Founder’s fears of move not on agenda

May 14 2008 by Peter McCusker, The Journal

THE founder of Hargreaves Services has spoken of his fears the fast growing company could be pressured into leaving the North East – though the company’s chief executive has made it clear this is not on his agenda.

Bob Young founded Hargreaves in 1994, selling it 10 years later to the management team headed by current chief executive Gordon Banham for around £20m.

Mr Banham has since turned it into one of the region’s fastest growing companies and Mr Young believes it will soon top the £1bn turnover mark – joining a group of regional giants like Arriva, Northern Rock and Sage.

Mr Young, who has remained Hargreaves’ honorary president since 2004, retires on Friday.

He said: “I am so proud of Hargreaves, its chief executive and the team. I have no doubt they will grow to be of even greater significance to County Durham.

“Their acquisition strategy can double the size of the company, but as they do that, the pressure will come on the directors to move south.

“When I sold the business, I sold it with a guarantee from the chief executive that as long as I was involved it would be based in County Durham.

“He will now come under pressure to relocate the headquarters. The company is based here but has virtually no work in County Durham.”

Hargreaves was floated on the AIM in 2005, is now valued at £500m and employs 2,600 people, with 300 of these at its County Durham headquarters in Esh Winning.

Mr Young, who is also the honorary president of Newcastle United Football Club, continued: “I believe the company is now targeting acquisitions of strategic significance, in the £100m to £200m category.

“Such an acquisition would be a transformational acquisition and while it is not inevitable, I believe it is desirable. The company has huge shareholder support.

“The company currently employs 300 people in County Durham and if we can persuade the directors to stay just imagine what kind of positive impact this could have on the county.”

Mr Young, who is no longer a shareholder at Hargreaves, started the business in 1994 when RJ Budge (now UK Coal) decided to shed its haulage business. By 2004 it was still mainly a haulier employing 600 people but since the management buy-in, it has diversified and is now a minerals and support services company.

Responding to Mr Young’s concerns about the future location of Hargreaves Services, Gordon Banham said: “Our company’s growth and diversification in recent years has seen us explore the need to establish a regional presence in other parts of the UK.

“This is simply a reflection of the way in which the group has developed and it is eminently sensible that we look closely at these options.

“However, our roots are here in the North East. We have an established base at Esh Winning – and a professional, hard-working and loyal workforce.

“No matter how we grow our business in the future, we will retain our headquarters in County Durham.”

On acquisitions, he added: “We are not currently in negotiations regarding any acquisition but we are a progressive company and it is our intention to develop by organic and acquisition growth.”