Billington shelves plans for £10m factory

STRUCTURAL steel manufacturer Billington Holdings has shelved plans for a multi-million pound redevelopment of its Yorkshire site.

The Barnsley-based company, which supplies steel to schools, supermarket stores and commercial office buildings, was planning to build a new £10m fully-automated factory to bring the operation in line with its plant in Bristol, which has received significant investment.

It wanted to buy a redundant piece of canal, which splits the site in two, from Barnsley Council. However, chief executive Steve Fareham told the Yorkshire Post the plans have been put on hold until economic conditions improve.

Hide Ad
Hide Ad

“A lot of our investment in capital equipment has been in Bristol so all our machines down there are state-of-the art,” he said. “In Barnsley, the machines are very serviceable and reliable but heading towards 20 years old. We had a grand masterplan to acquire what was the former canal from the local authority and create a new factory. With the fall-off of the industry...there was no point in pursuing that goal at this moment in time.”

He added: “We’d finally concluded what seemed like an eternity with the local authority to buy this redundant piece of canal and come to some understanding but by the time everything had come to fruition the world had collapsed on us. It’s all about timing.

“It’s there, it’s in our back pocket and we know what we would like to achieve. We’d like a fully-automated plant eventually.”

The company, which saw profits and sales slump in 2010, has been diversifying into niche areas including safety solutions and specialist steel manufacturing in order to combat the downturn.

Hide Ad
Hide Ad

There are now two sides to the business. The structural steel side includes the main Billington Structures division, as well as its specialist tubular steel division Tubecon and Marshall Stairs, which it bought via a pre-pack administration for £98,388 last month.

The safety solutions side of the business includes the Easi-Edge steel barrier rental company, which grew its stock by 20 per cent last year, and its Hoard-It site security hoardings business, which has achieved £1m turnover in its first year of trading.

Billington Structures, which makes up about 85 per cent of the total company, is experiencing its largest forward order book for five years helped by a supermarket chain, believed to be Sainsbury’s, and a football stadium.

Work taken on for this year, though, is on lower margins, which analysts say is due to higher steel prices, more competition and the group looking to raise salaries for the first time in three years.

Hide Ad
Hide Ad

As a result, Mr Fareham said Billington Holdings, which employs over 400 staff, is diversifying to reduce its dependence on the structural steel side.

The company is also launching a new joint venture to tap into London’s skyscraper market. Mr Fareham said it is at an “embryonic stage” of the tie-up with Dorset-based Bourne Steel, a similar sized rival, but added; “Together we can tackle some of the bigger jobs that traditionally we would have been excluded from.”

Mr Fareham believes the economy is at the bottom end of the cycle. “Sense and reason seems to be coming back into the market place. The number of suicide below-cost bids is diminishing. We’re seeing some green shoots of activity. Certainly the commercial office buildings are coming back in London,” he said.

However, the cost of raw materials, remains a problem. “Tata Steel, which is our main product and accounts for as much as 50 per cent of our total costs in a tender, has been very volatile and continues to be so...so consequently our forward visibility through Tata from a price point has been somewhat shortened,” he said.

Hide Ad
Hide Ad

In 2010, the group sold its Hollybank business, which provides roof supports for mining, and Dosco Overseas Engineering, which designs and makes roadheading and tunnelling machines for mining and civil engineering.

Although analysts are expecting Billington Holdings to make a loss this year after it posted a 26 per cent fall in revenues from £57.2m in 2009 to £42.3m in 2010 and reduced profits from £5.1m to £1.4m, the company remains optimistic about the future.

“Before we divested we had a mission statement to get up to £130m turnover,” said Mr Fareham.

“We’ve got a long way to go to get back to that, but that’s still the desire of the management and shareholders. Being realistic it would be nice to think we could get up to that in five years.”

Backing from the analysts

Hide Ad
Hide Ad

Analysts remain upbeat about the future of Billington Holdings despite forecasting a difficult year ahead.

In a note issued yesterday, Fairfax predicted a pre-tax loss for 2011. It said Billington did not pay a final dividend for 2010 because of cash flow concerns resulting from lower profit expectations, worsening payment terms and more expensive steel stock.

However, it said of the company: “Interesting for long term. Will survive the downturn since management is experienced and group has net cash of £5m.”

It added: “Group has four other divisions which have interesting growth prospects: Easi-Edge (edge protection systems to steel frame structures), Hoard-it (sustainable site hoarding system), Tubecon (complex and technical structures) and Marshall Steel Stairs (bought from administration).”