SURVIVING THE SPECULATORS

history of Britain's fourth oldest company is a parable of the fate of the British economy

I REMEMBER Witney on a damp November evening, 20 years ago; it was quiet as the grave. I drove up Mill Street, past the blanket factory for which the little Oxfordshire town was famous: a huddle of grey stonework and a tall, brick chimney, a glimpse of antique industrial England.

My next visit must have been 1983. I saw, perhaps for the first time, what was about to become the essential symbol of the new, post-industrial England, the edge- of-town supermarket complex. A huge food store designed to look like a barn had sprung up, surrounded by carparks, to fill a meadow. Even the roads had changed: there was a bypass, and a spreading estate of small factories and discount warehous- es. Everyone talked about Waitrose, but no one mentioned the blanket factory and fewer and fewer of them were buying its products. The age of duvets had arrived.

The Eighties transformed Witney. In the Oxfordshire county plan, it was one of four places (the others were Banbury, Bicester and Didcot) scheduled for rapid expansion to relieve pressure on Oxford. At one stage Witney was able to claim the dubious title of fastest-growing town in southern England. Its property values soared. And its biggest landowner — sitting benignly on 55 acres — was the blanket factory, that relic of a past age, ripe for the taking. The story of Early's of Witney, the town's last blanket-maker and one of Britain's oldest companies, is the perfect parable of the fate of manufacturing indus- try, perhaps even of the British economy itself: a name synonymous with quality; a product unaltered for generations; a pater- nalistic management which failed to invest and was outflanked by changing tastes; a hijack by chancers who gambled and lost. And now a tentative recovery, scaled- down, strapped for cash, gasping for sur- vival.

Witney emerged as an important weav- ing centre because of the particular quality of its coarse broadloom cloth, produced from the wool of Cotswold sheep. Witney blanketing was noted for its whiteness attributed to the 'nitrous' water of the river Windrush, which is still pumped through Early's mill today. Thomas Early, a Quaker, was apprenticed to a Witney weaver in 1669.

Only three British companies (members of the exclusive Tercentenarians' Club, of which Richard Early, last of his line, is a founder) claim a longer unbroken pedi- gree. The Earlys gradually became the leaders of Witney life, exercising a potent Quaker mixture of high-mindedness and business acumen. They provided the town with pageantry, pubs, housing, schools and one of the first known profit-sharing schemes.

Early's prospered by producing blankets for soldiery, and by exporting to North America through the Hudson's Bay Com- pany. In the Canadian winter a heavy blanket was a valuable commodity: the Witney Point Blanket, produced since the 18th century, still carries four black threads, or points, to indicate that it can be traded for four beaver skins.

At its zenith, Early's employed 2,000 people on three-shift working. It was a vertically integrated operation, taking raw bales of finest merino wool to be spun, woven, dyed and finished. A royal warrant had been held under 13 consecutive monarchs, and the tercentenary in 1969 was celebrated in style. Annual sales in that era ranged up to £15 million. An eighth-generation Early was at the helm, the company was secure against take-over bids by the presence of the textile group Courtaulds as a passive shareholder, and all was well with the world. But then came the duvet, cheap acrylic blankets from Portugal, old age and new values. By 1984, Early's was down to just under

'Oh, no, it's an attention-seeking missile.'

£9 million of sales, although still modestly in profit. In 1988, when everything else in England was booming, sales were flat at £9 million and Early's was making a loss. Richard Early and other family directors had passed retirement age. Much of the plant was also old; it was many years since they had bought new looms. The factory looked more like a 'heritage' attraction than a thrusting international competitor.

The brand was still respected in the bed- ding world (having by now absorbed its last local competitor, the company owned the rights to the generic tradename 'Witney blanket') and Early's controlled 70 per cent of the domestic blanket market. But suc- cessive mild English winters and the advance of the ubiquitous duvet meant that the market was fading away.

The land was still there, however, and increasingly valuable as the town around it mushroomed. The old management remained gently oblivious — as peppercorn rent from the town council for a six-acre sports field, Richard Early was happy to accept a single red rose on his birthday.

The first predator had appeared on the horizon some years earlier. Courtaulds, seeing the blanket market shrink, had let it be known that their Early's stake was for sale: a notorious asset-stripper and former amateur boxer called Charles Mackenzie- Hill started sniffing around. Early family solicitors persuaded an investment compa- ny called Clayhithe to buy out Courtaulds instead.

Clayhithe tried to modernise Early's management. But, as sales failed to improve, it became apparent that the worth of the blanket business was now lit- tle more than the intangible value of the Witney trade name. A serious return for investors could only come from developing the property assets. One plot was sold off — as a supermarket site, needless to say and planning permission was sought for a wider scheme. Then, just as the Eighties property bubble was about to burst, came an offer which simply couldn't be refused. The land and buildings were valued in the company's books at £1.3 million, and here was someone willing to buy the company, complete with its loss-making parts, for more than 11 times that sum.

The new player was David Holland, a barrister turned property developer, and his company was Grovewood Securities. The past tense is appropriate, since, barely 18 months after it bought the 320-year-old Early's, Grovewood went bust. It was a, classic Eighties corporate vehicle, and it was almost bound to crash.

Grovewood had changed its name from Nash Industries, which had been a small industrial conglomerate dating from 1889. In the Eighties it had passed into the con- trol of David Newton, described by a col- league as 'a successful entrepreneur, an in-and-out sort of chap', who now lives in the south of France. In early 1990, Newton brought in Holland, whose success with a London property business called Randsworth Trust — sold to Americans at the top of the market — had given him something of a following among institu- tional investors.

Holland rapidly dispensed with some of the former Nash management and made his strategy for the group quite plain. It was 'to rationalise its remaining manufac- turing operations in readiness for disposal and to concentrate on the businesses of property development, investment and construction'.

Holland is described by various parties to the Grovewood debacle as 'a creative mind', 'a brave buccaneer' and 'a man in a hurry'. It is generally agreed that he rarely listened to advice, from his board or any- one else. A local official frustrated by abortive dealings with Grovewood says that they were `bloody awful negotiators with no damned judgment; they paid too much in the first place, then tried to take too much profit for themselves.'

The price Holland paid for Early's, in May 1990, was £14.7 million. A carpet- making subsidiary was quickly sold off to reduce the outlay. As late as August 1990, the Witney properties were independently valued at £15 million. Briefly, it all looked like a terrific deal. Holland upped the stakes by buying the adjacent Witney Town football ground as well. A 'compre- hensive redevelopment' plan — a super-

store, a petrol station, offices and houses — was on the drawing-board.

But the blanket business, now restricted to a single building on a small plot of land, was never part of the plan. It was up for `disposal', and its operations immediately suffered from a decision by Grovewood to close the spinning mill, which happened to occupy an especially juicy supermarket site. Early's cash balances were siphoned off by Grovewood in the form of manage- ment charges. Even the antique board- room furniture disappeared. According to the present chairman of Early's, Peter Haworth, 'they just raped the balance sheet; the whole thing was ruined'.

Meanwhile, despite a slump in its share price and cripplingly high interest rates, Grovewood went for broke — quite liter- ally so, as it turned out. In November 1990, it acquired another company, Priest Marians — owner of the Langham Estate between Oxford Street and Euston Road — which was already in trouble with its bankers. The enlarged group had debts of more than £180 million. The Langham Estate had been valued a year earlier at £175 million but the prospectus noted that `current conditions in the property market might result in a lower valuation'. Four months later, Holland was cautiously opti- mistic: Priest Marians, he said, tad con- siderable profit potential over the next three to four years'.

But by October 1991 the banks were closing in. The game was effectively over. Price Waterhouse, appointed as receivers, found Grovewood's books and records 'in disarray' and its insurance cover with- drawn for non-payment of premiums. To offset a deficiency of £204 million, the company had tangible assets consisting of `two racehorses and some furniture and office equipment'.

Back at Witney, Early's had automati- cally gone into receivership along with its parent. Without the disastrous interven- tion of Grovewood, the blanket business — much as it needed a kick — would have suffered no such drastic fate. The fact of receivership in itself damaged the busi- ness, creating uncertainty for staff and strained relations between Early's and its major customers, who could no longer be sure of continued supply. And the search for a new owner was dragging on — some 70 potential buyers had come to look.

Most of them were chiefly interested in acquiring the Witney brand name. Only 'It's the Agassi look.' the company's own workforce had a deeper commitment to the continuation of Early's. It was to the existing management that it was sold by the receivers in December 1991, in a buy-out deal backed by two 'ven- ture capital' companies and sustained by a hefty mortgage on the remaining property. The heated negotiations featured in a recent fly-on-the-wall BBC series, The Ven- turers.

Highly geared management buy-outs are another piece of Eighties financial wiz- ardry. In the depths of recession, with bankers and venture capitalists monitoring every twitch of the monthly figures, they require particular resilience on the part of the managers involved. Early's soldiered on through 1992 against the odds, with its staff numbers down to 160 and sales of about £8 million — in real terms perhaps 20 per cent of its historic high. But it struggled through. Most recently Peter Haworth, a genial Lancastrian 'company doctor', has come in as chairman at the investors' behest. The horizon has begun to look a lit- tle brighter.

The best news is that, after a generation of decline, blankets are making a come- back, whilst duvets have apparently peaked. In the United States, now a major target for exploitation of the Witney brand name, total blanket sales rose by 24 per cent in 1992. Big British retailers are show- ing new interest, and Early's are beginning to sell them other forms of bedding printed linen, Chinese patchwork covers. And you can still buy a classic striped Wit- ney horse-rug for your thoroughbred — no doubt Grovewood's last assets were wear- ing them, unpaid for, when the receivers arrived — or a massively heavy Witney Point Blanket to see you through an Arctic hunting trip.

Returning to Witney 20 years on, I found the grey stone buildings still there at the top of Mill Street — marked 'Danger keep out', the gateways overgrown with nettles. A rich Oxford college has bought the Early's land from the receiver for an undisclosed price, and will not be accepting red roses as rent. The local authority is buying back the football ground, and another 'comprehensive redevelopment scheme' is awaited. Elsewhere in the town, there is a brand new, empty office block in the style of the National Gallery extension and a 'retirement village' in cute Cotswold cottage pastiche. There is a petrol station the size of a small airport on what was once a field of allotments. And Tesco and Sains- bury are battling in the high court over rival applications for superstore sites. It is post-modern England in miniature.

Up at the Early's factory, rolls of flat, oatmeal-coloured blanket cloth wait to be dyed, to have their nap raised, to be cut and finished with satin edges by homely women on elderly industrial sewing machines. 'We've survived 13 reigns,' Peter Haworth says, 'and we've even survived the 1980s.'