A Family Firm saved by embracing Employee Ownership.

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How Co-operative Development Scotland helped turn Scott & Fyfe into an employee-owned business


Owned by the Tough family, Scott & Fyfe have been designing and producing a vast range of technical textiles for almost 150 years.  However, the profitability of the company was severely undermined by the structural decline of two major markets and the 2008 recession. Led by a new chairman in 2009 and chief executive in 2010, the company consolidated its asset base and redefined an innovation-led business model in collaboration with the Glasgow School of Art.  However the family shareholders’ future role remained unresolved.


In summer 2011 the chairman, with previous experience of employee ownership, proposed that the family sell out to the employees. Concerned with the long-term sustainability of the company and its presence in Tayport, its local community, the family liked the concept.  Six months of internal discussion led to ready acceptance of the projected transition outline and valuation.  Co-operative Development Scotland (CDS) was then approached in January 2012; following a feasibility study CDS provided subsidised specialist advisers to help the board determine the final structure and details for the transition to employee ownership. In parallel the family took specialist professional advice which validated the decision and the format by August 2012.


In December 2012 the family sold to the newly-created Employee Benefit Trust (EBT). In January 2013 the two sons, executive directors with 74%, reinvested their proceeds net of tax in (long-term) redeemable preference shares (with minority protection rights) to fund the company going forward. Each employee received £500 of free shares. Further direct ownership is accessible through a Savings Investment Plan (SIP) with free matching shares geared to company performance), a 10% profit participation for all on a per head basis (half payable in shares) and a management incentive scheme related to both company performance and personal goals (again half payable in shares). Although the EBT will never own less than 50.1% of the equity, direct share ownership is a key characteristic of the Scott & Fyfe philosophy.


The proposed change in ownership was presented to unsuspecting employees in September 2012, supplemented by a detailed explanatory website ( and a ‘boarding card’, welcoming everyone as owners. The board also decided to reduce the disparity between defined benefit and defined contribution pension schemes over time and promoted the view that employee’s equity stakes represented a further pension pot. Detailed introductory workshops were here held. Employee elections determined one employee director, two employees as EBT trustees and the already established employee forum was extended with two additional members.  All employees vote at the AGM after a detailed presentation and Q & A session.


Whilst it is premature to make a final judgement, there have been significant changes in attitude, commitment and responsibility since this transformation. There is greater camaraderie across teams, significantly improved flexibility in allocations, working hours, cross-skilling and holidays and 70% participation in the SIP.  Briefings have given employees a deeper understanding of the business and they are beginning to think as business owners. Employee engagement is now firmly part of company’s DNA and a recent 2015-2018 strategy review embraced and enhanced that.


“For me, the most positive outcome of employee ownership is that our future is secured in a stable business structure that will allow us to prosper and grow.”

- Katrina MacKay, chair of the Employee Forum at Scott & Fyfe

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