UK: Shipton Mill and the tale of the lucky miller. (2 of 3)

UK: Shipton Mill and the tale of the lucky miller. (2 of 3) - Food manufacture was Colchester's idea. The father of Adrian Ashcroft, another of the co-operative's partners, suggested wholemeal flour. Stoneground wholemeal bread not only had all the right

Last Updated: 31 Aug 2010

Food manufacture was Colchester's idea. The father of Adrian Ashcroft, another of the co-operative's partners, suggested wholemeal flour. Stoneground wholemeal bread not only had all the right "organic" associations but also the market for the product was actually ballooning back in 1980.

In his search for a suitable mill, Lister scoured the country from Newport in South Wales to Banbury in Oxfordshire, across East Anglia and down to Kent. "It had to be 80 miles out of London", he says, "because of the price". By the time that he reached Shipton Mill he was running out of possibilities. But the location, close to the M4 between London and Bristol, was ideal. Proximity to markets was by no means the only benefit: "The Cotswolds are identified with health foods - they have a craft image which is important when selling to master bakers."

Renovating the mill and installing the machinery occupied the first year or so. The fact that the co-operative already knew something about building restoration, and could carry out much of the job itself, was in one sense a bonus. The drawback was that the mill diverted resources which could otherwise have been generating revenues. And time was running out, for while the co-operative and its helpers were gradually getting Shipton Mill into running order, and learning how the machinery worked, the competition was on the move too. The three giant milling groups - Associated British Foods, Ranks Hovis McDougall and Dalgety Spillers, which together account for 75% of the flour produced in Britain - had also noticed the growth in demand for wholemeal bread, and were taking steps to protect their market shares. And, as Colchester says: "They could do in one year what we did in three."

Lister maintains that the big millers enjoyed no significant cost advantage since the price of grain was the same for all. Further, that the economics of production favoured the enterprising small competitor, who had only to pour natural grain in to the hopper above his millstone and draw off the wholemeal flour beneath. The main part of the industry, by contrast, was geared to the manufacture of white flour using heavy steel rollers, and needed to mix back the previously extracted bran and wheatgerm in order to arrive at an approximation of wholemeal flour. Even today wholemeal flour is still produced by this convoluted and capital-intensive means. However, the industry leaders have invested in more traditional methods as well, and the relative advantage appears less than clearcut.

But in any case, the co-operative felt confident that it had a market for its product: many of the master bakers canvassed by Lister before the mill went into production said yes, they would be happy to try wholemeal flour from the new supplier. Yet when it came to the crunch they were less sure that they wanted to upset existing relationships. Besides, there were early disappointments to do with quality. English wheat was low in gluten, which helps dough to rise, and was generally better suited to biscuit manufacture than to bread making.

In the hope of selling to bakers the mill had to buy North American grain, ruinously expensive because of a trade barrier imposed by the European Community. The problem was not exclusive to Shipton Mill, and has since been partially resolved by farmers who have planted improved strains of wheat; the millers have helped themselves, too, by fortifying their flour with gluten, which is produced as a by-product of starch. But as the dollar hardened against sterling in the early 1980s, the financial state of Shipton Mill became increasingly precarious.

The mill's finances had actually been cushioned in a wholly unforeseeable way. In 1982, following the announcement of an award for the restoration of the building, a manager of Barclays Bank rank up out of the blue with the offer of a business start-up loan: £60,000 with interest related to turnover and pegged at an extremely attractive level for two years. But as losses mounted, so, inevitably, did tensions within the co-operative, particularly as the revenues of the decorating business in London were still being diverted to develop the mill.

In 1984 Colchester became "desperate". He even explored the idea of buying an Oxfordshire company making frozen dough to provide an outlet for the mill. He had by then lost all enthusiasm for co-operative decision making: "We had board meetings about milling methods rather than the realities of the financial position." By the year end he had decided that the businesses must be restructured.

Lister, in Colchester's view, was extremely relaxed about the situation. It is easy to imagine. Lister has a slightly vague way of talking and takes a long view of things. "The people who built Shipton Mill - the ponds, the wheel, the mill-race - had a tremendous sense of continuity. They had vision, they weren't building for themselves," he says. "The same continuity underlies what we do. We're not working for a five-year payback."

Find this article useful?

Get more great articles like this in your inbox every lunchtime

What Lego robots can teach us about motivating teams

People crave meaningful work, yet managers can so easily make it all seem futile.

What went wrong at Debenhams?

There are lessons in the high street store's sorry story.

How to find the right mentor or executive coach

One minute briefing: McDonald’s UK CEO Paul Pomroy.

What you don't want to copy from Silicon Valley

Workplace Evolution podcast: Twitter's former EMEA chief Bruce Daisley on Saturday emails, biased recruitment and...

Research: How the most effective CEOs spend their time

Do you prefer the big, cross-functional meeting or the one-to-one catch-up?

6 rules for leading a remote team

Our C-suite panel share their distilled wisdom.