THE COMPANY was at its most vulnerable at the end of 1962. Its accumulated profit and loss account carried an adverse. It had just arranged a scheme of repayment with the Inland Revenue. The trustees of the 1951 settlement seriously doubted the wisdom of keeping the business going.
The bank also had doubts. The story is that Walter Townend was telephoned early one morning and asked to report to the bank an hour later. He found himself having to persuade bank officials that the bank would be much worse off by calling in the company's overdraft than if the business was allowed to continue. He argued that stocks would be sold at a loss, the plant was worn out and the condition of the buildings was poor.
By Easter 1963, Fred Farrar could tell his fellow trustees that the losses had been halted and since the New Year the firm had been operating at a small profit. During the previous year 80 employees had left and not been replaced. The London office had been closed and stocks had been reduced. Although production for British Rail appeared to be on the wane, Holdsworth's were making cloth at a profit for a number of passenger transport authorities. The firm was marketing a new line in slipper cloth and a new type of carpeting. The latter, known as Woolfax, was a Wilton-weave carpet, made using jute and with a rubber backing. The company was also investigating the possibility of a heavier carpet for contract work. Carpeting was intended to produce half the firm's profits.
Farrar had a hard time convincing his colleagues on the trust that there was any merit in continuing to produce moquette, bearing in mind the state of the market and the poor rate of return it gave. Farrar insisted that 'in the longer run people would prefer a good quality article and furthermore moquette could be adapted to a variety of uses'.
The trustees continued to believe that the situation would not improve. They felt Bill Holdsworth was 'insufficiently aware of the realities of the situation to take a responsible decision as to whether the company should be carried on with a very real risk of his bankruptcy if it was'. They could not wait forever in the perhaps forlorn hope that the fortunes of the business would ever improve. Sale or liquidation would have to be considered. The trustees had contacted Lloyds Bank who shared this view and were also in touch with a firm specialising in company sales and mergers.
The new carpet proved disappointing. By the middle of 1963, despite heavy marketing, it was selling badly and making a loss. On the other hand, the moquette trade was reviving and providing the company with orders several weeks in advance. The trustees appointed by the Midland Bank remained sceptical of this improvement and were impatient for a sale.
Thomas Downey, however, held the contrary view. He was certain that the company had turned the corner. It was profitable once more, albeit in a small way, and it should be allowed to continue at least until the end of 1963. Downey already had in mind the idea of a capital reconstruction of the business. He knew that this would take time to bring about and he had to keep the Midland Bank trustees at bay. He consciously began to pursue a policy in order to give the business the breathing space it needed.
The revival of the company continued through the autumn of 1963. Fred Farrar told the trustees on 17 October that further pruning of overheads, combined with a growth in sales, had produced a net profit for the first nine months of the year. New moquette ranges had been introduced, business with the bus and coach industry was good, and trade with British Rail was increasing. There was still competition from Belgium in the domestic furnishing trade but the company had launched a number of new designs and its prices were still lower than those of its rivals.
This recovery simply convinced the trustees that 'the time had now been reached when it was right seriously to consider selling the company - the company was now a more saleable proposition and from the beneficiaries' point of view it would be the best solution'. It was also pointed out that 'the risks of carrying on were considerable and the overheads were sufficiently substantial for the company again to make big losses'. The trustees also reported that they had the support of Lloyds Bank in pressing for a sale. Thomas Downey, however, insisted that he still hoped to find the mean of preserving the company until Bill Holdsworth's eldest children came into their inheritance.
The company turned a loss in 1962 into a net profit at the end of 1963. The trustees, however, were becoming impatient with the lack of any resolution of debts and suspected that things were being allowed to drag on. At a meeting in January 1964, to which neither Downey nor Farrar were invited, the other trustees reiterated once more that it was in the best long-term interests of all concerned that the business should be sold.
Fred Farrar was invited to resign as a trustee. He was furious. He attacked the trustees for holding meetings without his knowledge, refused to resign, and told them he considered that 'the best advantage of the children lies in the future success of the Company'. He continued that 'our efforts at Halifax are directed to improving the financial position of the Company and to preserving the business for the children, which was the original intention of Mr Holdsworth - any action taken by the Trustees which impede the present improvement could only have the effect of destroying the Holdsworth family'.
The impasse between the two sides continued during 1964. In August, Thomas Downey presented an upbeat analysis of the company's progress. He confidently and accurately predicted a substantial net profit for the end of the year. He had faith in the abilities of the present board to maintain this situation until such time as the business could be handed over to the next generation of the family, as Bill Holdsworth wished. The trustees 'suggested to Mr Downey that there had been a deliberate policy of drift in respect of debts which Mr Downey said was one of masterly inactivity to which no objection had been made. He felt, however, that this had been justified by the figures which were now beginning to appear'.
The trustees were irritated. They showed no confidence at all in the future of the business and made one last attempt to press for the company to be sold. The returns to be found elsewhere would be better and the company would now fetch a better price. If Bill Holdsworth refused to sell the company, they would take counsel's advice on their role as trustees in such a situation. Their letter to Fred Farrar suggested that Bill Holdsworth
'must surely realise that there is no great future in leaving his children to carry on such a hazardous business. Additionally, when the eldest comes of age, he will still, from the point of view of the business, be regarded very much as a junior employee. He has years to go in which to gather the sort of ripened experience which will be necessary to pull the Holdsworth company out of its rut, always assuming that it can be done, and one has to bear in mind also that to place a boy amongst the hardened business men, particularly in that trade, who will surround him will be very much like throwing him to the wolves.'
The trustees did not get their way. Bill Holdsworth wanted nothing to do with the idea of selling the business. Thomas Downey, Fred Farrar, Walter Townend, and Philip Sunderland were all determined to ensure that the company would survive for the next generation to take it over, even if meant, as it did, that it had to be run on a shoe-string.1
In Ireland, the farming experiment at Bellinter Park was ending in failure. An attempt to turn all the pasture-land over to barley and sell it to Guiness had foundered during one of the wettest summers the Irish countryside had seen. The land was turned back to grass, sheep and cows. There was a lot of staff, a lot of equipment, tractors, trailers, and machinery and, recalled Bill's wife, 'we had great fun and a wonderful life at great cost'. In 1965, Bellinter Park was sold. The house itself was sold to the Order of Our Lady of Sion. Everyone in the family apart from Bill Holdsworth was heart-broken. The family returned to Halifax.2
Over the next two years, the debts were finally settled. The bank, criticised in the past by Thomas Downey for ill-advised lending, agreed to write off £5,000.3
If the conclusion to this episode in the company's history should have heralded a new beginning, then the omens were inauspicious. The wool textile industry was in recession. Too much productive capacity was chasing too little business. Synthetic fibres were making inroads into the demand for woollen and worsted cloths. This affected Holdsworth's as much as anyone else since vinyl for a time threatened to succeed moquette as the standard covering for buses.6 Many British firms disappeared in the face of such a hostile trading environment. In 1966, Japan had succeeded Britain for the first time as the world's largest importer of wool.7 During 1967, Holdsworth's turnover dipped and the firm went back into loss.
In July 1968 Fred Farrar died. He had been a staunch ally of the family and the firm in his role as a trustee had played an important part in ensuring the survival of the business.
Trade, however, began to pick up again. Holdsworth's returned to profit. Six new German looms, the first new looms to be acquired since the 1930s, were installed. The firm won two gold medals for its moquette and domestic furniture upholstery fabric at the International Textile & Fabric Exhibition in Sacramento in California in 1968 and would win a further three at the 1970 exhibition. The company also gained some prestige from supplying all the upholstery and carpets for the Flying Scotsman travelling exhibition which toured the United States in 1969.8
With some interest being shown in Holdsworth's moquettes by a number of American firms, the board agreed that Bill Holdsworth should travel to the United States and explore the possibility of opening up the American market.9 But Bill Holdsworth was not well. He was never a man to visit the doctor and by the time he realised that taking pills out of a bottle was doing nothing to relieve his discomfort it was too late. He was diagnosed as having cancer of the duodenum. At the end of October 1969 he underwent a major operation at the Halifax Royal Infirmary but there was nothing the surgeons could do. Bill Holdsworth died on 14 November 1969 at the early age of 46.10
His death brought a flurry of interest in the business from those who thought they would be doing his widow a favour if they took the company off her hands. But Dina Holdsworth believed that if the business was good enough to arouse such attention, she must not let it go under any circumstances. The view of the trustees had changed and they supported her in this approach. A director of the business since the 1950s, she now became seriously involved for the first time.
Her eldest son, Michael, had been encouraged by his father to consider entering the business. The preservation of the family business was after all the main reason Bill Holdsworth had refused to succumb to the pressure from the trustees of the 1951 Settlement to sell the company.
Michael, however, hated Halifax when he was a boy. With his brothers and sisters, he had been brought up in the fresh air of the open countryside. Halifax seemed to be perpetually overcast with a black pall from the smoke spewing out from a hundred chimneys. When it rained in Halifax, it rained soot.
Michael wanted to be a farmer. He became a stockman and worked for three years on farms in Wiltshire. He learned to rise early and work late at all times and in all weathers. But he realised that he would never be in a position to own a farm large enough to be sufficiently profitable. All the land that the family had once owned had gone.
Michael returned to Halifax and asked his father if he could start learning about the family business. He studied for a diploma in textile technology at Huddersfield Technical College. Returning to the class room after the open air was difficult but he enjoyed the practical work he was doing at the mills and was earning more money than he ever had in farming.11
The business made steady progress at the turn of the decade. During the buoyant years of the early 1970s, the company gradually increased turnover, while profits had also risen. But the prevailing culture remained one of parsimony and a resistance to change, the one feeding off the other.
The main weaving shed at Shaw Lodge Mills, 1973
The company had survived only because of Walter Townend's ability to put into practice Thomas Downey's insistence upon stringent cost control. The Settlement trustees were waiting for any slip-up to give weight to their call for the disposal of the business. The bank was nervous about the firm's prospects and absolute in its refusal to provide any money for investment. Walter's priorities were to eliminate debt, avoid owing money, and put profits into the bank.12
In this oppressive atmosphere, every penny counted. New pencils were never given out unless the stubs of the old ones were handed in. Used brown envelopes were slit open and used as scrap paper. The heating was turned off on a Friday evening and turned on again on Monday morning. In cold weather staff worked in the offices in their coats and scarves. In the inadequately lit and badly heated design department, one young designer wore fabric around his knees to keep warm on the coldest days.13
More seriously, there was little investment in new plant or machinery. In any case, Walter was sceptical about the value of new machines. If a machine did not work, it was the fault of the weaver or the loom tuner. There was no money for maintenance. The roof leaked and during a storm water would cascade down onto the machines. The chief engineer, Leslie Gartside, would clamber onto the roof and mark the spot where the offending tile had moved with a piece of paper, promising to have it repaired once the rain had stopped. Of course, the piece of paper inevitably disappeared and the right gap was never traced.14
If there was no money for new machines or for proper maintenance, then there was also very little for any increases in wages and salaries. Holdsworth's slowly but surely fell well behind the wage rates and salary levels being paid elsewhere in the district by similar firms.15
Walter's antipathy towards new machinery was mirrored in the approach both he and Philip Sunderland had towards sales. Dina Holdsworth, a committed European who had been a keen supporter of her husband's attempts to boost the company's exports, was forever being told 'The home trade's the thing!'16
Both men, however, succeeded in keeping the business going so that the sixth generation could take it over. Walter's greatest strength was letting his managers get on and manage without interference. He would goad people into doing their job more effectively by the passing comments he made. He had a difficult job to do and he earned people's respect for the way in which he did it. Philip Sunderland was a first-class salesman, he knew the product and was known by everyone in the trade. Business was done on a very personal basis with relatively few customers and these close relationships counted for a lot at a time when the business was struggling.17
Philip Sunderland & Walter Townend In 1972, when Michael Holdsworth became 25 and inherited in his own right the shares placed for him by his father, Thomas Downey's job was done. He retired from the board in October at the age of 80 after 15 years as chairman. Dina Holdsworth took over as chairman and Michael began attending board meetings. He became a director in May 1974.
For Michael Holdsworth, the next few years were a frustrating but formative apprenticeship. It was all too clear to him that most of the firm's machinery was out of date and that the firm's approach to marketing needed overhauling: 'we were making a product which was adapted to our machinery which we weren't very efficient at making and trying to sell into markets where our competitors were more focused and much larger'.18
But no one would invest in the business. The argument was that net profits, which between 1969-79 hovered around 3-4 per cent of turnover, were insufficient to fund any major capital spending programme. Michael's view was that without investment there would never be an improvement in profits. But Walter Townend, Philip Sunderland, the company's accountants and the bank felt unable to take anything other than a very cautious attitude towards spending.19
The result was that very little continued to be spent on the business. A handful of new looms were purchased in the early 1970s. One of the old mill buildings was demolished. The premises were repainted. In 1976 the boilers were replaced at long last. A new cropping machine was purchased and Walter Townend relented in his opposition to the installation of a telex.20
Mertens and Frohwein Loom, installed 1973
There was still resistance to any expansion of the company's export sales but some progress was nevertheless made. The main overseas markets remained Germany (where Happich was the major customer) and Scandinavia. New contacts were made in Italy and France. In 1977 Dina Holdsworth visited the United States where 'she felt that there was opportunity to obtain a great deal of business and hoped to see follow up for the less expensive qualities when production was fully organised'.21 Several years would pass, however, before the company properly tapped the potential of the American market.
Marketing remained elementary, the company rarely attended trade shows, and the art of selling could more properly have been termed the art of allocation. Michael Holdsworth found it depressing accompanying sales representatives on their visits to customers and listening to the long litany of complaints. Deliveries, for example, were being made at 14-16 weeks with anything less than that considered speedy. On his visits overseas, export customers approved of the quality of the product but were deterred by the general economic malaise which afflicted the country during most of the 1970s. By 1979, however, the company had increased exports as a percentage of turnover from ten per cent in 1969 to 35 per cent.22
Philip Sunderland died suddenly at Shaw Lodge Mills in September 1975. This prompted a reorganisation of responsibilities. Michael Holdsworth was appointed general manager and also took charge of sales until Raymond Sutcliffe, an experienced and long-serving representative, became sales director in 1977. Walter Townend was appointed managing director.23
During the next two years, a radical reappraisal was made of the firm's business. At the start of the 1970s, the contract, furnishing and motor trades each accounted for approximately one-third of turnover. The contract business consisted almost entirely of British Rail and London Transport. It provided the looms with very long runs at very cheap prices. The domestic furnishing trade also provided huge orders and minimal profits. Holdsworth's uncut wool upholstery moquette suffered badly from the introduction of Dralon which sold much more cheaply. At one time the company had attempted to make its own Dralon without success.
The most profitable sector for the company was the manufacture of moquette for the bus and coach trade. Turnover in this area doubled from 1972 to 1977 but after taking inflation into account this was less than was needed to match the 1972 figure in real terms. Total sales in 1977 barely exceeded sales achieved in 1972 in real terms. Even worse, net profits in the following year were worth only half as much as in 1972.
As the bus and coach business picked up, it became obvious that the company did not have sufficient capacity to cope with all three areas of business. Walter Townend advised Michael to concentrate upon the source of most profits. Since the poorest returns were coming from the furnishing side, the decision was taken to withdraw from it. Domestic upholstery required the company to produce new designs every year. In the autumn of 1978 therefore Holdsworth's announced that no new patterns would be introduced although fabric based upon existing patterns would still be supplied to customers. This was intended to leave the door ajar should the company decide to re-enter the market in the future. From 1977, furnishing fabric contributed less to Holdsworth's turnover, and in 1979 this represented barely more than one per cent of the company's home trade compared with 21 per cent for contracts and 77 per cent for the bus and coach market.24
In March 1979 Walter Townend retired and Michael Holdsworth took over as managing director. Although he had found the previous seven years an often frustrating experience, he had had the time to form his own vision of the company's future. It was now time to put it into practice.
Cross references used in this chapter
Sources of Information used to prepare the John Holdsworth corporate history
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David W. Holdsworth |
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