Turmoil hits textiles sector

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In August 2000, the Belgian textiles company LDP filed for bankruptcy, shortly after the DVW group, another important Belgian textiles firm, went under. The trade unions representing LDP's workforce obtained the support of bankruptcy trustees in occupying the premises. Meanwhile, in view of the textiles sector's excellent health, takeover candidates are queuing up.

The Belgian textiles sector was hit by turmoil in summer 2000. On 17 August, the Tournai commercial court received a bankruptcy petition filed on the previous day by Établissements Louis De Poortere (LDP), a textiles company with plants in Mouscron (Walloon region) and Kortrijk (Flanders), specialising in up-market products. At the same time, another textile group went under: DVW, established in Mouscron and Waregem (Flanders). The Belgian General Federation of Labour (Fédération Générale du Travail de Belgique/Algemeen Belgisch Vakverbond, FGTB/ABVV) and the Confederation of Christian Trade Unions (Confédération des Syndicats Chrétiens/Algemeen Christelijk Vakverbond, CSC/ACV) immediately called for workers to occupy LDP's plants in order to preserve the business, which could not withstand a protracted halt of production.

The LDP workers' representatives, partially backed up by the bankruptcy trustees, could barely conceal their anger at the controlling shareholder. With the ink hardly dry on the bankruptcy petition, the French-based Balsan group – which holds 57% of LDP's shares and is managed by Vincent De Poortere– was already lining up to take over LDP assets after the bankruptcy. Balsan is seen by many as being responsible for the bankruptcy, all the more so because it takes place at a time when the Belgian textiles sector is enjoying the best of health. On top of this, the majority shareholder is alleged to have allocated a BEF 240 million Walloon region subsidy for purposes other than those determined by the regional authorities.

In former times, LDP employed as many as 3,000 workers. On the eve of bankruptcy, it employed only 500. The workforce figure was widely reported as 750, but this refers to the headcount established for the last social elections of employee representatives in May 2000, which takes into account workers on long-term sick leave and some of the 383 workers affected by the most recent restructuring (ie working out their notice ahead of early retirement).

It is not known whether Balsan's attempt to take over the LDP assets is viewed with approval by either the trustees or the Walloon region (a minority stakeholder holding 27% of LDP shares via Sogepa). In the past, Balsan is seen by commentators as having made questionable strategic choices. In the mid-1990s the French group, under the guidance of another member of the De Poortere family, refocused its production on tuft – a bottom of the range textile product – undermining LDP's up-market image (luxury carpeting). At the same time, it failed to refurbish its manufacturing facilities despite the need to accelerate, increase and standardise production. The Balsan group would appear to be presently capable of raising the funds needed to buy up LDP's assets, although it was unable to buy back the company's receivables or inject fresh equity, and whereas Balsan's tufting unit in Châteauroux (France) was modernised and is much more profitable than its Belgian counterpart.

In any case, there is no shortage of takeover candidates. The first in line, as mentioned, is Vincent de Poortere's Balsan group, which may raise a question of business ethics. The second is Dry Tex Two, headed by Pascal Dryon– a former chief executive of LDP who was ousted by Mr de Poortere and is now controlling shareholder of velvet producer De Poortere Frères (DPF). The third and last candidate is Ghent-based textile group Domo, part of the Beaulieu textile multinational. The stakes are high: some 1,500 jobs, mostly in Flanders, are directly or indirectly concerned.