Entrepreneur Claas Daun Builds Global Textile Empire
August 7, 2002
Business Maven Quietly Buys Struggling Companies and Makes Them Profitable
South Africa - Loved, feared, hated, admired - Claas Daun, the legendary global textile giant, has built his $1.2 billion turnover empire from scratch by buying companies on the verge of bankruptcy for a song and using his entrepreneurial genius to turn them around.
''I have always gone against the tide, looking for opportunities where others have given up hope,'' said the silver-haired, self-styled ''white knight.'' Daun, a business maverick who grew up on a farm near Brenen in northern Germany, started his career in 1979 when he bought Richter Spinning, a struggling textile factory. By appointing the right management, boosting staff morale and injecting the necessary resources, he revitalized production and made a substantial profit in the process.
In South Africa alone, Daun''s $100 million investment generates a turnover of $380 million a year. The latest addition to his web of interests in the country is Glodina, a JSE Securities Exchange listed company based in KwaZulu-Natal, which he and his South African corporate head, Paul Schouten, snapped up at seven South African cents a share in October last year. The purchase increased their holdings in the company from 12 percent to 61.3 percent.
Other KwaZulu-Natal investments include Gelvenor, a high-tech industrial textile manufacturer that Daun bought when the Anglovaal Textiles (Avtex) group was unbundling its non-core businesses in 1998; Hoescht, a high-tech producer of polyester-based products; and Feltex, an industrial group focusing on automotive foam moldings.
Western Cape-based investments include Table Bay Spinners, Boland Fine Spinners and Wellington Industries, which were amalgamated and rationalized from a R12 million loss in 2000 to a R9 million profit last year.
Court Fabrics, a niche upholstery and woven fabrics manufacturer in Paarl, the home of many of South Africa''s estate wines, has become highly profitable since its recapitalization and now operates around the clock, exporting 25 percent of its production. Home Fabrics, Fabric Library and SA Fine Worsted in the Western Cape, and Da Gama Textiles in the Eastern Cape, have reported similar successes.
''Each company operates independently, mostly under the umbrella of Courthiel Holdings, a subsidiary of German-based Daun & Cie AG, and is expected to be profitable in a stand-alone capacity,'' Daun said. Daun also has interests in Portugal, Canada, the U.S. and China, where he is currently negotiating a joint venture with a company that he aims to develop into the country''s leading spinning, weaving and finishing operation within five years.
''Discussions have been long and difficult, but it looks as though an announcement could be made by October,'' he said. His penchant for investing in countries where perception is worse than reality has also spread the tentacles of his empire into the Czech Republic and Uzbekistan. The textile king has enough faith to give a relatively free hand to the managers he appoints, but said retaining a positive outlook is essential.
''When management starts talking about the weak economy and tough trading conditions, I know it''s time for a motivational boost or new appointment,'' he said.
Undeterred by sanctions and political instability, Daun made his first investment in South Africa in 1987 when he bought Courthiel Holdings. A no-frills businessman, he drives a hired Citi Golf and is easily mistaken for one of his companies'' middle managers. On a recent visit to SA Fine Worsteds, the down-to-earth multi-millionaire was taken for a new employee.
The man who has sequestered himself from the media for so long after being misquoted in the European press has opened up recently to South African journalists. However, he prefers to steer clear of talking about himself and focuses instead on the need to think positively and have the courage to step in where others might fear to tread.
''In South Africa, people talk about crime, the exchange rate, AIDs and corruption, but I prefer to focus on potential,'' said Daun, who has made Cape Town his second home for the past 13 years. ''This is a magnificent country with wonderful people and enormous investment opportunities. There is a huge gap between perception and reality and in all the years I have been here and the vast undeveloped distances I have traveled, I have never been the target of a single criminal incident.''
So great is Daun''s belief in his adopted country that his two daughters and son all went to school in Cape Town before completing their studies in Germany.
But behind his calm manner lies an astute business brain that can equal any computer in instantly recalling figures from any of his varied interests. These qualities, combined with a steely determination and no-nonsense approach, make him a formidable competitor and a target for labor activists. Described by analysts as ''having no allegiance to labor,'' Daun''s successes have failed to ingratiate him to the unions, which internationally regard his companies with suspicion and concern. At a recent International Labor Organization (ILO) conference in Europe, Daun came under heavy attack for his lack of sensitivity to labor issues and his ''hard-line pursuit of profit.'' But all Daun''s companies are unionized and the man himself is quick to point out that his uncompromising stand on profitability has saved far more jobs than it has cost. Although he has created 19,000 jobs in South Africa by saving companies on the brink of closure, the Southern African Clothing and Textile Workers Union claims that his hardline policies have resulted in 3,600 job losses over the past year. Schouten, however, maintains that a more realistic figure associated with rationalization and restructuring would be in the region of 1,500. Impatient with over-regulated labor laws, Daun recently wrote to South Africa''s President Thabo Mbeki, criticizing him for discouraging foreign investors by making it so difficult for them to run internationally competitive businesses. ''But despite the drawbacks, South Africa has tremendous potential as an investment destination,'' said Daun, who recently accompanied German President, Johannes Rau, and top German businessmen on a three-day tour of the country to coincide with the 50th anniversary of the German Chamber of Commerce in South Africa. Daun has quashed analysts'' speculations that he could have a medium to long-term strategy to consolidate the South African textile industry into a single significant entity with sufficient critical mass to bargain effectively with retailers. While not specifically looking for new businesses in South Africa, he said that if another struggling company with potential was going cheaply, he would definitely consider buying it.
Margie Inggs is a staff writer for Business Report South Africa.
South Africa - Loved, feared, hated, admired - Claas Daun, the legendary global textile giant, has built his $1.2 billion turnover empire from scratch by buying companies on the verge of bankruptcy for a song and using his entrepreneurial genius to turn them around.
''I have always gone against the tide, looking for opportunities where others have given up hope,'' said the silver-haired, self-styled ''white knight.'' Daun, a business maverick who grew up on a farm near Brenen in northern Germany, started his career in 1979 when he bought Richter Spinning, a struggling textile factory. By appointing the right management, boosting staff morale and injecting the necessary resources, he revitalized production and made a substantial profit in the process.
In South Africa alone, Daun''s $100 million investment generates a turnover of $380 million a year. The latest addition to his web of interests in the country is Glodina, a JSE Securities Exchange listed company based in KwaZulu-Natal, which he and his South African corporate head, Paul Schouten, snapped up at seven South African cents a share in October last year. The purchase increased their holdings in the company from 12 percent to 61.3 percent.
Other KwaZulu-Natal investments include Gelvenor, a high-tech industrial textile manufacturer that Daun bought when the Anglovaal Textiles (Avtex) group was unbundling its non-core businesses in 1998; Hoescht, a high-tech producer of polyester-based products; and Feltex, an industrial group focusing on automotive foam moldings.
Western Cape-based investments include Table Bay Spinners, Boland Fine Spinners and Wellington Industries, which were amalgamated and rationalized from a R12 million loss in 2000 to a R9 million profit last year.
Court Fabrics, a niche upholstery and woven fabrics manufacturer in Paarl, the home of many of South Africa''s estate wines, has become highly profitable since its recapitalization and now operates around the clock, exporting 25 percent of its production. Home Fabrics, Fabric Library and SA Fine Worsted in the Western Cape, and Da Gama Textiles in the Eastern Cape, have reported similar successes.
''Each company operates independently, mostly under the umbrella of Courthiel Holdings, a subsidiary of German-based Daun & Cie AG, and is expected to be profitable in a stand-alone capacity,'' Daun said. Daun also has interests in Portugal, Canada, the U.S. and China, where he is currently negotiating a joint venture with a company that he aims to develop into the country''s leading spinning, weaving and finishing operation within five years.
''Discussions have been long and difficult, but it looks as though an announcement could be made by October,'' he said. His penchant for investing in countries where perception is worse than reality has also spread the tentacles of his empire into the Czech Republic and Uzbekistan. The textile king has enough faith to give a relatively free hand to the managers he appoints, but said retaining a positive outlook is essential.
''When management starts talking about the weak economy and tough trading conditions, I know it''s time for a motivational boost or new appointment,'' he said.
Undeterred by sanctions and political instability, Daun made his first investment in South Africa in 1987 when he bought Courthiel Holdings. A no-frills businessman, he drives a hired Citi Golf and is easily mistaken for one of his companies'' middle managers. On a recent visit to SA Fine Worsteds, the down-to-earth multi-millionaire was taken for a new employee.
The man who has sequestered himself from the media for so long after being misquoted in the European press has opened up recently to South African journalists. However, he prefers to steer clear of talking about himself and focuses instead on the need to think positively and have the courage to step in where others might fear to tread.
''In South Africa, people talk about crime, the exchange rate, AIDs and corruption, but I prefer to focus on potential,'' said Daun, who has made Cape Town his second home for the past 13 years. ''This is a magnificent country with wonderful people and enormous investment opportunities. There is a huge gap between perception and reality and in all the years I have been here and the vast undeveloped distances I have traveled, I have never been the target of a single criminal incident.''
So great is Daun''s belief in his adopted country that his two daughters and son all went to school in Cape Town before completing their studies in Germany.
But behind his calm manner lies an astute business brain that can equal any computer in instantly recalling figures from any of his varied interests. These qualities, combined with a steely determination and no-nonsense approach, make him a formidable competitor and a target for labor activists. Described by analysts as ''having no allegiance to labor,'' Daun''s successes have failed to ingratiate him to the unions, which internationally regard his companies with suspicion and concern. At a recent International Labor Organization (ILO) conference in Europe, Daun came under heavy attack for his lack of sensitivity to labor issues and his ''hard-line pursuit of profit.'' But all Daun''s companies are unionized and the man himself is quick to point out that his uncompromising stand on profitability has saved far more jobs than it has cost. Although he has created 19,000 jobs in South Africa by saving companies on the brink of closure, the Southern African Clothing and Textile Workers Union claims that his hardline policies have resulted in 3,600 job losses over the past year. Schouten, however, maintains that a more realistic figure associated with rationalization and restructuring would be in the region of 1,500. Impatient with over-regulated labor laws, Daun recently wrote to South Africa''s President Thabo Mbeki, criticizing him for discouraging foreign investors by making it so difficult for them to run internationally competitive businesses. ''But despite the drawbacks, South Africa has tremendous potential as an investment destination,'' said Daun, who recently accompanied German President, Johannes Rau, and top German businessmen on a three-day tour of the country to coincide with the 50th anniversary of the German Chamber of Commerce in South Africa. Daun has quashed analysts'' speculations that he could have a medium to long-term strategy to consolidate the South African textile industry into a single significant entity with sufficient critical mass to bargain effectively with retailers. While not specifically looking for new businesses in South Africa, he said that if another struggling company with potential was going cheaply, he would definitely consider buying it.
Margie Inggs is a staff writer for Business Report South Africa.
