|By Rick Romell, Milwaukee Journal
SentinelMcClatchy-Tribune Regional News
October 12, 2010 --Kohler Co.'s golf-and-hospitality venture in Scotland has run largely in the red since the firm bought the Old Course Hotel Golf Resort and Spa in St. Andrews six years ago, financial reports show.
The business, run through the Kohler subsidiary The Old Course Limited, has had one profitable full year since the purchase was announced in October 2004.
Cumulative annual losses from 2005 through 2009 total 8.2 million British pounds -- about $13 million at the current exchange rate.
The losses, and the entire Scottish operation, represent only a tiny slice of Kohler Co.'s overall business, which generated $4.5 billion in sales last year, according to a spokesman.
But the firm's foothold at what is regarded as the birthplace of golf has captured widespread attention. And with British law requiring many non-public companies to file annual reports, it offers a peek into a small part of the very private Kohler Co.
The luxury hotel in Scotland overlooks the famed Old Course, site of this year's British Open. Besides the 144-room hotel, Kohler's St. Andrews holdings include The Duke's golf course; Craigtoun Manor, an adjacent rundown mansion Kohler has begun redeveloping; and Hamilton Hall, a dilapidated former hotel overlooking the 18th hole of the Old Course that Kohler bought a year ago and plans to restore.
Depreciation and a big write-down last year on Craigtoun Manor account for most if not all of the cumulative loss of The Old Course Limited since 2005, the financial reports indicate.
The company halted work on Craigtoun Manor after buying Hamilton Hall, which now will be redeveloped first. Meanwhile, the firm last year recorded a 4.9 million pound charge related to the manor, citing the effects of the economic downturn on real estate in the United Kingdom.
Sales for The Old Course Limited totaled 9.9 million pounds in 2009, down from 11.7 million the previous year and 12.4 million in 2007. Sales had been rising until then.
A Kohler spokesman declined to comment on the financial results of The Old Course Limited.
The Scottish operations are part of Kohler's hospitality group, which also includes such well-known Wisconsin destinations as The American Club in Kohler and the Whistling Straits golf course north of Sheboygan.
The company's grittier roots are in foundry work, plumbing fixtures, generators and engines.
Kohler currently is negotiating with United Auto Workers Local 833, which represents about 2,000 Sheboygan County factory workers, on a new labor contract. Talks continued Monday, with a union leader describing them as productive.
The firm is seeking such concessions as a five-year pay freeze, a two-tier wage system that would give new hires 65% of what current employees make, and the right to extensively use temporary "flexible" workers who could be dismissed without cause and would receive reduced or no benefits.
Kohler has said that under its current cost structure its Sheboygan County manufacturing operations "are not sustainable long term."
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