Great Products Lousy Deliveries? - Future of STW

Great Products, Superb Quality, Lousy Deliveries

We’re pretty sure that a number of our Customers will agree with the above statement. Since starting the Company back in 2008 the Company has grown steadily each year by around 10%. We’re very proud of this achievement especially given the Countries general economic situation over this period. The nature of our business has also changed over the period from one which had a very limited product range to one that now has 14 designs encompassing over 5000 different parts. We estimate that if we had been able to meet our delivery commitments then our growth would have been in the region of 20% pa.

We’ve been quite aware of our delivery shortcomings for quite some time now. We’ve been working tirelessly to try to address the issues by investing in new machinery, staff and building additional stocks where we can afford to do this. The last one however, does tend to add to the lead time issues in the short term.

Another issue you should be aware of is that Steve is approaching retirement age and wants to start planning an exit strategy. For some strange reason, he wants time to play with his toys rather than enduring the stresses and strains associated with being a Director of a small Company.

We have therefore decided to put the Company up for sale and have engaged an agent to work on our behalf. We are both convinced that this is the only way forward to attract sufficient new investment into the Company. The alternative is to just carry on as we are and we feel that we’ll be missing out on a major opportunity to expand if we do this. We have a number of ideas about growing the business and a list of new products we could add to our range with suitable levels of investment and resource. It will be our intention to continue with the new owners for a number of years after the sale.

The reason for publishing this now is that we are both well aware of how quickly the rumours can get around our community and without information they can turn negative quite quickly. This announcement should be seen as being positive and beneficial because it is designed to enhance our Company by helping us make sure we can deliver on our commitments by improving on our deliveries.

Please feel free to ask any questions you think are appropriate. We are quite happy for you to ask questions on the forum or you can email us if you prefer.

No doubt many of you will be curious about the sale details. I have posted a link below for your information.

http://www.daltonsbusiness.com/engineering-companies-for-sale/unique-steam-engine-manufacturer-and-ret-daventry-northamptonshire-uk/379626

Regards

Dean and Steve

Hi Steve and Dean

I would just like to say. Good luck with the future and thank you both for getting me in to the wonderful world of steam engines and the fun and games associated with me playing. Sorry displaying my wonderful engine.

Without your products coming in to my life I would still be in a deep depressive state.

I salute you both.

Lynn Robinson
Customer and now friend.

I echo Lynn's sentiments completely!

It's been an amazing journey for all concerned & I'm delighted the huge risks Steve & Dean took when they started STW, have paid off!

Regards,
Tony

My first thought was panic as I have just started one of your kits! Should I be worried?
I am already behind on receiving kits and still have a number of years to go.
This is a bit of a bolt out of the blue.
I think there may be one or two worried people out there now concerning spares and help in the future.
I hope the factory remains in the UK as it make a good selling tool for your products and I did enjoy the tour you gave me.

Phil.

Hi Phil,

In answer to your points:

My first thought was panic as I have just started one of your kits! Should I be worried? Why should you be worried? The company has money in the bank and an order book of over £1 million. You can see from the advert what we turn over per year and the gross and net profit (yes we make a profit) we make so things are good. We still currently own STW and run it and if an buyer that doesn't suit everyone (Steve and I, staff and customers) doesn't come in absolutely nothing changes. This isn't about the short term future of the business but the 'entire life' of the business and growing the 'brand' worldwide and the range. Every owner(s) of a business has to have an exit strategy at some point. Today alone i have turned down two orders for two complete sets of kits for engines we currently do not have in stock. This is becoming a more regular occurrence. Why not look at the bigger picture and instead of turning orders away find a way to fulfill them while at the same time meeting delivery targets. This does that. Please also remember just because we have advertised it for sale does not mean we have a buyer or it will sell.

I am already behind on receiving kits and still have a number of years to go.This is a bit of a bolt out of the blue. What was the alternative? Keep it from everyone and then just announce it after it was sold. No this is not how we work. The majority of our customers are our friends and not just customers. We don't just make the parts, we share highs and lows and meet for a beer etc at shows so we felt it was important to let everyone know as we have nothing to hide. We knew there would be a risk in letting people know and some people might panic or not order but that's the chance we are happy to take for being honest and letting everyone know our intentions. We hope this is seen as and proves to be a positive NOT a negative and we do both intend to stay on.

I think there may be one or two worried people out there now concerning spares and help in the future. As the advert shows we have around 1/2 million pounds worth of stock. Of course people might initially be worried but with that sort of stock level there is absolutely no reason to be. The support and help received won't change.

I hope the factory remains in the UK as it make a good selling tool for your products and I did enjoy the tour you gave me. Thank you. We enjoy giving customers tours and are very proud indeed of what we have achieved. We own the factory and of course would ideally want the base to stay in Daventry plus the staff we have are important to us.

Thank you for you quick answer.
As you must under stand this is a big investment in one of your products so don't be surprised if question are asked - you did say to do so.
No, you should not keep it to yourself as you said the rumour mill would go into full swing, so that the right thing to do.
I hope everything works out well for you and your company because you have a great product and it would be nice to carry on build after this build has finished. So future business can not be ruled out.
So don't take offence with my questions because none was intended.
I did enjoy talking to you down at Dorset this year very helpful and of cause I look forward talking to you in the future.
Phil.

Hi Phil,

No problems with any questions, please feel free and will do my best to answer them as best as i can.

All the best

Dean

Thanks Dean.
I do wish you all at STW the best for the future, as EVERYBODY says - you make great kits and award winning engines and I looking forward to the day I steam mine. Long may you continue to make them.
All the best.

Phil.

Okay so you say the company will stay in production and all us customers will get the remainder of our kits sent out even when the company sells, But god forbid a Modelworks situation arises and STW shuts down completely what are us hundreds of builders supposed to do then, are all us current builders both new and old going to get all our kits built to high standards and not rushed, or what.

Russ

Hi Russ,

I can understand customers being worried but to compare us to Modelworks over seven years later I feel is derogatory to everything we have achieved and how far we have come. We own the business, we aren't answerable to a chairman etc and everything we do is for the benefit of the company. (I was paid more while working for Modelworks than I've ever drawn from STW). There is NO COMPARISON and absolutely NOTHING to be concerned about. We have grown the stock and range five fold and while doing this make an increased profit year on year. Why wouldn't the company therefore stay in production? We still own it, if we sell then we intend to stay on full time for at least three years and work with any new owner where ever needed. Any sale could take months or even years to go through and even then if we don't feel it's right we won't sell. End of.

We have advertised the company for sale not because we are in trouble, lack sales, have no cash or assets (like Modelworks) but because we feel we have taken it as far as we can with the limited budget that two guys who just worked for the previous company are able to raise.....we feel to get deliveries back on target while also investing in new ideas and new models and growing the company internationally will take a bigger player than Steve and I with a better knowledge in sourcing and manufacture while also employing more staff. Although the quality and products we produce really are second to none at a recent show we were targeted with abuse about our late deliveries to the point we went away and asked ourselves are we the right people to turn this around when actually we put quality over deliver any day? Additional to this neither of us are getting any younger, I've done this job for eighteen years and as stated Steve is 60 next month and at some point it was inevitable we considered some sort of exit strategy.

Why would the MW's situation arise again. Some one would be buying a successful company that are profitable, have 1/2 million pound of stock, 150k minimum of assets and a superb product range. To us this is securing the company future not the opposite and most importantly WE AREN'T JUMPING SHIP. I very much doubt any one is going to invest as much as the asking price and then not invest further in growth and the expanding the brand/range we've developed to make it more profitable.

All the best

Dean

The demise of MW and STW just wanting to sell their company cannot be compared, the two are completely different situations as I see it.

If I had the money I'd put an offer in now, hopefully someone will come along to give the pair of you a long and enjoyable retirement   and to take STW to the next level, which as I see it at every rally, even with my elderly MW agri will only grow and grow.
There are so many folks these days who, like myself, have no chance of building/owning an engine due to space, engineering skills or machinery but with STW you can.

I think its a sensible thing to do, the other option would be to stop taking orders and wind it all up at retirement, but that wouldnt work financially nor would it be good for customers, this is a long term plan which is a very sensible thing to do, and I'm no expert in this kind of stuff, but can see exactly why Steve and Dean need to start now. A lot of problems come from people not starting to make plans early enough and then suddenly turning round and bleating. I personally had to do similar but on a different subject, I know many people who didnt and then bleated when their world fell apart.

I have no quarms about spares even for my elderly MW, and if I wanted to do a new build this news wouldnt concern me, sadly it may put some folks from making a purchase, who dont understand about future planning but it really shouldnt make any difference.

Steve and Dean,

I think you have made a good, well thought out option for your baby STW.
You can only expand and grow so far without turning to external investment to boost areas of the business.
This mainly focuses on supply and delivery chain issues.
Something you may have considered without selling entirely but with Steve getting no younger selling is the best option going forward.

The business could really benefit with the right boss and ideas and capital to pump in.

I'm confident, so long as the new owner doesn't want to change the Balance of profit and quality that those already building or interested in starting should be worried at all.

best of luck.

Nick

Dean & Steve

I am a relative new comer to STW and I would like to thank you both for your honesty in coming forward with your future plans. That's something that is a bit rare these days and is certainly appreciated. Reading your answers to owners concerns has put my mind to rest and I can't think of anything to add. I'm in a similar position to Steve in that retirement is hopefully looming. That's one reason I am building the SCC now. It's so I can build it while I'm still earning just in time for my retirement. I'm sure you'll both be around for a while yet as these things do take time. Next year when it's time for the boiler I think I'll make a day of it and come and pick it up. Would be good to meet you all and have a tour of the works.

All the best guys and keep up the good work.

Jim

Hi just to say thanks for the update taken aback at first but understand its better coming from the horses mouth as far as future kit deliveries goes we have nothing to worry about as the lads care to much about there customers and business so good look lads hope it all goes ok
alex

Dean,

I'll be picking up my boiler in the beginning of next year and look forward to seeing you again.

A friend will be coming too as I want him to see what a great bunch you are, he has been waiting 5 years for a 3" Burrell to be built for him and he has still not got it. Me, I reckon I'll have by 4" in steam before he has his 3" in steam.

Plan ahead...... there is no harm in that, I'm doing the same at 56 hence building the engine now, and I'm thinking of a 6" Devonshire so what are the chances?

Keep up the good work.

Best wishes

Richard.

Good luck to you both, I've checked my piggy bank and came up well short of the asking price   .  This is a great investment opportunity for the right investor.

While I can understand some will have concerns. Several times in the past businesses have been bought and cash borrowed for investment.  All this has to be financed and things can go wrong (been there and seen it happen about 15 years ago).  However no one would want to buy the business and see it fail, loosing their cash so I am sure the future will be safe.  In addition after all the hard work I know both Steve and Dean wont want this either, and will make sure any investor / purchaser is right for the future of the business.

Investors are in the main much wiser having come through the hardest, longest recession in world history.  It is a real credit to all those in business, including Dean and Steve, who have seen controlled growth through the period and come through with year on year net profits. I obtain a copy of their published accounts every year and not once have I been concerned about the financial position of the business.  Yes ok kits are sometimes behind, as mine are slightly now, but then I have several kits in the spare room and if they were on time I would have less space in the spare room and more boxes.  They do catch up again, and to me I would rather have the quality we get than rushed parts and problems.  

I also have no concern for the future of the business.  I will shortly have finished my engine, currently I am in two minds weather to keep it or sell it on (yes I know what you are all thinking....what sell it after all that work).  For me the pleasure has been in the building of it, I am not sure it will extend to operating it once its finished, but time will tell.  

What I do know is that whichever I decide I will be looking at what else is in the STW stables for my next project.

I don't have a completed engine in the garage so I AM concerned, my own build is 7 months behind - 8 if no kit arrives next week.
Personally I would be closing the order books or placing customers on a waiting list possibly taking a reduced deposit, I would also reduce the range of engines / wagons to a realistic number. There is no point advertising for customers and expanding a range of products if the supply chain and stock control system cannot cope and fails to deliver the goods.

Dean/Steve

Any update on this topic, sorry I have not been in touch for a while but I did see this.

All the best

Brian

I dont see any change happening quickly, as they have said its a "long term" plan so unless a buyer suddenly trotts along, that remember they said they would vet and make sure they were right for the company, then I doubt theres no real news.
Its no different than selling a house, it may take a few years.