Shiloh Plc’s recent history has not lived up to its biblical name, which means “a place of peace and tranquility”. A cotton spinning company since 1874, it sold off its last two mills to a management buy-out team in March 2000 in order to concentrate on its new identity as a focused healthcare group.
Despite picking up £6m worth of assets for £2m and a deferred consideration of £150,000 from its old owners, Shiloh Spinners Limited went into administration in October 2001 and production was shifted to Lithuania.
Edmund Gartside, Shiloh’s chairman, takes no pleasure in reflecting that the MBO team’s problems prove that he was right to sell out. “I felt very, very sad about the sale because my family has been in the cotton industry for 130 years.”
A cotton wool factory at the company’s base in Royton, is now the only link with the town’s traditional core industry although it still retains a workforce of 200 in the Borough at three sites. At its peak in 1913, Oldham had 337 mills and although 70 still survive as buildings, the vast majority are now used for other purposes.
Despite the disposals, Shiloh remains a fast growing business with a near £40 million turnover in 2001-02 (up 38 per cent on the previous year). The reason is its healthcare activities, which began as a diversification in the early 1970s when the company invested less than £10,000 in a company which made hospital wipes.
This grew to a turnover of more than £10m while spinning was on its steady decline. Incontinence pads, in which Shiloh is the UK market leader, and workwear were added to wipes and the group now has £70m worth of contracts with health trusts in England and Scotland. It is also developing an outsourced delivery service, driven by the company’s own IT platforms, under which Shiloh’s products and those of other companies are ordered by health service staff and delivered direct to patients’ homes.
In 1998 Shiloh invested in a new sterilisation and decontamination unit at Bellshill in Scotland which was a loss maker for two years but is now the group’s star performer. TSS Ltd, the operating subsidiary which runs the plant, achieved sales up more than fourfold to nearly £4m last year and made an operating profit of £444,000.
The group has signaled its intention to give priority to developing the TSS business. With the advent of new European standards for instrument sterilisation units, the Department of Health intends to spend £200 million on improving sterilization facilities. As Shiloh was the first private sector company to commission an ‘off site’ purpose built unit, it is in pole position to take advantage of these plans.
The big question facing Shiloh now is whether to diversify further within the healthcare sector. Its Liverpool-based mobility division, which supplies and services wheelchairs for private customers and hospitals saw further expansion during 2001-02 with the acquisition of three businesses at a cost of £3.33m.
The mobility business now has a national 17-centre network stretching from Edinburgh in the North to Hampshire in the South with branches in Cardiff and Essex. The division made an operating profit of £457,000 on sales of £6.1m last year, equivalent on an annual basis to an operating profit of £675,000 on sales of £9m.
Shiloh is investing heavily in its Home Delivery Service, which has won contracts with a number of NHS trusts. Despite growth in sales of 17% to bring annual sales up to £20.1 million, profits have fallen but the group expects that returns will increase on the back of developing relationships with customers.
“We are looking for 10-15 per cent growth per annum plus whatever comes from acquisitions,” says Mr Gartside. “There is not a great deal of synergy between our businesses even though our customers are mainly in the health service, but we hope that the Shiloh name has a reputation for service which helps us to win us new business.”
As part of its new product development program Shiloh Healthcare has invested in new equipment at Lion Mill to make specialized wound management products. The £300,000 investment marks the first phase of the group’s planned entry into a much wider portfolio of healthcare products based on innovative design and manufacture.
Healthcare represents a successful diversification of the Borough’s business base. The biggest employer in the sector is SSL International, formerly Seton Healthcare, which went from being the maker of the famous Tubigrip bandages – an Oldham invention – to a world leader in condoms and branded medicines.
A whirlwind series of acquisitions, culminating in the purchase of Durex condom maker London International, turned the group into an international player. But then an accounting scandal and a Serious Fraud Office inquiry cast a shadow from which it is now emerging.
The company has disposed of a number of product lines including incontinence care and over-the-counter pharmaceuticals and may sell other business units as well. But with Durex, Dr. Scholl’s foot care remedies, surgical gloves, and antiseptics for the health care environment still in the portfolio, SSL remains a major presence in more than 30 countries worldwide.
Management of some parts of the group have reverted back to Oldham where it employs 400 at two sites, Tubiton House (production of wound management products and R&D) and Greenwich House (finance and IT). The company insists that the Oldham sites “remain a significant part of our UK operations.”
| Date | Company | Activity | Acquisition Cost (£m) |
|---|---|---|---|
| Feb 74 | W M Supplies Oldham | Medical products manufacturer | start-up |
| Nov 86 | Beeline Disposables Sussex | Medical products manufacturer | 0.2 |
| Oct 90 | Macdonald & Taylor Oldham | Cotton wool manufacturer | 0.2 |
| Oct 90 | Fast-Aid Products Glasgow | Medical distributor | 0.5 |
| Nov 97 | Trust Sterile Services Bellshill | Sterilisation services | start-up |
| Mar 00 | Shiloh Spinners Bolton/Oldham | Cotton spinning | -2.2 |
| Nov 00 | ICR Mobility Liverpool | Mobility products and services | 1.6 |
| Apr 01 | Lakesway Mobility Cumbria | Mobility products and services | 0.6 |
| Jun 01 | Hunters Mobility Sunderland | Mobility products and services | 1.1 |
| Dec 01 | Xarica (incorporating Venus Healthcare) Oldham | Medical products | 0.2 |
| Mar 02 | Care & Mobility | Mobility products | 1.7 |