Harris Tweed Hebrides

The abuse last time I made any sort of comment about HTH was intense, and very well written.  Indeed, one might even think that the same person had authored all of the abuse.

I remember that when HTH was formed, I described them as the likely saviours of the Harris Tweed industry, a view that itself was the subject of a lot of abuse.  I stand by that original assessment, although I could never have foreseen the self-immolation of the one-time 99% market leader under the misguided leadership of Mr Haggas.

I represent many weavers, and know many employees at HTH, so I have a vested interest in hoping the company grows from strength to strength, but that doesn't equate to blind acceptance of press releases or the failure to comment on planned developments.

I am told by "someone close to the action" that a major funding announcement is due.

Anyone reading the press releases from the pen of the The Minister for Uig couldn't fail to make the connection.

As if more information was needed, on 5 January, Harris Tweed Hebrides LLP changed its name to Harris Tweed Hebrides Mill LLP and Harris Tweed Hebrides Shawbost Ltd changed its name to Harris Tweed Hebrides Ltd.  As I previously mentioned, with the new HTH being set-up and controlled by a reorganisation specialist the plan seems blindingly clear.

The sums my source has mentioned are very significant sums of public money (which I'm not going to report) matched by private finance, which can only be good for the industry and the islands. 

All the feedback about the future of HTH is hugely positive; but it would help if the public agencies - in the interest of openness and transparency - insisted that companies seeking finance comply with their obligations to file accounts and Annual Returns as a prerequisite. 

I look forward to the abuse for reporting the reality ahead of the positive spinning press releases. The accounts will be due in by January (so that the LLP partners can file their tax returns) so expect the funding announcement very, very, shortly.

I'm told the MP and MSP are far from happy with this investment in Wilson Enterprises, and have made their objections clear to the appropriate people, but that they are to be ignored.  Look forward to (at best) lukewarm press releases.

I look forward to the abuse resulting in me making this announcement head of the spinning press releases.

Harris Tweed Hebrides

There has been so much good news and so many press releases acclaiming this company that we are almost expected to accept the total world domination as a matter of course.

That's not to demean in any way what has been achieved in growing from nothing to 95% of the industry in a matter of a couple of years; albeit assisted by the suicidal business polices of Mr Haggas.

So amongst all this good news, why are the accounts to December 2010 now nearly three months overdue at Companies House, and why is the Annual Return overdue?

And why was a new company called Harris Tweed Hebrides Shawbost Ltd formed in November 2011?

The sole director is Malcolm Holmes (no, not the drummer in OMD!) of Tods Murray, solicitors, whose work skills includes expertise in corporate reorganisation.  With the one share held by nominees, I suspect a major restructuring is in prospect.

The question is: why?  With 5 mortgages, the suspicion is clear.

Interested observers will be intrigued by the eclectic list of members, who presumably have provided significant investments in the company.  Uist readers will recognise the Storas unofficial executive board.

Harris Tweed - a rich man's industry

One of the great surprises whilst I was away was the absence of any comment over the Harris Tweed Hebrides accounts, which were finally completed. They were due to be at Companies House in August 2009, but didn't get signed off until June 2010.

That is usually a sign of financial problems, and allied with all the changes in the ranking agreements for the 4 Floating Charges, it didn't look good.

However, a review of the accounts shows a position that is not as bad as I feared, but underpins the sheer scale of capital investment required to open the mill and get it operational. I have no inside knowledge about the financial position, so I am using my experience to try to read all I can into the accounts.

Anyone who has tried to interpret a set of abbreviated accounts will know just how little information there can be, and how much can be obscured. Limited Liability Partnership accounts are even more obscure, if that is possible. Readers are advised to think of them as partnership accounts first and foremost, with some limited company presentational issues.

I've attached a set of the accounts, which show (on page 3) an apparent loss of £680k. I say apparent, as it is possible that some of the £1.7m in "Loans and other debts due to members" may also have affected the profit and loss account; but this is impossible to quantify. If I had to speculate, I would guess that perhaps £1m of the £1.7m was through the P&L, increasing the loss to £1.68m (the reason for that estimate is that security has been granted over only £709,000 of the members loans).

The Floating Charges are mainly to the Royal Bank for debt factoring, but the first charge was to Iain Taylor, who owns and funding the mill.

A start-up loss of £1.5m would not be unexpected, indeed I had expected to be nearer £2.5m to equip the building, and market and develop the business. [As an aside, I expected all the bad news to be thrown in and appear in the 2008 accounts, but I suspect that this might not be the case]

Stock at £500,000 would imply turnover of between £2-£3m (3 months stock in yarn and finished tweed). Debtors of £890,000 strongly suggests that the debt factoring has been grossed-up by the auditors - that is to say that the debtors include the full amounts owed by the customers to the debt factors, with a compensating and offsetting balance in creditors for the advances received from the factors, and potentially repayable.

On any reasonable basis, perhaps £400,000 in creditors would be due to the debt factors, with perhaps £600,000 in debtors being the amounts due by the ultimate customers. Implying perhaps £250,000 being promised from Mr Taylor, but unpaid at the year-end.

But look at the level of turnover. It is so wildly out of proportion to the publicity generated and the energy expended by the Board, and there seems not a huge amount of evidence that turnover has grown significantly since that point, and I doubt if it is past breakeven. Yet.

With Haggas liquidating some of the group companies for very good financial reasons, it is painfully obvious that the industry has shrunk fast with large and continuing overheads and fixed costs requiring a huge financial input and a large personal financial risk, before turnover can be ramped up to turn the companies from loss to profit.

That the industry has to rely exclusively on such goodwill from three very rich individuals for its survival is a measure of the continued failure of the industry and its supporters to deliver new market and recovered volumes.

We need to be grateful to these three investors, but as a community we also need to realise that it is built on very shaky foundations and is entirely dependent on the continued financial support of a very few; unless somehow the industry can be resurrected.

I know that the kids put a lot of work in the signs around the entrance to the Castle Grounds for the Festival, most of which were based around the theme of Harris Tweed, but it all struck me as all so desperate and backward looking, celebrating an industry that has been constantly in the doldrums since before the kids were born. And possibly since even before their parents were born.

It is no longer OUR industry, probably because WE let it drift into failure. Accept that; be grateful for the external investors and the drive of some local residents; and hope that THEY make a success of OUR lost heritage.

Cont page 94

That is a phrase well know to readers of the Private Eye, but on the page 94 of Saturday's Times Magazine is an advert that - sadly - sums up the state of the Harris Tweed industry.

Harris Tweed jackets at a special offer of £150 each, down from £300 and available in only four styles.

This offer can only be thanks to the relentless drive and marketing skill of Brian Haggas who bought the biggest mill and has obviously succeeded in his ambition to make Harris Tweed a high-quality, high-value product again. Not.

Just how low can the world-famous product go, before it bounces back to its rightful heights?

Just so you understand the target market, watch the wonderful Major Hoad explain what sort of jacket you want and need....

There is more of this wonderful - indeed incomparable - stuff on YouTube.

All of which might explain why Harris Tweed is where it is.

Harris Tweed Investment Fund

Having had some serious doubts about the operation of the Harris Tweed Investment Fund, I am delighted to have been proved wrong.

It was a very smart piece of thinking by the Council to provide the facility, which meets the needs of both the company and the self-employed weavers by guaranteeing a steady flow of work throughout the traditional quiet period.

Hopefully the industry will grow stronger and the Fund will no longer be necessary, but at the moment that doesn't seem likely. I am awaiting the lodging of the accounts to 31 December 2008 for Harris Tweed Hebrides LLP to try to assess the state of the industry, but they are now overdue, which is never a good sign.

The only other mill, of Harris Tweed Textiles reported a loss of around £140,000 last year and is only avoiding insolvency via a loan of £565,000 from it's owner.

It appears the industry needs owners with deep pockets for at least a few years yet.

Harris Tweed

Comhairle nan Eilean Siar £300,000
European Regional Development Fund £98,000
Scottish Government £Nil

The speed and volume of the (false) claims of involvement by the MP and MSP in the ERDF application (the full costs of which is presumably being by the Comhairle or by HIE Innse Gall) indicates just how much money the industry can expect to get from the intense lobbying (sic!) by our elected representatives.

More job losses

With MacKenzie's mill paying off another 11 staff, you have to ask: is there a less successful strategy that can be followed for Harris Tweed?

The existing strategy has lead a premier, premium, product that sustained vast numbers of jobs across the islands being turned into an empty shell with no production; and damn all sales.

The wise man has his say:

We continue striving to re-invent our excellent product which has been totally devoid of promotion for the last 40 years.

Ignoring the nonsense about 'no promotion', just how you reinvent a product by removing customer choice and offering only a product no-one wants, is beyond even me.

With the other mills striving to fill the production gap, and re-inventing the product by supplying customers with what they want, the situation could be so much worse. From having 99% of the world market, MacKenzie's are going to end up with a tiny share of a much reduced market.

Haggas will have to re-invent the cash pile that he has lost as a result of his 'strategy'.

Harris Tweed

If you read the Gazette you will have seen that our MSP interrogated Jim Mather on the plight of the weavers (at last in the view of reporter Donnie MacInnes). If you read the Official Report, you will see that it as just a very bland question tabled in response to a more incisive question by Jamie McGrigor, who showed his real understanding of the situation by asking a follow-up question to the Minister.

The sheer pathetic and mechanical nature of the question asked by Allan is the worst sort of soft-ball questioning started by the Tories fawning to Maggie, and perfected by arse-licking Labour MPs during the Blair Reich. The nature of the planted question (for that is obviously what it was) signals the end of any hope of an investment fund for Harris Tweed (as I forecast), which never even merited a question in Parliament.

But, but, but, this is a reserved matter, so where the hell is the Barra Bhoy in all of this? He should be raising questions in Parliament, discussing the matter with officials of the Dept for Work and Pensions, and generally being active on this issue. Unbelievably, Mr Allan has done us all a favour in pointing out that MacNeil is doing nothing on the matter. But then MacNeil and Allan seem to inhabit different realities for a lot of the time.

As someone pointed out to me, the £350k for an Weavers investment fund that MacNeil sees as the salvation of the industry would give 200 weavers weeks work maximum, and what happens then? No-one knows, because no-one has bothered to think it through. Weavers need about £5k income extra each or perhaps 30 tweeds for 400 weavers = £1.8m annually which shows the real size of the problem.

The Government are not even being addressed on this issue with our politicians preferring to make soothing and meaningless noises.

Weaving industry stuffed

So the weavers have been hung out to dry yet again, by another lot of politicians.

Allan is now asking the Scottish Government to support the weavers claim to entitlement to Job Seekers Allowance. This will be the same campaign as MacNeil fearlessly lead for the best part of 20 minutes, a couple of years ago, and consisted of him writing one letter.

And that campaign was a failure, as will be Allan's. It is utterly pointless getting a Scottish Minister to prod a UK Minister, it only gets their backs up and achieves nothing. That may be the very point.

Alasdair Morrison undertook a similar fruitless and uninspired campaign a few years back, but Calum MacDonald was successful, until the Treasury changed the rules.

The real significance of the press release is that it signals that the Weavers Investment Fund is going nowhere and does not have Scottish Government support.

The emphasis has changed to the benefit entitlement – just as Angus recommended, no doubt much to the chagrin of the SNP - only in a pathetic, insincere fashion, designed to give the impression of doing anything, whilst actually achieving nothing. Situation normal, then.

BTW, does anyone know why Mr Mather responded so quickly to this letter from Mr Allan and has failed to reply (as far as we know!) to correspondence about the weavers investment fund, or indeed about Lighthouse Caledonia?

Want to buy a slightly used Harris Tweed Mill?

Today's post brings an invitation to consider the purchase of the Harris Tweed Mills currently/formerly occupied by Haggas at Sandwick Road.

Approx 1 acre is being offered by the agents comprising the main office blockthe works
and the open space behind the works, leaving only the area accessed from Cabarfeidh Road as part of the operation. Or what used to pass as a business.

According to the blurb I received, prospective buyers should be aware that redevelopment of the site will not be approved by the Council [it is too close to the Gas tanks] and that there is no central heating in any of the 30,000 sq ft of accommodation.

Hurry, hurry, before these buildings get snapped up.

The future for Harris Tweed

Today's embargoed report about the re-opening of the Shawbost Tweed Mill is absolutely fantastic news, and as I alluded to yesterday, I am delighted and fully supportive of this proposal.

It is exciting times for the industry, with the owner of the largest mill - John Haggas - seemingly bent on forcing a square pin into a round hole, and working in the believe that the supplier is always right, irrespective of the customer's views.

What a team that has been put together to re-open this mill: Iain Taylor, Brian Wilson, Alasdair Morrison, Rae MacKenzie and Iain Angus MacKenzie all bring huge amounts of skill and experience to the roles they will occupy, and the 300+ weavers will hopefully see an immediate benefit.

The industry now has two large companies, one operating a range of only five patterns of their choice, and Harris Tweed Hebrides who will offer the full range of patterns, utilising the skills and customers that Haggas has cast aside.

The impact of the industry on Lewis cannot be understated for the financial effect it has on the crofter/weavers who make the Tweed in their own homes; on the upstream businesses on the islands who manufacture products for resale; and on those who will find direct employment in the mill.

The emotional impact is immeasurable too.

Plaudits, pats on the back and congratulations to the team for this success, and my very best wishes for the future. Hopefully this is just the first step of many towards regeneration of the islands.

Update 2/11/07: BBC news coverage available.

Harris Tweed revisited

The £1 million order is back on, according to the BBC. My sources on the shop floor advise me that the Germans were ready to enforce their contract, and that an offer from Haggas to make a smaller batch was rejected.

For once common sense prevails, but it is a hell of a way to run a business.

Harris Tweed

I've had my doubts for some time about the future of the industry, but refusing a million pound order, really shows what is going on.

My understanding, from workers on the shop floor is that an order was placed for some of the existing patterns but was rejected by Haggas because it was not in one of the five designs that he has decreed will be used in future.

Unbelievable as this may seem, the logic is clear (as I have previously warned): churn out huge volumes, maximise the profit before the market is saturated, sell up and move on.

This will destroy the industry, as who now will have confidence in placing any orders for Harris Tweed? The empty shell that will be left will have a mountain to climb when Haggas is finished profit stripping.

It is now probably too late to do anything. Let's just wave farewell to our heritage, as it - and the profits - head to Yorkshire.

MacLeod of Lewis is no longer an 'approved' tweed

Harris Tweed

Don't say I didn't see the end of the industry as we know it coming....

Investment: great
Permanent contracts: great
Redundancies: terrible
A reduction in patterns: disastrous

So why is it all happening? Simple, if you have been in business yourself. Streamline production, slash overheads with new technology, produce the product at a lower cost and sell shit loads of metres. I forecast increased orders and reduced income (for weavers) whilst cheap and nasty - "traditional" (sic, sic, sic) - Harris Tweed is sold by the mile to unsuspecting Japanese and Americans.

Stuff the heritage, weigh the pound notes.

Remember that the business is now based in Yorkshire, not locally, which is a hell of a hike for Council meetings.

Traditional Lewis dress

Harris Tweed

The industry is bought by John Haggas of Yorkshire, and we all breathe a sigh of relief that it is secure.

Release that breath.

Now single-width looms are to be phased out and the mill in Shawbost is closed. Some of the competition were bought up at the same time (no doubt in a very nice deal for them) and the capacity closed, and the building put up for sale.

Anyone who had any doubts about his intent (and I was one) need only look at the incorporation of the company Harris Tweed Scotland Limited (number: 05987374) on 2 November 2006 with a Registered Office at Haincliffe Road, Keighley, Yorkshire, where Brook Taverner are headquartered.

I would guess that this is the new parent company for the Kenneth MacKenzie group of companies, and the ability of the HTA to prevent a Yorkshire company using the trademark protected name, shows just how toothless the body actually is.

The future? Like too many of our assets, they have been sold to off-islanders to exploit mercilessly, with profits going elsewhere and with the weavers - once again - getting the shitty end of the stick.

As the product range is "slimmed" (read: slashed, with no investment in anything other than the bog-standard, mass produced, unexciting range for the aspirant generation with no interest in tradition) the skills will be lost, and the industry will chug along doing nicely, but without any real prospect of significant growth. I'll almost guarantee that profits will rise in the short-term as risk and the range drop, but that in the medium term the industry is doomed.

Someday I'll recount HIE's role in making this happen in the guise of "rescuing the industry".