Outlook: Royal Doulton

BRITAIN'S TEXTILE industry has already all but gone down the Swannee due a combination of the strong pound, cheap imports and the well publicised problems of Marks & Spencer. Now our fine china industry has developed some yawning fault lines too.

As corporate announcements go, yesterday's from Royal Doulton was as bleak as they come. Some 1,200 jobs are to go, including 1,000 in the UK. Moreover, half of them before Christmas (nice touch, that). All this has resulted in pounds 45m of exceptional charges - and, oh yes, there was another profits warning. It won't be a happy Yuletide in the Potteries.

We have seen cuts elsewhere in this troubled industry, most notably from Churchill China, but nothing on this scale. Is this an industry-wide problem, or has Royal Doulton cracked its own teapot, so to speak?

As is often the case, the truth lies somewhere in between. The strong pound has destroyed exports and cheapened imports, although to be fair, Royal Doulton wasn't blaming the pound yesterday. This is more a tale of a rather old-fashioned company in an old-fashioned industry being too slow to change than anything else.

Used to producing good quality products that sold themselves, Royal Doulton has been caught out by more modern, design-conscious operators like Villeroy & Boch of Germany. Royal Doulton soldiered on with its production-driven ethos. It over-produced, over-stocked and under-invested in marketing, branding and retail positioning.

These days, people just don't seem to want the same crockery set as their mum. Belatedly, Royal Doulton is now trying to catch up. It has cut 320 lines to 120. And more attention is being paid to design and marketing. But it will be a long haul.

According to the British Ceramics Confederation, the number of workers involved in pottery production in north Staffordshire is now around 20,000, a figure only marginally lower than 10 years ago. Further cuts now seem certain. Does Britain still have a place in pottery production or, like textiles, will much of it move offshore? Grim though this latest news has been, there are certain unique selling points.

The "Hand Crafted in England" stamp is a key part of top brands; cheap labour competitors cannot replicate that. There are also some parts of the production process where the British have skills that are not often matched elsewhere - hand-painting for example. It is not all gloom and doom, but the industry does need to start living in the real world.