Woven into the industrial fabric; Andrew Seal bought recession-hit mills to protect his wool business

November 12, 2013 5:55 pm

Woven into the industrial fabric

By Andrew Bounds

Thirty-five years ago the young Andrew Seal was getting used to being sent away with a flea in his ear. As he traipsed round the textile mills of Bradford, which had until recently been the woollen capital of the world, trying to sell raw fibre, “they told me to come back when I’d been around a while,” he says. Now he owns many of the famous mills that turned him away. SIL Holdings, started by his fatherin 1970, has not only become one of the biggest remaining British woollen operations, but it is credited by many with saving parts of the domestic industry from recent near collapse.

“We did keep certain parts of the industry alive and maintained the infrastructure. But my motivation was to strengthen the business, not protect the industry. I have to be selfish,” says Mr Seal.

A ruddy-cheeked 55-year-old, he is wearing a formal suit, tie and braces – but the tie, a Christmas gift, is decorated with performing seals.

SIL supplies luxury fibres such as cashmere and mohair to brands such as Gucci, Prada and Ralph Lauren, as well as wool for Savile Row tailors. Having started as a trader in the raw material that is cleaned and processed for spinning into yarn, SIL has had to become a producer as well. As the recession took hold, worried banks were calling in the debts of SIL’s customers, the mills, which forced them into administration. SIL began buying its own and other stricken customers out of administration in order to capture more of the value chain of textile production and to protect its products.

The businesses it rescued include famous names such as cashmere maker Joshua Ellis and John Foster, whose Black Dyke mills have made top quality wool for suits since 1819. “We have turned companies that were failing into companies that are thriving,” Mr Seal says. He borrowed against the assets of the business to buy them from administration.

Acquisitions threaded together

SIL has bought several textile businesses since 2007, acquiring some venerable names at a good price as the recession took hold. 
●It moved into weaving with worsted (suit material) maker William Halstead (founded in 1875) in 2007.
● In 2008, SIL entered the dyeing market with Roberts Dyers (founded 1900) and so was present in the entire production process. ●Weavers picked up by SIL include Joshua Ellis (founded 1767), the most distinguished name in cashmere, Kynoch (1788) and John Foster (1819), the worsted weaver, all acquired in 2008.
 The purchase of Abbotsford furnishing fabrics in 2009 opened up direct sales to consumers via accessories such as cushions.
● This year it bought Reid and Taylor (founded 1839), a clothmaker in Scotland, after its Indian owner put it into administration.

He is speaking in the vast Victorian six-storey Ladywell Mills that SIL is at last making full use of after 35 years, thanks to its acquisitions. The reception area, with its wood panels, leather sofa and framed certificates, feels like a relic of a lost age. The most poignant sight is a black-and-white photo of the Yorkshire city’s wool exchange in 1954, a vaulted hall full of sober gentleman traders. The city’s entire industry could probably fit in the room now, thanks to the way production has moved in the intervening decades to Asian countries where labour is cheaper.

But alongside the photograph is a clue to SIL’s survival and success: a certificate in Mandarin stamped in Beijing, setting up a representative office in China in 1979. “My father was probably the first British company into China. He was too early in some ways,” says Mr Seal. SIL has succeeded by adapting to new conditions, not preserving the past. A sign of the times is that SIL traditionally used “commission” mills to spin its yarn but had to take it in-house over the past decade as most of them folded. The industry that employed about 70,000 in Bradford in its late Victorian heyday had shrunk to less than 1,700, though it had increased to 2,460 by 2011 as the world rediscovered the quality of English cloth.

The textile industry in general “has to take a good hard look at itself and think whether it could do things differently or better”, says Mr Seal. “The view is, ‘we have always done things this way’, and that is what I hear time and time again. We can’t do things the way we used to.”

Mr Seal studied business and textiles at Leeds University but did not intend to join the business un­til he enjoy­ed a stint there in 1976 so much he stayed. His brother Jeremy joined after switching from financial services and heads the fibre division.

As well as China, the company did good business behind the iron curtain, getting paid in hard currency. The fall of the Berlin Wall in 1989 almost destroyed the business: “We lost 60 per cent of our trade.”

This recession, however, has been a different story. “It has been great for us. It has allowed us to expand . . . and be a high-volume producer. We started with quality and now we have quantity too,” says Mr Seal.

Turnover, expressed in dollars, fluctuates because of exchange rates and commodity prices. In 2012 SIL had revenues of $46.4m, producing $934,000 in pre-tax profits – down from $2.9m year on year, thanks partly to a one-off interest charge.

The workforce has grown from 40 a decade ago to 235. Mr Seal takes a hands-on approach to management, saying a new culture is vital in businesses that suffered years of decline. “The shop floor was not pulling their weight and the management was not pulling their weight. We are changing that.” At one recently bought mill, he says he saved £250,000 a year by eliminating routine overtime. But, he adds: “We are very loyal to staff. I work 12 hours a day. If you want to work 10-12 hours a day you will be well rewarded.”

Asian countries once seen as competitors should now be viewed as customers. “We have pushed [the ac­quired companies] into exporting . . . Look at Russia, China and India. They want luxury brands. They can afford to buy our products. We are bringing fibre from China, processing it and selling it back as a suit to the Chinese. There is a demand for ‘Made in England’ and ‘Made in Italy’,” he says, adding: “They want it on the label outside, not inside.”

About two-thirds of SIL’s output is exported and the company trades in more than 50 countries.

As a young man, Mr Seal went with his father on buying trips to the US and China, and sales trips to the former East Germany. He still travels to Texas and South Africa to buy mohair. SIL has Europe’s only mohair-combing facility, making it ready for spinning.

“I love the ups and downs of it,” he says of life on the road, buying and selling. He took his own son on a trip to Texas, where they drove hundreds of miles inspecting barns full of mohair. One day, with the price at $2 per pound, Mr Seal felt it would not go any lower and bought everything he could. “We got back to the car and the agent’s phone was red-hot. My competitors were all on to him trying to get anything they could. The price went from $2 to $2.75 in a day.”

Outside Ladywell Mills sits his Range Rover, with the number plate “MOH 4IR”.

Mr Seal is trying to bring similar marketing flair to all the businesses that now make up SIL.

Not every innovation has succeeded. The mill’s basement is full of dilapidated machinery shipped back from a joint venture in Mongolia. “We went over there and found there was no fabric and a load of Russian motorbikes in the factory. They had sold it all to buy them.”

Despite moving into wool and manufacturing, SIL remains committed to luxury, focusing on alpaca, cashmere and mohair. “It is small-volume and high-margin. There will always be a market for the top end.”



About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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