THE chief executive of Greggs has backed a call from the Bishop of Durham for firms sitting on record-breaking cash reserves to use the money to invest and create jobs.
Ken McMeikan said there needed to be a “mindset change” among leaders of successful firms who are holding off investment plans due to the uncertain economic environment.
McMeikan, who recently stepped down as chairman of the CBI in the North East, said he had sympathy with the case put forward by Bishop Justin Welby in a recent interview with The Journal.
Citing figures showing that the cash holdings of UK companies have reached a record total of almost £700bn, the bishop called on North East firms to “play their part in the heavy lifting of the economy over the next two or three years”.
“(They) have to invest in a way that creates employment and helps to make society a better place for the company to exist in over the next 10 or 15 years,” the bishop said.
“Companies have the capacity to do that. They are much more powerful than individuals and at the moment, they have got more money than Government. The corporate surplus is more or less equivalent to the Government deficit.”
McMeikan, who was an active champion of the role of business in the community during his tenure as CBI chairman, said he was proud of what North East companies had achieved in that period.
But he admitted more needed to be done, especially with the economy continuing to struggle and unemployment remaining high.
McMeikan told The Journal: “Greggs is investing and creating jobs by doing that, but we are in a fortunate position because we have the cash available to invest. I think there is a need for businesses that have the cash that also have the opportunity in terms of growing their business that they should be investing now.”
Echoing the comments made by Bishop Welby, McMeikan said that companies needed to break the cycle of under-investment caused by a lack of confidence.
A quarterly survey published by the North East Chamber of Commerce this week highlighted the problem, with plant investment once again negative after creeping into positive territory for the past two quarters.
“There is a risk that by not investing, they don’t create the jobs and that doesn’t put money back into the economy,” said McMeikan. “We need a mindset change so that business leaders have the confidence and the courage to invest now rather than waiting. If they don’t invest now because they are concerned about the outlook for the economy then that might mean that the economy doesn’t grow.” Under McMeikan’s leadership, Greggs has expanded aggressively, creating hundreds of new jobs in new shop and bakery facilities.
The company, which will update the City on its performance in a trading statement next Thursday, has also grown its successful breakfast club programme and is encouraging other firms to adopt the model.
But McMeikan, who said the Government needed to lead by example by investing seriously in infrastructure projects, added: “We have got to face the facts that we have still got high unemployment compared with the rest of the UK and job creation remains a practical challenge for the business community.
“Youth unemployment is a particular challenge. We need to get more companies in the North East using the Youth Contract and apprenticeship programmes to encourage them to employ more 16 to 25-year-olds.
“There is a huge responsibility to create hope and opportunity for the next generation who face the prospect of not getting into work.”