Jobs are set to go at Dundee textiles manufacturer Low & Bonar with the sale of its artificial grass yarns production business to the Mattex Group for £22.61 million (€27m).
About 80 people are employed at the firm’s Caldrum Works where carpet backing production also takes place.
Low & Bonar transferred most of its artificial grass yarns production to Abu Dhabi in 2014 to improve profitability. That move saw almost half of the company’s 140-strong Dundee workforce being made redundant.
Mattex has carpet, artificial turf and geotextiles operations in Dubai, Saudi Arabia and in the USA.
Low & Bonar has now commenced a consultation process with its workforce in Dundee who are affected by the transfer of the sports pitch yarns business to Mattex.
A spokeswoman for the company was unable to comment on how many of the 80 Dundee staff are involved in the consultation.
It is understood some Dundee are staff are involved in both artificial grass yarns and carpet backing production.
The spokeswoman added: “We have commenced an information and consultation process for all employees affected by the transfer of the business with unions and employee representatives. It would not be appropriate to speculate about the outcome of this process at this time.”
Only the artificial grass yarns production division has been sold to Mattex and carpet backing production is being retained by Low & Bonar in Dundee.
Mattex does not have any existing facility in the UK and has said it has no plans to maintain any UK facility.
Low & Bonar today announced the sale of its artificial grass yarns production business comprising the majority of its Sports & Leisure global business unit, for €27m.
The Mattex Group is a major global business-to-business polymer-based, synthetic materials group, focused on the production and supply of carpet backing solutions for the carpet industry and with a leading global position in the supply of grass yarn.
Low & Bonar said the disposal will comprise the sale of Bonar Emirates Technical Yarns, the group’s Abu-Dhabi-based grass yarns production facility, and the main production assets in both Europe and the United States.
“The Mattex Group will not acquire the group’s Dundee factory, which will remain with Low & Bonar and continue to provide the base for the group’s carpet yarn manufacturing business,” the firm stated.
Low & Bonar’s grass yarns business has undergone extensive restructuring in recent years and is now profitable.
The returns to the group from Sports & Leisure remain low compared with other business units and the firm said the potential for significant further improvement is limited in the near term.
Management want to achieve at least 10% operating margins in all its global business units and exit businesses unable to reach that threshold. The net proceeds of the sale will reduce the group’s net borrowings.
In the year to 30 November 2015, Sports & Leisure had revenues of £38.3m and operating profit of £1.2m (giving an operating margin of 3.1%). The grass yarns share of that revenue was approximately 88%.
Brett Simpson, group chief executive, commented: “We are determined to actively manage our portfolio of businesses and products to deliver and sustain high-quality earnings across the group. This disposal shows our commitment to this strategy.”