UK: My Best Deal - How the money flows in - POLYPIPE.

UK: My Best Deal - How the money flows in - POLYPIPE. - Plastic waste pipes and fittings and other people's dirty water have been the source of Polypipe and Kevin McDonald's fortune.

by Chris Blackhurst.
Last Updated: 31 Aug 2010

Plastic waste pipes and fittings and other people's dirty water have been the source of Polypipe and Kevin McDonald's fortune.

If there's one person who illustrates the cliche, "Where there's muck there's brass", it is Kevin McDonald. One of seven children, the son of an insurance agent, he was born in South Yorkshire in 1933. Today his fortune is worth over £40 million and most of it has been made from other people's dirty water. Polypipe, the Doncaster-based company - he is its chairman and managing director and, with 23%, its major shareholder - is one of the country's leading suppliers of plastic waste pipes and fittings.

Before you mock - even McDonald would agree his is not the world's most fashionable product list - consider this: in the year to June, Polypipe increased its turnover by 33%, to £108 million. The company, which began life with annual profits, in 1980, of £120,000, now makes over £15 million a year.

McDonald himself appears totally unaffected by it all. He is the sort of man who looks just as much at home in a pair of overalls as in a pinstriped suit. When he talks, his voice is pure, thick, tyke. His language, like his approach to business, is down-to-earth and commonsensical. He doesn't, though, appear to be the type of Yorkshireman who fervently believes that there's only one beer, John Smith's, and one cricketer, Geoffrey Boycott.

We met shortly before Polypipe's results press conference in London. In answer to the question, did he ever expect all this - the media attention, stockbrokers hanging on his every word since Polypipe floated in 1985 and its market capitalisation increased from £12 million to £150 million, and public relations men bending over backwards to accommodate him - he shakes his head and replies, simply: "Oh God, no."

By now, if he had followed the conventional path society had laid out for him, the best McDonald could have hoped for was to be a jobbing plumber, with his own firm, a few vans and a couple of assistants. At school - Mexborough Tech - he took the building trades course and, at 15, left to join a local builder as an apprentice plumber. From 1955 to 1957, he did National Service at Newark as an air-frame fitter. On demob he returned to Yorkshire and plumbing - though not the dirty end of the business. As an apprentice he had successfully completed a City and Guilds course so he got a job teaching plumbing at Mexborough Tech. To earn extra money, he worked as a part-time sales rep for Osma Plastics and when he got bored with full-time teaching he switched to selling during the day and teaching in the evening.

But he soon grew bored with that also and decided to go into business himself. He gave up his £800-a-year job as a sales rep and founded his own company, Bartol Plastics. In 1966, he sold Bartol, one of the first businesses to specialise in plastic plumbing fittings, to Hepworth Ceramics. Bartol was valued at £450,000 but with earn-outs and share options, the whole deal was worth £2 million. He joined the Hepworth board and ran the firm's plastics division but in 1972, after what he refers to as "differences of opinion with the board" - his colleagues wanted to concentrate on ceramics, he was a plastics man - he left to start another business - MacDee - making plastic baths.

Having made his fortune, he was not going to lose it, however. He kept his Hepworth shares and ran MacDee on a shoestring. It was a canny move. As the early '70s slump took hold, MacDee almost perished and he was forced to sell it for cost to McKechnie.

The deal which he picks without hesitation as his best, came in 1980, when he linked up with Geoff Harrison, an engineer, and Brian Leesing, a financial systems man, to form Polypipe. As ever with McDonald, the idea was simple and brilliantly executed: by pooling their talents they could under-cut existing plastic pipe suppliers who in their view were over-pricing.

McDonald cashed in his shares and became the majority shareholder. Polypipe built a state of the art factory, and within a short period they were undercutting competitors in waste pipe making, by an incredible 80%.

Polypipe now employs 1,600 people, the Doncaster factory is 10 times the size it was. They have made no major acquisitions and have cash - safe in the bank, of course. One purchase he has made, though, was that of MacDee - which had been absorbed by Hepworth - in 1989 for £3.5 million. Why? "They were starting to get into our business, so we felt the best way to stop them was to take them out." No frills, no fuss, get on with it and do it.

Chris Blackhurst is business features editor, The Independent on Sunday.

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