THE joint managing director of Walker’s Shortbread has declared the labour shortage crisis is the “biggest issue” facing the food manufacturer as it seeks to bounce back from the damage wreaked by the pandemic.
Jim Walker’s comments came as the historic Aberlour-based business said the year covered by the most recent accounts was “the most challenging that the company has ever faced”.
Mr Walker said a combination of the pandemic and Brexit had weighed heavily as the accounts show that sales fell by 11 per cent to £132.4 million. Pre-tax profits dipped to £3.57m from £7.64m.
Directors write in the accounts that the impact of the pandemic had been “central to every decision taken” in the year ended December 31, 2020, which also saw the company suffer the “financial consequences” of the 25 per cent tariff on imports to the US market.
Turnover fell as the Covid crisis forced the closure of the company’s key tourism and travel markets for much of last year. Walker’s also suspended production for a three-week period shortly after the first national lockdown was imposed in March 2020.
The company had hoped for an improvement in its fortunes in the current financial year, but its progress is being hobbled by an acute shortage of staff sparked by Brexit and the end to free movement of people between the UK and European Union.
There are currently more than 200 vacancies at the shortbread-maker which normally employs 1,600 staff, despite wages offered being “above union rates”. The company lost around 400 members of staff from EU countries following Brexit.
Mr Walker said: “We were hoping to make a good recovery this year, but we are now in a situation where we are very short of staff. That’s making the recovery much more difficult to achieve. So this year is not going to be much better.
“We had hoped to get back up this year again, but it is going to be tough. Shortage of labour is our biggest issue now, and some problems with supplies as well. But mainly labour is our biggest problem.”
Asked if the labour shortage was connected to Brexit, Mr Walker said: “Yes, that is more or less the situation. We used to employ people from overseas… they haven’t been available this year and we haven’t been able to replace them.”
Mr Walker said the company has been striving to recruit people by increasing wages, but said its efforts are hampered by the company’s location, as well as competition from other sectors which are also short of staff.
He said: “We are in a position here where there is a very small community. There’s only about 800, 900 people in Aberlour… so it is hard getting the people we need.”
Asked to comment on claims from some in the UK Government that the labour shortages have been caused by businesses not being properly prepared for Brexit, Mr Walker replied: “We were very well organised for Brexit. Our exporting team did a fantastic job.”
Noting that Walker’s had sent extra supplies into Europe in the month before the UK exited the EU on January 31, in a bid to mitigate potential disruption to its supply chain, he said: “There were many, many problems with Brexit and we didn’t get any goods into Europe until February.
“There are still some countries that it is very, very difficult shipping goods into; France is tricky, Spain too. It’s been very difficult.”
Mr Walker said he hopes the company is able to overcome the “ongoing” hurdles of supplying into the EU market, but is less confident about solving the labour shortage.
He said: “The labour thing… it is hard to see how we can solve that ourselves.
“We pay above average rates for food production, we pay above the union rates and we believe we look after our staff very well. But there are just so many alternatives.”
Mr Walker does not believe the end of furlough will provide a supply of candidates, stating his view that many who had been on the job support scheme will have found other jobs. Students who may have worked for the company during the summer months have also returned to university.
Mr Walker said: “We are quite a sound, well-funded business and we have always been very cautious. We are not highly geared and we tend to invest as we go along. But instead of recovering in a year it is going to take a few years to recover to get back to where we should be. I think the whole food industry will have challenges with [its] supply chain.”
However, Mr Walker added: “We are 120 years old… we will survive.”
Meanwhile, Mr Walker said the axing of the 25% import tariff in the US, its biggest market, had been a bright spot for the company last year. “It went on far too long,” he said.