Mergers and Acquisitions – 70 Year Anniversary

Mergers and Acquisitions

By 1964 Hans Rappolt was wishing to retire from the business that he and Peter Simon had so successfully built up. Peter was reluctant for a variety of reasons to buy out his brother-in-law’s share of the business and was wondering what the best method would be to enable Hans to retire.

Chance then played a part in determining Ramon’s future. On a visit to London, Peter Simon was walking down Tottenham Court Road when he met Henry Rothenburg. Henry had been Peter’s sergeant during the Second World War. The two men had lunch when Henry revealed that he was now the managing director of a company called James North & Sons Ltd, based at Hyde in Cheshire, which had patented PVC gloves for domestic and industrial use and was selling them very profitably world-wide. When Peter told his friend about his own situation, Henry suggested that Ramon would be a good fit for James North. On 16 December 1964, James North & Sons acquired all Ramon Knitting’s shares.

North’s acquisition of Ramon secured the company’s financial future. Because of the close relationship between Henry Rothenburg and Peter Simon, North rarely interfered in the daily management of the company. Peter was given a contract as managing director and told to continue managing the business as if it were his own. This enabled Ramon to retain its own individuality and family atmosphere. There were Christmas parties and staff outings to places like Windsor and Skegness.

The significant difference under new ownership was that James North & Sons, as the parent company, took a dividend each year from Ramon which left very little profit carried forward within the business. For much of the time the impact of this was mitigated by the fact that whenever Peter Simon requested capital expenditure, he simply rang Henry Rothenburg who was able to approve or reject the request straightaway.

This was the case in 1968 when Peter saw a new warp-knitting machine for floor-cloths at a show in Basle. He placed an order immediately after ringing Henry to obtain his approval for expenditure worth £8,800 (worth around £125,000 today).

The arrangement came under pressure during the late 1960s and early 1970s as the scale of the capital spending requested increased. This occurred because output had reached capacity in the existing factory and major customers were becoming dissatisfied with stretching delivery times.

Ramon’s position as a subsidiary of James North & Sons Ltd came to an end in 1972. The year previously Henry Rothenburg had died suddenly. As the company’s only executive director, he had never found delegation easy and had never appointed a second-in-command. Although the board was strengthened by the appointment of Peter Simon, Henry Rothenburg’s early death left James North rudderless and prey to take-over bids. In 1972 James North, and Ramon with it, became part of Siebe Gorman, later known as Siebe plc.

Peter Simon remained managing director of Ramon until his retirement in 1981 and continued to run the company as he had always done. He kept his eye fixed on Ramon’s profits, of which Siebe approved, rejecting proposals from the parent company whenever they seemed likely to have a detrimental impact on them. For example, Ramon continued to buy yarn more cost effectively from its long-established spinners overseas rather than at a more expensive price from within the Siebe organisation.

By now the company made more than 20,000,000 cleaning cloths each year and employed 140 staff. The product list lengthened in response to customer demand, featuring various styles and sizes of cloths and dusters, oven gloves, wash leathers, face flannels, socket mops and jug mops. The firm began to use automated packaging equipment and, continuing its innovative approach, was one of the first to introduce roll packs in the late 1980s. Now widely copied, this proved an effective way of providing minimal packaging for a commodity product.

The company was able to sell as much as it could produce. In the early 1980s the resulting pressure on space led Ramon to take over about a third of the space available in the building that fronted Barkby Road and ran the length of Clipper Road which had easy access to the company’s existing factory. Over the next few years, as the tenants moved out, Ramon gained occupation of the entire premises.

The pressure on space continued to grow as the number of women carrying out overlocking work at individual sewing machines increased. Training costs were also increasing and at the same time Ramon was struggling to find the skilled labour needed for overlocking. (For some time the firm had been ferrying in staff by mini-bus from Melton Mowbray to Leicester.) The answer lay in automatic overlocking machines. The first machine came from Spuhl Anderson in the USA but it was not very reliable so Ramon turned instead to the superior Akab machines made in Sweden.

Siebe acknowledged the merits of Ramon’s case for substantial capital expenditure (each machine cost £180,000) and several Akabs were acquired in 1986, each one capable of overlocking over 200,000 cloths every week. The acquisition of these machines did not lead to any job losses among the 30 or so overlockers at the company. Some were transferred to run the Akabs while others were transferred to packing and other duties.

By the following year, Ramon’s annual output had reached 26,000,000 cloths which it was calculated would cover 700 football pitches, stretch 5,500 miles laid end to end, tower three-and-a-half times higher than Everest, weigh a thousand tonnes and reach the moon and back twenty times if the yarn was unravelled. In addition, the company was importing five million yellow dusters every year from Pakistan, a country which now accounts for 90 per cent of all the yellow dusters made in the world.

Ramon was even sending dish-cloths abroad to places as unlikely as Iceland and the West Indies but the UK remained the firm’s only significant market. Prospects in the European Union were limited since Europeans historically preferred sponges and non-woven cloths made of man-made fibres to dishcloths. Conversely, potential European competitors posed little threat to Ramon in the UK.

One of the most significant steps in Ramon’s history was to acquire Initial Janitorial Manufacturing in 1992. Based in Bradford as part of the Initial group, this firm had been making mops for several years, building up an excellent customer base. Initial was taken over by BET which decided to dispose of the janitorial business whereupon Ramon where asked if they would be interested in acquiring Initial Janitorial’s machinery, stock and customer base.

Ramon had sold factored mops in the past but not in any great volume. The company recognised that the market for janitorial supplies was growing with the increasing general awareness of the need for more stringent hygiene standards in hospitals, food production and other sensitive areas and with the advent of contract cleaning firms. For some time Ramon had been supplying colour-coded cloths and accessories to customers in these sectors, many of whom were already supplied by Initial Janitorial. The idea for manufacturing mops had been backed by Simon Baldock, Ramon’s sales manager since 1989. He and others appreciated that this would not only strengthen Ramon’s position in the market but also provide the company with a new opportunity for future growth.

Ramon’s parent, Siebe, gave its support for the move and the business was transferred from Bradford to Leicester and installed in a refurbished factory adjacent to the company’s Clipper Road works.

70-YEARS-anniversary

Coming soon… “The Introduction Of Colour Coding” dont miss it.

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