Our Engineering & Manufacturing Team is led by Kirren Keegan bringing practical advice and guidance to the engineering sector.
Engineering and manufacturing businesses have traditionally suffered from high equipment costs. In order to be competitive, modern equipment is needed and this is expensive. Often this machinery is leased or subject to finance and this means the overheads of the businesses are high. As with other specialised industries, it is not practical for these firms to expand and contract their labour as demand requires, so they must retain their skilled staff during periods of low demand."
We recognise that the global pandemic has caused serious issues for manufacturing companies who have been unable to take advantage of the shift towards working from home and who have had to cease operations entirely for lengthy periods.
Demand for the business’s products may have dropped and depending on the industry they work in they may not be likely to see an immediate upturn in demand.
These businesses can often be rescued as a going concern. Refinancing would always be considered as a possible means of doing that as well as more formal agreements with creditors or procedures to allow new management to run the business. To do this it is important to seek early advice and return the business to profitability as soon as possible.
Sometimes a formal insolvency process is unavoidable, however, a proper use of this process can deliver a positive outcome. An example of this is an engineering company we dealt with which had lost a key customer. The business struggled to support its overhead base and although when introduced to us, it had in part replaced that turnover, it could not continue with the burden of historic debt. It was recommended that the Company enter Administration with a view to a sale as a going concern, as this was the best option for creditors and for the employees. A sale was successfully achieved, saving 17 specialist engineering jobs, paying preferential creditors 100p in £ and paying a small dividend to unsecured creditors. The successor company continues to trade.
If your engineering or manufacturing concern is experiencing stress, a discrete call to our expert Kirren Keegan may well reveal options you had not yet considered.