Editor Alun Thorne talks to the boss of one of the region’s most important manufacturers about surviving the recession and the search for future growth
William McGrath is something of a sports fan. As well as being a long time supporter of Birchfield Harriers, the chief executive of Aga Rangemaster is not adverse to using a little footballing parlance when describing how he has kept his company profitable during the downturn.
“Last year was right to play five at the back and not let any goals in,” said Mr McGrath. “But this year with the market easing it is important to be more enterprising going forward – it’s time to set Agbonlahor free.”
Mr McGrath was speaking after the Leamington-based firm, which has just celebrated its 300th anniversary, saw profits fall to less than £1 million for 2009 as the number of Aga cookers it sold fell by a fifth year on year.
But while profits may have fallen, Mr McGrath said the firm remained in rude health after undergoing a significant restructure and focusing on cash in the bank.
He said: “What we set out to do when we could see it was going to be a pretty difficult 2009 was to draw a line in the sand and remain profitable, which we have done.
“We wanted to shift the balance and strengthen our cash position. We set that target and the cash position has improved from £5.8m to £28m.”
The company has three major operations throughout the Midlands with its Aga plant at Coalbrookdale in Telford where it specialises in the famous cast iron cookers, its factory in Leamington where it produces the Rangemaster, Fulcrum and Mercury ranges and its plant in Nottingham where the company makes sinks.
As part of restructuring, the company has pulled all the back office staff for all three operations under one roof in Leamington, taking about £10million out of the cost base over the past two years.
These savings and the “private equityesque” controls that have been imparted on the business have allowed the business to continue to implement its long term growth plan.
“Because we have relatively strong cash strength we have been able to invest in product and we have a good phase of new product coming through,” said Mr McGrath.
“With Rangemaster particularly we have good new products coming out this spring and these will be important for us at a couple of the big trade shows that are coming up at the NEC.
“Last year was a difficult year but this year we are thinking forward. We bought the Mercury brand from Lincap which is more modern than the traditional Rangemaster – more minimalist with hi-fi style controls and the like but still retaining the look, feel and finish that we are famous for – the reality is that the customer base wants lots of different looks.”
While still an aspirational brand, Mr McGrath is adamant that the company remains competitive and must continue to be so in the difficult economic climate.
“It is good to have a commercial proposition that is something to aspire but we are also offering a smaller price point,” he said. In April our products will be going up by around five per cent but at early level a two-oven Aga in oil is £4,995. We think Aga offers fantastic brand values – they offer great cooking, a pretty punchy commercial offer.”
Part of the company’s long-term growth plan is to exploit the continental market and Mr McGrath said a devalued sterling is helping it have a strong first three months of the year.
He said: “An area that has got off to a flier this year has been exports to the near continent with France doing particularly strongly for us at he moment.
‘‘it is part of our long-term plan to be much stronger on the continent which is never going to easy as we are a UK manufacturer and our main competition is European but the exchange rate gives us an advantage but makes life difficult for European companies importing into the UK.”
And with a successful first quarter almost behind him, Mr McGrath can’t help but think of his beloved football again as he plots the months and years to come.
He said: “Last year it was a situation of passing the ball to feet and getting the basics right. Overall we are looking at 2010 to see more revenue growth than over the last 12 months. It is an important period running up to Easter but the number of leads we are receiving is appreciably better than this time last year.”