Not Made in Britain: How the Olympics got outsourced overseas

Should we care that so much London 2012 work has been outsourced to foreign firms? Has London missed out?

Follow me: @shrutitripathi6 and @LondonLovesBiz

91% of the Olympic souvenirs don't come with a 'Made in Britain' tag

91% of the Olympic souvenirs don’t come with a ‘Made in Britain’ tag

In his Budget speech in March, George Osborne told the nation that the Olympics would be “Made in Britain, created in Britain, designed in Britain, invented in Britain”. And indeed, the Olympic Delivery Authority has made £6bn worth of Games contracts available to UK companies.

But these feel-good nuggets don’t tell the whole story. There are plenty of London businesses who feel they have been squeezed out of Olympic opportunities by foreign firms.

Some 91% of the Olympic souvenirs weren’t manufactured in Britain. China alone manufactured two-thirds of the 194 products you can buy on the London 2012 website.

Team GB’s Olympic gear, designed by Stella McCartney, was made in a sweatshop in Indonesia. The British ale industry was left high and dry as Olympic officials picked Dutch lager Heineken as the official beer of London 2012.

And critics have slammed Olympic authorities for trading Britain’s legacy for cheap and cheerful production.

So have the “greatest Games on earth” really been that great for UK businesses?

Olympic contracts have left Britain’s turf in two ways. First, when LOCOG chose foreign companies over home-based companies for some Olympic contracts. Secondly, when UK companies did bag some of the coveted Olympic contracts, they decided to outsource work to foreign companies.

It’s time to hear from some of the UK businesses who feel they’ve been left in the lurch for Olympic contracts.

Back in February, an Arkansas-based firm bagged the contract to print 11 million Olympic tickets. Trade union Unite branded the move as “a slap in the face, a kick in the teeth and a two fingered salute to print workers and businesses in the UK”.

Team GB's Olympic gear, designed by Stella McCartney, was made in a sweatshop in Indonesia

Team GB’s Olympic gear, designed by Stella McCartney, was made in a sweatshop in Indonesia

“It is obviously a real shame that local businesses have lost the opportunity to be part of the Olympics,” says Nick Green, founder of printing company, “As the nation pays for the Olympics, it would be ideal to see that money go back into UK-based businesses.”

But could British printing companies produce tickets here? “Without a doubt. I am sure that had businesses got the opportunity, they would be able to offer extremely competitive pricing.”

Another outsourcing snub is the furniture contracts for the Games. While you may see the Olympic stadium draped in patriotic red, white and blue, the furniture tells a different story. The contract to install loose furniture like seats in the Olympic Village went to Australian firm Ramler Furniture.

It’s got the owner of British company Sandler Furniture, Roy Sandler, up in arms. “They won’t even consider talking to a firm located around two miles from the Olympic Village, yet go ahead and award much of the furniture contract to a company in Australia who purchased most of it in China!” says Sandler.

Roy Sandler, owner, Sandler Furniture

“They won’t even consider talking to a firm located around two miles from the Olympic Village, yet go ahead and award much of the furniture contract to a company in Australia.”

-Roy Sandler, owner, Sandler Furniture

To add insult to injury, Sandler was approached by the ODA to buy chairs off the authority once the Olympics are over. “They could get in touch with me to dispose the chairs, so why didn’t they pay any heed to my requests for arranging a meeting so that we could showcase our products? I’m not saying favour me, all I’m asking is to give me a fair crack of the whip.”

Even the Olympic bell, one of the star attractions of the opening ceremony on 27 July, will not come with a “Made in Britain” stamp. Games organisers chose East London’s Whitechapel Bell Foundry to cast the bell. But because the firm didn’t have enough resources to make the bell in Britain, it subcontracted the job to a Dutch manufacturer.

Loughborough-based company Taylor’s Bell Foundry was second in the running for the contract.  Managing director Richard Grimmett was furious when he heard the casting was outsourced to a Dutch company. He told The Daily Telegraph: “It is the British Olympics but the bell is being cast by a foreign company in a foreign country. It does not make sense to me.

“We feel very disgruntled. Given the state of the economy at the moment, a contract of this nature would have given us the opportunity to lift the industry in this country, refresh our materials, employ more people and put us on a finer footing for the next few years,” he added.

London 2012 Olympics: tickets will be flown over from Arkansas as printing contract goes to American firm

11 million Games tickets to be printed overseas - LOCOG’s big printing mistake

Miles Parker, chairman of the manufacturing network body Made in London, is furious about the situation: “The whole rationale behind outsourcing contracts that could’ve been made right here in the UK is abysmal. Why on earth have we let a golden opportunity slip through our fingers?”

But is the outrage of UK companies a classic case of the heart ruling over the head? Why should we care if UK companies outsource some aspects of an Olympic contract? After all, doesn’t it make perfect business sense to choose cheap-as-chips production to maximise profits? And wouldn’t that be better for UK contract winners – and so, potentially, the economy as a whole?

As Tim Bradshaw, CBI head of enterprise & innovation, says: “Some [UK businesses that have won Olympic contracts] may, for example, do design and development in this country, while deciding to outsource their manufacturing to other markets. That means that the overall production process still creates jobs in the UK and benefits our economy.”

Dr. Leslie Budd, academic consultant for BBC Two’s Made In Britain programme, argues: “The Olympics might be a public-funded jamboree, but as long as the UK companies [that are] outsourcing pay corporation tax in the UK, then more sales would generate more profits.”

Naveed Butt, sourcing manager, LocalBoyz

“Manufacturing abroad is up to 60% cheaper, which allows retailers to sell at a price that consumers’ can afford”

-Naveed Butt, sourcing manager, LocalBoyz

LocalBoyz, a Loughton-based retail company, supplies Games merchandise to Sports Direct. It didn’t think twice before subcontracting the contract to India, Pakistan and Bangladesh.

“Manufacturing and shipping Olympic merchandise abroad is up to 60% cheaper, which in turn allows retailers like Sports Direct to sell at a reasonable price that doesn’t burn a hole in the consumers’ pockets,” says Naveed Butt, the company’s sourcing manager. “So in effect, outsourcing is helping everyone in Britain to enjoy the Olympics.”

So the big question remains: should we take the outsourcing on the chin, or be really cross about it?

We might have been more forgiving if the Olympic memorabilia outsourced to foreign manufacturers raked in huge profits. Sadly, that’s not necessarily the case.

The official Olympic scarf, for example, was made in factories in India, China and Turkey. The British Olympic Association (BOA) thought it could raise £10m in the sales. But with just two weeks to go for the Games, the BOA is £2m short.

Yet one can only imagine how deep the shortfall would’ve been if those scarves came with “Made in Britain” tags.

At a time when the UK economy is in recession and we’ve quadrupled the Olympic budget from its original estimate of £2.3bn to £11bn, maybe choosing China to get a good bargain is a wise decision.

Where does that leave disgruntled London businesses? Well, they can still bid for Olympic Legacy contracts after the Games finish. There are some fantastic opportunities available – but whether businesses’ British pride will allow them to tender now remains to be seen.

Readers' comments (5)

  • Shraddha Kaul

    It certainly does make perfect 'business sense' to choose cheap-as-chips production to maximize profits! Its high time we accept that most of the manufactured goods in Britain are too expensive to be affordable. Call it lack of skills or resources. If outsourcing works - why not? Btw. this feature makes a great great read - didn't want to miss a word! :)

    Unsuitable or offensive? Report this comment

  • We are a Banner and Display manufacturer in Waltham Abbey, Essex. We have just seen 40 grands worth of banners go up in our Town and we did not even get asked to quote,. Despite being on the Compete For Database. We gave up with Compete For when we found our A German firm was awarded a contract. If we would had some of the business we would have invested in more full time people. I am a sporty person and im not going to watch any of the coverage. We should care, but its like everythng else in our country EVERYONES ON THE TAKE

    Unsuitable or offensive? Report this comment

  • Naveed Butt, sourcing manager, LocalBoyz
    says "Manufacturing abroad is up to 60% cheaper, which allows retailers to sell at a price that consumers’ can afford"

    Thats all very well but what happens if the consumers dont have jobs, can they afford to purchase goods from their Unemployment Benefit ?

    Unsuitable or offensive? Report this comment

  • Anonymous

    The so called open procurement for the Olympic Games was yet another total con on SME's,.

    We supply physiotherapy and medical equipment so tried early on to get involved. we were met by a wall of silence and it was obviously another inside job as no tender opportunities were ever issued. When I made enquiries I was told as this was dealt with by the Olympic authority they were under no obligation to m,ake the procurement process public

    Unsuitable or offensive? Report this comment

  • Diplo Docus

    We should have taken heed long ago and been warned by the defiant nature of the aggressive LOCOS defence of the appalling £400k logo, when so many obviously better (and free) designs were offered. £400k's worth?

    I think not! So here was an organisation that was absolutely convinced of its own immutable good judgement and sense and eager to brush off all criticism by hiding behind what must be one of the "ultimate deadlines" in world events - a deadline which left little scope for debate or discussion. So there was none at virtually every step of the way.

    Sir Keith Mills (he of Nectar fame) has a fearsome "get it done" reputation, and Coe's political instincts have imbued him with a sufficiently brass neck to brazen out just about any crisis of confidence. And the remit of the Olympics "at all costs" also lead LOCOS to imply that anyone daring to criticise anything they were up to was being unpatriotic and obstructive.

    There was a small ticketing company just 3 miles from the site that applied a month late for official consideration and warned all concerned that based on their knowledge of the technology, and an easily googled reputation for questionable practises, that the chosen contractor would probably fail to "satisfy the marketplace" - which of course it did in a big way.

    It seems most big decisions were taken on the basis of "no one ever got questioned for choosing a large company" (however dubious their reputation) - which these days precluded just about all UK participation since there are no serious UK businesses left standing in the arena of big event construction and management.

    Of 25 listed "partners" on the web site, maybe 3 are UK businesses. And one of those is the moribund and mostly publicly owned Lloyds Bank.

    Although both have "arse covering" comfort for decision makers, neither (US owned) Ticketmaster nor (the British) G4S have a glittering reputation for excellence amongst their customers.

    Based on the story so far, there is a good chance the Olympics will be an expensive embarrassment. But at least we can then blame all the foreigners for screwing it up.

    Unsuitable or offensive? Report this comment

Social Bookmarks