The Belt And Braces of Finance

One and a half centuries are probably long enough for a business to establish its credentials. Compared with the average start-up company which is likely to disappear before its third birthday, any enterprise that can claim to have been in the same trade since 1867 is overdue for its long service award. The origins of Thomas Walker date back to an eponymous Victorian entrepreneur who launched his company in Birmingham to produce fasteners for the garment trade.

Four generations of the Walker family carried the business through into the 21st Century; still in Birmingham and still very much in the fasteners industry.
David Jackson, the CEO of Thomas Walker Global – TWG for short – brought the story right up to date. A Management Buyout (MBO) in 2009 found him moving from the Sales Director’s seat to the top spot in a business which had successfully diversified without ever losing sight of its heritage. “Garment fasteners are one of the two business streams today. The other is a line of products for the Identity sector, where we had become involved back in the 1990s when new outlets for our distinctive expertise were identified.”

Clothing fasteners and the kind of security badges worn extensively by staff and visitors to premises are surely strange bedfellows? There is logic, however, in that decision to diversity. Securing the overwhelming majority of identity badges to the wearer’s clothes is a snap-on clip – almost identical to the clips and adjusters on trouser braces: Thomas Walker had been supplying this ‘hardware’ since the 19th Century. Demand for personal identity solutions has burgeoned in an environment of greater corporate and public sector security, prompted by incidents such as 9/11. TWG has responded with a complete portfolio which includes card holders, retractable badge reels and lanyards, to complement the clipped badge cases.

Trouser production moves eastwards
With the centre of gravity of the garment industry shifting towards the Asian sub-continent and the Far East in the latter part of the last century, Thomas Walker moved production of trouser hooks and bars eastwards around 2000. The highly specialised equipment needed to mount the hooks and bars into the trousers – the Group’s Crown Jewels – continue to be produced in the UK and supplied to the companies purchasing the fasteners.

Through its office in Hong Kong, TWG manages distribution of about 70% of its fastener output to garment producers across Asia and westwards as far as Istanbul; typically India, Indonesia, Sri Lanka, Cambodia and Turkey. The Birmingham head office of the Group looks after the Identity sector and sales into clothing manufacturers in the remainder of the world.

Two sides of the Chinese coin
Manufacturing in the Far East has distinct advantages – the most obvious being proximity to key markets and benefits in the cost of production. But David Jackson identified the downside – the strain that production in that part of the world has on the funding of the Group’s business. “While our producers in China quite reasonably expect prompt payment, we have a period of at least a month while stock is being shipped back to Europe, a further period of stockholding before we can sell it on to customers, and then the credit period before payment is forthcoming.”

There was another consideration facing the TWG management. A consequence of the MBO was that the Group’s premises no longer matched its physical requirements: more appropriate facilities had to be found and the cost of the move financed.

Traditional banks were less than receptive to the notion of funding those finance gaps. Our Accountancy advisors, Crowe Clark Whitehill, understood our need for additional working capital both to meet our existing requirements and to expand into new markets. They recommended that we should contact Trade & Export Finance Ltd.

While it was soon apparent that Mark Runiewicz and his team had the technical skills and the contacts to help us, there were two other important factors. Apart from being based locally, in Birmingham, TAEFL is an SME that understands – and can be responsive to – the issues faced by businesses which also fall into that band. They operate within our culture and at our scale.”

Putting a solution in place
And the solution that was offered? TWG had pre-sold all of the goods that would be shipped from China when funds were available. TAEFL arranged for a specialist trade finance company to purchase the materials from China; paying the supplier directly. While retaining legal ownership of those items, the finance house released them to TWG. The end customers are invoiced on delivery by the finance company. When the products are exported, a bill of exchange is raised, payable on 60-day terms and discounted under a stock finance facility.

David Jackson again: “There is a huge demand for the kind of service provided by TAEFL. Few owners of SMEs would have the knowledge or experience to tap the resources they need. In Trade & Export Finance, we found an organisation which has the contacts and knows how to talk to them. It is like having an unofficial non-exec sitting alongside me.”