China move rejected as company stays in North

Oct 6 2008 by Peter McCusker, The Journal

ONE of the UK’s few remaining independent chemical companies has vetoed a move to China and opted to keep its manufacturing base in the North East.

Thomas Swan has been established in Consett for over 80 years and is now run by Harry Swan, the great grandson of its founder.

Mr Swan took over the role of managing director two years ago and his first task was to consider whether it should relocate some of its production to China – but he has now revealed the business will remain in Derwentside.

“We have made a commitment to keep manufacturing in the North East. This gives our customers, suppliers and workforce the stability to know we will continue to be based here.

“Most of the chemical companies have moved to China, but we will not,” he said.

The move has been warmly welcomed by 126 employees the company currently employs at its base in Crookhall, Consett.

Mr Swan explained the factors which had led to his change of heart. “Two years ago it was as cheap to have some products made in China and shipped back to Consett as it was for us to buy the raw materials,” he said.

“But there has been a sea change since then. Raw material costs have gone through the roof and labour costs have soared. There was also the fact that China shut up shop during the Olympics. Who knows if this could happen again for another reason?

“Many manufacturers are now working on a ‘China-plus-one’ basis – using China for some things but making sure you have a back-up in place.”

The China decision follows a tough couple of years for the company which has seen turnover slump from £28.5m in the year ending March 2006, to a projected turnover of £17.5m for the year end March 2009.

This has seen staff numbers fall at its Consett HQ from 154 to 126, but its American sales division is still going strong, bringing the total staff roster up to around 250.

The privately-owned company is cash-rich following the sale of a subsidiary for £12m a few years ago and recently invested £700,000 in a new centrifuge.

Swan’s has three main divisions: performance chemicals, which are a range of products it makes for industry; custom manufacturing, a side of the business it aims to grow from £3m a year to over £10m in the coming years, and advanced materials.

The advanced materials business is poised to grow after winning exclusive rights to a carbon nanotube product – which is 60 times stronger than steel.

Mr Swan said: “As a privately-owned company not answerable to shareholders our timescale is different to others. We place a lot of emphasis on research and development, but we are not under the pressure that others are under to drive the business forward year on year.

“We have had a tough couple of years but we have a strong business and a growth line going forward for the next 10 to 20 years.”