Allied Glass invests millions in bid to conquer global markets

The Leeds-based business went through a secondary management buyout a year ago in a deal valuing the manufacturer at £75m.

Allied makes glass containers for the premium spirits industry and has customers including Diageo, Chivas and William Grant & Sons.

Alan Henderson, the 37-year-old managing director who led the buyout, sees diversification into Europe as “a key part of the growth” of the business, which is backed by the private equity arm of Barclays Bank.

In an interview with the Yorkshire Post, Mr Henderson said that Allied wants to win new work in France, Italy, Spain and Poland.

He said: “We are targeting key brands that we want to be associated with and know we can do a good job for.”

Allied has hired 30 people to staff a new facility in Leeds in a £600,000 investment to create a new operation decorating bottles.

The print operation went live two weeks ago and is now decorating bottles for Johnnie Walker. The company hopes the new facility will open up the Cognac market.

Mr Henderson said: “It allows us to grow brands and allow us better access into France.”

Allied plans to invest a further £2m in new machinery which will allow it to cater for growing demand in emerging markets for whisky.

This will go live in January. It is unlikely to create new jobs, but it will help secure those on site, said Mr Henderson.

Total capital expenditure this year will be around £3.5m. The company also expects to spend around £150,000 on staff training.

The company has recruited a French salesman to help with its ambitions and the sales director is spending more time in Europe, which is currently dominated by three main players, Verallia, Owen Illinois and Arda.

Staff are improving language skills across the accounts, sales and design teams and the company now has some Polish speakers.

“We are trying to make sure the business can interact with customers in their own language,” said Mr Henderson.

Allied has found success in recent times through so-called brand derivatives, where well-known spirits companies develop new products with a more exclusive feel, such as Johnnie Walker Black whisky.

The company has had a busy year since the MBO. Turnover increased by nine per cent to £85.5m and the workforce expanded by 30 to 660.

The company expects to see growth by 10 per cent this year. It counts itself as the market leader in premium spirits in the UK market, claiming one tenth of total market share.

“We are very busy,” said James Hart, the new finance director, who joined recently from Sheffield manufacturer Firth Rixson.

“The biggest pressures are cost pressures rather than customer pressures.

“Energy is a big cost. It’s a big part of our business.”

Energy costs have more than doubled on the open market since 2009, according to the company, which buys forward to try to give customers price stability.

Mr Hart said: “We have to manage that the best we can. It’s a market where it’s very difficult to see anything other than an increasing price every year.”

Alongside rising energy costs, the company faces a challenge common to many manufacturers – a shortage of skills in the labour market.

Mr Henderson said: “Engineers are still very thin on the ground. Finding a shopfloor person with the right skillset is very diffi- cult.”

The company has found success by taking on apprentices and equipping them with the skills needed for glass manufacturing. Allied is also sponsoring a new recruit through an engineering degree course.

Mr Henderson explained: “We see that as the best way forward. Grabbing people and spending time, money and effort training them ourselves so we can gear ourselves up for what’s happening in the future.”

He said the negative image of British manufacturing over the last couple of decades has made it harder to encourage young people into the sector.

“British manufacturing does have good careers to offer,” he insisted. “It does have good prospects.”

Mr Henderson described Allied Glass as “a good, solid UK manufacturer, growing in output and growing in UK jobs”.

He added: “We are directly exporting now, which is what the UK economy needs.

“As we grow, do we acquire? Do we move into Europe itself? Do we expand sites?

“The whole view of the business is about growth and becoming bigger and stronger.”

Surviving because they are good

Those manufacturers that have survived the recession did so for a reason.

“They are here because they are good,” said Alan Henderson, managing director of Allied Glass.

He urged domestic manufacturers to give themselves a wider exposure than just the UK and Western European markets and look to the fast-growing emerging economies.

Allied Glass is proud of its staff retention rates. Mr Henderson started with the business as a graduate trainee at 21, while Richard Summers, the operations director, joined 23 years ago. The executive chairman is Andrew Spencer, who led the 2002 MBO from parent Associated British Foods.