Snow is the icing on Salt Union's cake: Alison Eadie looks at how strict attention to costs is paying off at a company that until April was part of ICI

Click to follow
THEY call it the 'ead butt' scheme down the Winsford rock salt mine in Cheshire. 'Because if we don't meet it, we get an 'ead butt,' jokes Jimmie Walsh, a miner. At the mine's head office, William Cortazzi, managing director of Salt Union, refers to it more scientifically as 'ebdit', the earnings before depreciation and interest target that rules his working life.

'Ead butt or ebdit, all 200 employees of Salt Union know that their bonus scheme is linked to it and that meeting it means more pay.

Until April, Salt Union was a small part of ICI's chemicals and polymers division. A pounds 47.5m management buyout gave it independence and ended ICI's long involvement in salt.

The buyout encompassed the Winsford mine, Britain's only working salt mine, whose output ends up on the roads as de-icing salt; and the Weston Point plant on the banks of the Manchester Ship Canal, whose white salt is used in water softeners, chemicals and food processing. Some 25 per cent of its output is exported.

The leading equity investors were D George Harris and Associates, a US company founded by George Harris, former president of SCM Corporation and Foreign & Colonial Ventures. The link with Mr Harris makes Salt Union part of an international group of salt companies - his extractive minerals business empire acquired post-SCM, includes the North American Salt Company, the third largest producer in North America.

Being part of a large salt family gives Salt Union a warm feeling it lacked at ICI. There, it was more of a corporate orphan, lumped uncomfortably with hazardous chemicals.

The Weston Point plant, which dates from 1911, was suffering from serious neglect when Mr Cortazzi, a graduate recruit to ICI in 1982, took over as manager two years ago. 'There were 100 shutdowns in 1990, the equivalent of one every three days,' he explains.

Although there had been investment in a new bagging plant and silos in the 1980s, salt suffered from having 'no champion in the organisation'. Nor, as a low-tech, low-margin, bulk commodity item, was it a high priority in ICI's chemicals strategy.

Mr Cortazzi was given scope to put things right. A quality programme was launched, safety improved and stoppages reduced. But then came the Hanson threat. ICI took a long hard look at itself and decided to put the salt business up for sale.

Salt Union's managers and investors believe it is a fundamentally sound business. It is reasonably recession-proof and not particularly vulnerable to imports. The price is regulated by the Office of Fair Trading, which in 1986 investigated the dominance in the industry of British Salt, part of Staveley Industries, and ICI.

The largest variable is the weather. Snow produces a surge of demand for rock salt for the roads and a healthy boost for granular salt from the supermarkets, as householders sprinkle their front paths. Much of Mr Cortazzi's effort is directed towards eliminating the vulnerability of the business to the elements.

The method is to pay vigilant attention to costs, so that snow becomes a bonus leading to accelerated debt repayment, rather than a vital requirement.

Cost savings since the split from ICI have been considerable: Salt Union was immediately spared its proportion of central overheads for maintenance, training, engineering and all the other services it used. Supplies are costed on a commercial basis. The company still buys power, brine and explosives from ICI, but at strictly market rates. A new warehouse is presently being erected for white salt storage, bought for a fraction of the pounds 2.2m price ICI's project group costed it at.

Salt Union managers are learning to think like entrepreneurs. Four stainless steel silos lie on their sides on the Weston Point plant intended for salt storage use. They were bought at a knock- down price when a local brewery closed down. According to John Dernie, manufacturing manager, the speed at which the silos were bought would not have been possible under ICI.

While enjoying their new-found freedom, Salt Union managers are not ungrateful to their former employer. Mr Cortazzi stresses how helpful ICI was during the divestment in allowing Salt Union to wean itself gradually off ICI systems. ICI remains a major supplier and customer - its power station buys pure water back from Salt Union. The relationship is amicable.

But the change in culture is obvious. If his face-cutting machinery breaks down, Jimmie Walsh now rolls up his sleeves and helps the fitter to mend it. In the old days, he says: 'We would tell someone it was broken and then sit down and have a brew.'

The miners do different jobs underground, including maintaining their own vehicles, rather than being limited to one area of expertise. They also have input into deciding what new machinery should be bought. With Rowland Howe, mine production manager, they scour the second-hand market for bargains.

'They now tell me what they are doing,' Mr Howe quips. 'Because they know exactly what production targets they must meet, the miners take responsibility for tackling the day's work.

Productivity is up. The mine's workforce was cut by 22 to 70 and a four-day week introduced when Salt Union was started. Since output has remained the same, tonnes per man hour have nearly doubled in two years.

Changed working practices mean miners are working harder through the year and being paid more on a consistent basis.

After nine months of independence, Salt Union has built up its own finance, personnel, purchasing, product testing and marketing teams. It is extending its quality training to all employees - a statement of quality policy adorns the back of Salt Union business cards - and of course is concentrating hard on its ebdit. Now all it needs to put the icing on the cake is a white Christmas.

(Photograph omitted)