UK: The restyling of Delta. (3 of 3)

UK: The restyling of Delta. (3 of 3) - On the cables side, too, safety has a part to play. In the wake of the King's Cross underground fire, Delta has developed a zero halogen low smoke cable of which it has high hopes, in Europe as well as the UK. It ha

Last Updated: 31 Aug 2010

On the cables side, too, safety has a part to play. In the wake of the King's Cross underground fire, Delta has developed a zero halogen low smoke cable of which it has high hopes, in Europe as well as the UK. It has particular attractions in high risk areas such as hospitals, where vital equipment must be kept running at all costs, but managers believe that its use will become more widespread. The coatings technology was transferred from US specialist cables company FL Surprenant, which Delta acquired in 1988 for £18.6 million.

New technology aside, the real break for the cables division came in 1988 when Easton masterminded the merger of Delta's cable operations with those of Hawker Siddeley in a £200 million joint venture. Before the merger Delta was stuck at number three to BICC Cables and Pirelli, while Hawker Siddeley languished in fifth position. The merger gave the combined business, Delta Crompton Cables (DCC), leadership in general wiring, joint leadership (with BICC) in medium voltage power cables for the regional electricity companies and a strong position in the growing field of special cables. Delta, with 64% of DCC's equity, has management control.

As well as market leadership, the merger gave DCC the opportunity to become the lowest-cost producer - another key Delta goal. Dick Watts, the effervescent managing director of the cables division, has emerged from a reorganisation of cable production which involved closing three out of nine factories, moving 297 pieces of machinery between plants and repositioning a further 123, constructing five new buildings and refurbishing a further seven, not to mention retraining 770 of the total 2,000 workforce. Says Watts (who talks of having had two jobs - one by day, making cables, and the other by night, solving what he calls the Chinese puzzle): "Every plant was affected. At the Derby factory, one of the biggest single sites in Europe, only two pieces of kit weren't moved."

Now, instead of each factory doing a bit of this and a bit of that, each is a centre of excellence dedicated to a particular type of cable, which keeps raw material costs right down. Derby makes power cables, while the spanking new Leeds plant produces special cables, including the new fire resistant range, instead of house wiring. At the Llanelli plant, which now concentrates on light general wiring cable (the commodity end of the market), capacity has been increased by 70 to 80%; the adjacent copper wire mill and PVC compounder feed directly into two production lines.

Overall the £30 million rationalisation has cut overheads by a full third, making DCC the lowest-cost producer in Europe. The group average of 11.7% is pulled down, however, by the engineering division, which has the lowest margins at only 7%. "There's a lot of work going in - rationalising, decanting, consolidating companies, taking out overheads," says Easton. "There's no question in my mind that we will see (margins) in the right area in a couple of years' time." Accordingly, for example, the controls and precision components part of the division is undergoing its own rationalisation, five sites being combined into two.

Meanwhile the hunt for takeover targets goes on. In the US a senior Delta man has been put in to head the newly established holding company, looking for acquisitions in flow control, circuit protection and associated areas. In Europe acquisitions are likely to be "very strategic - the priority is adding to and repositioning what we've got", according to Easton. While plumbing fittings is pan-European, cables and circuit protection are solidly UK based, despite strong exports. Some analysts believe that that makes them attractive to a European major wanting to establish a strong UK presence in the run-up to 1992.

While a bid cannot be ruled out, Delta's underlying strength is evident. With its lean cost base, strong market positions and new products, Delta is well placed to profit once volumes return. But 1991 will still be a gritty year. Its metal-bashing past may be behind it, but Delta will have to remain on its mettle.

Find this article useful?

Get more great articles like this in your inbox every lunchtime