Stoddard International plc

Riverside Mill
Barbadoes Road
Kilmarnock, East Ayrshire KA1 1SX
United Kingdom
Telephone: ( + 44) 1563-578-000
Fax: ( + 44) 1563-578-011
Web site: http://www.stoddard.co.uk

Private Company
Incorporated: 1862; 1895 as A.F. Stoddard & Co.; 1998 as Stoddard International
Employees: 585
Sales: £32 million ($56 million) (2003)
NAIC: 314110 Carpet and Rug Mills; 313311 Broadwoven Fabric Finishing Mills; 313312 Textile and Fabric Finishing (except Broadwoven Fabric) Mills

Perhaps more than any other company, Stoddard International plc represents the glory as well as the devastation of the United Kingdom's textiles industry. The country's oldest, and once one of its largest carpet makers, the Elderslie, Scotland-based company entered 2005 with little hope of surviving as a going concern. Founded in 1862, Stoddard has become nearly synonymous with fine British carpets, producing both tufted and axminster carpets for some of the world's most prestigious floors: Stoddard provided the carpets for HRH Princess Elizabeth's wedding in 1947, and the company has produced carpets for the White House, the Scottish Parliament, and, more recently, for the set of the blockbuster movie Titanic. Yet after battling competition for more than 40 years from lower-priced imports, Stoddard has succumbed to the sustained consumer preference for bare and wooden floors at the turn of the 21st century. Despite restructuring its production base—closing two factories, including its former headquarters, and consolidating its manufacturing at a single location in Kilmarnock—Stoddard continued to suffer mounting debt and dwindling sales. By the beginning of 2005, with annual sales dropping to just £30 million (approximately $55 million), Stoddard's debt had climbed to £9 million, while losses reached £100,000 per day. Placed in receivership in February 2005, the company has entered negotiations with a prospective buyer, although Stoddard was not expected to continue operations as an autonomous company.

Founding the Scottish Carpet Industry in the 1860s

The glory years of the British carpet industry, and its textiles industry in general, began in the early 19th century as the United Kingdom took the lead in the industrial revolution. The invention of the steam engine, which was then linked to the newly invented mechanical looms, permitted the industrial production of carpets for the first time. Previously a luxury affordable only by royalty and the very wealthy, carpets gradually became available to the growing middle class as well.

The 1830s marked an era of accelerated innovation in the British carpet industry. In 1832, for example, a new method for printing and weaving yarn with incorporated designs was invented. That machine was known as the Tapestry Carpet Loom. Scotland, with its access to large quantities of wool, became an important center for the United Kingdom's carpet industry and boasted a number of prominent names in carpet weaving, such as Henry Widnell & Stewart, based in Edinburgh; Templetons, in Kilmarnock; and J&R Ronald, operating a tapestry factory in Elderslie.

Another important U.K. carpet maker, Chenille Axminster, was founded in 1837 by William Quigley and grew into one of the major manufacturers of axminster type carpet in the United Kingdom. Invented in the early 19th century, Axminster—named after the town, which was another major U.K. carpet-making center—automated the process for creating pattern designs during weaving. Quigley's addition to carpet-making technology came through his discovery that he one could steam and press the tufted chenille fabric to make a smooth surface.

A talent for innovation, in conjunction with a need to cut production costs, enabled Great Britain's carpet makers to dominate the industry by the middle of the century. British carpet makers also enjoyed ready and cheap access to raw materials, especially jute, cotton, and wool, which were brought in from the United Kingdom's rapidly expanding colonial empire. GreatBritain emerged as the world center for textile production, particularly in the sector of high-quality carpets. Within the United Kingdom itself, competition among carpet makers was often quite fierce, especially during the many downturns that marked the industry's history.

The reputation of Scottish-made carpets in particular received a boost in the early 1860s with the arrival of Alfred Stoddard. A retired commissions agent, Stoddard arrived in Scotland in 1862 and bought J&R Ronald in Elderslie, which by then had gone bankrupt. Stoddard relaunched the Elderslie plant and reoriented its focus. Using his American connections, Stoddard steered the company toward supplying the export market, especially the fast-growing market in the United States.

By 1875, Stoddard was exporting more than 75 percent of the carpets it made, for the most part to the United States. Joining Stoddard at the company was son-in-law Charles Renshaw, who later took over as head of the company. Under Renshaw, the company began supplying other export markets, especially Australia, New Zealand, and South Africa. In 1895, Renshaw incorporated the company as A.F. Stoddard & Sons, listing it on the London Stock Exchange.

Expansion in the 1960s

In the mid-20th century, Stoddard had gained a reputation as one of the United Kingdom's top producers of high-quality carpets. The company's reputation was cemented in 1947 when it was selected to provide the carpets for HRH Princess Elizabeth's marriage at Westminster Abbey. Stoddard's carpets also became featured in such prominent locations as the White House, Balmoral Hall, and Scottish Parliament.

The development of new carpet-making techniques, such as those that enabled the creation of tufted carpets and broadloom carpets, as well as continuing improvements in mass production techniques, had made carpets more affordable. In the United Kingdom, consumer tastes embraced the comfort of carpeting for the home, and Stoddard's domestic sales grew in consequence. By the end of the 1940s, domestic sales represented more than 40 percent of the group's total sales.

The 1950s, however, marked a challenging period for the company. By then, Stoddard's export focus had shifted to Australia, which became the group's largest market into the early 1950s. However, when Australia implemented new import restrictions in 1952, Stoddard found itself more or less cut off from its primary foreign market.

Into the late 1950s, Stoddard recognized the need to brace itself for the changes associated with Britain's joining the European Common Market. With the lowering of trade barriers among European nations, Britain's carpet industry faced a new round of intensified competition. Stoddard saw expansion as a means of countering the threat. In 1959, the company acquired rival Scottish carpet maker Henry Widnell & Stewart Ltd. The following year, the company built a new tufted mill in order to expand its capacity. That mill was operated as subsidiary Glenvale Carpets Ltd. Through the 1960s, the company acquired a number of other Scottish carpet markets. In 1966, Stoddard received the Royal Warrant.

Stoddard also took advantage of the Common Market to make a move onto the European continent. In 1961, the company formed Bergoss/Stoddard BV., a 50–50 joint venture with the Netherlands' Bergoss Gerbre van der Bergh Koninklijke Fabrieken. The joint venture launched construction of a new tufted mill, and production began in 1962. This continental presence encouraged Stoddard to begin exploring further expansion into the European market.

Struggles in the 1980s

By then, the British textile sector was already beginning its long decline. For more than 100 years, the textile industry had been the country's single largest employer. Even as late as the 1960s, the carpet manufacturing continued to employ more than 1.5 million people. Yet that number was to shrink dramatically over the next decades as cheaper textile products, including carpets, began to flood the United Kingdom from Asian countries and elsewhere.

Stoddard, given its focus on the high-end market, was able to resist the trend toward cheaper imports longer than many of its peers. Indeed, in the 1970s, the company appeared buoyant, instituting a policy of expanding its foreign sales, in part by creating new international subsidiaries in France, Germany, and Australia, among other countries. The difficulties in the textile sector forced the closure of a number of prominent carpet makers, including Chenille Axminister, which failed in 1968 before being bought by Stoddard.

Yet the sluggish economy of that decade, and new rounds of protective tariffs and subsidies in such countries as Australia and the United States, made it difficult for Stoddard to break out. By the beginning of the 1980s, the company had begun cutting back on its foreign operations, shutting down its subsidiaries in France and Germany and restructuring its U.S. operations.

Stoddard's difficulties imposing itself overseas led it to focus its efforts back home. In 1980, the company reached an agreement with Guthrie Corporation to merge their carpet manufacturing operations. The deal involved Stoddard's acquisition of Guthrie's Templeton and Kingmead Carpets subsidiaries in exchange for a 39.4 percent stake in Stoddard.

The newly enlarged company now took its place as the United Kingdom's number two carpet manufacturer, trailing only Carpets International. Yet the merger of the two companies tipped Stoddard into the red by 1981. In response, Stoddard underwent a restructuring, shutting down a spinning mill in Cumnock, a dye house in Glasgow, and consolidating production from the Templeton and Kingsmead sites into its main Elderslie facility.

Company Perspectives:

In the carpet world, the name Stoddard reigns supreme. With a history and experience stretching back over 160 years, we are now Scotland's oldest and largest carpet company.

Continued pressure on the U.K. carpet industry through the 1980s led Stoddard to attempt to diversify its operations in the late 1980s. In 1988, the company acquired Sekers, a textiles manufacturer specialized in the production of curtain fabrics and silks, paying £17 million. Following the acquisition, Stoddard changed its name to Stoddard Sekers International.

However, the Sekers deal quickly turned sour for Stoddard, in part because accounting discrepancies had overvalued the company. Hard hit by a rise in silk prices, the company decided to sell off the silk operation in 1989, which was spun off in a management buyout worth £8 million. Instead, the company attempted to shore up its carpeting operations, acquiring the U.K. operations of Belgian carpet producer Louis de Poortere for £950,000 in 1991.

Collapsing in the 2000s

The 1990s spelled the beginning of the end for the British textiles industry. The rapid globalization of production techniques, which saw the development of a new manufacturing model based on outsourcing to third-party producers in low-wage developing markets, made it all but impossible for British textiles manufacturers to compete. In Scotland, the loss of jobs was dramatic. By 1993, just 57,000 textile jobs remained.

The carpet industry faced a still more fundamental concern. The 1990s and early 2000s saw a massive consumer disaffection with carpeting in favor of bare and wooden flooring styles. The rise in popularity in do-it-yourself television programs, which often presented carpets as old fashioned, only made matters worse for the carpeting industry.

Stoddard now found itself doubly vulnerable. As it struggled to maintain carpet sales and profits, its Sekers textiles business slipped into losses. By 1998, with Sekers' losses mounting to £1.5 million, Stoddard decided to exit the fabrics business and refocus on its core carpets production. In that year, the company sold Sekers to Wemyss Fabrics for just £600,000. Stoddard then changed its name to Stoddard International.

The refocusing effort was accompanied by a change in management, with Alan Lawson named CEO in 1998. Lawson and his new management team then launched a restructuring effort, which included streamlining the company's lineup of brands and cutting down on its range of carpets. Lawson also attempted to convince the United Kingdom's 16 remaining carpet manufacturers to group together to create a unified marketing front, similar to that used to boost the Scottish whisky industry. That effort resulted in a controversial advertising campaign featuring model Helle Maested naked on a carpet. The campaign proved successful, however, briefly boosting carpet sales and enabling Stoddard to post a profit in 2001 for the first time in several years. The company also received a boost when it provided the carpets for the blockbuster film Titanic.

Nevertheless, the recovery proved short-lived. By 2002, Stoddard's sales were once again sagging. In that year, in an effort to pay down debt and streamline its production, the company announced its intention to shut down two of its production sites, including its Elderslie headquarters, and consolidate production solely at the Kilmarnock site. The sell off of its property was completed in 2003. However, the company, which had hoped to raise as much as £17 million from the sale, was finally forced to settle for just £7 million. With its debt at more than £12 million, the company's finances remained in crisis.

Stoddard losses, which doubled to £6 million at the end of its 2003 year, continued to mount throughout 2004. By the beginning of 2005, the company was reeling under a debt load of £9 million, while its losses were increasing by as much as £100,000 per day. Finally, in January 2005, the company was forced into receivership. The company's receivers, accounting firm Ernst & Young, announced that it intended to find a buyer for the company, and as late as the end of February remained in negotiations with a potential unnamed buyer. By the beginning of March, however, Stoddard's rescue appeared increasingly unlikely. At that point, the Scottish textile industry as a whole had nearly vanished. By 2005, fewer than 20,000 textile workers remained. Stoddard International, after nearly 150 years, remained a symbol of the once-great British textiles industry.

Principal Competitors

Coats Holdings Ltd.; Howrah Mills Company Ltd.; Allied Textile Companies Ltd.; Chapelthorpe plc; Gaskell plc; Sirdar plc; Victoria plc.

Key Dates:

1862:

Alfred Stoddard acquires a Scottish tapestry maker, J&R Ronald, and begins producing carpets at Elderslie, primarily for American market.

1895:

Son-in-law Charles Renshaw incorporates the company as A.F. Stoddard & Co. and lists it on the London Stock Exchange.

1947:

Stoddard provides the carpet for Princess Elizabeth's marriage at Westminster Abbey.

1959:

Stoddard acquires Henry Windnell & Stewart.

1966:

The company receives the Queen's Royal Warrant.

1970:

Chenille Axminster is acquired.

1980:

Stoddard acquires Templeton and Kingsmead Carpets from Guthrie Corporation.

1988:

Stoddard acquires fabrics and silks maker Sekers and changes its name to Stoddard Sekers International.

1989:

The silk operation of Sekers Silks is sold off in a management buyout.

1991:

Stoddard acquires the U.K. sales operations of Belgium's Louis de Poortere.

1998:

The company sells off Sekers and refocuses on carpets as Stoddard International.

2002:

Soddard announces plans to consolidate its manufacturing at its Kilmarnock plant.

2003:

The company sells off its Elderslie site.

2005:

Stoddard is placed in receivership.

Further Reading

Black, David, "Stoddard Future Threadbare," Scotsman, January 7, 2005, p. 45.

"Carpet Maker Stoddard International Waiting for Buyer to Muster Finances," Fibre & Fashion, February 18, 2005.

Dixon, Guy, "Carpet Maker Lays Down a Survival Plan," Scotland on Sunday, May 26, 2002, p. 2.

Dorsey, Kristy, "Stoddard Lays out Strategy for Recovery," Herald, August 29, 2003, p. 28.

Koster, Olinka, "End of an Era as Trendy Floors Pull Rug from under Royal Carpet Firm," Daily Mail, January 7, 2005, p. 29.

Laing, Allan, "Can a Fitting Future Be Found for Firm That Gave Us the Slab Boys?," Herald, January 7, 2005, p. 3.

McConnell, Ian, "Carpet Maker Stoddard's Losses Double," Herald, April 30, 2004, p. 31.

Paisley, Jonathan, "Mystery Buyer Bids for Carpet Makers," Evening Times, February 1, 2005.

Powell, Robert, "Stoddard Recovers against All the Odds," Herald, March 31, 2001, p. 19.

Simpson, Cameron, "Final Collapse for Famous Carpet Firm," Herald, February 22, 2005.

Smith, Mark, "Life-Saving Deal Imminent for Carpetmaker," Herald, February 1, 2005.

——, "Receiver Has Doubts About Sale of Stoddard as a Going Concern," Herald, January 7, 2005, p. 27.

West, Karl, "Troubled Carpet Manufacturer Teeters on the Brink of Collapse," Herald, December 24, 2004, p. 18.

Williamson, Mark, "Lifeline for Stoddard as Bank Rolls out Crisis Loan," Herald, January 14, 2005.

—M. L. Cohen