A forward thinking Scottish industrial textiles manufacturer is planning to put ownership of its business into the hands of its employees. Scott & Fyfe Limited, the Tayport based technical textiles manufacturer has announced it will transform itself into an employee owned company. The business is currently owned by the Tough family.
In 1864 Mr Scott & Mr Fyfe started a linen works in the town and the company is now one of the few survivors of the Tayside jute industry. Scott & Fyfe reinvented itself in the 1960s through the early replacement of jute with polypropylene and ongoing commitment to reinvestment in the latest technologies under the chairmanship of Hamish Tough who retired from the company in 2009.
New chairman Professor Nick Kuenssberg and chief executive John Lupton, recruited in 2010, introduced a number of significant changes to ensure a profitable professionally managed business with an innovation and export led strategy at its core, the benefits of which are said to have been recognised by the Tough family.
Hamish Tough and his sons Richard and David, who are both directors of the company, represent the family owners and they have decided that the long term sustainability of the company will be best served by building on this new strategy and also moving to employee ownership.
After months of discussion and consultation within the family and the board, supported by Co-operative Development Scotland, Scottish Enterprise and specialist consultants Baxi Partnership, the dramatic decision was announced to the 100 employees of the company with a detailed presentation last week.
The family will sell all their shares to a newly established Scott & Fyfe Employee Benefit Trust which will always own a majority of the ordinary shares and Richard and David Tough will reinvest the bulk of their proceeds in redeemable preference capital which will be paid out over a period of years.
Share Incentive Plan
In parallel a Share Incentive Plan will be set up to facilitate the issue and sale of shares to individual employees. Employees will each receive a one-off award of shares, 5% of the annual profit in shares and will have the opportunity to buy shares each year. Additionally senior employees will benefit from the issue of share options which will depend on satisfaction of demanding performance criteria.
According to the company, in this way only current employees and the Employee Benefit Trust will be ordinary shareholders in the company. All employees will be shareholders and will have the opportunity of building a packet of shares over the years which can be cashed in when they leave the company. Under employee ownership legislation there are said to be significant tax advantages for employees under these schemes which make such shares even more attractive.
Employees will have the right to elect an employee director of the company and to vote at the annual general meeting. They will also elect two trustees for the Employee Benefits Trust and will see the rights of the existing Employee Forum enhanced.
This combination of employee involvement and employee ownership, Scott & Fyfe says, will contribute to the future success of the company and will provide opportunities for employees to build a long term stake in the company.
Company Chairman, Nick Kuenssberg said: “The move by the Tough family is to be welcomed; this development will help to underwrite an exciting future for the company and its employees”.
Richard Tough added: “This whole process is complicated and will take time, but we as a family are fully committed to it and look forward to making it work for all concerned, the employees, the company and the Tayport community.”
John Lupton, chief executive, commented: “With the right teamwork we can be entitled to a share of the profits, with the right attitude we can add real value and with the right effort we can go out and make it happen. It is a new dawn for everyone at Scott and Fyfe and it is up to us to seize this opportunity.”
Sarah Deas, Chief Executive of Co-operative Development Scotland, welcomed the announcement: “We have been working since January with Scott & Fyfe and are delighted to see the company recognise the benefits of employee ownership and follow through with such an ambitious programme”.
Scott & Fyfe is a global provider of innovative textiles covering a variety of markets. Included in its product offer are:
- Stitch bonding and warp knitted fabrics which include Textron for rubber underlay backing
- Knitted fabrics and 3D spacer fabrics for the automotive industry
- Loop fabric for the technical and abrasive manufacturing industry
- Advanced glass fibre reinforcement materials for the FRP industry
- Woven fabrics for agricultural applications
Author: Billy Hunter