British United Shoe Machinery
Encyclopedia
British United Shoe Machinery (BUSM) Ltd. was the head office
in Leicester, England of a company which for most of the 20th century was the world's largest manufacturer of footwear
machinery and materials, exporting shoe machinery to more than 50 countries. In the 1960s and 1970s, it was Leicester’s biggest employer employing more than 4,500 locally and 9500 worldwide. Most of the workforce was recruited via an apprentice scheme which trained a large proportion of Leicester’s engineers. The company had "a respected reputation for technical innovation and excellence", between 1898 and 1960, it developed and marketed nearly 800 new and improved shoe machines and patent
ed more than 9,000 invention
s, at one time employing 5% of the UK's patent agents.
The collapse of the company in October 2000 destroyed the pensions of the workers. Their story became "one of the most vivid examples of what can go wrong with..Private Equity
" and brought "shame on Apax
." The company subsequently went into administrative receivership and was the subject of a management buyout
. This new company itself went into administration in September 2006. In November 2006 a new independent company, Advent Technologies Ltd, was formed by former workers of BUSM providing technical support, advice and spare parts for the range of BUSM machinery.
In February 1899, the 3 major US shoe machinery companies,Goodyear Machinery Company, Consolidated Hand Lasting Machine Company and McKay Shoe Machinery Company merged to form United Shoe Machinery (USM).
Pearson and Bennion's managing director, Charles Bennion
went to Boston
to negotiate a merger and the company which would eventually become BUSM was incorporated in October 1899 with the Union Works factory as its headquarters. The 1st years accounts dated 31 May 1900, showed 200 employees, profits of £16500 and £300,000 capital.
A further 10 acres (40,468.6 m²) of land was purchased in 1901 from the Belgrave Road Cricket and Bicycle Grounds, the former home of both Leicester Fosse FC and Leicester Tigers
.
machinery, which had the advantage of minimising entry costs for new customers. Lease restrictions however caused much resentment and there was particularly strong opposition from Northampton manufacturers who feared it was becoming a monopoly.
Despite the huge increase in demand for military footwear, World War I
saw over 800 of the highly skilled workers joining the armed forces. Under the Munitions of War Act 1915
passed in response to the Shell Crisis of 1915
, the company became a “Controlled Establishment” with workers pay and conditions very tightly regulated by the Ministry of Munitions. BUSM's expertise in precision engineering
led to orders for a range of military equipment including Naval gun mountings and aero engine parts as well as shells
and fuzes.
a process that continued after World War II and helped reduce the effects of the Economic cycle.
and the Second World War.
By 1930 it had 12 UK sales and service branches, a valuable asset for customers before reliable car travel was available. Issued capital was seven times greater than 1899 and profits were ten times greater.
WW2 saw a much higher percentage of BUSM’s precision engineering capacity switched to manufacturing arms than in WW1. Products included Naval gun sights and the technically very demanding precision cast wheelhouse for the Rolls-Royce Merlin
aero engine.
Post war, BUSM was an early user of numerical control
machines with the prototype Kearns horizontal boring machine now in Manchester Institute of Technology museum
being installed in 1949.
, an organisation half its size.
The already strong German and US competition and the growing Italian
shoe industry was joined by competition from Korea
and Taiwan
both using cheaper labour and all started to source local machinery. BUSM itself initiated design simplification offering Injection moulding
and cementing as an alternative to stitching.
In 1983 the Department of Trade and Industry sponsored a transformation of BUSM's manufacturing processes with what was one of Europe's most advanced Flexible manufacturing system
s, four KTM numeric control machining centres were installed for discrete component manufacturing. BUSM’s unique application of FMS to highly varied, low volume work remained in use for 15 years.
The company also developed computer control machinery claiming world leadership of microprocessor controlled shoe machinery and 75% of the world market by the end of the 80s.
By 1986 Emhart's business strategy had changed to avoid highly cyclical industries like footwear.
After 18 months negotiation, “Britain’s largest ever Management buyout
” led by John Foster
purchased the shoe machinery business excluding materials at a cost of £80M.
Chris Price, a former BUSM graduate apprentice who became Research and Development Manager and eventually rose to the board rejoined the MBO as Technical Director.
Finance Director Richard Bates said “We have broken free of the shackles of a multi-product group run on financial criteria, so we can now run a single industry business”.
Under Emhart's ownership, the old Union Works was demolished and the site, the sports club and the Mowmacre Hill sports ground were sold off.
"BU's renewed vigour" became apparent when in 1989, it was one of only three UK companies to win both a Queen's Award for Technology and a Queen's Award for Exports
.
Exports accounted for 60% of the business.
In 1990 BUSM bought the shoe materials company Texon from Emhart’s owners Black & Decker
for around $125M, doubling turnover to £200m and increasing the workforce to around 3000.
USM-Texon as the group became known, transferred workers to its new pension scheme. USM-Texon was in a unique position, the only one in the world manufacturing both shoe materials and machinery.
Now focusing on materials, it opened a factory in Foshan
South China in 1993 and Chennai
, India in 1994 and planned to float
on the London Stock Exchange
the following year.
Chris Price's achievements were recognised as he became the 1995 president of the Institution of Mechanical Engineers
, the youngest for 100 years.
ists Apax for £131M.
John Foster retired in 1996 and received an OBE.
Apax appointed Dr Neil Coutts as BUSM Chief Executive and later that year, the company completed its largest ever factory, employing 7000 people in Vietnam.
In 1997, USM-Texon announced they would demerge into British United Shoe Machinery and Texon UK "in order to increase the focus on their respective businesses."
The award-winning Research and Development department's budget was "promptly cut.. by 60 per cent" and Chris Price left for Rolls Royce where he eventually became an Executive Vice President.
On completion of the demerger in 1998, Coutts joined Apax owned Dexion which went into receivership in 2003, leaving workers worse off than if they "had never joined the Dexion scheme." Coutts remained a BUSM director, others included Jon Moulton
, the Apax former head of Buyouts and Roger Earl.Company House Accounts 363's Annual Return USM Group Holdings Ltd Company No 3473337 11 November 1999 Earl was to head the 2000 Management buyout in which Moulton was the majority shareholder and controlling interest.Company 4479445 British United Shoe Machinery Directors Reporte and Consolidated statements for the year ended 31 December-2004 Tim Wright of Apax was a common director of both BUSM and Texon's parent company.Company 3473337 USM Group Holdings Reports and Accounts 31 December-1998 section 22
The company failed to thrive. In February 2000, Crispin, a key IT asset, was sold by installments to Texon, allegedly at a knock down price. The company continued to manufacture machinery, producing a stock pile which remained unsold until purchased from the Administrator by the management buy out company. On September 14, 2000 the USM-Texon scheme transferred assets into the BUSM plan set up in March 1999. On September 30 a new valuation of this scheme showed it needed payment of £2.3m to meet Guaranteed Minimum Pension
. Around 1 October, the third and final installment for Crispin was paid and on 4 October the bank put in Administrators.
The failure caused little initial surprise or anger as shop floor
Convenor and Pensions Trustee Bob Duncan had long assured workers that whatever happened to the Company their pensions were safe. Unfortunately and unknown to Duncan, the official advice on which this was based on simply wasn't true. As one of four Judicial Review
litigants, Duncan played a key part in Dr Ros Altmann’s
eventually successful Pensionstheft campaign. Invited to give evidence before the Public Administration Select Committee
, Duncan blamed the government’s misleading information. The Committee agreed.
Once the Independent Trustee revealed the full extent of the pension loss in January 2002, Apax’s alleged role in the collapse of the company came under scrutiny. Three separate complaints were made, all rejected on the grounds of jurisdiction leading Dr Ashok Kumar MP to tell Parliament that "Some serious joined-up thinking is needed on all these issues". Duncan complained to OPRA
but this organisation at that time could only investigate alleged wrongdoing by Trustees and notoriously lacked effectiveness The regulator did say that the complaint contained information which "might be of interest to the DTI" though a dossier submitted via Patricia Hewitt under Section 447 the Companies Act 1985
was rejected as the DTI could not investigate unincorporated bodies such as pension schemes, an investigation was unlikely to be effective, and complaints were best handled by the Pensions Ombudsman.
Workers then complained to the Pensions Advisory Service and then to the Pensions Ombudsman
. Apax’ solicitors immediately challenged his right to investigate a share holder under the PENSION SCHEMES ACT 1993, PART X which limits jurisdiction to scheme trustees, managers or employers. This forced the Ombudsman to drop the lead case and to advise others that "any complaints against directors of Texon or Apax would be outside the Pensions Ombudsman's jurisdiction as they are not employers, trustees, managers, or administrators in relation to the BUSM Pension Plan".
Following advice from Ros Altmann
workers went to see their MPs, and also found strong support from both National and local newspapers. They blamed Apax for having engineered the collapse Edward Garnier
named Sir Ronald Cohen and asked what discussions "ministers
have had..about the collapse of the pension scheme". Patricia Hewitt
, the Health Secretary and a local MP also called for an enquiry. In a letter to Alan Johnson MP,the Department of Trade and Industry minister, she recommended "that the Companies Investigation Branch should look at the concerns raised by my constituent. It may be that the problem falls between DTI and OPRA; but it is clearly important that such serious allegations are properly investigated." The response merely referred to the CIB investigation in 2002 and its conclusion that "the issues raised were best dealt with by other bodies." Garnier raised the issue again with the new Minister for Pensions Reform Stephen Timms
citing the "mysterious circumstances" under which the pensions disappeared. Timms agreed to "look into" the complaints saying that "in recent years, there have been too many instances of that kind."
The press expected a proper enquiry. In September 2005 Timms wrote back to Edward Garnier saying that the Pensions Regulator had found no breach of Pensions Regulations, though the Pensions Ombudsman was still investigating two complaints.DWP Letter to Edward Garnier MOS(PR)/05/1595 Neither organisation of course could investigate Apax so Timms' "investigation" revealed nothing new.
included the good news that workers would receive most of their expected pensions from an improved Financial Assistance Scheme
. A long standing meeting arranged by Loughborough MP
Andy Reed
with minister James Purnell
took place shortly afterwards following which, both BBC
and ITV
regional news led with interviews of those attending. For some, it was too late. The Mail on Sunday, whilst crediting pensions minister Mike O'Brien MP with achieving a fair outcome, described the suffering of Chris and Elaine Barrett who both died before any Government compensation could be awarded and the effects on George Curtis, a Parkinson's sufferer forced to work beyond 55, the age of ill health retirement at BUSM. ITV showed Curtis at work and followed up later when, thanks to Altmann's campaigning, he was awarded a pension at 60.
Sir Ronald Cohen and Apax insist all questions have been addressed but in the absence of any meaningful enquiry, it was left to MPs, Ros Altmann, and the media to comment on Apax's behaviour.
Ros Altmann described BUSM as "one of the worst cases of scheme wind-ups that I have seen. ..the actions of the former owners - Apax - have been immoral."
MP Ashok Kumar said, "I think these people needed flogging. I feel so angry on behalf of decent upright citizens robbed of their basic human rights. ...'These are greedy, selfish, capitalists who live on the backs of others. In a modern democracy these people have been robbed"
For the Mail on Sunday it was "Shame on Apax."
Company 3473337 USM Group Holdings Reports and Accounts 31 December-1998
Head Office
Head Office is a 1985 American comedy film, produced by HBO Pictures in association with Silver Screen Partners. It stars Judge Reinhold, Eddie Albert, Lori-Nan Engler, Jane Seymour, Richard Masur, Michael O'Donoghue, Ron Frazier, Merritt Butrick and was directed and written by Ken...
in Leicester, England of a company which for most of the 20th century was the world's largest manufacturer of footwear
Footwear
Footwear consists of garments worn on the feet, for fashion, protection against the environment, and adornment. Being barefoot is commonly associated with poverty, but some cultures chose not to wear footwear at least in some situations....
machinery and materials, exporting shoe machinery to more than 50 countries. In the 1960s and 1970s, it was Leicester’s biggest employer employing more than 4,500 locally and 9500 worldwide. Most of the workforce was recruited via an apprentice scheme which trained a large proportion of Leicester’s engineers. The company had "a respected reputation for technical innovation and excellence", between 1898 and 1960, it developed and marketed nearly 800 new and improved shoe machines and patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
ed more than 9,000 invention
Invention
An invention is a novel composition, device, or process. An invention may be derived from a pre-existing model or idea, or it could be independently conceived, in which case it may be a radical breakthrough. In addition, there is cultural invention, which is an innovative set of useful social...
s, at one time employing 5% of the UK's patent agents.
The collapse of the company in October 2000 destroyed the pensions of the workers. Their story became "one of the most vivid examples of what can go wrong with..Private Equity
Private equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
" and brought "shame on Apax
Apax Partners
Apax Partners LLP is a global private equity and venture capital firm, headquartered in London. The company also operates out of eight other offices in New York, Hong Kong, Mumbai, Tel-Aviv, Madrid, Stockholm, Milan and Munich. The firm, including its various predecessors, have raised...
." The company subsequently went into administrative receivership and was the subject of a management buyout
Management buyout
A management buyout is a form of acquisition where a company's existing managers acquire a large part or all of the company.- Overview :Management buyouts are similar in all major legal aspects to any other acquisition of a company...
. This new company itself went into administration in September 2006. In November 2006 a new independent company, Advent Technologies Ltd, was formed by former workers of BUSM providing technical support, advice and spare parts for the range of BUSM machinery.
Formation
During the nineteenth century, many shoe manufacturing processes were mechanised and the resulting numerous small factories merged over time. In 1882, Tomlin and Sons of Leicester, cutlery and shoe machinery manufacturer and William Pearson of Leeds were acquired by Merry and Bennion which by the mid 1890s was a leading supplier of UK shoe machinery. Renamed Pearson and Bennion, in 1898 it moved to the new Union Works factory in Belgrave Rd Leicester.In February 1899, the 3 major US shoe machinery companies,Goodyear Machinery Company, Consolidated Hand Lasting Machine Company and McKay Shoe Machinery Company merged to form United Shoe Machinery (USM).
Pearson and Bennion's managing director, Charles Bennion
Charles Bennion
Charles Bennion was a businessman, manufacturer and philanthropist who purchased Bradgate Park for the people of Leicestershire....
went to Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
to negotiate a merger and the company which would eventually become BUSM was incorporated in October 1899 with the Union Works factory as its headquarters. The 1st years accounts dated 31 May 1900, showed 200 employees, profits of £16500 and £300,000 capital.
A further 10 acres (40,468.6 m²) of land was purchased in 1901 from the Belgrave Road Cricket and Bicycle Grounds, the former home of both Leicester Fosse FC and Leicester Tigers
Leicester Tigers
Leicester Tigers is an English rugby union club that plays in the Aviva Premiership.Leicester are the most successful English club since the introduction of league rugby in 1987, a record 9 times English champions - 3 more than either Bath or Wasps, the last of which was in 2010...
.
Expansion and business strategy
The new United Shoe Machinery was uniquely able to supply a footwear manufacturer with all machinery needs. By 1908 the company's technical innovations were sufficiently noteworthy to attract a visit from the British Association for the Advancement of Science. The company followed US policy of leasingLeasing
Leasing is a process by which a firm can obtain the use of a certain fixed assets for which it must pay a series of contractual, periodic, tax deductible payments....
machinery, which had the advantage of minimising entry costs for new customers. Lease restrictions however caused much resentment and there was particularly strong opposition from Northampton manufacturers who feared it was becoming a monopoly.
Despite the huge increase in demand for military footwear, World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
saw over 800 of the highly skilled workers joining the armed forces. Under the Munitions of War Act 1915
Munitions of War Act 1915
The Munitions of War Act 1915 was a British Act of Parliament promulgated during the First World War which brought private companies supplying the Armed forces under the tight control of the newly created Ministry of Munitions, regulating wages, hours and employment conditions...
passed in response to the Shell Crisis of 1915
Shell Crisis of 1915
The Shell Crisis of 1915 was a shortage of artillery shells on the front lines of World War I, which largely contributed to weakening public appreciation of government of the United Kingdom because it was widely perceived that the production of artillery shells for use by the British Army was...
, the company became a “Controlled Establishment” with workers pay and conditions very tightly regulated by the Ministry of Munitions. BUSM's expertise in precision engineering
Precision engineering
Precision engineering is a subdiscipline of electrical engineering, electronics engineering, mechanical engineering, and optical engineering concerned with designing machines, fixtures, and other structures that have exceptionally low tolerances, are repeatable, and are stable over time...
led to orders for a range of military equipment including Naval gun mountings and aero engine parts as well as shells
Shell (projectile)
A shell is a payload-carrying projectile, which, as opposed to shot, contains an explosive or other filling, though modern usage sometimes includes large solid projectiles properly termed shot . Solid shot may contain a pyrotechnic compound if a tracer or spotting charge is used...
and fuzes.
Shoe components
The 1920s saw the company diversify into shoe components including those made from synthetic materials,a process that continued after World War II and helped reduce the effects of the Economic cycle.
Great Depression and WW2
The company flourished throughout the Great DepressionGreat Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
and the Second World War.
By 1930 it had 12 UK sales and service branches, a valuable asset for customers before reliable car travel was available. Issued capital was seven times greater than 1899 and profits were ten times greater.
WW2 saw a much higher percentage of BUSM’s precision engineering capacity switched to manufacturing arms than in WW1. Products included Naval gun sights and the technically very demanding precision cast wheelhouse for the Rolls-Royce Merlin
Rolls-Royce Merlin
The Rolls-Royce Merlin is a British liquid-cooled, V-12, piston aero engine, of 27-litre capacity. Rolls-Royce Limited designed and built the engine which was initially known as the PV-12: the PV-12 became known as the Merlin following the company convention of naming its piston aero engines after...
aero engine.
Post war, BUSM was an early user of numerical control
Numerical control
Numerical control refers to the automation of machine tools that are operated by abstractly programmed commands encoded on a storage medium, as opposed to controlled manually via handwheels or levers, or mechanically automated via cams alone...
machines with the prototype Kearns horizontal boring machine now in Manchester Institute of Technology museum
Museum of Science and Industry in Manchester
The Museum of Science and Industry in Manchester, England, is a large museum devoted to the development of science, technology, and industry with emphasis on the city's achievements in these fields...
being installed in 1949.
Monopoly and breakup
In December 1947 the US government brought proceedings against USM alleging a breach of the Sherman Anti Trust Act in that the company had been a monopoly since 1912. A “trial of prodigious length” followed but although the verdict went against USM, the corporation wasn’t broken up and the judgement and remedy was confirmed by the Supreme Court in 1954. The government renewed its complaint in 1967 but although the District Court ruled nothing had changed, this time the Supreme Court ordered the company to be broken up. It was required to divest a substantial part of its business and change its leasing strategy over a 10-year period. The sell-off raised $400 million but attempts at diversification failed to generate enough money and in 1976 the company, heavily in debt, was bought by Emhart Corporation, now Emhart TeknologiesBlack & Decker
Black & Decker Corporation is a corporation based in Towson, Maryland, United States, that designs and imports power tools and accessories, hardware and home improvement products, and technology based fastening systems...
, an organisation half its size.
Decline, partial recovery and return to private ownership
Though the company won a Queen's Award for Export in 1971, the 1970s saw BUSM's advantage in complex production machinery eroded, as off the shelf hydraulics, pneumatics and electronics replaced many mechanical components, reducing the cost of entry to new competitors.The already strong German and US competition and the growing Italian
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
shoe industry was joined by competition from Korea
Korea
Korea ) is an East Asian geographic region that is currently divided into two separate sovereign states — North Korea and South Korea. Located on the Korean Peninsula, Korea is bordered by the People's Republic of China to the northwest, Russia to the northeast, and is separated from Japan to the...
and Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
both using cheaper labour and all started to source local machinery. BUSM itself initiated design simplification offering Injection moulding
Injection moulding
Injection molding is a manufacturing process for producing parts from both thermoplastic and thermosetting plastic materials. Material is fed into a heated barrel, mixed, and forced into a mold cavity where it cools and hardens to the configuration of the cavity...
and cementing as an alternative to stitching.
In 1983 the Department of Trade and Industry sponsored a transformation of BUSM's manufacturing processes with what was one of Europe's most advanced Flexible manufacturing system
Flexible manufacturing system
A flexible manufacturing system is a manufacturing system in which there is some amount of flexibility that allows the system to react in the case of changes, whether predicted or unpredicted...
s, four KTM numeric control machining centres were installed for discrete component manufacturing. BUSM’s unique application of FMS to highly varied, low volume work remained in use for 15 years.
The company also developed computer control machinery claiming world leadership of microprocessor controlled shoe machinery and 75% of the world market by the end of the 80s.
By 1986 Emhart's business strategy had changed to avoid highly cyclical industries like footwear.
After 18 months negotiation, “Britain’s largest ever Management buyout
Management buyout
A management buyout is a form of acquisition where a company's existing managers acquire a large part or all of the company.- Overview :Management buyouts are similar in all major legal aspects to any other acquisition of a company...
” led by John Foster
purchased the shoe machinery business excluding materials at a cost of £80M.
Chris Price, a former BUSM graduate apprentice who became Research and Development Manager and eventually rose to the board rejoined the MBO as Technical Director.
Finance Director Richard Bates said “We have broken free of the shackles of a multi-product group run on financial criteria, so we can now run a single industry business”.
Under Emhart's ownership, the old Union Works was demolished and the site, the sports club and the Mowmacre Hill sports ground were sold off.
"BU's renewed vigour" became apparent when in 1989, it was one of only three UK companies to win both a Queen's Award for Technology and a Queen's Award for Exports
Queen's Awards for Enterprise
The Queen's Awards for Enterprise is an awards programme for British businesses and other organizations who excel at international trade, innovation or sustainable development. They are the highest official UK awards for British businesses...
.
Exports accounted for 60% of the business.
In 1990 BUSM bought the shoe materials company Texon from Emhart’s owners Black & Decker
Black & Decker
Black & Decker Corporation is a corporation based in Towson, Maryland, United States, that designs and imports power tools and accessories, hardware and home improvement products, and technology based fastening systems...
for around $125M, doubling turnover to £200m and increasing the workforce to around 3000.
USM-Texon as the group became known, transferred workers to its new pension scheme. USM-Texon was in a unique position, the only one in the world manufacturing both shoe materials and machinery.
Now focusing on materials, it opened a factory in Foshan
Foshan
Foshan is a city in central Guangdong province in southern China. The prefectural area under the city's jurisdiction over an area of about 3,840 km² and a population of 5.4 million of which 1.1 million reside in the city proper ....
South China in 1993 and Chennai
Chennai
Chennai , formerly known as Madras or Madarasapatinam , is the capital city of the Indian state of Tamil Nadu, located on the Coromandel Coast off the Bay of Bengal. Chennai is the fourth most populous metropolitan area and the sixth most populous city in India...
, India in 1994 and planned to float
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
the following year.
Chris Price's achievements were recognised as he became the 1995 president of the Institution of Mechanical Engineers
Institution of Mechanical Engineers
The Institution of Mechanical Engineers is the British engineering society based in central London, representing mechanical engineering. It is licensed by the Engineering Council UK to assess candidates for inclusion on ECUK's Register of professional Engineers...
, the youngest for 100 years.
Failed Flotation, Apax Partners and pension collapse
Initial optimism turned sour and the flotation was cancelled, leading to its acquisition in 1995 by Venture CapitalVenture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
ists Apax for £131M.
John Foster retired in 1996 and received an OBE.
Apax appointed Dr Neil Coutts as BUSM Chief Executive and later that year, the company completed its largest ever factory, employing 7000 people in Vietnam.
In 1997, USM-Texon announced they would demerge into British United Shoe Machinery and Texon UK "in order to increase the focus on their respective businesses."
The award-winning Research and Development department's budget was "promptly cut.. by 60 per cent" and Chris Price left for Rolls Royce where he eventually became an Executive Vice President.
On completion of the demerger in 1998, Coutts joined Apax owned Dexion which went into receivership in 2003, leaving workers worse off than if they "had never joined the Dexion scheme." Coutts remained a BUSM director, others included Jon Moulton
Jon Moulton
Jon Moulton is a British venture capitalist. He is the founder and managing partner of the private equity firm Better Capital, and is the former managing partner of the private equity firm Alchemy Partners...
, the Apax former head of Buyouts and Roger Earl.Company House Accounts 363's Annual Return USM Group Holdings Ltd Company No 3473337 11 November 1999 Earl was to head the 2000 Management buyout in which Moulton was the majority shareholder and controlling interest.Company 4479445 British United Shoe Machinery Directors Reporte and Consolidated statements for the year ended 31 December-2004 Tim Wright of Apax was a common director of both BUSM and Texon's parent company.Company 3473337 USM Group Holdings Reports and Accounts 31 December-1998 section 22
The company failed to thrive. In February 2000, Crispin, a key IT asset, was sold by installments to Texon, allegedly at a knock down price. The company continued to manufacture machinery, producing a stock pile which remained unsold until purchased from the Administrator by the management buy out company. On September 14, 2000 the USM-Texon scheme transferred assets into the BUSM plan set up in March 1999. On September 30 a new valuation of this scheme showed it needed payment of £2.3m to meet Guaranteed Minimum Pension
Guaranteed Minimum Pension
The Guaranteed Minimum Pension is the minimum pension which a United Kingdom occupational pension scheme has to provide for those employees who were contracted out of the State Earnings-Related Pension Scheme between 6 April 1978 and 5 April 1997...
. Around 1 October, the third and final installment for Crispin was paid and on 4 October the bank put in Administrators.
The failure caused little initial surprise or anger as shop floor
Shop floor
--The Shop floor literally is the floor of a factory where people work on machines, or the space in a retail establishment where goods are sold to customers...
Convenor and Pensions Trustee Bob Duncan had long assured workers that whatever happened to the Company their pensions were safe. Unfortunately and unknown to Duncan, the official advice on which this was based on simply wasn't true. As one of four Judicial Review
Judicial review
Judicial review is the doctrine under which legislative and executive actions are subject to review by the judiciary. Specific courts with judicial review power must annul the acts of the state when it finds them incompatible with a higher authority...
litigants, Duncan played a key part in Dr Ros Altmann’s
Ros Altmann
Dr Ros Altmann, born 1956, is a UK pensions expert and campaigner. She led a long campaign on behalf of 140,000 Allied Steel and Wire employees and their families whose company pensions were jeopardised when the company went into receivership. She has also supported a campaign for people whose...
eventually successful Pensionstheft campaign. Invited to give evidence before the Public Administration Select Committee
Public Administration Select Committee
The Public Administration Select Committee is a Select Committee appointed by the British House of Commons to examine the reports of the Parliamentary and Health Service Ombudsman and to consider matters relating to the quality and standards of administration provided by civil service departments,...
, Duncan blamed the government’s misleading information. The Committee agreed.
Once the Independent Trustee revealed the full extent of the pension loss in January 2002, Apax’s alleged role in the collapse of the company came under scrutiny. Three separate complaints were made, all rejected on the grounds of jurisdiction leading Dr Ashok Kumar MP to tell Parliament that "Some serious joined-up thinking is needed on all these issues". Duncan complained to OPRA
The Pensions Regulator
The Pensions Regulator is a non-departmental public body which holds the position of the regulator of work-based pension schemes in the UK. Created under the Pensions Act 2004, the regulator replaced the Occupational Pensions Regulatory Authority from 6 April 2005and has wider powers and a new...
but this organisation at that time could only investigate alleged wrongdoing by Trustees and notoriously lacked effectiveness The regulator did say that the complaint contained information which "might be of interest to the DTI" though a dossier submitted via Patricia Hewitt under Section 447 the Companies Act 1985
Companies Act 1985
The Companies Act 1985 is an Act of the Parliament of the United Kingdom of Great Britain and Northern Ireland, enacted in 1985, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.The Act was a consolidation of...
was rejected as the DTI could not investigate unincorporated bodies such as pension schemes, an investigation was unlikely to be effective, and complaints were best handled by the Pensions Ombudsman.
Workers then complained to the Pensions Advisory Service and then to the Pensions Ombudsman
Pensions Ombudsman
The Pensions Ombudsman is the official ombudsman institution responsible for investigating complaints regarding pensions in the United Kingdom. The Pensions Ombudsman is a non-departmental public body, and the holder is appointed by the Government, but acts independently after appointment. His...
. Apax’ solicitors immediately challenged his right to investigate a share holder under the PENSION SCHEMES ACT 1993, PART X which limits jurisdiction to scheme trustees, managers or employers. This forced the Ombudsman to drop the lead case and to advise others that "any complaints against directors of Texon or Apax would be outside the Pensions Ombudsman's jurisdiction as they are not employers, trustees, managers, or administrators in relation to the BUSM Pension Plan".
Following advice from Ros Altmann
Ros Altmann
Dr Ros Altmann, born 1956, is a UK pensions expert and campaigner. She led a long campaign on behalf of 140,000 Allied Steel and Wire employees and their families whose company pensions were jeopardised when the company went into receivership. She has also supported a campaign for people whose...
workers went to see their MPs, and also found strong support from both National and local newspapers. They blamed Apax for having engineered the collapse Edward Garnier
Edward Garnier
Edward Henry Garnier, QC, MP is a barrister and Conservative Party politician in the United Kingdom. A former Guardian Newspaper lawyer he is on the socially liberal wing of his party and has been the Member of Parliament for Harborough in Leicestershire since 1992...
named Sir Ronald Cohen and asked what discussions "ministers
Minister (government)
A minister is a politician who holds significant public office in a national or regional government. Senior ministers are members of the cabinet....
have had..about the collapse of the pension scheme". Patricia Hewitt
Patricia Hewitt
Patricia Hope Hewitt is an Australian-born British Labour Party politician, who was the Member of Parliament for Leicester West from 1997 until 2010. She served in the Cabinet until 2007, most recently as Health Secretary....
, the Health Secretary and a local MP also called for an enquiry. In a letter to Alan Johnson MP,the Department of Trade and Industry minister, she recommended "that the Companies Investigation Branch should look at the concerns raised by my constituent. It may be that the problem falls between DTI and OPRA; but it is clearly important that such serious allegations are properly investigated." The response merely referred to the CIB investigation in 2002 and its conclusion that "the issues raised were best dealt with by other bodies." Garnier raised the issue again with the new Minister for Pensions Reform Stephen Timms
Stephen Timms
Stephen Creswell Timms is a British Labour politician, who has been the Member of Parliament for East Ham since 1994. He is a former Cabinet Minister having served as Chief Secretary to the Treasury from 2006 to 2007...
citing the "mysterious circumstances" under which the pensions disappeared. Timms agreed to "look into" the complaints saying that "in recent years, there have been too many instances of that kind."
The press expected a proper enquiry. In September 2005 Timms wrote back to Edward Garnier saying that the Pensions Regulator had found no breach of Pensions Regulations, though the Pensions Ombudsman was still investigating two complaints.DWP Letter to Edward Garnier MOS(PR)/05/1595 Neither organisation of course could investigate Apax so Timms' "investigation" revealed nothing new.
Aftermath.
The Budget of March 2007Finance Act 2007
The Finance Act 2007 is an Act the Parliament of the United Kingdom prescribing changes to Excise Duties, Value Added Tax, Income Tax, Corporation Tax and Capital Gains Tax. It enacts the Budget of 21 March 2007....
included the good news that workers would receive most of their expected pensions from an improved Financial Assistance Scheme
Financial Assistance Scheme
The Financial Assistance Scheme offers help to members of who have lost out on their pension either because their employer became insolvent between 1 January 1997 and 5 April 2005,...
. A long standing meeting arranged by Loughborough MP
Loughborough (UK Parliament constituency)
Loughborough is a county constituency represented in the House of Commons of the Parliament of the United Kingdom. It elects one Member of Parliament by the first-past-the-post system of election.-Boundaries:...
Andy Reed
Andy Reed
Andrew John Reed is a British Labour Co-operative politician who was the Member of Parliament for the key marginal Constituency of Loughborough from 1997 to 2010.He is a notable sports enthusiast, a fortuitous coincidence as "Loughborough is home to the most comprehensive sports development...
with minister James Purnell
James Purnell
James Mark Dakin Purnell is a British Labour Party politician, who was the Member of Parliament for Stalybridge and Hyde from 2001 to 2010. He is currently the Head of the Open Left project at the left leaning think tank Demos...
took place shortly afterwards following which, both BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
and ITV
ITV
ITV is the major commercial public service TV network in the United Kingdom. Launched in 1955 under the auspices of the Independent Television Authority to provide competition to the BBC, it is also the oldest commercial network in the UK...
regional news led with interviews of those attending. For some, it was too late. The Mail on Sunday, whilst crediting pensions minister Mike O'Brien MP with achieving a fair outcome, described the suffering of Chris and Elaine Barrett who both died before any Government compensation could be awarded and the effects on George Curtis, a Parkinson's sufferer forced to work beyond 55, the age of ill health retirement at BUSM. ITV showed Curtis at work and followed up later when, thanks to Altmann's campaigning, he was awarded a pension at 60.
Sir Ronald Cohen and Apax insist all questions have been addressed but in the absence of any meaningful enquiry, it was left to MPs, Ros Altmann, and the media to comment on Apax's behaviour.
Ros Altmann described BUSM as "one of the worst cases of scheme wind-ups that I have seen. ..the actions of the former owners - Apax - have been immoral."
MP Ashok Kumar said, "I think these people needed flogging. I feel so angry on behalf of decent upright citizens robbed of their basic human rights. ...'These are greedy, selfish, capitalists who live on the backs of others. In a modern democracy these people have been robbed"
For the Mail on Sunday it was "Shame on Apax."
BUSM Factory Site
In 2007 a planning application was made for 1210 houses on the former sitehttp://rcweb.leicester.gov.uk/planning/onlinequery/Details.aspx?AppNo=20070419 by Trafalgar Global Ltd. The construction of new homes commenced in 2010 with the first residential occupiers of site moving in in 2011.External links
Company 3473337 USM Group Holdings Reports and Accounts 31 December-1998