HARRIS TWEED INVESTMENT FUND
OPERATIONAL GUIDELINES
1. INTRODUCTION
1.1 Comhairle nan Eilean Siar and its project partners wish to work with the Harris Tweed Industry in order to establish a Harris Tweed Investment Fund (HTIF) which will support production within the industry as it seeks to restructure and reposition itself.
1.2 This document sets out the:
§ Objectives of the HTIF
§ Implementation of the HTIF
§ Financial Arrangements
§ Application Form
2. OBJECTIVES
2.1 To establish an Investment Fund which will finance the production of a fixed volume of the most popular tweed patterns during the off-peak production season.
2.2 The objectives of the Investment Fund are:
§ To support the Harris Tweed industry to become increasingly market-led and responsive to market demand.
§ To enable the mills to maintain production on a year-round basis and thereby reduce the problems associated with extreme seasonality, such as workforce retention and the attractiveness of the industry as a career option.
§ To ensure access to tweeds to support small business producers and design houses to reduce the effects of the current downturn in production.
§ To establish a scheme which will achieve these objectives without distorting the market or adding to the risk of over-supply
2.3 The Fund will be operated by Comhairle nan Eilean Siar. Funding has been provided by Comhairle nan Eilean Siar and the European Regional Development Fund.
3. PROCESS
3.1 Mills interested in seeking investment from the HTIF must submit an application to the HTIF via the Comhairle by the specified deadline. This application requires the Mills to detail:
§ Type of tweeds to be produced (pattern, colour, volume, no of beams, etc.)
§ Production timescale
§ Cost of order
3.2 A HTIF Panel will be established consisting of representatives of Comhairle nan Eilean Siar the Association of Harris Tweed Weavers, Highlands and Islands Enterprise, the Harris Tweed Authority and other external agencies as required.
3.3 The Comhairle will prepare reports for the Panel based on the applications received, and recommending the orders to be placed. The Panel will meet to consider applications to the Harris Tweed Investment Fund within 14 days of the deadline for submission of applications and will determine the orders which will be placed.
3.4 Acceptance of an order by a Mill signifies agreement to the terms and conditions of the Investment Fund. Mills will be notified of the Terms and Conditions on placement of an order.
3.5 The order will be placed in the form of a Letter of Offer giving terms and conditions of order which must be signed and returned to the Comhairle within 7 days of posting. The Comhairle will confirm receipt of Letter of Offer.
3.6 Acceptance of an order by a Mill signifies agreement to the terms and conditions of the Investment Fund as set out in the Letter of Offer.
4. FINANCIAL AGREEMENT
4.1 The HTIF will pay 66% of the cost of the Tweed
4.2 Participating mills will be required to finance the cost of production by 34%
4.3 The Comhairle will pay its contribution when the Tweed is produced and stamped. Arrangements for payment from the HTIF to the Mill will be contained within the Letter of Offer.
4.4 The Comhairle will retain reservation of title over the tweed, which is identifiable by a piece number, from the point of issue to the weaver, to give security over payment. The Mills should provide details of the piece numbers prior to the Comhairle providing payment for the order.
4.5 The mills will sell the cloth on behalf of the Comhairle, which will not be a party to the transaction, which remains between the mill and the customer.
4.6 Arrangements for the repayment to the HTIF will be contained within the Letter of Offer.
4.7 Any surplus on the price paid by the final customer as compared to the initial cost of the order will be retained by the Mill.
4.8 In order to ensure an onus on the Mills to sell the stock, they will be required to buy back any unsold stock from the Investment Fund at the end of an agreed period.
4.9 To ensure compliance with State Aid rules, interest will be charged on the investment in line with the European Reference Rate.
4.10 The EC provides guidance on calculating the reference rate which would be deemed to be commercial. The rate applicable depends on the creditworthiness of the company and the level of collateral offered. Normally 100 basis points are added to the base rate on the assumption that they are: loans to undertakings with satisfactory rating and high collateral orloans to undertakings with good rating and normal collateral.
4.11 Interest will be charged on the Comhairle’s contribution to the order. Interest will be applied from the date on which payment from the HTIF is received by the mill.
5. PRODUCTION AND DISTRIBUTION PROCESS
5.1 By accepting the Letter of Offer, the Mills agree to the following:
§ Standard commercial arrangements and timescales for paying weavers.
§ To undertake all elements of the production process as per any commercial order.
§ That on completion the Tweeds become the property of Comhairle nan Eilean Siar.
§ That they will store and sell the Tweeds on behalf of the Investment Fund.
§ That all Tweed is produced in accordance with the requirements of the Harris Tweed Authority.
5.2 The aim of the HTIF is to encourage full-time weavers to stay within the workforce. Therefore, by participating in the scheme there is an onus on the mills to ensure that priority is given to full-time weavers. The Comhairle would also wish to see that, as far as is possible, the Tweeds it is ordering are being distributed to Weavers in a fair and equitable fashion.
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