Ceramics Industry

Part of the debate – in Westminster Hall at 3:06 pm on 27 April 2004.

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Photo of Michael Fabricant Michael Fabricant Shadow Minister (Trade and Industry) (Trade and Economic Affairs) 3:06, 27 April 2004

I am delighted that the debate has taken place today, and I particularly want to congratulate my hon. Friend—I use that term advisedly—Ms Walley on securing it, and Paul Farrelly on the valuable work he has done. I rise to speak not only as a shadow trade and industry spokesman but as a Staffordshire Member of Parliament. Hon. Members have already pointed out that there are structural problems in the ceramics industry as a whole. I would like to pay brief tribute to the work of the Ceramic Industry Forum operating in the European Parliament, which is chaired jointly by Malcolm Harbour and Michael Cashman.

There are problems in the ceramics industry generally, but the problems at Royal Doulton have been exacerbated by the crass incompetence of the recent management. The hon. Lady has already pointed out the history of Royal Doulton, so it is clear that the demise of the company is not just the demise of a single factory or firm. A short time ago, it was the leading English group of fine china companies. The English fine china business has always been cyclical, but it has been a proud and successful exporter of fine English products.

In the early 1980s, as we heard, Pearson found that the business was not performing to its expectations. Its response was not to close down the company but to bring in a new chief executive to give the business inspired and creative leadership. It engaged Stuart Lyons, who had a background in menswear manufacturing, and had previously been managing director of the UDS retail group.

In those days, Stuart Lyons, with the support of the Pearson chairman, Viscount Blakenham, introduced new manufacturing technology to the tableware, figurine and glass-making operations, and combined that with innovative design and marketing programmes. In addition to the existing markets of Canada, the USA and Australia, he opened distribution subsidiaries in Hong Kong and Tokyo, and the company's products were sold in 80 countries around the globe. Royal Doulton became the world's leading specialist fine china retailer, with more than 400 branches, including the Lawleys shops in England and a successful chain in America.

However, 10 years ago, when the Pearson group decided to concentrate on its media activities, Lord Blakenham invited Stuart Lyons, who had by then been awarded a CBE for services to the china industry, to make the business public and gain a separate listing on the London stock exchange. Royal Doulton plc was listed in December 1993, and in the three years that followed the company doubled its earnings per share and delivered dividend increases of 13 per cent. annually. It was a success. Annual turnover was more than £250 million, with profits rising to £17.6 million. On the strength of that achievement, further expansion was planned. It was apparent that the brand names of Royal Doulton, Royal Albert, Royal Crown Derby and Minton, all part of the Royal Doulton group, were more powerful in the USA than the distribution that they commanded. America was then, as now, the world's richest market, and the company had already opened a chain of 50 stores there that were well managed and commercially profitable. Guaranteeing Royal Doulton's success, and safeguarding the work force in north Staffordshire, depended on further penetration of the US market, as well as on building up the United Kingdom market.

With the full support of his board, his independent chairman, the banks and the company's financial advisers, Lyons spent many months negotiating the agreed acquisition of a large and profitable retail group in the USA. That should have been a further step in Royal Doulton's expansion and a significant boost to the Stoke-on-Trent economy.