“The De Klerk family must learn to eventually give up the company”

All hands are on deck at Beaulieu. On Thursday, the company announced that artificial grass will soon no longer be produced on the production line at the Ostrozebeke plant in West Flanders, and that yarn production in Comyns in Hainaut will also be stopped and moved to Comignies, France. As a result, 149 jobs will be lost at both locations. The reason? A very poor annual result, with a €500 million drop in turnover and a net profit that shrunk from €120 million to €2 million in 2023. Many other locations have had to make do over the past year and a half.

Explaining the downturn, Beaulieu cites a combination of the general global economic downturn and the specific economic climate in Belgium and Europe. During the 2020-2021 coronavirus pandemic, the company launched a renovation wave with carpets, vinyl, artificial turf and parquet. Today, consumers around the world are tightening their purse strings due to high inflation and interest rates. “It is also no coincidence that both stopped activities were in Belgium,” says one of the company’s experts. “These are now partly moving to France and Spain, where wages and energy costs are much lower. Management waited too long to make the adjustments.

But observers believe that the dissatisfaction of family shareholders is far more serious and at the same time more profound due to a lack of strategic foresight. For decades, this strategy was rooted in the legacy of the late Roger de Clercq. “He had the brilliant idea of ​​taking the entire production chain from chemicals to plastic granules to floor coverings and distribution into his own hands through so-called vertical integration,” explains one expert in the industry. “As a result, his products were much cheaper than those of all his competitors in the 1960s and 1970s. This combined with the law of large numbers meant that he was able to achieve relatively large profits on large volumes of carpets.”

This has long been Beaulieu’s secret to success: it has always been primarily a chemical company. Half of its turnover still comes from chemical products (polyamide and polypropylene granules, fibers and yarns), which it also sells to external (flooring) manufacturers. “For decades, the second generation has enjoyed the benefits of this almost on autopilot. The chemical market must pick up for cash flow to flow freely.

But those days may be gone. “For now, you can still blame the recession on the failure of the global economic engine, but even if things improve, the Chinese and Turks, who have fully benefited from Russia’s cheap raw materials and energy, are likely to fall,” said one insider. “Add to that the problems China has in selling its products on the US market (due to high import tariffs), and you have a long-term problem with the dumping of their chemical products and finished flooring on the European market.”

Furthermore, observers have criticised the family shareholders for continuing to retain control over operations. “Despite his blunt style and allergy to the tax authorities, Roger de Klerk was probably one of the greatest entrepreneurs of post-war Europe,” said one observer. “His daughters-in-law inherited his empire, but unfortunately they did not inherit his business talent, nor his energy and entrepreneurial spirit. This still affects the company to this day.”

“The current generation is simply not capable of keeping the company on the right track,” he says. “When things get bad, the four branches of the family come together, but as soon as an external CEO is appointed and things pick up again, they start to get involved again – each according to their own vision.” The last external manager who really did well dates back almost a decade: Geert Roelens. He was a buffer between the then volatile and taciturn strongman and largest shareholder Francis De Clerck on the one hand and management on the other, giving clear direction and making the right decisions.

Since his sudden resignation in 2015, CEOs have taken over: Francis De Clerck succeeded Roelens, and Stefaan Colle took over. For a time, when chemicals industry veteran Pol Deturck took the helm in 2021, it seemed that the family also saw the light at the end of the tunnel. New Beaulieu has arrivedit seems. With the family withdrawing from operational management, there will be more room for openness and corporate governance, as evidenced by the appointment of a series of external directors: former banker Peter Vandekerckhove, serial entrepreneur Bart Deconinck, former right-hand man of the company Marc Coucke Barbara De Saedeleer and Lotus chairman Jan Vander Stichele.

Meanwhile, that new wind has become a breeze. After Mr. De Turk’s departure last year, Dominiek De Clerck suddenly became chairman of the board in February and chief executive a month later, albeit in an interim capacity. “It’s strange that this man who had always been seen as the neglected child of the family, who had reported his brother and brother-in-law to the court for tax evasion, suddenly took over the entire group.” Even the usually inscrutable Francis asked his brother to do this, according to people familiar with the matter.

Is it because Dominique, 63, is the youngest in the family? Because Stefaan Colle is currently facing serious health problems? Or again: because there is no third generation in the family. Caroline De Clerck, who represents her father Francis on the board, is positively evaluated. “But is she capable of leading the whole team?” Dominique’s children are only in their thirties and have their own projects. Stefaan Colle and Ann De Clerck’s son Edward will be groomed to lead Belgotex, the company group that Colle left out of the merger in 2006.

The question is whether and how Dominique de Clercq will be able to clean up the team again. According to multiple sources, closures and restructuring will follow. Consultants Deloitte, for example, will examine the activities to see which ones create little added value.

“That, and the hope of a chemical renaissance, could have stopped the bleeding. But I don’t see anyone in the group and the family at the moment who can turn around the Beaulieu[a leaking tanker]and develop enough foresight to do it. The company must move away from chemical production, which was the holy grail of the past, listen more to the market, become more agile and innovative. The family must learn to eventually let go of the company. So it’s time to appoint a new external CEO. But many of the top people who knew the industry are no longer there. And he must be able to cope with the interference of his family.”