an inflationary increase. Yeah. And some rounding numbers. We inherited some products with some, you know,£37.26p for a garment type thing. So, we've done some rounding up and inflationary measures. Yeah. And are you worried about that? Because obviously, with all the volatility in the Middle East and, you know… Yeah. I'm incredibly worried about it. And I think that's also why it's super important to try and keep as much of supply chains as local as possible, you know, as the straits come, you know, or COVID or any of these things.

37:59We're almost more reliant on trying to maintain that we've got a core element of skills left in this country so that as the time needs, we have that, you know, basis, whatever industry it is, to expand it out.

38:12Steph McGovern:And do you have component parts of your products that come from other countries? Yeah, so Buffalo actually invented Pertex, which is used by every outdoor brand around the world. Sadly, we don't own that element of the business. That was sold off long before our time. So it's owned by a Japanese company and they make it in Japan, India, China. They're manufacturing in local different bases just in case there is a systemic issue in one or the other. The pile we still make in the UK, we try and get as much of it from the UK. To be honest, it's a lot easier if it's just from down the road. in the main and trying to support things.

38:49So, yeah, the world's in a difficult place. And the more the supply chain is kept local, it is easier. It's not always possible.

38:59Steph McGovern:Yeah. Well, good luck because, you know, as a proud northerner, I want to see businesses thrive in the region because it's really important. So good luck with it. Thank you so much. Thanks for having us. Thank you. So there we go. That's Ben Fogel and James Sleater there. A couple of things I wanted to pick up with you, Robert, off the back of it. One is that point about procurement and how they have managed on a local level. They're obviously doing all these small deals with local police forces, things like that. But getting that centralized, that big contract, which could make a huge difference to a business like them.

39:37Steph McGovern:They argue it would be jobs in the area, money in the area, money kept in the UK economy and everything else. you know and this you you've interviewed someone recently who works in AI you said the same thing you know it's interesting that issue of businesses that seem to do well on a local level with contract government contracts but not on a national scale although I think Ben and James seem to me to be highlighting a slightly different problem from what Alex Stephanie of Beam who supplies this so-called Magic Notes product it's a product that basically it's an AI product which basically turns things like interviews into structured documents transcripts and that you know provides summaries and all the rest of it and you know it's he he's been supplying this product to social services massively sort of speeds up analysis of social service interviews that kind of kind of thing and saves social services money but the problem that he sort of highlighted was the risk aversion of central government the story he told was of trying to get this magic notes project rolled out throughout the ministry of justice throughout the probation service he felt that you know this would save them a ton of money and a ton of time the moj denied this but he felt they sort of ripped off his ideas um but also that they were just a bit risk averse that um and this is certainly something that i've come across to an enormous extent over the years with British businesses trying to supply to the British public sector is that officials either go for the brand they know, often an American brand, or they try and do it in-house.

41:20And they're just very wary of British small businesses. I mean, maybe the Buffalo thing is also about risk aversion or worries about the brand, But it doesn't seem it feels slightly different from from from from what Alex was saying in the sense that, as you say, Buffalo, an incredibly well-known and respected brand within the kind of clothing that you're talking about. And it's very difficult for me to see, you know, when you're it's not like buying a high tech product where maybe the officials don't really get it. I mean, is it just that it's too expensive relative to Chinese suppliers or something?

41:59Steph McGovern:Yeah, well, that was going to be my next point because and what I wanted to ask you about, because, you know, as you point out, they know this brand. When ministers turn up at the factory, they're wearing buffalo jackets like loads of protection officers wear them. So, you know, this is, you know, an understood and much loved brand. But then it does come back to cost because they're saying they are more expensive than the, you know, the other military uniform offers from abroad. and so there's it but their argument is and i wanted to ask your opinion on this they're saying yeah okay we are a bit more expensive but by paying a little bit more you're keeping jobs in a business you're you know you will they'll be able to invest and grow pay more tax and everything else so should the government pay more for stuff for jobs money investment in the uk or should they go for the cheapest to save the public purse?

42:56Steph McGovern:And that's the other dilemma here. So, look, the classic economic argument would be that the government should buy cheapest. And that is definitely the mindset that this government has had, certainly since, really pretty much since Thatcher and onwards. There is a really interesting question whether that moment of basically just scouring the international market, and this normally means in recent years going to China to buy the cheapest, is the right approach. And certainly, if you look at America, even before Trump's America, they had a much more, they have a much more aggressively buy American policy within the American public sector.

43:46And that does support very large numbers of important American businesses in tech, in defense, in manufacturing more generally. It's a very difficult argument because if one had the confidence and I, you know, this I'm interested to know your judgment about this. If one had the confidence that Buffalo is potentially a really competitive business that could, for example, grow overseas, develop exports. it's got a terrific product and with just a little bit of additional you know with a little bit of additional purchase from the UK government that would give it the cash flow to invest a bit more and get into this sort of virtuous cycle of of growth then you would say absolutely the British government should be doing this but then you know if you certainly go back decades and and actually even more recently than that, we have seen, you know, British governments supporting essentially failing businesses and keeping them alive when actually it would be better for all concerned, even for the workers, for the business to be put out of its misery so that the business, you know, so everybody then goes off and finds more productive either employment or productive uses of capital.

45:17So it is tricky. It's about judgment. And I guess the thing that this government and when i say this government i don't mean this government i just mean the british government over many years and particularly the public sector struggles to do and you can sort of get this because officials and are not you know trained to be like sort of dragon's den judges right um and and and uh you know but they do struggle to make you know subtle judgments about the kind of businesses that are worth supporting and others where you're just subsidizing a lame duck. I mean, for what it's worth, we're going to have an example of this in real time now, because the British Prime Minister has just said that the state is going to take control of British steel.

46:05Now, you know, he says this is a national security emergency. We've got to have steel making in the UK and that's why he's doing it. But if in five years' time we see that a ton of money has gone down the drain in an incredibly inefficient business at a time when we could have been buying this steel more cheaply elsewhere, then that won't look so clever. So, you know, these are risky judgments. Probably the thing that is worst about the British public sector often in these sorts of situations is, you know, the sort of jobs, what's known as the jobs worth attitude, that they don't want to take a risk on a business that could be, you know, a fast growing success because, quote, it's not worth my jobs, you know, it's more than my jobs worth if the thing goes bust.

46:58And that is a kind of mentality that we have to get away from in the UK.

47:02Steph McGovern:Yes, because obviously we were talking, weren't we, to the British Business Bank about this and about how you sometimes have to take risks and know that some of the investments will go badly as well in the criticism there. And I think specifically with Buffalo, from what the lads were saying, this is a business that needs a lot of modernization. So it's not like they're already there in terms of how they're using AI and things like that. There's a lot of work to be done. And as things stand, they've put a lot of their own money in, but they're not seeing, they're not taking, you know, any money out of it yet.

47:40Steph McGovern:So, and I put to them, well, it feels a bit like a social enterprise. And so what they need to do is probably have set out their stall a lot more about how they are going to modernise it and what that would look like in terms of growth and then, you know, the employment and everything else. So they have an ambition. But I could understand as a government, as you say, because then other businesses are going to come out and say, well, hang on a minute. What will you help them? What about us? We're doing this. And then before you know it, you get the government's paying more for loads of things just for the sake of helping British businesses that might not be viable in the longer term anyway.

48:23All right. So I'm going to put it back to you then. I mean, obviously, I don't know James and Ben. Some might look at the fact that Ben is a sort of TV celebrity and think this is just a vanity project. But do you think they're capable of managing this business reasonably well? Were you impressed with them? And then I suppose the second question is, is Buffalo, I mean, you'll be a perfectly good judge of this. Is it good gear, as it were, or what my grandfather would call decent schmutter? I mean, is this a quality project?

48:53Steph McGovern:yeah so i would say yes i think they can do it because james sleeter has got a really strong background in um you know in clothing i know it's you know he's a tailor he's run several businesses he's also a former banker so he does care about money i don't think he's doing it for a vanity project and equally ben you know but ben um again is someone who really cares about what he wears when he's climbing mount everest and everything else so in terms of the quality of the product that's partly the reason why he did this. And, you know, he spoke very passionately about the people who work there. And, you know, we're talking about a place in the north, Sheffield's really strong history, and we mentioned steel.

49:31Steph McGovern:You know, Sheffield's got a long history in terms of steel, of cutlery making, of all these industries which have really struggled. And there's not been much investment since we've seen the decline of lots of those. So I do think they definitely, and they do want to make money from it. They're not doing it. As Ben was talking about his wife, you know, it was going to kill him if he doesn't pull some money out of it in the end. Whether they can do it and whether they can do the modernization that's needed quick enough without being hit by the rising energy costs, the rising component costs of the products, which they do bring in from other countries, that is where you know are the margins going to get so tight that it then becomes you know not viable in the time that they've set to do this i think that's the challenge for them is all those variables which are just putting more and more pressure on industry on businesses like that which are high use a lot of energy and a lot of labor with labor costs going up with energy prices going up and component costs being a little bit more volatile then is that can they modernize enough to to so that that isn't an issue for them i don't know and that's the that's the big question here buffalo's a type of brand like barber where if you get it right then you know it's really desirable across the world yeah well look i look obviously i wish everybody concerned including the workforce very well i mean i'm afraid i am a bit of a sucker for the romance of manufacturing i'm always incredibly impressed when i come across um firms that are still making particularly clothes in the UK, given, you know, our great heritage, our great traditions in clothing manufacture.

51:18And so much of, I mean, that industry was absolutely decimated from the 70s onwards. So I would say more power to their elbows, more power to their sewing machines.

51:30Steph McGovern:Yeah, exactly. Right, we should wrap things up. Thank you very much for listening to us, but that's it from us. And the rest is money. Bye-bye. Goodbye. .