On Wednesday, July 28, 2021, the traffic was heavy through Yeovil. Roadworks were causing delays and I was late. When I arrived and rushed up the stairs to the meeting room, I was embarrassed to find they had waited for me, more because a late arrival would be an unwelcome interruption once a start had been made than anything else.
We were at the English tannery Pittards. Employee long service certificates were being handed out to those with more than 25 years’ service and at the same time the Company wanted to recognise 15 recent starters by giving them a copy of a small book I had written about the Glove Business.
These young people were a mx of apprentices, recent graduates and regular employees a few of whom I had met before. All were keen and enjoying being in manufacturing. I also knew many of the long-service employees as many had worked far longer than 25 years and quite a few close to forty. I had left Pittards some 25 years before. Pittards was a place where employees stay, where along with the grumbles of everyday life loyalty is high. From the shop floor worker, through the secretarial staff to the directors, staff turnover is low. A tannery is nothing without its people and Pittards staff, young and old demonstrate the finest, in England and in Ethiopia.
A long history
There are many stories to be told about Pittards, and in this column I have always thought they would start with the two-hundred-year celebrations being prepared for 2026. The company is much older but that is the year of the first written record – a pay slip – and so the chosen year to celebrate.
So, it was a shock when on Wednesday September 6, Administrators called in on Monday and expected to quickly manage what is often called a “prepack” shuttered the business and made all Yeovil staff redundant. For some reason the deal could not be concluded and there was no time to wait for alternate bids. As I write, there is still hope that something can be saved in Ethiopia where there is a large tannery, along with a glove and a leather goods plant. I met the full team in Ethiopia during a visit in October 2019 and the young, bright and dynamic team there fully deserve the chance to succeed; Ethiopia needs these types of light manufacturing jobs.
I have no doubt that over time recent events will be poured over and analysed by all and sundry. Some snap judgements already appearing are not very clever and many have obviously been made with little real understanding of the business.
But in bigger picture terms the seeds of failure were sown by a previous regime back in the 1990s as the world was globalising. They refused to follow their footwear customers overseas and chose not to start tanning in Ethiopia despite a splendid opportunity and moral imperative to do so after a hundred years of making strong profits out of Ethiopian skins. Hanging around in the UK without secure raw material access for gloving and without the skill to be “special” in the exceedingly competitive bovine shoe upper leather world spelled disaster.
Management team left with a precarious legacy
At first, they seemed to be surviving but shrinking size and low profits meant creating a huge pension crisis. When that was resolved in 2005 the new management team was left with a precarious legacy. A weak balance sheet and a high-risk strategic position. The years before the financial crisis were also when the political and economic world began to swivel away from the old order, and the belief that western capitalism would always create economic growth with democracy wandering inevitably along behind.
This change was crystallised by the financial crisis which showed that long term survival could not be assured if a company is heavily in debt. Pittards made huge developments in sorting the strategy, the business structure and building strong teams in both Ethiopia and the UK ready to take the business forward. But profits were elusive, and the world moved from sequential economic shocks to bigger more random yet regular changes. It was death by a 1000 cuts, whichever you choose as the final killer. The closure was a shock, but it was not altogether a surprise.
We should recognise that recent decades have made it very clear that many old economies, and certainly the UK, do not understand manufacturing. This runs through the politicians, the City of London and the banking system. Asset management, the world of bonds and all manner of financial shenanigans has taken over from patient capital and wise council that we used to have when banks did banking and the City and the politicians supported them.
Go back in time and instead of bringing Pittards to a stop, the bank would have taken time to understood the business and recognise that it was well managed, on the right track, in the right place in Africa for the future and hugely undervalued. Ratios do not recognise vision and strategy. When banking was organised by the Livery Companies with this patient capital approach the City of London grew wealthy.
A serious and thoughtful bank that worked with its clients would not have pushed Pittards to the brink but enlarged its facilities freeing a well led management team to make a great success.
The leather industry has too much capacity and companies will always come and go. Pittards should not have been one of those; the company, and their entire workforce will always have a piece of my heart.