Posted on Wednesday 22 June 2011 byUlster Business
Ulster Carpets has reiterated its commitment to the Craigavon area and work is under way on its new production facility. Symon Ross caught up with Managing Director Nick Coburn to hear how the manufacturer's products are being used from the US Midwest to the Middle East
Though he didn't set foot in Northern Ireland on his recent visit to the Republic, US President Barack Obama did walk on a little bit of Ulster.
That's because Portadown manufacturer Ulster Carpets provided a deep red carpet to a church he visited in Moneygall, Co Offaly, the home of one of the President's ancestors.
It wasn't the first time Mr Obama had walked on an Ulster carpet either, as the Washington DC Convention Centre and the Washington DC Hilton hotel, venues for events to celebrate his inauguration, were also carpeted by Ulster Carpets.
"We supply a lot of the carpets he walks on in the States in Washington and we were very happy to be involved," Ulster Carpets Managing Director Nick Coburn told Ulster Business.
"At a time when Ireland needs good news and tourism needs good news, anything that helps sell Ireland abroad is welcome. We also have a large operation in the US, so any good news that goes back and is listened to by Americans is good for us."
The company is of course a mainstay of the Craigavon business landscape, having been established in Portadown in the 1930s. While all of its main UK competitors have either moved to cheaper locations in Asia and Eastern Europe, or gone out of business, Ulster Carpets took the decision in 2008 to stay in Northern Ireland, investing in a new central production facility.
It has committed to investing £30m in the next five years and has completed phase one of the project, which relates to distribution. Coburn says market growth and results to date have vindicated the strategy.
"The more we progress with it the more we feel assured we made the right decision because it carries operational efficiencies. Certain operations added over the years were in the wrong place, so it is an ideal opportunity to start with a clean sheet," he said.
The company is proud to have provided stable employment for three generations of local people and says it aims to ensure its pay rates are at the higher end for the sector, with 10% of profits paid to employees.
"The company was set up here in 1938 at the tail end of the depression of the 1930s to provide employment to the Portadown area, and that idea still holds good. We're also into the third generation of families in the Craigavon area, across all sections of the community, who are working here. So there is that loyalty which works both ways," he explains.
But there are also hard edged commercial reasons behind Ulster Carpets' commitment to the area, learned the hard way following an ill-fated acquisition of a company in South Africa in the early 1990s which was made on the basis of accessing low cost labour.
"We pumped in about £20m to make it work but couldn't get it to work so we exited from that operation and brought everything back to Portadown. We realised Portadown had the best workforce, the best productivity and service to the market. Having gone through that learning experience it helped reaffirm our commitment," said Coburn.
Though it may pay slightly more in electricity and transport costs, the easy access to its main markets in Europe and US makes Northern Ireland the perfect location, he adds.
While it remains committed to manufacturing in Northern Ireland, Ulster Carpets realised even before the recession that it had to adapt to remain relevant in the global economy. Where ten years ago 70% of its business would have been retail business – for residential homes mainly in the UK – now 70% of its revenue comes from its contract business.
The most positive markets have been hotels, casinos and cruise ships and in the last six months it has completed a £1m contract at London's prestigious Savoy Hotel and announced £1.5m of deals from Saudi Arabia, including bespoke carpets for the King Abdullah Convention Centre in Jeddah.
"Retail, particularly in Ireland, has suffered and the UK is soft at the moment. But that is more than being offset by our international market strength. Our financial year ended in March and we would expect to see an increase in profits and growth in sales, primarily because of our export markets," explains Coburn.
"We focused very strongly when the recession hit on developing new markets, particularly in places like the Middle East, further into Eastern Europe and maintaining our strength in America, which is one of our strongest markets and is starting to recover very well this year," he added.
"We have carpet which is expensive to make so we are at the premium end of the market – five star hotels like the Ritz Carlton, Four Seasons, casinos and cruise ships, which is a strong segment of the market for us."
Within months of the financial market crash in 2008, Ulster Carpets took the bold move of establishing a full time office in Dubai from which to service the potentially huge Middle East market, including Abu Dhabi and Qatar. Coburn said the investment was necessary to allow it to get specified by designers and close deals with property owners in the region. While it hasn't been without its challenges the move is yielding results.
"We would hold our hands up and say that when we first went in there two and a half years ago we made mistakes, we didn't understand the culture particularly well. So what we've got now is a mixture of our own people and locally employed people who understand the working culture. The countries within the Middle East are all very different too. So there was a hard learning curve where we made mistakes, but at the same time, two and a half years on we are seeing very strong business that complements the work we are doing in the US and Europe," the MD said.
Held up as a local manufacturing success story, Ulster Carpets has in the past year had visits from an array of politicians, including Prime Minister David Cameron, Secretary of State Owen Paterson, Enterprise Minister Arlene Foster and Finance Minister Sammy Wilson.
Nick Coburn believes that, certainly at a local level, those politicians understand the importance of supporting manufacturing while other sectors are in the doldrums and are starting to turn that into action.
"We hope that government is listening. They are making the right noises about moving from dependence on the public sector and financial services to more of a manufacturing base. If that rings true, and if the Corporation Tax in Northern Ireland changes, that would be evidence the Government is listening. If we don't have the right environment in Northern Ireland we won't create the jobs, we won't invest as heavily," he said.
"I would have a bit more of a concern about manufacturing in the UK. We don't believe the British Government has fostered a good environment for manufacturing companies to innovate, to grow, to invest and create jobs and wealth. There is an unnecessary burden of regulation that is placed upon business."