Mixed views on furlough as family firms debate the way ahead at Herald event

NO crystal ball was required to predict that much of the debate at The Herald’s Scottish Family Business Breakfast would focus on the current coronavirus pandemic. But far from painting a picture of despondency and fear over what the future holds, yesterday’s event highlighted a mosaic of diversification, disruption and innovation.

But there were mixed views over whether the Coronavirus Job Retention Scheme – due to close on October 31 – should be extended. Some panel members suggested that the UK Government should look to countries like Germany where the government has agreed to extend its scheme by a year.

Asked if furlough should be extended for all, or for specific business sectors only, Peter Facenna, managing director of Glasgow-based Allied Vehicles Group, supplier of adapted and special-purpose vehicles including taxis, said “it would be delaying the inevitable”.

Mr Facenna said: “Like many other businesses we have had to make some people redundant but all of them will be on the payroll until the end of October to give them a chance to find something else. Furlough has enabled us to do that but I do think it needs to come to an end soon and not continue for a couple of years.”

Lyndsay McGonigle. managing director of The Top Drawer, a fast-growing East Kilbride-based furniture and home décor business which has been providing a personalised virtual shopping service during in recent months, said furlough coming to an end was a “big concern”. “We don’t have a big pot of cash and I think it has to be considered on a sector-by-sector basis, not simply a broad brush to extend furlough for everyone,” she said.

Giovanna Eusebi, co-owner of Eusebi’s Deli & Restaurant in Glasgow’s west end, said that the furlough scheme had been much needed by the hospitality industry but “we have sadly had to let some of our workforce go”. She pointed out that future demand was “impossible to predict because there is always the fear of another lockdown”.

Ms Eusebi added: “By extending furlough … we will need to pay for that at some point. People need a chance to look for another job and we have to rebuild our businesses. The Eat Out to Help Out scheme has helped us during August but continuing furlough is a drain on the economy.”

The event, designed to explore the challenges and opportunities facing the family business sector – one of Scotland’s biggest contributors to economic growth – also heard from keynote speaker Mike Donaldson, the chairman of Fife-based James Donaldson & Sons who, with his brother, Andy, is the sixth generation of the family to run the business.

Taking the audience on the firm’s journey since its launch in 1860 to its present status as a £225 million revenue business operating out of 32 sites with 1,000-plus staff, Mr Donaldson spoke about the challenges associated with bringing in a non-family member – Scott Cairns – as group managing director in 2011.

Mr Donaldson said that since joining the company, Mr Cairns had taken it from two-three per cent net return to a 5%. Earlier this year, the business acquired two companies – Rowan Manufacturing and Smith and Frater. “We’ve grown to eight trading businesses,” he added, “each with its own managing director and finance director.

“The business has diversified over the last 20 years and we now plan to look at further vertical integration. However, our values are at the core of everything we do – those are customers, integrity, people, sustainability and family.”

Asked about non-family members coming into a close-knit independent business, Angus-based Iain Stirling, owner of Arbikie Farm Distillery with his brothers John, David and Sandy, with ambitions to become one of the world’s most sustainable distilleries, said: “A family business needs continuity but there is a lot to learn about other cultures so we need that outside experience.”

The event was chaired by Donald Martin, editor of The Herald and Herald on Sunday, and sponsored by from Business Gateway, Clydesdale Bank, Family Business Solutions Ltd, Strathclyde Business School and TL Dallas.

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