Drives & Controls has received the following letter from two executives at Laurence Scott & Electromotors Inc in the US, commenting on the background to recent events at LSE.
Some recent reports in the UK have suggested that Laurence Scott & Electromotors was "rescued" by ATB. That is a mis-statement of the facts. It was George Clair who rescued LSE when it was truly in need of rescuing and did an admirable job of turning a company on the brink of collapse in 2005 into a profitable company on the brink of a renaissance in 2007. Consequently, it did not need saving now – it needed reorganization.
Mr. Clair bought a company that was destined for the scrap heap, and its 200 jobs with it, and he devotedly and single-mindedly turned it around. Its vendor and customer base was re-established and its future was bright. It was quite simply his pride and joy.
Accordingly, Mr Clair followed advice to undergo voluntary administration as a remedy for intractable "cashflow problems," only to find that he had sailed into a "perfect storm." What happened to George Clair is analogous to a healthy person going into the hospital for a hip replacement to restore his mobility and then having his organs harvested instead.
Talk of Mr. Clair being outbid should be seen in the light of two important facts.
First: the "pre-pack" process he was advised to enter into was presented to him as a procedural matter that was to have been wrapped up over a weekend, as was recently demonstrated in the case of Leeds United. If he had understood the vulnerability involved, he would never have considered it a viable option. He had other choices.
Second: once in a position of having to bid for his own company, Mr. Clair would have exceeded any bid, had he been given the opportunity to do so, because to do otherwise would effectively convert all his past efforts into a colossal waste – which is what happened.
There would have been NO jobs to save if it weren’t for the tireless efforts of George Clair over two years to take a company on the verge of extinction and not only turn it around, but to carry everyone forward with him. It was a miracle for the people of Laurence Scott that he came along and it is highly unlikely that anyone else would have had the imagination to envision and the determination to achieve what he did – certainly not in the magnanimous way he did it. The former owners weren’t willing to try. And the winning bidder didn’t step forward when they were in the market for a British motor company in 2004.
LSE is being bought by ATB’s UK subsidiary, Morley – the Leeds-based mining motors specialist which it acquired in 2004. Ironically that was the same year that FKI decided to close Laurence Scott. It would be interesting to know whether or not they had shown any interest in LSE when it was in trouble.
For George Clair to spend two years protecting other people’s jobs, only to lose his own, is a travesty. What did Mr. Clair get for two years of dogged efforts to revive a dying company and pay 200 salaries, week in and week out, just to have the proceeds of his success handed to a buyer that had no part in creating it?
And what could speak more eloquently of his regard for the workers at Laurence Scott than the immediate redundancy of almost half the workforce once the administrators were in place? What that demonstrated was that Mr. Clair had retained 79 people on the payroll that the company could have done without, whom he intended to include in the future success of Laurence Scott no matter what. And he was up to the task – although in the short-term it was part of the problem.
Incredibly, even after the administration was in place and the administrator told Mr. Clair that he was going to have to make possibly as many as another 80 workers redundant, George gave the administrator £50,000 to prevent that from happening.
His focus was on so much more than the bottom line. He saw the business as a family, as anyone who attended the Christmas party he gave the employees last December can attest. He felt a tremendous kinship with the spirit of [Laurence Scott’s founder] William Harding Scott, had reached out to his grandchildren and learned everything he could about the man, and was passionate about restoring his company. In the past few months he had enthusiastically dusted off the original LSE logo, which had been replaced with a modern, far less distinguished brand.
We would like to take this opportunity to clear up an apparent misconception about George Clair’s intentions regarding Laurence, Scott & Electromotors in the United States. The reason for considering building a factory in Louisiana was not to transfer any work from Norwich, but to find a way to penetrate the American market. Incredibly, establishing a presence in the largest national market in the world was something never attempted by Laurence Scott in its 123 years of existence. Mr. Clair intended to rectify that.
A facility in Louisiana would have been an adjunct to the Norwich plant, not a replacement for it. The plan was to assemble motors there from components machined in England. The emphasis was to be on developing the small motor division, which had been allowed to sink almost into oblivion under FKI.
Sales were so poor for LSE small motors that we were in the situation of manufacturing one-offs in a market where high volume is the only way to stay competitive. Mr. Clair hoped that by assembling and testing small motors in Louisiana while taking advantage of government development grants due to Hurricane Katrina and lower wage rates due to Louisiana being one of the poorest states in the US, he could salvage the small motors division instead of scrapping it altogether.
Far from taking away jobs from Norwich, jobs would have been added there as sales grew in the US because the machining would have continued to be done in England.
It was never our intention to take jobs out of Norwich for the simple reason that the level of craftsmanship there is superb. Under Mr. Clair the heavy motor division was to remain tied to Norwich, and always to Norwich. Anyone who says otherwise doesn’t know what they’re talking about.
Characteristically, Mr. Clair is putting the best possible face on the loss. He certainly takes pride in the company he saved and the regard of the people he worked with. He takes tremendous satisfaction in the jobs that were secured on his watch. But for those of us who have known him for years and admired him for his daring and his decency, the only conclusion that we can come to is that he paid dearly for those benefits and after spending two years with his sleeves rolled up he got a very raw deal. The very least that can be done now is to make sure that people know what actually happened.
Laurence Scott had a very bright future with George Clair at the helm and it is hard for us to reconcile events with the famous English sense of fair play. But Mr. Clair is not walking away from the motor business. He retains Laurence Scott & Electromotors, Inc. and has a wealth of goodwill he can count on going forward.
Mr. Clair has regained his balance after the body blow, in no small measure due to the outpouring of encouragement and support he has received from customers, suppliers, and former employees, who admired what he accomplished and the way he did it.
As one email said: "I’m very sorry at the way things turned out for you. Your intervention is the only reason that there was an LSE to sell at this time… it is a real tribute to you that there were at least three bidders, including yourself, to buy LSE as a going concern and everyone in Norwich owes you a lot."
Director of US Marketing and Sales
Laurence Scott & Electromotors, Inc.
US Operations Administrator
Laurence, Scott and Electromotors, Inc.