The past few weeks have been rife with speculation as to the future of some of the industry’s best known names. Weatherseal, Zenith, St Helens Glass etc. Earlier on in the month I reported on 200 jobs being lost in Norwich at Zenith HQ.
There has been much talk about the future of the Kairos Group, the parent company behind 7 home improvement brands and a group which employs 2000 people. Over the weekend reports surfaced that the company was to be closed, putting those 2000 jobs at risk.
No statements have been made on the Kairos Group website, but ITV Granada is carrying a report on their website, in which company Director Adrian Kirk made this statement:
We were hoping to continue longer with a sales process of the business we were undertaking but unfortunately we have to close prematurely. The reason for this is that our retail finance facility bank has taken the decision to withhold over £300,000 of monies for jobs we have fitted over the last two weeks. This money was earmarked for customer deposits, employees and self-employed subcontractors and the ability to finish all outstanding installations.
The Directors are devastated by this decision and has left us no option but to close. We would like to take this opportunity to thank all of our employees and self-employed subcontractors for their hard work and loyalty and wish them every success in the future.
When a business closes its always a terrible day. People lose their jobs, risk and stress goes through the roof and everything becomes so much more difficult for those people affected. This is a big close, putting thousands of jobs at risk. This is going to have an effect not only on those directly involved with the companies, but all other associated businesses and people. It will have a knock-on effect, no doubt, on companies down the supply chain.
A sign of what is to come?
The industry doesn’t feel very stable right now. There’s a lot of movement in terms of companies going into administration, or being put up for sale. There is constant chatter about other companies being acqusition targets. Those who I speak to agree that the profitability of the sector is being tested. So with the Kairos Group troubles, is this a sign of more to come?
There is always a danger that you can talk yourself into a negative situation. I would tend to agree with that. Indeed, much of the coverage on DGB of late has been about businesses in our industry in distress. But, stats don’t lie, and FENSA’s own figures of volumes being down over 8% is a stat that tells a story. Thats a decline we haven’t talked ourselves into. That is simple economics and a sign that home owners may be starting to reign in their spending on home improvements. That 8% stat was published in a Safestyle trading update story a few months back. Perhaps nearer the end of the year we’ll get some updated figures to see whether this was a blip or a trend.
From where I’m sitting the industry is still too populous in terms of the number of companies versus consumer demand. It makes for a buyers market when it comes to M&A activity. Question is, if we are about to enter a slowdown, will companies in UK fenestration begin to question the wisdom of acquisitions, and decide to grow their company by stealing business from competitors rather than buying them up? Would it be more prudent to focus on “domestic” growth and up other things like marketing and advertising? Would certainly be the cheaper option, and for the better companies should mean success via that avenue as well.
Getting back to Kairos, administrators are to be appointed soon. For the sake of those who worked for the company, it is hoped that a buyer can be found and as many jobs saved as possible.
I’ll update this story as and when more information becomes available.
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