One of the Tata Steel Works blast furnaces seen at sunset in Port Talbot, South Wales, on May 31, 2013.Rebecca Naden/Reuters
Sir Terry Matthews made his fortune in the technology sector with a series of companies including Mitel Corporation, Corel Corporation and Newbridge Networks, which he sold for $7 billion (U.S.) in 2000. Now Sir Terry has returned to his roots in Wales to undertake what may be his biggest challenge yet – rebuilding Britain's largest steelworks.
Sir Terry has set up Excalibur Steel UK and is attracting investors to buy the ailing Tata Steelworks in Port Talbot, near Swansea. Tata put its UK operations up for sale in March, citing inefficiencies at the division, which includes three steel manufacturing facilities. Our Port Talbot factory is our largest, employing approximately 15,000 people directly and indirectly.
For any buyer, this challenge can be daunting. The integrated plant, which makes steel strip used in auto manufacturing, construction and home appliances, is aging and losing about $2 million a day. Energy costs are twice as high as in the rest of Europe, and steel prices have plummeted due to oversupply from China.
“I've never been one to avoid any kind of conflict,” Sir Terry said in an interview in his Ottawa office. He added that he deliberately chose the mythical name Excalibur because it was an “invincible sword.”
Sir Terry, 72, is confident he can turn the factory around, citing a restructuring plan that was rejected by Tata authorities because it would have required nearly $200 million in equipment upgrades.
“In my opinion, everything I've heard so far says the turnaround plan could work,” he said, adding that the business could be profitable within two years. Ta. “I think steel is an important and strategic item for the UK.”
The acquisition effort has received support from Welsh officials and the UK government, which has pledged financial support and a 25% stake. Local Tata management is also helping, with Sir Terry being assisted by his long-time business partner Roger Maggs. He is also a former Alcan executive and native of Wales, who ran the Canadian venture capital firm founded by Sir Terry in the 1990s.
Sir Terry is respected in his native South Wales. He came to Canada in his 1970s and has remained deeply involved in the region while building a career as a successful entrepreneur. He owns his five-star resort near Cardiff, chairs Swansea's local development committee and has invested in 10 technology start-ups. He is consistently hailed in the local press as Wales' first millionaire and was knighted in 2001.
John Warman, 71, who worked as a blast furnace maintenance worker at Port Talbot Works for 30 years and is now a town councilor, said: “He has made a huge contribution to this sector and is very knowledgeable about finance.'' “There is,” he said. “We fully support efforts to make Port Talbot a success,” he added. “I still feel there is a future there, and so do many others in Port Talbot.”
Mr Warman said the steelworks was the heart and soul of Port Talbot. Port Talbot has a population of 45,000 and has been the center of the British steel industry for hundreds of years, thanks to the area's abundance of metallurgical coal. “This part of Wales is a close-knit community,” he says. “Over the years, almost everyone has had someone who has worked in a factory, whether it be a father, grandfather, uncle or aunt.”
Port Talbot chief executive Stephen Phillips, who is working on Excalibur with Sir Terry, said closing the factory would destroy the economy. “We know the scale of the challenge, but we also know the potential impact it will have not just on Port Talbot, but on the wider South Wales economy,” he said.
Still, saving the factory will not be easy. Tata recently sold its British factory for just £1 ($1.45) to an investment firm that has promised to invest $700 million in exchange for wage cuts and changes to its pension system. And so far, no firm bid for Port Talbot has emerged.
“Frankly, I'll be the first to admit that it's not a completely coherent picture at this point,” Phillips said of the Excalibur project. “It's been less than a week since I left.”
Sir Terry is energized by the fight to keep the factory open. “People are fighting back as a team,” he stressed. “And I like it.”
