Most in procurement are well versed in risk management. But there is now a large, foreseeable – and little discussed – iceberg looming on our collective starboard bow. I am describing the small matter of Scottish independence. You know it is there, know it’s getting closer and probably have done nothing to prepare your business.
Reflect for a moment on what might follow should UK plc scrape the independence berg. Expect a new currency. Some form of border control. Anticipate increased transaction costs alongside a highly emotional, politicised English reaction. If nothing else, uncertainty brings risk and with it, unavoidable cost. Is it not time you take an interest and build a contingency for anything sourced north of Berwick?
The English reaction to independence is key. Westminster will surely no longer favour a Scottish economy in which over 22 per cent of the workforce is employed in the public sector, much for UK central government. UK Government, the defence and finance industries will look very different if Scotland votes ‘Yes’. Why should England support its newly independent neighbour with debt financing, investment, jobs, defence or buying largesse?
This new Scotland will most probably trade from outside EU jurisdiction, but will be obliged to accept EU terms of trade. Like Norway this will require adherence to EU rules without influence over their design. Much international business managed today in Edinburgh is bound to migrate over the border. England’s likely refreshed desire to look after its parochial interests must have consequences. The recent decision to maintain warship building in Scotland is a case in point. Such decisions will change when political parties are driven to placate the demands of English voters.
If you have assets bolted to the Scottish floor life might become a little more complex. If you enjoy a relationship with Scottish suppliers, supply security might just become a little more volatile. Think of the upheaval in countries such as Egypt, Iraq and Venezuela when new currencies were launched.
One final point about value to Scotland arising from the oil and gas sector. Unless nationalised, those resources belong to those who found and own them – not the Scottish exchequer. There will be tax revenue but nothing like the impressive numbers quoted as the energy bounty accruable to Scotland post-independence. Scotland is not as well heeled as the SNP thinks.
The independence iceberg is getting closer. You owe it to yourself and your organisation to manage the risk for the good ship procurement. If you live or work in Scotland, find yourself a lifeboat.
☛ Edward Smith (not his real name) is a senior procurement professional in the oil and gas sector.