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Hogwash

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In the early 1980s, to Margaret Thatcher’s annoyance, union reps and managers at the steelworks in Port Talbot agreed a strategy to save the plant.  As a result, Port Talbot was spared the post-industrial blight visited upon most of Britain’s ex-industrial towns.  Now in private hands, and despite periodic crises, the steelworks employs some 4,000 people – a big drop from the 20,000 workers during the plant’s heyday in the 1960s.  Nevertheless, those 4,000 jobs are supplemented by hundreds more sub-contractors, and together these provide the demand for local small and medium businesses.

What saved the Port Talbot plant was an agreement to implement neoliberal efficiency savings.  Key among these was the sub-contracting of what we might think of as efficiency buffers – redundant capacity to cope with emergencies.  For example, prior to the agreement, the steelworks employed a small army of fitters, electricians, welders and other skilled workers whose skills were only required when something went wrong.  Instead of being paid a full wage – often for sitting around playing cards and drinking tea – they would be paid a retainer together with a set fee every time they were called out.

Similar arrangements were in place in the railway industry in those days too.  And I personally spent shifts playing cards and drinking tea as part of the spare train crews kept on standby for sickness cover and unforeseen emergencies.

Whatever else neoliberalism was about, cutting out these “inefficiencies” lay at its heart.  Companies were losing money paying people like me to sometimes sit around all day.  And so, the redundancy process was enlisted to cut the workforce down to its bare minimum.  Any work which could be contracted out was privatised in order to cut the wage bill; if necessary even by relocating the work to the other side of the planet.  Today, for example, fish caught in the seas around the UK is frozen and then shipped off to Asia to be boned, filleted and packaged before being shipped back to the UK supermarkets – it is more efficient to do this than to pay (at higher wages) British filleters to wait on the dockside for the trawlers to land their catches.

Where work was retained in the UK – for example, lorry driving or meat processing – this was usually achieved via precariarity – the use of insecure work at low wages and with poor conditions.  Indeed, more often than not, these sectors of the economy depended upon cheap migrant labour and used various scams – such as over-charging for accommodation or work clothing – to pay below the legal minimum wage.

As with the steelworks in Port Talbot, the origins of this neoliberal process can be traced back to the 1980s, despite the establishment media’s fetish with blaming everything on Brexit.  Indeed, insofar as there is a European dimension here, it is in the way in which the Maastricht Treaty enshrined neoliberalism into law.  And it did so in a manner which benefitted the multinational corporations at the expense of small and medium businesses.

Consider, for example, the UK pig crisis which is currently bubbling to the forefront of political-media consciousness.  The UK’s pig farmers have, apparently, succeeded in doing something which is impossible in a free market – they have over-produced pigs.  In a free market, of course, pigs – or any other foodstuff – cannot be over-produced, because oversupply would translate into lower prices and thus higher demand.  This though, highlights something which ought to have been obvious about neoliberalism – it works against free markets.  Indeed, the hyper-efficient processes neoliberalism deployed to squeeze inflation out of the economy involve highly regulated corporations; including in the market for meat.  As the British Meat Processing Association explain:

“The British meat industry is responsible for supplying safe, wholesome and quality meat and meat products to people across the UK and further afield.

“It involves businesses throughout the ‘food chain’ from farms, abattoirs and cutting/processing operations through to food manufacturers, distributors and the supermarkets that sell their products.”

The chain between farm and plate involves a series of different hyper-efficient industries each working to drive costs to a minimum.  Including: Slaughter at abattoirs, cutting at meat producing plants, processing and manufacturing plants for making secondary products such as sausages and pies, wholesale companies, and retailers.  Each of these processes is subject to a high degree of specialist regulation, making them highly inflexible in responding to major shifts in supply and demand.  And each is, of course, linked by and dependent upon road transport.

As with the HGV driver crisis and the global shipping crisis, what is happening in meat processing is an example of the inability of hyper-efficient processes to handle major disruptions to the system.  And while Brexit has not helped the global nature of the crisis point to the response to the pandemic as the immediate trigger.

Refrigerated meat processing plants proved to be a breeding ground for Covid-19.  And as Nan Jones at New Food Magazine explains, incompetent government processes for controlling the spread of the virus have added to growing labour shortages:

“Even before the onset of COVID-19, the industry had been struggling to find employees, particularly amongst British workers, with the average shortfall over the last couple of years running at 10-11 percent. This year has seen that number rise to 15 percent, and the so-called pingdemic has added even more pain. One company last week reported a 33 percent labour shortfall at a single site. Labour and skills shortages of this magnitude could prove fatal to some meat plants if the situation is allowed to continue.

“Meat processing, unlike other manufacturing, is still a very labour-intensive industry because of the level of manual dexterity needed, much of which can’t be replaced by automation. Processing plants need large numbers of skilled and semi-skilled workers to keep food production rolling, but these skills can’t be learned overnight. It takes at least 18 months to train a fully skilled butcher, so if one is lost from a production line, that person is not easily replaceable.”

The result is that pigs which should have been processed during the pandemic remained on farms, where they continued to need feeding and regular veterinary checks.  And since overweight and over sized pigs are less valuable, the delays have eaten into farm profits and threaten to put farmers out of business.  Of more concern is that once bottlenecks of this kind have been created within hyper-efficient systems, only the expansion of the entire system can overcome the problem.

Systems designed to operate at maximum efficiency in normal conditions – dotted line – are vulnerable to extraordinary shocks precisely because they have dispensed with the resilience buffer provided by surplus capacity – like a few traincrews, steelworks fitters and meat cutters occasionally sitting around playing cards and drinking tea.

In 1971, there had been 1,890 abattoirs in the UK.  By 1992, as Maastricht regulations were coming into force, this had shrunk to just 670, causing questions to be raised in Parliament:

“The effect of directive 497 cannot be underestimated. The Federation of Fresh Meat Wholesalers has said that it will cost about £400,000 for the smaller slaughterhouses to reach the level of standards of structural change required by the directive, and an infinitely greater sum for some of the larger ones. That is unacceptable.

“The most recent information supplied to the Commons Library by the Meat and Livestock Commission said that it expects the number of slaughterhouses to fall from 670 to possibly fewer than 350. That is extremely serious…

“At present, an animal can be taken to the closest abattoir. Under the changes, if small abattoirs go out of business, animals will either be transported over a greater distance or, if there is a spare vet—which will be unlikely—they could be shot on the spot and then taken. It is far more likely that they will be taken to the knacker’s yard and used for pet food…

“What about those with small numbers of stock who wish to take three or four animals per week to slaughter? Will they be dealt with by the large slaughterhouses which have contracts with Tesco or Sainsbury? No, they will not—such slaughterhouses are designed for a steady throughput, and it would be uneconomic to put only a few animals through. Therefore, there will be more farmyard slaughter which will not improve animals’ welfare or hygiene in the food chain. It will go against all the standards that we rightly set out to maintain.”

By 2003, there were just 320 abattoirs in the UK, and this fell to 249 in 2018, with most of the remaining small abattoirs facing closure.  And the hyper-efficient abattoirs which remain are unable to process the backlog on the farms because of transport problems and, especially, labour shortages at the cutting plants.  So that regulations which were, in part supposed to improve animal welfare have resulted in vets aborting pig foetuses at the farm as the only means of cutting the oversupply.

As with the HGV driver shortage, shipping problems and the growing crisis in the NHS, the official response is to attempt to bring back the cheap eastern European workers who left during the pandemic.  But as these neoliberal hyper-efficient processes breakdown, nothing short of an expansion of the entire system – in this case from farm to plate – can clear the backlog without allowing the crisis to morph into widespread business failures and a collapse of whole sectors of the economy. 

And there’s the rub, because it is precisely the shift to hyper-efficiency from the mid-1980s, which allowed the western economies to continue growing following the inflationary oil shocks of the 1970s.  As Joseph Tainter warned, it is precisely these attempts at sustaining civilisations which eventually cause them to collapse.  In a more resilient age, our economy might have bounced back from the pandemic.  But in the age of hyper-efficiency, our just-in-time processes are proving too fragile to survive this level of disruption.  Far from building back better, we look set to build back smaller, local, and far more expensive.

As you made it to the end…

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