Jobs safe for now as cable company is sold

Oct 23 2007 by Andrew Mernin, The Journal

MORE than 300 workers at a cable maker which has been bought by an Indian firm have been told their jobs are safe in the short-term but may not be so certain further down the line.

AEI Cables, which employs 314 people at its plant in Birtley, Gateshead, has been sold for £13.3m to New Delhi-based cable maker Paramount Communications.

Paramount has retained the Birtley firm’s management team but has hinted at staff cutbacks in coming months as it aims to turn AEI into a profitable firm by the end of the next financial year.

Surrey-based plc TT Electronics has sold the loss-making firm at a discount to reduce its borrowings and the deal follows the closure of its power cable division in 2005.

Paramount chairman and chief executive Sanjay Aggarwal said: “We have no plans of cutting jobs currently but we will review this at regular intervals and if there is any overstaffing, we will have to work out something.”

AEI was sold at around £13m less than the actual value of its assets which are estimated to be worth around £26.5m.

The company has been in operation at its site off Durham Road, Birtley, since 1950 and serves a number of industries including construction, defence, mining, oil and gas, power and rail.

In a statement made to the stock market, TT Electronics said: “The disposal of AEI Cables is an important step towards increased concentration on our electronic activities and follows the closure of the power cables division in 2005.

“This is in line with our strategy of rationalising our non-core activities. Our electrical division now comprises profitable businesses manufacturing non-commodity, high margin products.”

Regional development agency One NorthEast said they had met Paramount representatives in India to learn more about their investment plans for AEI.

A One NorthEast spokesperson said: “We understand the investment will be good news for AEI Cables, with many jobs safeguarded.

“Paramount is a successful Indian company with a business rationale of growing AEI Cables in the North-East and introducing some of the latest manufacturing techniques into the Birtley business.”

Paramount Communications is one of the largest cable manufacturers in India and is listed on the Bombay Stock Exchange. It serves rail, telecom, industrial and power industries and exports its products to more than 20 countries. The company’s acquisition of AEI is the latest example of firms from India flexing their financial muscle in the North-East on the back of the booming Indian economy. Last year pharmaceutical firm Pfizer sold its plant in Morpeth to Indian healthcare giant Nicholas Piramal India Limited.

Last October a bumper £3.5bn finance package was put together by India’s Tata Steel for steelmaker Corus, which employs around 3,000 people on Teesside.

TT Electronics, which closed a semiconductor plant in Blyth last year at the cost of 132 jobs, also owns Northumberland engineering group TT Welwyn Components – a Bedlington firm which makes aircraft parts.