Shake-up in cables industry to cost 870 jobs

BICC and Delta yesterday announced a radical shake-up of their troubled cables operations which will lead to 870 job losses in the UK and a string of factory closures.

Sites in north London, Swansea, Derby and Wrexham will close as part of the huge restructuring operation which will see the two companies swap large parts of their cable businesses in an effort to stem plunging profits.

The deals leave BICC to concentrate on heavy duty cable for the power transmission industry, based at its factory in Wrexham.

Delta will be focused on cable for the construction industry at its existing plants in Llanelli and Derby.

The move has been prompted by the dramatic slump in the European cables market has been dogged by over capacity.

BICC has already been forced to announce mass redundancies in Italy and Germany as part of a wide scale rationalisation of the business. The company has axed more than 2,000 workers from its cable business over the last twelve months as part of a pounds 45m cost-cutting programme.

Alan Jones, chief executive of BICC, insisted that this would be the last major restructuring of the group's cables business for some time.

"When I arrived at BICC there was a lot of tidying up to do and this is the end of that tidying up program. This makes our cables business much stronger," he said.

Jon Scott-Maxwell, chief executive of Delta, said: "Delta is participating in the long overdue rationalisation of the European cables industry. I believe our cable business now has a long term future, whether that is with us or with somebody else." Delta is likely to look to sell the business as soon as possible as part of its strategy to concentrate on its electrical and manganese divisions.

In a complicated swap of assets BICC will pay Delta pounds 5m. It has also bought Delta's copper rod mill for pounds 17.8m at Enfield which will be closed down, with production shifted to Merseyside.

The reorganisation will cost BICC pounds 140m and Delta pounds 49m in asset write- downs and redundancy costs. BICC plans to close Delta's power cables business in Enfield, north London, Swansea and Derby after acquiring them as part of the deal.

Delta's shares jumped 18p to 265p and BICC's shares rose 0.5p to 140p. "This looks like a good deal for both sides in a dire market," said one industry analyst.

Investment column, page 24