In the second of our regional reports, Jim Tucker presents an encouraging picture of Welsh small business activity.
Through an office window the green, gentle hills of mid-Wales can be seen dotted with the region's most famous product - sheep. Inside the office, a young woman, in smart white cap and white coat, is talking briskly on the telephone about matters not wholly unrelated to mutton and lamb, yet a world away from farming. She is Margaret Eaton, quality controller for Zest Foods. Her conversation is about extending the range of herb sauces which Zest manufactures and sells all over Britain and Ireland, and soon in Japan, through supermarket chains, large stores and, yea, even Fortnum and Mason. The company has increased its business by at least 60% a year since it came to Newtown, Powys, in 1987. Its success is typical of many firms have have moved to Wales, encouraged by aid packages. They bring new kinds of business to replace or work alongside the traditional local economy. Many have been able to take the conditions of the area - even the difficulties - and turn them to profit. And they have found a labour force ready to adapt quickly and effectively.
Zest is run by Tim Clarke and his wife Rina. He has settled happily in Wales after a cosmopolitan lifestyle. Born and brought up in Sri Lanka, he wrote for magazines in Britain and was once public relations officer for Saab in the US. But his prime interest was always food making and he and Rina began producing sauces from what was virtually their garden shed in St Austell, Cornwall on return from the US. As the business developed, the difficulties of distributing from Cornwall became apparent and they looked for somewhere new. They narrowed down the options to two and finally picked Newtown. There were three main factors: a central location - 90 minutes by road to Manchester, three hours to London; the beauty of the environment; and the package put to them by the Development Board for Rural Wales (DBRW).
And it was road access plus the Business Enterprise Scheme and the Welsh Development Agency (WDA) which also helped draw a heavier industry, Deeside Aluminium, to a greenfield site further north, on the Wrexham industrial estate in 1984 - one hour from Manchester or Liverpool. The company produces aluminium billets from scrap via electric and gas melting furnaces, metal filtration, continuous casting and heat treatment, and then uses a mighty circular saw to cut the aluminium "logs" to suit individual customers. Wolf Breit, the 48-year-old managing director, also comes from far afield. An Australian, he studied metallurgy at Melbourne University and business management in Switzerland then worked for a spell with Alcan at Rogerstone, South Wales. He returned to Australia as a management consultant, and came back again to Wales in the mid-'80s, when with two former Alcan colleagues he founded Deeside. Breit says: "We are central to the UK here, and with good entrance to the North and South. We have customers in Scotland, London and South Wales." All consignments go by road. The company also sells between 25 and 30% of its production in Europe - the Netherlands, Germany, Belgium and France - and, as Breit says, Wrexham is usefully placed for the ports. Deeside, which employs 75 people and operates around the clock seven days a week, is 65% owned by BES funds, 18% by the WDA, with the rest of the equity held by the founding executives and others. In 1984 the investment total was about £5.5 million. The figure has now risen to £9.5 million, the growth largely funded by the business.
Breit says the area's history of heavy industry meant the company was able to draw on a workforce with the right traditions, through not specifically in aluminium. Unemployment - after the steel and mine closures - provided a pool of labour. "All our recruitment has been local, from both sides of the Welsh-English border. I feel an affinity with the Welsh worker. In the north and south he is hardworking and adaptable and therefore non-militant." There is no shopfloor union at Deeside but a works council meets every four weeks, with nine workforce members and four managers. Breit claims it operates to everyone satisfaction.
Zest's Clarke has also found that his locally recruited workforce quickly adapted to the new - in his case the skills of mass manufacturing "free from artificial anything" herb sauces. His production manager, Steve Jeffery had a background in ship building and was general manager of a local furniture factory which went bust. Margaret Eaton was poached from Sidoli, ice cream manufacturers in Wales. At full complement, Zest's workforce is 10.
In the south, land surveyors Longdin and Browning, based in Swansea, but operating throughout the UK, found that despite the area's heavy industry tradition it was able to supply all the sophisticated electronic engineering skills the firm needs. Part of its work is road and traffic surveys. The firm's Clear Cone system enables transport authorities to survey motorway surfaces, due for possible repair, to an accuracy of 3mm, without the inconvenience and expense of coning off. A specially adapted van parks on the hard shoulder, taking measurements with an infra-red beam transmitted from a manned, hydraulic rotating turret. The basic apparatus - an electronic theodolite and distance measurer (EDM) - uses existing, Swiss-made technology, but all the hydraulics and electronic refinements were designed and made in Swansea and Port Talbot. The WDA helped pay for marketing research for Clear Cone in the US and Germany and this summer director Mike Bennett has been demonstrating a vehicle specially adapted for American requirements in California, with hopes that Clear Cone will be taken up there and in other states.
The company is also developing a traffic census system called Clear Count, a manageably sized, box-shaped unit that could be fixed to a lamp post or placed at the roadside to record traffic flow, including type and size of vehicles. It would cost councils between £10,000 and £30,000 "and preferably below £20,000", says director, Ian Smith. Clear Count would displace the present expensive and laborious systems. Smith hopes to have a Clear Count prototype by the beginning of 1993 and workable units soon afterwards. The company has had two-thirds of a £75,000 WDA technology growth loan and a £45,000 Specialist Products Under Research (SPUR) grant from the Welsh Office. Security for the loan is provided by the "intellectual property" of the invention itself and, theoretically, if Longdin and Browning to not make a go of it the WDA could take the idea over and develop it. "This is unlikely," Smith says, "because the board would know we had done everything possible and nobody else was likely to succeed."
The outcome of a management buy-out in 1980, Longdin and Browning settled in Wales because it already had part of its operations at Llanelli. It draws its graduate surveyors from all over Britain, but most of the rest of the 65 staff - drawing office personnel, digitisers and software experts - are local and, according to Ian Smith, provide first-class backing to staff in the field.
Longdin and Browning's headquarters is a handsome, 22-room former mansion in a leafy suburb of Swansea. The beaches of Mumbles and Gower are nearby. In Wales, quite apart from the financial help on offer, the environment is a draw for many new companies.
Tim Clarke rhapsodises about the mid-Wales setting. "It's the best of all worlds. The recreational opportunities are wonderful. There's Snowdonia in the north and a beautiful coast in the south, both accessible." He and his family try to camp at least once a year at Whitesand Bay near St David's, Dyfed. His wife, Rina, has made integration particularly easy. She was born in Camarthen and is Welsh-speaking. "Newtown itself is not particularly Welsh," Clarke says, "but this does help." Rina is a governor of the Treowen primary school, attended by their children - "a brilliant place", Clarke says - and is also a marked asset when Welsh language television and radio programmes do items about Zest.
Clarke stresses that aid packages are not just finance, but contain less tangible back-up which boosts confidence. This is confirmed by Wolf Breit. Deeside Aluminium has a nominee director from the WDA on its board - local businessman Roy Johnson. "He is not employed by the WDA, but represents it," Breit says. "He makes an outstanding contribution. He is a good sounding board and has empathy with the local people and good local knowledge. Overall, the WDA influence should not be understated."
Tim Clarke agrees: "It's helpful to know there's an organisation behind us to supply guidance. Our speed of expansion is exciting but raises problems and I'm glad to be able to discuss things with the DBRW's financial experts. Sometimes they will point me to other advice outside the organisation. I like to be able to bounce ideas off people and not feel we are plugging away on our own. The DBRW has given great help with publicity and the WDA is good for international contacts. Also we've taken stands on WDA displays at trade fairs."
As to practical financial help, Zest had a capital investment grant from the DBRW when it first moved to the St Giles Technology Park, Newtown in 1987 and a year rent free. When Zest outgrew these premises and transferred to Mochdre Estate, the Board came up with a great for moving and re-equipping and allowed another rent-free period - this time six months. The Board also gives 50% towards the cost of trade shows. "Shows are expensive," Clarke says, "but we favour those, rather than advertising." It seems to work and Zest now manufactures for Tesco, Boots, Sainsbury and Plumrose under their labels and for Fortnum and Mason and Queensworth under Zest's own. Turnover is up to £750,000. In 1987 Zest won the Small Business of the Year Award organised by Lloyds Bank and She magazine.
The firm doesn't entirely shun advertising and its stationery proudly carries the slogan "makers of Pesto" - the basil sauce described by Colin Spencer in The Guardian as "the best pesto I have tasted". And the labels on its Dill preparation trumpet saucily: "Perfect for potatoes, super for salads, vibrant for vegetables, far out for fish."
Management Today has published its first book on relocation, with Butterworth Heinemann (see Book Reviews, p112). International Relocation is a practical guide to the problems of transferring staff abroad. Highly recommended at £14.95 (plus £2.50 postage and packing, it is available from: Rachel Cutter, Butterworth Heinemann, Linacre House, Jordan Hill, Oxford OX2 8DP.
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