The new owner of Waterford Wedgwood intends to use the celebrated but struggling ceramic and crystal tableware brands as a platform for acquisitions after cutting costs and transferring production of all but the most prestigious products overseas.
Michael Psaros, co-founder of KPS Capital Partners, told the Financial Times his strategy for turning round the lossmaking company was to cut costs by streamlining its back-office operations and to shift more production to low-cost countries.
"It is all based on costs and we are not assuming any revenue growth to achieve profitability," said Mr Psaros. He completed the purchase of the important assets of Waterford Wedgwood out of receivership last night. "We intend for Waterford Wedgwood to be an acquisition platform in this industry and we're prepared to invest very significant capital in helping to grow the hell out of the business," he said.
The deal transferred 3,800 staff and many Waterford Wedgwood assets out of receivership, such as its Barlaston, Staffordshire china factory and visitor centre, and its biggest brands, including Royal Doulton and a licence to make Vera Wang pottery.
New York-based KPS, which specialises in buying troubled companies, will invest €100m ($135.5m) in the company. It will be "virtually debt free", after leaving its €800m of debts and pension liabilities in receivership. The deal involved operations in 10 different countries, including the US, Japan, Australia and Singapore. KPS is not buying any assets in Ireland except for its stock of products.
Mr Psaros said 173 of the 480 staff in Ireland would continue to work at the company, but they would be employed by the receivers, not by the new company. A consortium of local Waterford-based businessmen is in talks with the Irish government to fund construction of a new crystal factory in the area.
Mr Psaros described the existing factory in Waterford as "a dinosaur manufacturing plant". Mr Psaros said the company was shifting its Waterford crystal production to Germany and Slovakia, and its Wedgwood and Royal Doulton china production to Indonesia. But he said "it didn't do it fast enough".
"We are going to accelerate transfer of activity from the UK to Indonesia," he said. "Labour [there] is 85 per cent cheaper than the UK. Real works of art and highest-end products will still be done in Barleston."
KPS is to appoint Pierre de Villemejane as chief executive of the new company. He worked with KPS when he ran Speedline Technologies, a semiconductor equipment maker that it sold for a 10-fold profit in 2006.