The Highland Line: how will Caithness cope with the demise of Icetech?

The business began life and won international acclaim as Norfrost and it is difficult to exaggerate what it meant to the self esteem of Caithness – a successful manufacturing business located pretty close to where the British mainland runs out and becomes sea.

Pat and Alex Grant were feted for turning a small electrical shop in Castleton into something that could hold its head high above the ebbing tide of Scottish industry.

The Grants, particularly Pat a former British Businesswoman of the Year, were understandably held up as the glowing example of Highland enterprise, to would be entrepreneurs.

She would turn up in her expensive sports car –a Porsche with personalised number plate if memory serves – as a valued guest at numerous events hosted by the likes of Highlands and Islands Enterprise. She showed what could be done with vision, nerve and a lot of effort.

The Grants anticipated a huge increase in the demand for household freezers, and were proved right.

Norfrost became Britain's biggest maker and distributor of chest freezers, with a turnover of £22m and a workforce of around 400. The accepted economic multiplier meant this was equivalent to 4,000 jobs in the central belt, which puts their success in some perspective.

Even today the jobs being lost at the firm can be compared to 700 jobs going in Bathgate or Bellshill, which gives some idea of the impact on Caithness.

But, as economist Tony Mackay has identified, there was always a potential weakness at the heart of their business strategy which sooner or later would throw a spanner in Norfrost’s works. Like so many problems in the Highlands and Islands, it was down to remoteness.

Any business which has to transport its component parts to the other end of the country, before assembling the final products which then have to make a long return journey to markets, is a business which must be more exposed to changing cost pressures.

As fuel and raw materials cost more in the early 21st century, margins contracted and eventually in 2005 Norfrost went into administration, sending shock waves through the north.

But the Norfrost dream wasn’t dead yet. It was bought out by John G Russell, the Lanarkshire logistics group and renamed Icetech.

The Russell group thought Norfrost could be made viable by using the Russell family-owned firm's trucks and the chartered trains to move the freezers south.

It seemed to be working. Icetech was still making losses in its early years, £1.7m in 2007/2008 and of £700,000 in 2008/2009, but the following year it returned to profit.

Despite running up trading losses of £700,000  in the year to March 2009 and £1.7m in the preceding year, it returned to profit. It was only £5,000 but Russell’ s strategy seemed to be working.

However, competition from cheap labour companies, India and China in particular, was growing all the time. Then the killer blow was delivered in November when Comet failed. Although Icetech also supplied Currys and Argos, Comet was reckoned to account for 50% of a sales. No business could survive such a loss. Comet’s demise left Icetech a gross bad debt of nearly £900,000.

This week Icetech threw in the towel and appointed David Hunter, head of the significant business recovery and insolvency department at chartered accountants Campbell Dallas, as provisional liquidator.

He said Comet going down had proved a double whammy. Not only did 50% of Icetech’s market disappear but there was a glut of discounted goods hitting the UK market as a result of the Comet fire sales.

Hunter tried his best to be upbeat: “Despite the directors’ best efforts a new investor was not found for the company. We will work to identify a possible buyer and safeguard the site and its assets. Whilst the company has ceased to operate the workforce is still local and all the productive capacity within the factory is retained and operational.”

The Icetech factory occupies part of a 55 acre site owned by its parent company Russell, and Hunter said  “My first priority is to secure the site. We will then work to identify a buyer of the business and its assets with the aim of retaining some business on site.”

It is not going to be easy. To make things worse Caithness is having to face the loss of hundreds of jobs over the next decade as Dounreay’s decommissioning nears it target date of 2025. It’s not clear to anyone how Caithness is going to replace these jobs.

Most people interested in the cause of land reform will be saddened by the decision of Highland historian Jim Hunter to stand down from the group set up to undertake a radical review of land reform. The Scottish Government has charged it with advising on what to do to make stronger communities and ensure their economic growth.
Professor Hunter said his decision was due to “personal reasons”.

His place as vice chair is taken by Ian Cooke who is Director of Development Trusts and Associations of Scotland (DTAS) and was already an adviser.

The group is chaired by Dr Alison Elliot who was formerly a lecturer in psychology, and is currently an Honorary Fellow at Edinburgh University’s New College. She is best known as the first woman to be appointed Moderator of the General Assembly of the Church of Scotland.

The other vice-chair is Dr Sarah Skerrat, Senior Researcher and Head of Rural Society Research at Scotland’s Rural University College (SRUC) who led a study into community ownership.

It found it was contributing to the repopulation of rural Scotland.

Sound people all, but it was Hunter’s appointment which to many gave the group credibility. It was widely held that he would never be party to toning down any report just to please ministers or civil servants. He would say what had to be said.

His credentials were obvious. He wrote the seminal history of crofting; helped set up the Scottish Crofters Union and was its first director; served as chairman of Highlands and Islands Enterprise; and was Professor of History at the University of the Highlands and Islands.

Last year the Carnegie UK Trust published his book on the community buyouts over the last 20 years -  “The Low Tide Of The Sea To The Highest Mountain Tops “.

It argued that the limited amount of public money supporting communities in the Highlands and Islands has been well spent, particularly compared with the outlay on major public infrastructure projects. It was helping to ease, and in some cases reverse the age-old Highland problem of chronic depopulation and created employment.

However, although a known supporter of Scottish independence, he has been an outspoken critic of the Scottish Government’s apparent lack of commitment to land reform which allowed all momentum to be lost during the SNP’s first term of office.

He had been perplexed that given the social and economic achievements of the historic community buyouts, there had been minimal engagement by the four men who have held the office of First Minister of Scotland since 1999. In the book he called on Alex Salmond to put that right.

Hunter said the right wing Tory Michael Forsyth, when Secretary of State, had taken the time to visit the Assynt crofters in 1995 and Labour’s Jack McConnell followed in his footsteps in 2002.

But there have been no subsequent such visits to places like Eigg, Knoydart, Gigha or South Uist – certainly no recent first ministerial equivalent of the trip Prime Minister David Cameron made in August 2011 to Cumbria’s Eden District where he saw at first hand something of the achievements of one of England’s community land trusts.

If Alex Salmond, the present First Minister, were to do as Michael Forsyth did, people at the community ownership front line would be given a chance to explain to the man in charge of Scotland’s Government just what is needed by way of policy initiatives if the community land sector is to grow further.

The Scottish Government appeared to be listening and last June announced a new three-year Scottish Land Fund with £6m to help communities to buy land.

Then the following month at a Scottish Cabinet meeting on Skye, Mr Salmond announced the setting up of the review group. He was talking Hunter’s language: "Land reform is an important part of Scotland’s story. From the Crofting Acts of the 1880s and 1890s to the more recent right-to-buy legislation and support for community land purchase, significant progress has been made.

"We cannot underestimate the crucial part land reform will play in contributing to the future success of Scotland for the next generation. By improving the relationship between our land and people, we can create stronger communities and deliver the economic growth and fairer society that the people of Scotland quite rightly expect.”

It is just a shame that Jim Hunter isn’t going to be around to put his stamp on the final report.