Wednesday 24 July 2013

Tesco and Aggregate Industries - what on earth could they have in common?

Are all big companies the same? What for example do Aggregate Industries and Tesco have in common? Well, more than you would think.

We have already established that AI takes - from the ground and communities, but does not give anything meaningful back. Donations of 0.02% of sales mathematically rounds to zero. Meanwhile Tesco's boss, Philip Clarke, was recently quoted as saying "We were hearing that Tesco has got to put in more [to society] because people think that all we do is take out". Tesco claims it wants to change, and has a new "core purpose" added to the list on its boardroom wall - "We use our scale for good". AI on the other hand thinks it is just a matter of presentation, promotion, marketing, spin - its Chairman recently calling for the quarrying industry to do more to promote itself to the public.

But there are other similarities. Both have been no good for farming - an industry in crisis, with 30 dairy farmers quitting in April alone. Invariably, any new quarrying application has the word "Farm" in there somewhere - and let nobody claim that soils will be better following any restoration that may or may not happen. Tesco and other major supermarkets have also been devastating for farms, with tough contracts forcing many to quit and moving the UK's food self-sufficiency from 70% in the early 1990s to nearer 50% now. Tesco again wants to correct this, Philip Clarke saying "We've got to produce more food at home and we've got to make better deals with producers". That won't be easy with AI and friends digging up farmland everywhere.

Closer to home, both companies have also been accused of "sharp practices". AI by flouting planning conditions at Hillhead, and Tesco only yesterday by setting up a marquee selling "summer essentials" in its car park in Ilfracombe, without planning permission, angering local shopkeepers. Tesco too has applied for retrospective permission, but can carry on in the meantime, says North Devon Council, until permission is either granted or refused.

No doubt people can think of other similarities. Pile it high, sell it cheap etc. But it can be different. Companies can do good. Companies can give back. The application by Sirius Minerals for the York Potash Project in the North York Moors National Park has been mired in controversy and debate about its economic merits and environmental impact, and has been delayed yet again. But whatever the arguments, or maybe because of the arguments, the company is pledging to give back. Not AI's 0.02% of sales but 0.5% of sales - 25 times more. And it doesn't stop there. A Section 106 agreement would see £13m put into a range of community measures - tree planting, promoting tourism, road improvements and educational projects. Sirius Minerals is even paying for three displays from the Red Arrows for the annual Whitby Regatta whilst construction takes place.

Whether Sirius Minerals is buying off the community or making a serious effort to do the right thing, something would at least be flowing back to the North York Moors and the region suffering most impact - not least by creating about 1,000 jobs and paying tens of millions of pounds in royalties to landowners. At a market capitalisation of £270m the company is not small, but Holcim, AI's parent, is almost 60x bigger. AI gave back just £164k in 2011 - it's most recent figures - 5% of the figure paid to Holcim's boss in 2012. It needs to think about giving back something more significant to the communities it affects. AI would surely have more chance of persuading people of the merits of quarrying by doing so, than by any amount of spin and self-promotion.