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The Nimble SME and the Massey Ferguson 135

by Eamonn McMahon

With well in excess of five million companies, the UK SME sector now employs just under sixteen million people. The sector generated a combined turnover of £1.8 trillion* (46% of private sector turnover) and last year filed 6,500 patents with the European Patent Office. While there is certainly more work to do in promoting SME products and services abroad and in fostering growth from ‘small’ stage to ‘medium’ stage, as the Germans have so successfully achieved, there can be no doubt as to the extensive reach, flexibility and nimble nature of the UK SME sector. It is our economic bedrock.

As a scruffy pre-teen in the very early 1990s, I recall asking a farming uncle why he was particularly fond of ‘the massey’, his smallest tractor, more properly known as the Massey Ferguson 165. It was the most weathered and the least comfortable of the bunch (no roof, a metal chair and rusty enough to risk an unlucky driver tetanus). Surely, the shiny John Deere with an actual roof (WOW), and an exhaust that released its fumes from the back of the vehicle, limiting the taste of unburnt diesel in the drivers mouth, would be more appealing!? Hardly enthused by my ‘city boy’ question, I was dismissed with a sharp response and a wry smile.  “Reliability!” he asserted.

 

On a national level, both in the UK and Ireland, the 90’s was the decade of the large company – Media fluency helped cement brand power and expansive marketing strategies gobbled up the economic pie. The energy and glamour of commerce orbited around corporate executives while their SME counterparts were largely left in the unloved and impoverished shadows. The surge in technology advancement, increased availability of corporate-directed capital and a plentiful supply of university educated labour gave rise to an impressive acceleration in corporate productivity growth.  This mostly failed to flow down to the SME sector. The start-up culture was yet to take root and the SME was largely ignored by policy makers and considered to be a support function, rather than a driver of the broader economy.

In contrast, german regional governments competed with each other to farm their best home-grown SME prospects. Local banking infrastructure ensured easy access to capital and availability of equipment and machinery. Furthermore, at a European level, the German government pushed hard to create a more fair and level playing field for the SME. The result was spectacular. The ‘Mittelstand’ is now the success story of the European economy employing some 70% of the German, non-public sector workforce. It has grown to dominate many industrial sectors and niche globally. Examples of the German lead include the specialisms of auto parts, electrical equipment and cleaning chemicals. In fact the Mittelstand lays claim to the most market leaders with 1,300 niche leading companies. To put this into context, in second place is the US, with a much larger economy and just 366 niche leaders on its belt**.

By the mid/late 2000’s there was a realisation, initially by economists and later by policy makers, of the need to embrace the SME sector. However, It was the recession in 08/09, where the SME sector, despite huge obstacles accessing finance, stood relatively firm and their subsequent spectacular growth that really switcched the ‘awareness-light’ on for many. This is particularly the case with the micro end of the SME spectrum, where some 67% of respondents in a government research piece either grew employment or maintained employment at pre-recession levels. More recently, with many corporates pursuing aggressive ‘tax tourism’, the steady and loyal contribution of the 5 million+ UK SME companies to the public coffers has been most appreciated!

When I consider the enduring strength, the grit and potential of the typical UK SME, it is that picture of that small, nimble, well-aged Massey Ferguson that comes to mind. In fact, despite being out of production for several decades, the Massey Ferguson 165 is still the most sought after tractor at auctions and events across the country today. So to conclude lets embrace our future Massey Fergusons, in whatever form they take, and leave our corporate,  Range Rover Sports(an automotive oxymoron if ever there was one), to do what they do best, look good in the golf club

*UK Business Population estimate

**Sources: Simon, H.: Hidden Champions – Aufbruch nach Globalia, Campus Verlag Langenschedidt, F., Venohr, B.: (ed.):