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It’s a tribute to Alan Smith, the Managing Director of Welsh Slate, that all the serious bidders for the business when it was put up for sale last year wanted him and his team to remain in place.
It has also meant that the business plan developed by Alan following his appointment in March last year remains in place – a plan that in January delivered the highest level of sales the business has enjoyed for two years for the new owners, Northern Irish businessmen Kevin Lagan and his son Peter, and the directors.
Peter Lagan runs a business called Lagan Building Supplies, long-term customers of Welsh Slate. Kevin Lagan heads the £300million Lagan Group, with interests including construction, property development and building materials in Ireland, the UK and across the world.
He and his son, rather than any of their companies, bought the Welsh Slate business, with its headquarters at Bethesda at its Penrhyn quarry, for £31million from Alfred McAlpine. The deal included three other active quarries – Cwt-y-Bugail, Blaenau Ffestiniog and Pen-yr-Orsedd – and six consented dormant quarries.
The sale was completed in December (see the January issue of Natural Stone Specialist) ahead of Alfred McAlpine’s purchase by Carillion that was concluded in February following the all clear from the Office of Fair Trading.
Alan Smith – who, along with Finance Director Nicki Oakes, has a small stake in the business following the sale – was brought in at short notice by Alfred McAlpine Chief Executive Ian Grice after the previous top management team left amid allegations of accounting irregularities. The Serious Fraud Office are still investigating that.
Alan Smith is a geography graduate with 30 years experience in manufacturing and construction. He spent 16 years with Pioneer and 10 years with Aggregate Industries, where he was Managing Director of Bradstone, Aggregate Supplies, Brook Concrete, Stoneflare and Border Stone.
When Aggregate Industries were taken over by Holcim in 2006, Alan made a lifestyle decision to leave and start his own business importing stone from India and China for hard landscaping. When he received the call from Ian Grice and looked at the Welsh Slate business he decided to ‘park’ his business and concentrate on Welsh Slate.
In 2006 Welsh Slate had opened a new £6million, 6,500m2 factory that was intended to make more use of the stone from the quarry by sawing block that could not be riven by hand in the traditional way.
The new factory has a bank of six Pedrini bridge saws feeding two, 27-bladed Pedrini Arco secondary saws that in turn fed three tile lines to saw the slates horizontally in half and half again to reduce their thickness.
Flame finishing was intended to reproduce the look of riven slate and the edges were dressed to give a traditional, rather than sawn, appearance to the finished slate.
The idea was to get more finished product and less waste from the million tonnes of slate that was being blasted from the quarry each year. From that, just 20,000 tonnes of roofing slates were being produced, although an increasing amount was also used for architectural products and aggregates.
Alan’s initial assessment of the business focussed on roofing slate production and aggregates. Using slate as an aggregate has become increasingly viable because, as a secondary product arising from the production of roofing slate, it is exempt from Aggregates Tax.
The new MD decided early on to mothball the Cwt-y-Bugail quarry and close the two shops (in London and Belgium) that were selling architectural products such as flooring, cladding and worktops, made largely of the slate from Cwt-y-Bugail.
Welsh Slate had employed more than 400 people before Alan’s appointment. He reduced that by 160, saying he saw his role as saving the jobs of the remaining 250 people by getting the operation swiftly back into a profit. He says that objective has been achieved in less than a year.
In fact, Cwt-y-Bugail only remained closed for four months and during that time Welsh Slate continued to sell the stone from the quarry from stock. It was clear there was sufficient demand to warrant continued production, so production was resumed.
Welsh Slate are now producing scants that are sold to other companies to process into finished product, which is the way Alan likes it. It is an arrangement that is currently supplying 1,000 tonnes of 80mm thick paving for Caernarfon through Welsh stone company Cerrig.
Alan’s belief is that profitability is maximised by reducing the resources expended producing waste, which meant that Penrhyn quarry had to become more efficient. He has already reduced the amount of waste being removed from the face at Penrhyn and intends to reduce it further in due course by switching from blasting to sawing. And what used to be considered waste from the factory is now turned into walling, block paving, even coasters.
He says the quarries had been under-invested, which he is putting right by spending £2.6million in Penrhyn, where 80% of the roofing slate comes from, and £1.2million at Blaenau Ffestiniog, which supplies the other 20% (and is already twice as efficient as Penrhyn in terms of finished product per tonne quarried). The architectural product processing plant at Cwt-y-Bugail has been leased to another company, Called Cwt-y-Bugail Welsh Slate, to operate.
Alan has already had 800,000 tonnes of overburden stripped at Penrhyn to allow the top two benches to be widened and reduced in height from 20m to 10m. The removal of a further 1.8million tonnes of overburden this year will gradually allow the improvements to be moved down the face. “This is playing catch-up,” says Alan, “making quarrying more efficient and economical.”
Selection of the stone for the factory is now taking place at the edge of the quarry so waste does not go to the factory only to be brought back again.
The aim of the new factory was originally to process hard grey slate from the quarry that cannot be split by hand into roofing slate, but it has not proved economical because the hard slate wears the diamond saw segments too rapidly and they are expensive.
Horizontal sawing on the tile lines also had problems. The blades come in from either side of the slate but it proved impossible to completely eliminate a ridge where the two saws meet. So the secondary saws have now been set to cut the blocks into thinner sections that are only sawn horizontally once on the tile lines, leaving every slate with one clean face from the secondary saws.
There are three tile lines, but sawing enough stone to feed all three for the production of roofing slate proved difficult and now any attempt at doing so has been abandoned. Alan has discovered that the most economical level of production is achieved by having one of the tile lines working on roofing slate on a single shift. Another is used to make 11/2 width slates and architectural products such as the flame textured steps being manufactured when NSS visited.
The result of the changes is that the business is already ahead of targets this year and Alan confidently anticipates making a profit for the year. “That’s a big turnround from when I first came here,” he says.
Their production target for the year on roofing is 10.5million slates, which Alan has calculated is the most economical volume from a labour-intensive process. He is confident he can achieve that level of production and has no worries about being able to sell it.
Why is he so confident? “I have just spent a week visiting slate quarries in Spain and everyone, without exception, says they would love to have a slate of the quality of Penrhyn and Ffestiniog. It is without doubt the best quality and most aesthetically pleasing slate in the world.”
Enviably, demand for Welsh slate is high enough for production to equal sales. Previously, hefty discounts for forward purchasing were used to disguise production difficulties because at the top end new-build and conservation markets in which Welsh Slate operate the supply is the critical issue. Those discounts have now ended and prices have been eased upwards.
But the level of service offered has also been increased by welcoming orders for specials of particular dimensions or shapes rather than trying to concentrate on a standard product.
Architectural products are expected to contribute something less than £1million to the company’s £25million turnover, helped by the internal appointment in February of Andy Carson to sell the products. And aggregates will account for about 20% of turnover.
“We have made a lot of changes in the past year,” says Alan. “There will be more, but the major adjustments have been made. We now have stability of supply and stability of ownership.”
