China weaves long-term deal in Humberside

By Mark Kleinman in Hong Kong, Sunday Telegraph

Last Updated: 11:48pm GMT 27/01/2007

When economists began predicting that China would emerge as a marauding corporate predator on the international stage, Grimsby, the fishing town on the Humberside coast, was probably not quite what they had in mind.

But China National Bluestar Corporation, an industrial conglomerate, owned by the Chinese government, has other ideas.

Following the sale of MG Rover 18 months ago, this deal is among the few British take-overs to date by one of China's thousands of state-owned enterprises.

The agreement, struck last month, has rescued the British company, once part of the mighty Courtaulds group, from its second period of administration in less than two years.

The buyout of Fibres Worldwide, now renamed Bluestar Fibres, underlines China's appetite for internationally pioneered technology and is fuelled by the country's unprecedented economic surge. China's gross domestic product grew by 10.7 per cent last year, the fastest annual rise in more than a decade.

The deal saves about 170 jobs, although the closure of the speciality fibres business has resulted in around 35 redundancies. The management team, including the chief executive, David Service, is to stay on under the new owners, who have pledged to boost manufacturing output at the company's Grimsby factory from current levels of around 10,000 tons a year.

Bluestar Fibres makes carbon-fibre precursor, which is, when turned into finished carbon fibre, used in products such as tennis racquets, skis and the brakes of Formula One cars. Its biggest growth potential, however, lies in its application in the fast-growing wind-turbines sector, and customers include SGL Carbon, the German group.

Although China consumes 25 per cent of the world's carbon fibre, the production of the precursor material is highly specialised. The Chinese are keen to replicate the technology on a much larger scale so that it can meet more of the demand at home in future.

Once the annual capacity of the Grimsby factory — 80,000 tons — is reached, an additional manufacturing plant would almost certainly be built in China, those close to the deal say.

Fibres Worldwide's route to its current ownership has been a complex one. In the mid 1990s, the textiles arms of Courtaulds and Akzo-Nobel, the Dutch industrial group, were merged to form a new company, Acordis, with operations across Europe. A majority stake was acquired by the UK private-equity house CVC Capital Partners in 1999. However, falling margins in the British textiles industry exacerbated by intense competition in Asia and the rising cost of raw materials prompted CVC to pull the plug on the lossmaking British arm of Acordis in May 2005.

The company was sold on to a group of investors, including Service, and backed by the Icelandic bank Landsbanki. China Bluestar, advised by KPMG Corporate Finance, is understood to have approached the new owners shortly afterwards.

Service said that he has been reassured about the apparent commitment of China Bluestar to the business. Last week it sent four employees from its Beijing headquarters on long-term secondment to Grimsby. "We offered to rent them a house, and they [China Bluestar] said: ' Don't rent, buy one. We are here for the long term.' We know that with investment this business can be profitable," said Service.

Record Deal for Bluestar Fibres

11/03/08 #Article/Humber

A Plant that has been plunged into administration twice in the last three years has bagged a record-breaking deal with a Grimsby firm.

In a multi-million pound handshake with town firm Jex Engineering, wonder material carbon fibre will be produced in Grimsby for the first time ever at Bluestar Fibres.

The commitment underlines the work that has gone into turning the former Courtaulds, Acordis and Fibres Worldwide plant round, after a troubled three years that saw the loss of more than 200 jobs.

For 30 years, the Moody Lane plant, in its various ownership, has produced the pre-cursor to carbon fibre, which is used to make items ranging from golf clubs and fishing rods to sports cars and aeroplanes.

Strong, yet lightweight, demand is high, especially with the wind farm boom.

Now the end material itself will be spun at the Grimsby base.

Dr David Service, chief executive of Bluestar Fibres, said: "Carbon fibre is a new market for us, we have not made it before. Most of the product will go to China to help meet demand there."

More than a dozen jobs will also be created when the line is operational, and Jex is also recruiting to meet the workload.

Dr Service said: "We've worked with Jex for some time. They're a local company with exceptional skills and they have been appointed to provide the engineering design for the new line as well as the procurement of the equipment, its construction and commissioning."

The process engineering firm, based in Adam Smith Street, is celebrating the award, having worked with the firm for several years.

Jex managing director Paul Wilson said: "This is great news for the company and for our staff. It's also good news for the local economy - seeing such a huge investment being awarded to a local company.

"It is a multi-million deal and the biggest ever won by this company."

Jex currently employs 190 people at Grimsby with a further 90 at its Manchester and Birmingham divisions. The total locally is expected to increase by at least 10 in the short term as Jex looks to appoint a number of additional technical staff.

The company has already begun the design phase and commissioning is scheduled for the end of this year.