Steven Vass
Deputy Business Editor, Sunday Herald
THE managing director of Steel Engineering, one of Scotland’s leading hopes
for renewables manufacturing, has stepped down after the owners discovered
a “significant decline” in the company’s finances.
Peter Breslin, who had been in charge of the Renfrew-based company for
several years, resigned abruptly several weeks ago.
This came a number of weeks after former managing director David Maxwell,
who owns 51% of Steel Engineering, had discovered that the company’s
financial position was considerably weaker than he thought.
Though the details are still emerging, Maxwell confirmed that the
91-year-old fabrication company will post a loss in the current financial
year for the first time in a “good number of years”.
The company has had to negotiate extensions to due debts with both its
banker, Royal Bank of Scotland, and its landlord at the Westway industrial
park at Renfrew, where only last year it hosted First Minister Alex Salmond
to mark its expansion into nearly double its previous workspace.
Steel is also in negotiations with HM Revenue & Customs over a substantial
outstanding tax bill. Redundancies had been confined to around six staff
out of about 120, though fixed costs were not part of the problem.
Maxwell told the Sunday Herald that the past few weeks had been full of
“long days and sleepless nights” after discovering that the company was in
a “rapid financial downward spiral” during the summer.
He said the situation now looked to be improving, buoyed by winning
contracts worth “six figures” in the past several weeks, including
producing steel girders for a refurbishment of London Bridge in Southwark
and infrastructure for the Drax coal power station in Yorkshire, plus the
prospect of several larger contracts to be announced soon.
The news of the group’s difficulties will come as a surprise to the
renewables industry, where Steel has successfully positioned itself in
recent years as being among the best placed to benefit from contracts to
manufacture parts for offshore wind turbines and other marine devices.
Several years ago it pulled off a coup by being selected to make the steel
base for Samsung’s 7MW test turbine for the next generation of offshore
wind farms, which is currently being erected at Methil in Fife.
If the South Korean conglomerate achieves its aim to make it one of the
industry leaders, Steel could be in line to grow substantially from its
current turnover of around £10 million.
Steel has also made two prototype “sea snake” wave turbines for Edinburgh
developer Pelamis and supplied infrastructure for the Scottish
Power/Vattenfall East Anglia offshore wind farm including meteorological
masts, monopiles and platforms.
It announced several years ago that it received a £1.8m grant from the
Scottish authorities towards a £3m project to create a private mini-port at
Renfrew to increase capabilities.
Due to have been completed early last year, the project has been delayed
but is expected to be finished in the next few months.
Steel also made headlines for spending £250,000 to set up an in-house
skills training academy last year.
But like other Scottish fabricators which have seen the potential to grow
on the back of renewables, Steel has suffered from cooling sentiment
towards the renewables industry over the last couple of years in the UK and
elsewhere.
Causes have included the financial slowdown and the UK Government’s
protracted and uncertain reforms of the sector.
As a result, Steel intends to tilt its focus more towards the oil and gas
industry, where recent clients have included BP, Subsea 7 and the Hess
Corporation.
In the financial year ended May 31, 2012, the last year for which figures
are publicly available, it made a final profit of £4000 compared with a
profit of £293,000 the year before.
In 2012, the company had debts of £1.2m compared to £2.1m the year before.
The remaining 49% of Steel Engineering is owned by estate agency H Allan &
Son and its director, Hugh Allan.
Maxwell said: “In late July I realised that we were in a significant
financial decline and had to come out of retirement to attempt to stem that
decline.
“Mr Breslin resigned on September 10 and the situation has now steadied.
“With the grateful support of RBS and Scottish Enterprise, we will soon
return to a more healthy position.”
Breslin is an engineer by trade, although he is also the sole director of
Enhance Hair Solutions salon in central Glasgow and lists his occupation
on its company documents as “hairdresser”.
He did not return calls from the Sunday Herald in time for publication.
0 Comments