Thursday, 24 July 2014
Unipart Automotive parts unit goes bust
Unipart Automotive, a UK-based supplier of car parts and garage equipment, has collapsed with the loss of more than 1,400 jobs across the country after failing to find a buyer.
The business, based in Solihull, operates 180 branches around the UK, trading under three brand names – Unipart Automotive, Partco Autoparts and Express Factors.
Of the group's 1,813 staff, 1,244 were made redundant with immediate effect on today, while over 200 workers have been retained to assist administrators, KPMG. It is expected those jobs will be lost also when administration is complete.
The remaining 361 staff will transfer to Andrew Page and the Parts Alliance, which has bought 21 and 12 former Unipart branches respectively.
Mark Orton, a partner at KPMG and joint administrator, claimed: "Despite intensive efforts over recent weeks, a sale of the whole Unipart Automotive business could not be reached, and a buyer could only be found for 33 of the sites on a going-concern basis.
"Unfortunately, the business had been experiencing financial stress for a number of years, so the level of cash and further operational restructuring required to rescue a more substantial part of the business posed too much risk for most interested parties."
Roger Maddison, national officer for the automotive sector for the Unite union said, "We will be seeking an urgent meeting with the administrator to ensure that the interests of the workforce are top of their considerations."
While the UK had witnessed a sharp rise in new car sales, the spare parts market remains hugely competitive, with UK firms competing against overseas suppliers. Unipart Automotive found its margins squeezed by heightened competition.
KPMG is reviewing its options for the remaining assets of the business, including the potential sale of leasehold interests. Unipart's stock has already been sold off, leaving many empty units.
The accountancy firm added that Unipart Automotive also supported over 700 independent, owner-operated garages through its car care centre programme, and 19 franchises.
"These companies fall outside of the administration and will continue to operate as normal," according to KPMG.
Oxford based Unipart Group – which operates across the automotive, manufacturing, mobile telecoms, rail, retail and technology sectors – sold a 51 per cent stake in Unipart Automotive to H2 Equity Partners in 2011, retaining an equity stake but one condition of the sale was that Unipart Group exercised no operational control over the business. Also, Unipart Automotive was granted restricted access to use of the Unipart brand on a limited range of wholesale outlets.
Unipart Group has written off its stake in Unipart Automotive and is keen to stress that the two companies are quite different to one another.
John Neill, chairman and chief executive of the Unipart Group, said: "We are saddened by the Unipart Automotive situation and even though we sold control of this business years ago, we are concerned for the future of the employees.”
"The group is financially strong and well placed to support its international growth strategy,” he added.
Unipart Automotive was separate from Unipart Group with the exception of some distribution services provided by Unipart Group. The group said that less than one per cent of its 10,000 employees provided services to Unipart Automotive, and that those people would be deployed elsewhere in the business.
Unipart Group has three arms: Manufacturing, logistics and consultancy which includes healthcare and supply chain consultancy.
In 2013, Unipart Group’s turnover went up by five per cent to £1,056.3 million from £1,010.8 million; it had an operating profit £26.2 million in 2013 against £28.8 million in 2012 financial year. The company declared in 2013 it had a strong cash flow position that yielded net cash on the balance sheet of £25.2 million.
Unipart was formed in 1974 when British Leyland put John Egan in charge of the company with a remit to make it an independent business to market British Leyland service parts. Egan left the company in 1976 to join Massey Ferguson. John Neill took over from Egan and has remained at the helm ever since, having led a management buy-out in 1987. Unipart Group is 70 per cent owned by employees and its pension fund and 30 per cent by institutions.