SME Business Focus: The Bank of England�s decision to cut base rates by 0.5% to a record low of 1.5% on Thursday was greeted with only muted applause.
The Bank of England's decision to cut base rates by 0.5% to a record low of 1.5% on Thursday was greeted with only muted applause.
This was partly because some people thought policymakers should have been bolder. However, others were underwhelmed chiefly because previous cuts in official rates have not been translated into an increase in the amount of credit being made available to firms on acceptable terms. For all that banks talk about supporting business through the challenging times that we face, one champion of small business told The Herald last week that relations between lenders and firms may have been damaged irreversibly. He said many SMEs do not even want to approach their banks for help because they are scared that being seen to need assistance could open a can of nasty worms.
In this week's SME Focus, the owner of a survivor from Scotland's manufacturing heyday that nearly foundered after one bank threatened to pull the rug shows that it is possible to bounce back from seeming oblivion.
Name: Ian Kerr.
Age: I'm 58.
What is your business called? Lochrin Bain (Wm Bain Fencing).
Where is it based? In Cumbernauld, North Lanarkshire.
What does it produce? What services does it offer? High security steel fencing and gates.
To whom does it sell? Fencing installers - end users of our products include major utility companies, Network Rail, local authorities and the Ministry of Defence.
What is its turnover? £3m.
How many employees?We have 22.
When was it formed? William Bain & Co began life in 1859 in the old Lochrin distillery in Edinburgh as Lochrin Iron Works producing iron fencing and gates for estates in Scotland. William Bain had always had an interest in iron. However, iron fencing was in its infancy in these days and it wasn't until people gradually began to realise that fencing had a double purpose - to keep animals in as well as to keep people out - that the business began to grow.
In 1888, the Lochrin Iron Works was lifted from Edinburgh and replanted near Coatbridge, where it remained until 2003 when we moved to Cumbernauld.
Why did you take the plunge? I worked for Lochrin Bain as general manager at a time when it was owned by a large engineering company. When the firm went into receivership in September 1990, I was offered the job as managing director. The controlling interest was owned by a chap in England.
I bought 25% of the company when I became MD and then invested a significant sum to buy out my partner's controlling interest eight years later, when he sought to move the company down south.
Unfortunately, after 15 years without an overdraft, in 2005 the business suffered a shortfall of £800,000 on turnover due to a rise in steel prices at the time and many customers just stopped buying fences.
With my bank threatening to shut down the business, I put my family home up as collateral and also put £50,000 of my pension fund into the business to keep it going because I had an unwavering belief in the product and in our people.
At the same time as our bank was threatening to pull the rug from under our feet, our product was going through a rigorous evaluation and testing process by various government departments from which I was convinced it would emerge with flying colours.
Having put in a lot of hard work and effort in contacting and courting various prospective customers, I knew that it was only a matter of time before the product became a commercial success.
Last year I was approached by an investment vehicle from down south which wanted to invest a significant sum of money in the growth of the business - and I knew then that my faith in the business has not been misplaced.
However, in the event, I decided not to pursue that route, having become concerned that I would have to give up the controlling interest in the company I had waited so long and worked so hard to get. Fortunately, we've not looked back since and posted a record turnover for our last financial year.
What were you doing before you took the plunge? I was quality control engineer at George Taylor Engineering in Chapelhall, North Lanarkshire.
What was your biggest break? Buying out my partner's controlling interest in the company 10 years ago.
What was your worst moment?Standing in Hartlepool in October 2005 dazed by the news that my bank was about to close down the business, having rejected my request that it give me one year to turn around the business. I'll never forget that moment. Having started my life with very little - I remember being eight years old with no money and nowhere to go - the possibility that, 50 years later, I could wind up losing my house was a frightening moment. In the event, the Bank of Scotland came to my rescue.
I firmly believe that, in business just as in life, you've got to take the good with the bad. If truth be told, I've faced more difficult issues in my private life than I've ever encountered in business.
What do you most enjoy about running the business? No two days are ever the same.
What do you least enjoy? Paperwork.
What is your biggest bugbear? A lack of initiative in the workplace.
What are your ambitions for the firm? Our attention is now turning to the US, where we have a patent pending for the Lochrin Bain Combi, which I hope to have manufactured there under licence. We are also in discussion with a Spanish company about the manufacture of a specialised fencing product which will be re-badged under the Lochrin Bain banner.
However, we are intent on securing a greater share of the Scottish market, particularly within the education sector.
What are your top priorities? To push the company, our products and my colleagues to be the best we can possibly be; for Lochrin Bain to be illustrious and the first name on everyone's lips in the world of high-quality fencing; health and a happy family - and to remain sane while trying to accomplish all of the above.
What single thing would most help? Our banking sector could be doing more to support small firms through the current challenging trading conditions by returning to a traditional business banking model which would help re-establish a mutual trust between business owners and their bankers.
What could the Westminster government and/or Scottish governments do that would most help? The forthcoming Commonwealth Games in Glasgow represents a tremendous opportunity to boost the local economy, and I think that both the Westminster and Scottish governments could help maximise the opportunity for economic benefits to be realised from such major projects by seeking to source suppliers and contractors from within the local economy.
What was the most valuable lesson you learned? Never take anything for granted.
How do you relax? At the gym.
