Glass Merchants Ltd suppliers of a range of toughened glass
and double glazed sealed units employed 60 staff at their factory
in Great Barr in Birmingham. They found themselves in trading
difficulties in July 2006 caused by a variety of factors but
primarily the increasing cost of the manufactured glass sheets
they bought in.
The UK glass industry is very competitive and extremely price
sensitive and with a very small number of major producers producing
flat glass in the UK, companies like Glass Merchants Ltd are
at the mercy of these suppliers and the UK energy markets. But
that’s not all. When we became involved the price
of glass was being influenced by the failure of a furnace in
Europe. A classic case where events outside of the control
of a company can influence its survival.
Following Tony Mitchell’s appointment as Administrator
on 3 August, Cranfield Recovery started to prepare the business
for sale. This is where the first peculiarity of the
glass market came into play. One of the glass suppliers
had a policy not to supply to a company in insolvency, a policy
they adhered to vigorously. In order to maintain
supply we had to purchase glass in the spot market – going
to independent dealers and paying a premium.
With some difficult negotiation supply was secured and with
careful, planned communication to customers order levels were
maintained so that trading could continue to enable the business
to be sold as a going concern. Then fate dealt a killer
blow. The furnace broke down. In spite of the fact
that the problem was quickly identified and the spare part
was in the stores that wasn’t the end of the misfortune. The
spare part was faulty and instead of a brief blip in production
there was no production for 3 days. This was the difference
between being able to sell the business as a going concern
and having to close and sell the assets.
The new TUPE regulations also had a bearing on this case. With
60 staff there was a significant £150,000 contingent
liability, which no purchaser was willing to take on.
We eventually got the furnace working and did manage to sell
the assets for a good price and as far as we know, the new
company is continuing to trade from the old site, having re-employed
a number of the former employees. Not a classic style turnaround
but jobs have been saved and there is still a trading business.
