Examination of Witnesses (Questions 480
- 494)
MONDAY 29 MARCH 2004
ETHNIC CUISINE
LTD.
Q480 Dr Francis: What is your view
on European enlargement? Do you see that as a great opportunity
for you?
Mr Servini: Yes, we welcome it.
Our purchasing will be better. We do source the vast majority
of our product from within Continental Europe. We welcome it.
We welcome the opportunity in the long run to sell there and buy
there.
Q481 Dr Francis: Is that happening
already? Are you ahead of the game?
Mr Servini: Yes, there is an element
of that happening. Exactly what we are doing there, I would not
want to put on record but it will at the end of the day make us
more competitive. Ethnic Cuisine, because of its links with Sainsbury,
would not want to go to another supermarket in the UK, but there
is no reason why we should not go abroad. Once we get the links
of chilled product coming from other parts of Europe, we can sell
our products there.
Q482 Dr Francis: Does the name of
Servini assist you enormously in Europe or parts of Europe?
Mr Servini: It assists more in
Wales, I think.
Q483 Julie Morgan: In your submission
you mention problems with trade tariffs on purchases from outside
the European Union and the uncertainty that surrounds those purchases.
Can you explain the cause of those uncertainties and what the
UK Government could do to alleviate those problems?
Mr Servini: It does affect us
in a round-about way because it affects a lot of products coming
in from the Far East and Brazil for instance—raw material
for our competitors—and from time to time we are forced
to look at those products as well. The fact that for instance
on chicken meat—there is a tariff now on raw meat not on
cooked, whereas it was tariff-free on the raw. There is an element
of never knowing where you are with it. We have made a policy
of buying only our chicken in from Europe and our competitors
now are jumping around a bit. My point is that it is the uncertainty
in the marketplace. We would be quite happy to see Europe tariff-free,
but there are issues of uncertainty of tariffs from outside of
Europe which is always a problem.
Q484 Julie Morgan: Is there anything
the UK Government can do about this?
Mr Servini: Not really. It is
a difficult one. I am not altogether sure. I can understand the
need to say that everything should be tariff-free would be a problem,
and to us as well. I have probably made some notes on tariffs
somewhere. It is not a huge issue for us but I guess we would
like to see uncertainty taken away on tariffs. That is what gives
us the biggest problems, the uncertainty of tariffs.
Q485 Mr Williams: During this inquiry
we have been told a lot about the effect of clustering of different
types of manufacturing, and in Scotland we are told that food
production and food processing is one of those clusters that they
are supporting. Are you aware of this happening in Wales at all?
Mr Servini: I am not aware of
it happening officially or formally but there does seem to be
a growth in the food business in Wales. I am not aware of any
clear plan for it to happen.
Q486 Mr Williams: Do you think that
your company would benefit by being part of a cluster?
Mr Servini: Yes, quite distinctly—things
like cold storage, laboratories. We put products from China into
cold store and a lot of our raw materials come to us frozen. We
are not in the chill business, so it is not our finished products,
so we use cold stores quite a lot. We use laboratories a lot.
Food companies need laboratories, and we end up having our own
lab. There is absolutely no reason we should. The biggest cost
of that sometimes is the logistics, backwards and forwards to
the lab. I have explained that the way the bulk of food is moved
around the country is through networks of vehicles, a bit like
a train system; if you are out of the loop it becomes more expensive.
It is so much easier to be in the loop because lorries pass every
five minutes. All of our product is distributed in returnable
crates, so if you are in the network it is a huge advantage. The
labour skills as well—we would not see that as being competitive.
People would move up the skills in food companies and if there
was a movement of skills locally that would help. At the end of
the day, it shares the cost. The more food companies coming to
Wales, the better. It does not necessarily have to be all on one
trading estate; they can be in quite a wide area.
Q487 Mr Williams: On a slightly different
tack, I represent the part of Wales that is more involved in the
commodity production of food rather than the processing, and we
are always encouraged to add value and to move it around the country
and indeed internationally; and yet we are also being told that
food miles is a bad thing, and you should not source your food
from a great distance, or even sell it at a great distance. Do
you think there is an inconsistency there in the message that
food producers are getting from the Government and from the Assembly?
Mr Servini: Yes. It is logical.
It is a shame really that the distance of food travel does not
seem to affect the price: you can get applies cheaper from the
Cape than you can from the field next door. It seems cock-eyed
but that is the fact. At the end of the day, we will source our
own material because of the pressures we are under from supermarkets—we
are forced to source our raw material—quality first, but
if it is equal quality, then it is price. The fact that it comes
hundreds of thousands of miles is not our criteria. It should
be, and I do not know the answer to that.
Mr Williams: It is a problem for a lot
of us.
Q488 Dr Francis: If we could move
on to links with universities, we note from your evidence that
you have not had any significant involvement, and one asks the
question, why not? I read into that two things: it is perhaps
a self-criticism but also I am wondering whether you have been
approached. I can see predatory senior lecturers sitting all around
you to give you a warm embrace!
Mr Servini: They mentioned the
word "complaint". It was not intended as a complaint
but more self-criticism than anything. As I said, it is a tough
business. We are very much involved in our own business and it
tends to be a bit head-down, and sometimes you cannot see the
wood for the trees. The development of the business is now in
a calmer state, and we can progress to getting assistance. It
is a resource that we should be using a lot more and we are well
aware of that, but it was intended as a self-criticism rather
than anything else.
Q489 Dr Francis: So you would welcome
an approach from—
Mr Servini: Yes, absolutely.
Q490 Albert Owen: In the short presentation
you gave us, you talked about the difficulties in getting the
right skills. What sort of skills, education and experience are
you looking for; and are they readily available in the area?
Mr Servini: We are looking to
upscale in the knowledge economy, but the largest part of our
workforce is relatively unskilled. Again, it is a catch-22 situation.
We are forced to keep the labour costs down although the introduction
of the minimum wage did not affect us because when it came in
we were above it, but we are now at a level where we would not
want to see it rise more than inflation, certainly not after the
one in November where it gets to £4.80. We do not like being
at that point but all our competitors that produce products that
our products are judged against are all on that sort of level.
It is a bit of a spiral and a catch-22 situation. Our research
shows that pay is not top of the list for retention. We have introduced
profit-sharing, bonuses and things like that, and it has worked
very well for us one year, but last year, because we did not reach
75% of our profit level, the bonus was not paid, and then it can
be a de-motivating factor. For all that, we are re-introducing
it this year. In effect, if we reach 75% of our budgeted figure
we take 10% of our pay and distribute it, and that went down very
well for retention. It is job satisfaction at the end of the day
that seems to be the biggest factor, albeit pay is up there but
not top of the list. We are expanding the core for retention.
When we look into our figures, the core people are—the graph
is going up in terms of retention, so the core is getting bigger.
We have a real problem on the fringe, so there is an element of
our workforce that changes rapidly. On the one hand you could
look at it and say it is a huge problem, but it is not as big
a problem when you look into the figures. We are doing things
to grow it. The salvation lately has been the immigrant labour
that we have. It is still relatively a small percentage, but it
is probably somewhere between 5-10%. The recent immigrants to
the country are proving very stable and loyal on that little fringe
that we have had trouble with in the past. They are not treated
any differently or paid any less, but they seem to be much happier
with that level of pay and seem to be able to give us the continuity
and stability. With the employment of recent immigrants to the
country there has been a dramatic change to our retention and
attendance level, but it is only that element on the fringe.
Q491 Albert Owen: Are you talking
about the specialists? Are you looking for people from other parts
of the world because of the authentic nature of some of your dishes?
Mr Servini: We do have within
our product development department Chinese chefs, but they are
a small element. There is no link. At the end of the day, they
are on assembly lines and there is no link.
Q492 Albert Owen: So you could train
unskilled labour from the locality to do this work?
Mr Servini: Absolutely, yes. The
reason I am praising that group of people in terms of retention
is because they are always there and it is the continuity of coming
to work. It is no special skill because they come from China,
say, and it is Chinese food. That is not the issue.
Q493 Albert Owen: I was interested
in what you said about the minimum wage. In my constituency the
predominant sector that benefited from the minimum wage was catering
and food production, and in some cases it doubled their salary,
from the introduction from £1.80 to £3.60. You are suggesting
that you were already paying that level of £3.60 at the time.
Mr Servini: Yes, the introduction
of the minimum wage did not affect us because when it came in
we were already above it. It has now caught up.
Q494 Albert Owen: It did not affect
the businesses I am referring to, but it was a huge leap for the
individuals—but it was not in your case.
Mr Servini: Not in our case, no.
As I say, it has caught up now. We have started to get worried
now if it goes up more than the rate of inflation.
Albert Owen: I hope it does.
Chairman: Thank you very much indeed,
Mr Servini, for your answers.
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