Tag Archive | "Automotive"

RETAIL TRADE FACES ‘UNCERTAIN FUTURE’

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RETAIL TRADE FACES ‘UNCERTAIN FUTURE’


New car registrations continue to fall

The UK’s motor retail and parts industries face an ‘uncertain future’ as the number of firms in ‘significant financial distress’ according to a new report.

The research, published by insolvency firm Begbies Traynor shows that both new and used car dealers are having a very hard time as new registrations continue to fall. Interestingly, the firm cites a glut of used cars on the market as one of the reasons for used car dealer’s distress, rather than the number of pre Euro-5 vehicles taken out of the market as a result of scrappage schemes offered by various VMs.

Over the past year, the level of ‘significant distress’ for used car dealers rose by a third to 1851 dealers, compared with the same period in the previous year.

Julie Palmer, partner at Begbies Traynor, said: “Consumers up and down the country are tightening their belts in the face of rising inflation, increased interest rates and real wage pressures, causing households to put the handbrake on spending on big ticket purchases, and encouraging many to hold on to their vehicles for longer”.

“Even those owners looking to upgrade their vehicles are struggling to do so, as a recent glut of second hand cars on the market continues to depress the value of second hand motors while making new vehicles and their hefty price tags even less appealing”.

New car dealerships fair little better, with consumer confusion regarding diesel legislation and a lack of electric infrastructure keeping would-be car buyers away. Worryingly, the findings chime with the results of a KPMG survey released at the same time that predicts over half of all dealerships in the UK could close within eight years, leading a number of dealer principals and other motor industry executive to state that the only way these businesses can survive is to convert to a used car dealer and/or repurpose to becoming an independent service garage (see page 5).

FINANCIAL HEALTH

The Begbies Traynor findings were published in the firm’s Red Flag alerts, which monitors the financial health of UK companies. It warns that a number of macro-economic pressures last year contributed to this considerable increase in distress, with the combination of rising inflation, stagnant real wage growth, a weak
pound, political uncertainty, November’s rise in interest rates, and the ever-tightening credit environment putting increasing financial stress on businesses across the country. As a result, 258,349 UK businesses ended the year in a position of negative net worth, while a further 154,251 demonstrated a ‘worrying increase’ in their working capital deficit.

Palmer added: “When the overall business environment is so challenging, unfortunately there can be few real winners, however certain sectors of the economy are certainly feeling the pinch more than others. In particular, the vast UK support services sector saw a spike in distress as their stretched customers reined back spending. The construction industry saw the lowest levels of optimism in five years while the real estate sector felt the full impact of the increasingly stagnant UK housing market”.

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HELLA ANNOUNCES NEW PLANT AND BUSINESS DEAL

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HELLA ANNOUNCES NEW PLANT AND BUSINESS DEAL


Hella and BHAP tie the knot

AS PART OF growing demand for its vehicle lighting systems, Hella has opened a new production plant in Tianjin, China valued in low-to medium double-digit million euro.

The opening of the site follows a joint venture between Hella and Beijing Hainachuan Automotive Parts Co. Ltd. (BHAP) – a subsidiary of the BAIC Group, which will see both parties collaborate on LED headlamps, rear combination lamps, car body lighting and interior lighting under the newly formed entity, ‘Hella-BHAP’.

Markus Banner, Member of the Hella Management Board, said: “The new plant will strengthen our market position on one of the world’s major automotive markets. When extending our structures locally here on site, we are also very consciously counting on collaboration with successful Chinese partners such as BHAP. And that is because such cooperation means that we will be able to meet the needs of local customers even better than ever before.”

“Tianjin, where the new factory is located, is of strategic importance to the Chinese automotive industry as many of our key customers are located nearby”, said BHAP General Manager Chen Bao, “Hella is a perfect partner for BHAP, and we join hands to develop the automotive lighting business in this region and provide our clients with the best services and support,” adding that its cooperation will gradually expand into  electronics and aftermarket.

The new location employs100 staff with plans to extend this number to 250, along with its current site and 12,000 sq m production facility in due course.

 

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CLUBBING WITH THE TRADE

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CLUBBING WITH THE TRADE


Mitch Cameron shows us around a relocated TPS Branch in Slough.

New logo on signage

You have probably noticed the quiet growth of trade clubs over the past decade. At first, these were a way for the VMs to get the independent garages that wouldn’t normally consider queuing at a franchise’s parts counter to use genuine parts.

The idea worked, and today some of the clubs are as busy, and as lean and sales-focussed, as any branch of an all-makes factor chain.

Take TPS for example. Launched 11 years ago the trade counter started its first month with four branches selling mostly dealer-only parts and bodyshop supplies. Today, it has a nationwide network of 75 centres and has recently been through a programme of modernisation and rebranding.

To find out what these changes mean in practical terms, we’ve headed west to the Berkshire town of Slough to have a look at a branch that has recently relocated to a more modern site.

When we arrive at the allotted (and very precise) time of 11.15, the first thing to notice is the large signs across the driveway. “We were one of the first to receive the new branding” said Branch Manager Mitch Cameron, adding that the new silver logo (TPS originally stood for Trade Parts Specialists, but now has no official designation) looks very professional when combined with the new corporate colour scheme.

The new look continues inside the building, as staff are wearing a redesigned uniform that matches the silver logo. Customers, according to Cameron, appreciate all of these tweaks. “We hear a lot from the front counter that it is a pleasant place to get parts from” he said.

Actually, a partition screen between the counter and the telesales floor has a dual role as on the reverse it has a large sales board, filled with targets broken down in ways that no doubt makes sense to the nine people rattling the phones.

FIGURES
While the board of figures doesn’t mean a lot to us, it is clearly very important to Cameron and the team as monthly targets are broken down into weekly, daily and even hourly productivity goals. Like most factor branches, there is a morning rush, which finishes just after 11 (hence the time we were given to arrive) followed be a spike in activity in the early afternoon, mostly from garages who want to make sure their parts are ordered ahead of a vehicle arriving first thing in the morning.

Part of the programme of branch modernisation is a phone system that will be able to monitor call volumes, lengths, number of outgoing and incoming and so on. “When we get it, it will give us a much better handle on what the peaks are during the day” explained Cameron, adding that, in common with the practice at most factors, each operator has their own list of ‘regular’ clients that they build up a relationship with and a few customers can be in touch with the branch ‘seven or eight times a day’. One of the team is a bodyshop specialist, so he deals with the panel beaters around the town.

9,000 items including many crash repair parts

Another relatively new system is a ‘gap analysis’ tool, something many readers in factors may well be familiar with. Simply put, it looks at what customers have been purchasing alongside what they haven’t been. For example, a customer might buy many sets of brake pads from the factor, but never any hydraulic fluid. The tool can pick things like this out and the sales rep can then find out why, and see if there is an offer that will persuade the garage owner to change their buying habits.

VAN FLEET
The branch’s fleet also deserves a mention. There are 11 vans, which is not untypical for a branch of this size. However, the branch has also acquired a small hatchback car (a VW of course) that has been converted to carry a small amount of stock and be used for client visits. “The idea of that is we have some part time drivers in the morning to cover the busy period. In the afternoon when it is a little quieter, we can send some of the telesales guys out so they can meet their customers face to face” explained Cameron. “This is something we’re building on, that we hadn’t been doing particularly before”. It has been said many times before, but there is never any substitute in the aftermarket for getting out and shaking hands with people.

The factor’s fleet also boasts a motor scooter for local runs. Traffic in the area immediately around the industrial estate can be pretty gnarly first thing in the morning and the bike is just the thing for small deliveries.

Some 9,000 lines are kept in the stockroom. Brake parts, oil and filters are the fastest moving lines as you might expect, although around 15 percent of stock holding relates to crash repair and body refinish (On our visit, the side panel for a Caddy van was waiting to be delivered to a customer). As you’d expect, TPS delivers many OE parts from the parent company, but in a move to compete with others it also has a second-tier line called ‘FourPlus’, which as the name implies are parts for vehicles old enough to be out of the warranty period. All products in the range come with a two-year guarantee and meet the VM’s quality assurance standards.

The phones start to get busy again as the afternoon rush begins, so its time for us to leave. However, if you are in Slough and you notice that there are a lot of Volkswagen Group cars on the road, now you’ll know how they stay there.

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ELECTRIC VEHICLES VS THE AFTERMARKET

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ELECTRIC VEHICLES VS THE AFTERMARKET


What challenges does the lubricant industry face? With impending bans on traditional vehicles and increasing market share of EVs

At the end of last year, the UK media reported a sixth month consecutive decline in sales of diesel cars. UK Government’s uncertainty about how to treat vehicles once classed as ‘the green option’ has led to consumer caution about buying cars that might be subject to higher taxation in future.

In July 2017, the UK Government declared that from 2040, sale of motor vehicles powered with internal combustion engines, petrol or diesel, would be banned. This followed similar announcements made by the French Government earlier that year. Even Original Equipment Manufacturers (OEMs) followed suit with Volvo and more recently Jaguar Land-Rover announcing the end of petrol and diesel car sales from 2019 and 2020 respectively.

The impact on the automotive sector, its fuel and lubricant sales, as electric vehicle sales increase cannot be underestimated.

Barclays’ analysts reported that if electric cars with greater efficiency increased to one third of the current automotive sector, this would cut global oil consumption by 3.5 million barrels a day by 2025. This is roughly the equivalent of Iran’s current supply of oil at 3.8 million barrels a day that is the Organisation of Exporting Petroleum Countries (OPEC)‘s third largest member.

Globally, demand for oil is still growing. In their 2017 outlook OPEC signalled that the medium-term demand for oil for the period 2016–2022 would increase by 6.9 million barrels a day, rising from 95.4 million barrels in 2016 to around 102.3 million barrels a day by 2022. Developing countries are expected to account for the majority of this increase, with demand expected to increase here by 43.2 million barrels a day in 2016 to 49.6 million barrels a day by 2022.

A cut in automotive demand for oil would effectively wipe out half the expected increase in global oil demand by 2022. But globally, the demand for oil would still increase.

Transportation is expected to remain the largest consumer of oil products, both fuel and lubricants, well into 2040. Much of the sector faces weak competition from alternate sources of fuel and lubricants although improved efficiencies, the rise of hybrid or electric vehicles and a tightening of energy policies will help to decelerate increases in the demand for oil from this sector.

WHAT IS ALLOWED?
Details of the French and UK Governments’ decision to ban conventional internal combustion engine vehicles is still vague. Will hybrid vehicles still be allowed? What about heavy goods vehicles or diesel powered public vehicles such as taxis? Some analysts believe that Governments might have kicked an emissions issue aligned to poor air quality into the long grass. The UK faced with the prospect of fines by the European Union over the quality of its air in cities, needed to be seen to be doing something positive about the issue.

Today’s vehicles are cleaner and leaner than those of ten or twenty years ago. Exhaust after treatment devices, both catalytic converters and diesel particulate filters, have removed many post-combustion harmful gases. Car scrappage schemes promoted by both Government and car manufacturers have incentivised owners to replace ageing vehicles with more modern cars. Changes to car taxation duties reward cars with lower emissions.

Electric cars might not be the panacea for everyone. Limited battery range and the high cost of lithium power cells means that extended ranges between charges of 300 miles or more are not yet a reality. As local town run-arounds or shopper cars, electric vehicles provide a viable alternative to conventional vehicles for journeys typified by short local stops. For longer commuter journeys then electric vehicles alone do not currently provide a realistic solution in the absence of a national and comprehensive electric charging network.

Much needed investment in electric charging stations along major motorway routes and trunk roads still remains in short supply. The Petrol Retailers Association (PRA) gave evidence to UK Government’s Automated and Electric Vehicles Bill Committee in November arguing against proposals to mandate electric vehicle charge points in petrol stations and motorway service areas. Although subsidies exist for domestic installation, the Bill proposes that a larger commercial network of charging points would be paid for by fuel retailers who would, by implication, pass the charges back to motorists. Government would not fund such a scheme.

REQUIREMENTS
In terms of engine oil and lubrication requirements, hybrid vehicles act in a slightly different manner to more conventional vehicles. A distinguishing feature of hybrid electric vehicle is that the conventional engine switches off when the power available from the electrical cell exceeds that needed to propel the vehicle. This results in lower operating temperatures and higher stress during stop/start for the conventional engine, which could lead to increased sludge and varnish than that of conventional engines.

What of service intervals? In the UK, service intervals of 12,000 miles are usually expected by motorists. In America, some dealers are claiming that hybrid vehicles require oil changes every 5,000 miles or 10,000 miles if using a synthetic, more typical of conventional cars sold in that country. The move to lower viscosity oils could also confuse matters if a motorist has been used to using a 5w30 engine oil in their hybrid ten years ago and today the same, but newer, model of their much-loved car requires a lower viscosity lubricant of 0w20 or less.

For the aftermarket, although electric cars might prove a challenge today, a hybrid car is a more popular and obvious choice for motorists. They provide the assurance of extended ranges for longer journeys similar to that of conventional vehicles, with the benefit of lower emissions under town centre driving conditions.

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GETTING A NEW ANGLE ON SAXON

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GETTING A NEW ANGLE ON SAXON


Claire Seymour shows us some fast-moving products at a brand distributor in Hungerford

POS with current range

As is often the case in Aftermarket Lives visits, I’m admiring a warehouse, but if the truth be told it is probably the least interesting thing about the company that I’m visiting today (though it does have an exceptionally low roof height, which is due to planning restrictions in a residential area, apparently).

What is interesting is the products distributed by Saxon. By our count, the firm distributes 27 brands and hundreds of different products to chain stores and supermarkets, independent retailers and garage forecourts and online vendors alike. Most of the brands are distributed on behalf of other compnies, but some of the names, such as Sakura and Metro Products are wholly owned by Saxon.

With that in mind, it seemed like a good place to come to find out what products are trending and what belongs in the bargain bin. The answer, as I found out, is a little more traditional than you might think.

TREE GROWTH
Curiously, given that hardly anybody smokes in their vehicle these days, the humble air freshener is still the best selling product by volume in the warehouse and by far the best selling brand is Little Trees (nee Magic Tree) which despite the updated name, and slightly more realistic outline of an evergreen, is still essentially the same product that was invented in 1952.

That said, there are dozens of fragrances with names such as ‘Silly Citrus’ and ‘Summer Cotton’ to give the product a novelty each season. However, as Saxon’s Commercial and Products Manager Clair Seymour tells u it is the most traditional scents such as ‘Vanillaroma’ and ‘Black Ice’ that make up the majority of sales, with another long-standing product called ‘New Car Scent’ coming in third place. This struck us as curious – after all, who wants their car smelling of the glues and plastics that give new cars their distinctive smell?

Nonetheless, thousands are packed and shipped out to retailers from the Hungerford depot each day. Some like the contents of the boxes to be mixed, others like them with one ‘flavour’ at a time, while some clients like the trees to be pre- packed into quantities of three or six, which makes them more suitable for online retail. Saxon has done a supply deal with Amazon and the tech giant has a button that allows the consumer an option to ‘subscribe’ to have a regular delivery of a six-pack of Trees automatically sent in the post.

GUARD DOG
Sakura is a traditional accessory shop brand, which since becoming a wholly-owned Saxon brand has adopted a uniform brand identity and packaging style. This is good, because accessories as diverse as car vacuums, wheel trims and luggage straps are sold under the same brand.

Today the brand also offers a lot of light in-car tech: think of USB chargers, power inverters, FM transmitters and the like. The best selling line is none of these though: Indeed, it is a new version of a very old product that is delighting retailers this season, namely a dog guard. The guard differs from others, because it clips on to the head restraint supports on the back seat, rather than being a push-fit. On our visit, there were pallets full of these guards, which along with the related boot liner kit are doing big business for the firm. “It’s amazing the amount we are selling of these guards” said Seymour, explaining that the company looked at how it could improve the design following customer feedback.

OLD SCHOOL
Perhaps one of the most curious examples of a product thought to be obsolete is Stoplock. The bright yellow steel bar was an effective if unsubtle way of stopping joyriders stealing 1980s- era cars. However, the introduction of radio chip keys
made the Stoplock feel like a very twentieth century product, and in line with vehicle thefts, sales volumes declined sharply.

For a while, it looked like the existing stock POS with current range would be run down and the product quietly dropped, but something remarkable happened. A spate of thefts where criminals had managed to steal BMWs by hacking the OBD port led police in the West Midlands to advise motorists with high-end vehicles to start using such a lock.

“It is surprising trend” said Seymour, “But vehicle thefts have increased 12 percent since 2015, reversing years of decline and people were asking for a physical deterrent”.

Sales went up as people, understandably wanted to keep their car safe. Sales received a further boost when another group of wrongdoers worked out how to clone key fobs by using a weak radio signal when in close proximity. This led the company to retool and introduce new products that could fit over the bulge of the airbag on some luxury 4x4s. The company also introduced a neat black carry case to hide the lock in.

There are any number of new options one can have when ordering a new car, but for now it seems that the traditional products are the best.

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WINTER BLUES? GET READY FOR SPRING TIME

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WINTER BLUES? GET READY FOR SPRING TIME


New apps and wider distribution make for a better future for spring stockists. CAT Ed Greg Whitaker reports. 

Heavy rollers

As this month’s topic is springs, we thought we’d get on the road to visit two different spring suppliers to find out what they do first hand.

CZECH FACTORY
Our first visit was all the way to the Czech Republic to see the European production facility of KYB. Situated outside the town of Pardubice, two plants produce both coil springs and dampers. Established in 2003, the plants enjoyed large extensions a few years ago, allowing the spring factory to push 2.2m coils springs through the goods out door every year. The capacity is set to rise as extensions built on both plants in the last few years give the company room to grow.

We had a long tour of the spring factory and were fascinated to see how great machines twist bar into springs, which are then tempered and shot-peened before being laser etched and electrostatically coated. On our visit, the products being produced were being made with taper wire, although side- loading (banana) springs and other designs are also produced in the facility. Shot- peening with the correct medium is apparently critical

in producing a strong spring. Units from factories that haven’t been through this process, or have been blasted with the wrong medium can be a third weaker than those that have been correctly produced.

KYB hasn’t been slacking in investing in new technology. While were were in Pardubice we learnt about a new app, which unusually is for garages to show to customers. The app, named Suspension Solutions, is split into two parts. Part one is to help the technician explain to the motorist what issues have been identified with their vehicle’s suspension and which components need to be replaced. It sends the driver a text message with links to video clips which explain the dangers and risks associated with worn shock absorbers, coil springs, mounting and protection components. Part two is for showing the completed repair which a garage has carried out on a customer’s vehicle. It can send a text message to the driver with a before and after photo of the work carried out.

While the app can be viewed on the customer’s phone, garages will also be sent a type of VR headset, which is simply
a frame in which a phone slots in to. The end result is astonishingly good, and an interesting way of involving the customer in the work.

YORKSHIRE HUB
Meanwhile, we were interested to visit Lesjofors’ new facility in Huddersfield. The firm was keen to get its logistics based from one site, and so constructed this site measuring 65,000 sq ft situated right near the motorway network.

On CAT, we love a good warehouse and were fascinated to see how the design allowed use of the full height of the building, which left room for future expansion. Both Kilen and Lesjofors brand springs are stocked in the warehouse (Kilen was acquired by the parent in 1996) and leaf springs, gas struts for boots and bonnets, as well as sports lowering packs
are stocked alongside the regular coil springs.

Slightly less centrally located, the firm has a UK factory in Cornwall. It produced road springs under the Kilen springs brand, while other production takes place in Sweden where both companies originated. The factory doesn’t just produce car springs – indeed, it will produce to order any size and application, ranging from the type of spring found inside a biro, right up to the giant coils found on a mining truck.

Lesjofors has also recently published a phone application. The app allows professional users to search its catalogue by vehicle, with an option to search for country-specific references. You will also be look up technical articles when they’ve been uploaded.

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AIMING FOR PERFECTION

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AIMING FOR PERFECTION


PROMOTION ARTICLE ON BEHALF OF AISIN GROUP

Aisin braking portfolio

The Aisin group is a diversified global conglomerate with special expertise in materials processing, precision engineering and manufacturing technologies. While the principal activity is the design and manufacture of automotive parts and systems, the group also produces household appliances such as fuel cells and other products related to the energy, lifestyle and wellness sectors.

Guided by the founder’s commitment to “quality first”, Aisin has developed a strong position as a global supplier of premium automotive parts and systems to vehicle manufacturers. In addition to Toyota, which has taken a 24% equity in the company, Aisin is a major supplier to the Volkswagen Group, BMW, Volvo, General Motors, PSA Group, Renault-Nissan, Mitsubishi, Honda, Suzuki and Changan Group.

Aisin Seiki group
Japan-based Aisin has been processing materials and manufacturing premium precision products for more than 70 years. Founded as an aircraft parts manufacturer, the company has now developed into a Fortune Global 500 company with more than 190 subsidiaries and affiliates around the world. The Aisin group is a strong top-10 supplier in the automotive OE and aftermarket industries, and recorded net sales of over 29 billion Euro in the 2016 financial year.

Drive, turn, stop…

The Aisin automotive product range is comprehensive, covering all the principal vehicle functions – driving, turning and braking – and includes drivetrain, clutch, brake, chassis, engine and cooling systems, in addition to vehicle body parts.

The group strives to anticipate customer needs and has invested heavily in the last few years to meet the changing requirements of the automobile industry. Using its expertise in diverse metals and processing technologies, Aisin is now producing lighter vehicle parts – including cast parts for the engine and related areas – helping car manufacturers meet lower fuel consumption and emission standards.

Strong R&D resources

For these new trends, Aisin is able to draw on its impressive worldwide research and development assets. Back in 1970 it was one of the first auto parts manufacturers to construct its own vehicle proving ground equipped with test tracks. Aisin now has three proving grounds worldwide with a variety of track surfaces.

In parallel, state-of-the-art indoor testing facilities enable Aisin to evaluate a wide range of vehicle performance areas including electronic devices, fuel economy exhaust emissions, high-temperature environments and vehicle stability control systems.

Going forward, Aisin aims to continue working with its subsidiaries and customers to anticipate future requirements and fulfil its mission to contribute to the creation of a better auto society and higher standard of living.

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PHOENIX COMPANIES RISING FROM THE ASHES

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PHOENIX COMPANIES RISING FROM THE ASHES


It’s a sad fact of life that businesses can and do fail and the fallout can impact upon many – owners, shareholders, employees, customers and suppliers alike. Often there is nothing underhand about the failure – the company is wounded fatally by a lost contract, a massive hike in rent or rates, or has been unable to adapt to changing market conditions.

Occasionally, however, firms are set up to fail through the deliberate actions of their management with a view to defrauding creditors. In certain situations, directors of the failed company turn to what is known as a ‘phoenix’ company.

PHOENIX RISING
‘Phoenixing’, or ‘phoenixism’, are terms that describe the practice of carrying on the same business or trading successively through a series of companies which in turn becomes insolvent – the idea being that a new business rises from the ashes of an old one, like the Phoenix bird of Greek myth, hence the term. Each time this happens, the business of the insolvent company (but not its’ debts), is transferred to a new, but similar, phoenix company, usually through the use of a pre-pack administration. A pre-pack administration involves the business of the liquidated company being sold as a ‘going concern’, (i.e. as an operating business) through a process orchestrated by an appointed insolvency practitioner. The insolvent company then ceases to trade and might enter into formal insolvency proceedings or be dissolved.

Phoenixing often harbours negative connotations, mainly because of the actions of directors who force their companies into insolvency to then purchase back company assets through the new company, leaving behind any liabilities in the insolvent company. The process often involves financial loss being suffered by the creditors of the failed company – a practice that can both leave a nasty taste in the mouth and give phoenix companies a rather bad reputation.

There is no doubt that in rare circumstances, the directors of a company do set out to commit insolvency fraud and so will deliberately reform a business using a phoenix company to avoid paying creditors. They will ensure that the phoenix company is set up so that it appears slightly different from the insolvent company. The business will continue to trade and operate and the creditors of the insolvent company will not usually recover their debts as they remain with the insolvent company – a separate legal entity – and will not be transferred over to the newly formed company. The bad news for creditors and suppliers is that they will have no contractual claim against the new company for debts incurred by the old, defunct, company.

THE LAW SAYS
The governing law of England and Wales allows shareholders, directors and employees of insolvent companies to set up new companies to carry on a similar business, so long as the individuals involved aren’t personally bankrupt or disqualified from acting in the management of a limited company, and the trading name of the new company is not the same or similar to that of the insolvent company. Setting up as a new entity is legal if the process has been managed properly. Entrenched company law principles mean that a limited liability company is a legal entity separate from that of its shareholders and directors. Except in very limited circumstances, the responsibility for debts incurred remain that of the company, subject to the actions of the company directors.

One circumstance where a director can be made personally liable, jointly and severally with the company, for all the relevant debts of the new company, is where they contravene the Insolvency Act 1986 by acting as a director of a company with a prohibited name (i.e. a name which is similar to suggest an association with the previous company’s name). Further, the director will also be liable to a fine or potential imprisonment.

SEEKING SOLACE
So, what can you do if you suspect some sort of insolvency fraud being undertaken by a company that you are dealing with? What happens where you find yourself in the situation where you have supplied a company and your invoice has not been paid? What should you if do you’re also unable to reach anyone at the company to speak to about the money that you are owed?

The company at this point may or may not be insolvent. If the company in question is insolvent, the appointed insolvency practitioner’s function is to investigate the practices of the company and distribute any assets found to the creditors of the business. Predominantly, the underlying assets of the insolvent company are required to be sold at market value and not (deliberately) at an undervalue. You, as a creditor of this business, should have an interest in such investigations and you should speak to and assist the insolvency practitioner where possible.

Company directors owe numerous duties to their company and the key duties are codified in the Companies Act 2006. These include promoting the success of the company, exercising independent judgement, exercising reasonable care, skill and judgement, and avoiding conflicts of interests. Where a company is threatened with or starts to undergo insolvency proceedings, directors not only owe duties to the company, but also to the creditors of the company and a number of provisions of the Insolvency Act 1986 apply in this case.

STRICT RULES
There are strict regulations placed on the directors of an insolvent company and any appointed insolvency practitioner regarding the use of a phoenix company to carry on the business of an insolvent company. The intention of the regulations is to protect the interests of unsecured creditors and to prevent company directors from escaping their obligations. It is a criminal offence under the Insolvency Act to knowingly carry on business with an intention to defraud creditors.

If this is proven, an insolvency practitioner may make the decision that the director is liable to make a contribution to the company’s assets on winding up. Remember, it is legal for a phoenix company to be formed from the insolvency of a prior company. However, any director that is subject to a disqualification order or a bankruptcy order cannot act as a director of the newly formed company. You may suspect that a director of a company that you are dealing with may be acting in breach of a disqualification or bankruptcy order and if this is the case, you should also report this to the Insolvency Service.

DEAL WITH IT
Information is available online, free, at Companies House to any member of the public who wishes to see who is registered as a director of a company that they are dealing with. The name of the company (this may be different from the name with what the company trades as) or the company number will be required to use the Companies House search function.

Despite the losses that can be experienced by a creditor because of the use of a phoenix company that may have been subject to insolvency fraud, the financial failure of a majority of UK companies is not usually as a result of wrong doing nor the misconduct of company directors. Companies can be dissolved or face financial difficulties for a variety of reasons.

One protective solution, obvious as it sounds, is to conduct preliminary investigations on new customers before entering into a trade agreements or offering trade credit. As noted above, check the publicly available register at Companies House for information on company directors and their companies, seek trade references, and also carry out credit checks. Forewarned is forearmed.

It may be worth checking to see whether your supplier contracts have, or possibly should have, clauses which aim to protect your legal ownership of the supplied goods until payment has been made by a customer. Some supplier contracts may include what are known as retention of title clauses which will state that the goods delivered by a supplier remain their property until payment by the customer has been made. Legal advice should be sought as ‘retention of title’ clauses require careful thought and drafting to ensure that they are effective, an event of insolvency should be properly provided for in such terms and conditions in order for a supplier to limit exposure to the risk of non-payment.

WHAT TO BE AWARE OF
Directors who don’t conduct business in line with their legal obligations face potential disqualification from acting as a company director. The Company Directors Disqualification Act 1986 prohibits directors whose conduct led to the insolvency of a company from taking on similar roles elsewhere for a prescribed length of time. If, as a creditor, you feel or suspect that a director of the company you are dealing with is conducting their business in an unfit manner, you can report them either to the Insolvency Service, Companies House or the Serious Fraud Office.

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MARATHON ACQUIRES NEW WAREHOUSES

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MARATHON ACQUIRES NEW WAREHOUSES


Independent wholesaler Marathon Distribution has acquired two warehouses bringing its’ branch network to 14 sites. The move comes as part of a business strategy to improve its’ Northern logistic operations.

The Warrington distribution centre has recently opened its’ doors to trade customers.

Meanwhile, construction work on the new Gateshead site is still underway and should be functional by February next year.

The opening of these centres has also sparked a recruitment drive, creating a number of job opportunities and an internal shake-up, as Adrian McComas, Sales and Marketing Manager at Marathon Distribution, elaborates: “Several colleagues from our Castleford and Redditch depots will be transferring over to the new Warrington site.” He continued, “Regional Director Lee Pearsall has been appointed to manage operations for this part of the country.”

More branches are in the pipeline. McComas concluded: “We will also be looking to expand into Scotland in 2018 to enable us to service our Scottish customers more efficiently. We’ve already got substantial business in the North East and West of England, so it will make it easier to service those areas and gives us an opportunity to develop the business more, with more frequent opportunities for our stockists.” We look forward to reporting on these new sites when they go live next year.

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200K INVESTMENT AT REVCOAT

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200K INVESTMENT AT REVCOAT


Calcination Oven

Catalytic converter brand Revcoat Technologies has made a major investment in new processes and machinery. New equipment includes a calcination oven, automatic case seam welder and several types of automatic coating machines.

The firm produces various types of diesel particulate filters in addition to the converters for petrol engines and has spent over £200k on the new equipment.

James Slade, Director at the firm said: “Over the past 12 months we have researched and developed catalyst wash-coats using high oxygen storage chemicals and Nano-technology precious metal solutions to meet the requirements of today’s emission standards.”

“Combined with our specifically designed coating and canning technology we can produce emission catalysts tailored to any requirement. Our catalytic solutions and our proprietary catalyst coating technology are individually tailored to take advantage of the latest technology in raw materials.”

“Our investment in this technology for the development of automotive emission catalysts gives us the ability to offer solutions for present and future requirements of environmental legislation.” Revcoat Technologies is owned by by European Exhaust & Catalyst Ltd.

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