PROFITS halved last year at one of Coventry’s biggest employers before it went into administration, leaving 800 staff and their families with uncertain futures.
Recent accounts for CovPress Limited show profits halved last year to £2.2million as the company sought to expand, and interest payments on borrowing trebled to £1.5 million.
The administration has been blamed on ‘cash flow’ problems at the Burnsall Road, Canley firm.
The precision metal pressings company, which manufactures parts for automotive companies including Jaguar Land Rover, is now in the hands of administrators Grant Thornton.
Unite the union said Thursday’s announcement was “a worrying development for the 800 employees” and for the wider West Midlands economy.
Recently filed accounts for the year ending in June last year state the subsidiary of CovPress International Holdings was “benefiting from the dynamic growth policy” of parent company The Yongtai Group, which had also built a 1million sq ft production facility in Northern China to help build a “global” customer base.
The accounts state growth with new product installation was predicted, while five planned new projects would add “considerable pressure” to the production process, and finding the right skilled staff “continues to be a challenge”.
Turnover of £89million was recorded for 2014/15, which was greater than anticipated in part due to efficiency savings.
But profits were halved from £4.1million the previous year.
In another statement in the accounts dated September 1 this year, four weeks before the administration was announced, director Kit Halliday said: “We have seen exponential growth within our organisation and identify that we have one more year to embed our new contracts withing the business.
“We are in constant contact with the unions and our employees, discussing our plans for now and the future.
“Our goal is to improve our efficiencies through process and create stability within the growth period.”
The administrator says it was ‘business as usual’ for the Canley firm and was optimistic of securing a buyer to facilitate a takeover.
Joint-administrator Eddie Williams, of Grant Thornton, told BBC Coventry and Warwickshire: “We have tried to get the message out to workers as quickly as possible and we have been having face-to-face meetings.
“The majority have now had face-to-face meetings with administrators.”
The administrators added the company had “significant and urgent funding issues”.
It is understood to have started talks with creditors.
The union said the company had expanded after recent investment and had a good order book.
Since a £30million British-Chinese consortium takeover in July 2013 a further £25million was invested in both machinery and jobs to meet increasing demand”, CovPress stated on its website.
The company last year also bought out nearby Honda supplier UYT for £30million, which was renamed CovPress Assembly, safeguarding 400 jobs. It is not part of the administration.
Coventry city councillor Bally Singh said the CovPress companies were “ideally placed to serve the growing motor industry in the Coventry and Midlands supply chain as well as supply well established relationships with other manufacturers including Honda cars in Swindon.
“Coventry should not have to witness another wave of job losses in the manufacturing sector especially when the companies themselves are fundamentally sound.”
He said he hoped rumours of a move to China would not materialise, and called on the government to step in should there be any move towards closure.
The company’s website states: “The affairs, business and property of CovPress Limited are being managed by Edward Williams, David Dunckley and Richard Lewis of Grant Thornton UK LLP, who were appointed Joint Administrators on 29 September 2016.
“… Please continue to liaise with your regular contacts at the company for all enquiries.”