Whatever may happen between now and the end of the year, 2007 will go down as an annus horribilis at the UK’s largest private training company.First came the helicopter crash on May 2 that killed Phillip Carter, founder and driving force behind Carter %26 Carter Group plc, and his 17-year-old son, Andrew, as they were flying home from a football match.It was a terrible blow for the family and the business. The share price - then at %26pound;12.06 - started to sink. “There’s been great turmoil in Carter %26 Carter,” says its chairman, Rodney Westhead. “The death of Phillip Carter was a horrendous event.”Westhead has been running the conglomerate since then and will remain interim chief executive until a successor to the founder is appointed. “The company did go into shock for a short while but people are immensely resilient,” he says. “The strength of the team has come through after Phillip’s death. He would have been proud of the team he built.”Strength has been needed. First came the public admission that partnerships being planned with the further education sector, such as the first one the group had just struck with North Herts College, were not going to yield the immediate cash returns that Phillip Carter had predicted. And two weeks ago the group was obliged to issue a profits warning, triggering a further drop in the share price.Public purseAlready relying on the public purse for the bulk of its income, Carter %26 Carter was expected to make %26pound;3m from the government’s new Train to Gain (T2G) programme. But this scheme, which pays for people to be trained during working hours, had got off to a sluggish start and far from bringing home a profit, was going to cost the group between %26pound;3m and %26pound;4m.These events have rocked an enterprise that appeared to have experienced only success in the 15 years since its creator decided to leave a promising career in ICI and follow up a business idea of his own.The bumps, including the 75% drop in share price, have inevitably dented confidence, but the business remains robustly on course and focused, above all, on providing a high-quality service, says Westhead.He understands the concerns of the 2,500 employees, the customers and the shareholders. “It affects confidence in colleges,” he says, “and there’s a risk it’ll affect government confidence, but it has not impacted our day-to-day progression.”Further education uneaseSome college managements, however, are not unhappy about Carter %26 Carter’s current travails. Its hitherto relentless growth and acquisition of companies, and its huge appetite for public money at a time of “contestability”, when the government insists that the private sector should have an equal crack at funding once considered by colleges to be their preserve, has sent shivers around further education.The Carter %26 Carter phenomenon began because of an opportunity its founder had spotted while working in the paints division at ICI. “He took the view that the automotive sector could be better advised about the work it did, especially around crash repairs,” says Westhead. Carter set up as a “specialist outsource and support service provider” in 1992. In his work he was partnered by his wife, Judith. Hence the two Carters in the title.In 2003, with venture capital he bought Emtec, a big automotive training company. This boosted the group’s training business. Two years later, he bought the Automobile Association’s technical training services and then, in February 2005, floated his business on the Stock Exchange. It was worth %26pound;100m.That autumn he bought Assa, a training company specialising in food manufacturing and engineering. In 2006, he acquired Fern Group, which trained unemployed and disabled people for JobCentre Plus under the government’s New Deal programme, followed by Remit, the second largest apprentice training body in the motor industry.By April of this year, with its shares at their peak, Carter %26 Carter was worth %26pound;500m. It was training 35,000 people, including 13,000 apprentices, 11,000 of them in the automotive sector. The group had become an established trainer for health and social care, engineering, construction, travel and retailing.Shareholders were understandably delighted. And they liked the message that Phillip Carter gave out in the early part of this year that college partnerships, the first of which was with North Herts, would yield profits from day one.”My opinion differed,” says Westhead. “I’m an accountant. Only history will say who was right. We just don’t know yet.”On May 29 the group announced its first “outsourcing” partnership with a college had been signed and Westhead made it clear publicly he expected no profit would result in the first year.Under the partnership, which takes effect from September, the college and group join forces in construction and motor vehicle engineering. The college will remain responsible for the students and their wider educational development. The teaching staff will be employed by Carter %26 Carter.Westhead makes no bones about both partners’ wishes to build up the numbers of students and grow business. But that lies in the future, he stresses. “Our first job is to deliver a quality product from which the learners really benefit. If we do that well we will have more learners wanting to join us and more people to work with us.”The shock over T2G has proved as much a reality check to the government as to Carter %26 Carter and its shareholders. The fact that the government budgeted %26pound;230m for the scheme, but ended up shifting only %26pound;100m tells the story.The City predicted that T2G would help bump up the group’s profits to %26pound;23m in the current academic year.Disappointing take-upWesthead can’t say how many trainees the scheme was expected to yield, but it was certainly a great many more than the 500-600 who came in the first few months after launch last August. And, as other training companies and colleges found, a negligible number of these trainees were recruited by the government’s skills brokerage service.Next year, Westhead hopes that T2G will yield between %26pound;1m and %26pound;2m of profit.Its recent problems have not caused the group to question the extent of its reliance on the public purse, he says. Gordon Brown shows as much, if not more, willingness to invest in training.And is the group still wholeheartedly going after Train to Gain money? “Yes, absolutely. An area of business that will deliver %26pound;1.5m of profit in the coming year is an area of business that we would like to be involved in.”
Tags: egan, extent, family, job, money, pairs, rth
Copyright © 2008 Family News Home. All Rights Reserved.