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Weir`s £48m pumps sale to Sulzer collapses

27 March, 2007

The Weir Group`s planned £48m sale of its Glasgow-based pump manufacturing division to its Swiss rival, Sulzer, has collapsed after the two parties failed to agree terms. In a statement issued on 26 March, Weir said that it would be considering "a number of options relative to the future plans for Weir pumps" over the coming weeks. It added that the most likely outcome would be an investment in a dedicated facility in Glasgow to produce spares for Weir`s global customers.

But another possible purchaser for the pumps business has already emerged in the form of Clyde Blowers, whose owner, Jim McColl, has said he would be interested in keeping the business as a going concern. McColl started his career at Weir as a 16-year-old apprentice.

Under the Sulzer deal, Weir would have made a phased transfer of the business to the Swiss company, leading to around 400 possible job losses by 2009. Following the collapse of the deal, Weir warned that the 400 of the pump division`s 600 staff still face redundancy by 2009. The remaining 200 will be kept on to provide an engineering, design and technical sales presence in Glasgow, as well as a spares and maintenance operation.

Weir has been making pumps for more than 130 years, but the division now accounts for just 8% of its revenues (with sales of around £70m), and an even smaller percentage of its profits.

If the pumps division is sold, Weir will be left with 660 UK employees in its services division, and the group’s head office will remain in Glasgow. Weir employs around 8,000 people worldwide.

In its 2006 results, published earlier this month, Weir posted a 40% hike in profits and said it was looking for acquisitions and could raise £400m in debt to help fund any deals.

º  A new report predicts that the global market for pumps for the water industry will grow from $8.73bn in 2005, to $12.08bn by 2012. But the study, by Frost & Sullivan, warns that rising competition, increasing price pressures, and a market approaching maturity, will force pump manufacturers to adopt a more service-oriented approach to end-users. It also suggests that some manufacturers are responding to the competitive market by cutting overheads and production costs, resulting in poor-efficiency pumps – some with losses as high as 70%. It says that need to increase pump efficiencies significantly is "a major challenge for manufacturers", but one that they will have to address to comply with tougher energy regulations.




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