Bosal goes into administration

Bosal UK, which is best known as an exhaust manufacturer but also makes roof racks and towbars, has entered administration. Various news sources report that calling in the administrators follows the recent confirmation of a contract to supply Land Rover with the exhaust systems for its popular Evoque model.

On 11 January 2013, the company issued a statement appointing Phillip Duffy and David Whitehouse of Duff & Phelps Ltd, Manchester as administrators in a move that follows “a decade of strong support for Bosal UK from its owners in the face of a mix of factors which over time increasingly impacted on its viability”.

The pressures on the company are said to have been three-fold – a “fundamental transformation” of the sector; moves by competitors to “right size” and legal action by former employees.

According to the statement, “A fundamental transformation in both the UK and Europe of the automotive aftermarket. In particular, the introduction of stainless steel has seriously impacted on Bosal UK’s key product line – largely the replacement car exhaust systems. The fitment by vehicle makers of longer-lasting original equipment systems has done much to reduce demands for these products.”

The happened at the same time  as “Moves by Bosal UK’s key competitors to implement ‘rightsizing’ restructuring measures as well as switching production to best cost country sources in Eastern Europe and elsewhere” drastically rewrote the competitive environment.

And finally the long running legal challenge to Bosal UK by a group of 48 former employees claiming that they should benefit from an enhanced redundancy package negotiated more than 8 years ago has also taken its toll. On this note the administrators report that Bosal UK has appealed against a court judgement but has failed to overturn the original ruling, with potentially multi million pound consequences for the company in relation to a liability to both this group of former employees and potentially to its remaining employees.

“Given all of these factors the directors of Bosal UK believe that the company is unable to pay its debts and the future prospects for Bosal UK’s business and for its manufacturing operation near Preston can best be determined by a formal administration process…”, the statement concluded.