The demise last week of Waterford Wedgwood is a story of two once great companies that the public simply fell out of love with. What was once synonymous with classic luxury is now fighting for its survival as family board members scatter like shards from a broken fine bone china plate.
Early last week the company called in receivers and requested that its stock be suspended from trading as the board failed to pay back debts totalling €449 million. Since then, a total of eight board members have officially left their positions. Chief among them is leading shareholder and chairman Sir Anthony O'Reilly, his wife and Alan Wedgwood, great-great-great-great-grandson of the founder.
O'Reilly's brother-in-law, deputy chairman Peter Goulandris, and founding family member Lord Piers Wedgwood are understood to have retained their positions. However, with US private equity fund KPS Capital Partners having signed a letter of intent to buy the company, they cannot be feeling safe about their futures.
The group formed in 1986 when Irish crystal glassware producer Waterford Crystal merged with British pottery firm Wedgwood. Waterford dates back to 1783 but, after going bankrupt in 1851, didn't reform until 1947. Renowned for its exquisite glassware, it was a natural partner for Wedgwood, whose handcrafted pottery became a favourite of the English royal family.
Wedgwood can trace its roots back to 1759 and the family can even claim an indirect contribution to Charles Darwin's theory of evolution. Darwin married Emma Wedgwood, thereby gaining the financial security to pursue his scientific research.
The O'Reilly family came on the scene in 1990 when it bought a 30% stake. Although it helped turn the company around after years of losses the writing was on the wall. Consumers turned away from the very formal product range and, despite a flirtation with celebrity designers and moving production to Indonesia, the business simply failed to make a profit.
As the O'Reilly family exit the scene with a huge financial loss and consumers and commentators who refused to buy the products lament the company's fall from grace, there remains a salutary lesson for other family businesses. A grand history and tradition is no safeguard against global capitalism.
If your family business is prone to living off the memory of past successes then the Waterford Wedgwood story is a sobering reminder that people, taste and markets evolve – just as your own family does. This year is already shaping up to be one of the toughest in living memory, so ensuring you are focused on the present and the future should be a priority if you are to suceed the survival of the fittest.
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