Burberry's still British

It is unusual to hear Tom Jones commenting on industrial issues. Now, the iconic Welsh singer has joined other celebrities in a union-led campaign against the closure of a Burberry Group Plc factory in Treorchy, Wales.

Their complaint? That Burberry clothes aren't British unless they are made at home. They may be right that there is something odd when a homegrown brand such as Burberry, known for its beige plaid patterns, closes one of its few UK factories.

Yet they have lost sight of the bigger picture. As globalization progresses, we need to get used to the idea that the nationality of a brand no longer has much to do with where the stuff is produced. And the ability to adapt to new conditions is what has made the United Kingdom one of the most prosperous economies in Europe. There is no point in trying to stop it now.

Even if it is made in China, a Burberry is still British.

"Burberry markets itself as a British brand, and yet now they are considering moving the manufacturing work to China," Mervyn Burnett, the GMB union organizer who has been leading the campaign against the factory's closure, says in a telephone interview. "They don't need to do it. The customers believe the products are made in the United Kingdom, and they have a right to know that is the case."

Burnett has certainly been leading a successful campaign and Burberry has been put on the back foot.

The London-based luxury-goods maker last year announced the closure of the plant, which employs 300 people. The jobs will move elsewhere, though the company hasn't yet said where. Since then, the employees have been fighting back, and protests are taking place outside Burberry stores.

'Greedy, unethical'

The website http://www.keepburberrybritish.com has been highlighting the issues, and plenty of celebrities have joined the campaign.

"Burberry should not make this move," the GMB quotes UK actress Emma Thompson as saying. "It will brand itself as greedy, unethical and perhaps most importantly for the profile of the company inauthentic."

A company such as Burberry, which relies on being fashionable, can't afford that kind of publicity. It is fighting back. Last month, it donated the obsolete factory to the community and underwrote its value at 1 million pounds. "Whether used or sold, the site amounts to a sizeable donation to Wales," Burberry Chief Financial Officer Stacey Cartwright says in a statement.

The decision to close the factory won't transform the bottom line. The average wage there is just 245 pounds a week, according to Burnett. When you are selling polo shirts at 80 pounds each, it probably doesn't make much difference if they are made by British workers earning 50 pounds a day or Chinese workers on $10. The profit margins are still as lush as the Welsh valleys.

Three reasons

Yet, while we can sympathize with the people losing their jobs, Burberry has made the right decision, no matter how much criticism it has to put up with.

First, the company has a duty to boost profit as much as possible. Surely, if it didn't shift production to the cheapest location, it would be failing its shareholders. Companies exist to maximize profit that's how the system works.

Next, national identity has little to do with where the factory is located. It is about design, values, marketing and history. The stuff can be made anywhere.

Lastly, Britain's economy is growing because it has been good at shutting down old factories and shifting people into higher-value jobs. There isn't much money in garment manufacturing. It may look difficult, but the workers who are fired should be able to find employment that generates more wealth. Britain is, after all, a country where virtually anyone who wants a job can get one. The unemployment rate remained at just 3 percent last December.

Always British

National characteristics are retained regardless of the production location. If you buy a burger from McDonald's Corp in Paris, it is still an American meal, even if none of the ingredients came from the United States. A car from Bayerische Motoren Werke AG is still German even if it is assembled in the United States or China. Likewise, a Burberry shirt, coat or handbag is still British, even if it wasn't manufactured in the United Kingdom.

The company has made the right call. If the shirts can be produced cheaper elsewhere, they should be. That's progress. It's not always pretty, but it is what keeps the country prosperous even if Jones and Thompson can't see it.

Matthew Lynn is a Bloomberg News columnist. The opinions expressed are his own.

(China Daily 03/05/2007 page6)