A CABLE making business which was forced to restructure and shed more than 120 staff to survive has reported a loss of £2.2m after a turbulent year.
AEI Cables, the 170-year-old firm based at Birtley which is part of Indian cable-making giant Paramount Communications, went through a Company Voluntary Arrangement (CVA) in June 2011.
The legally binding arrangement with business creditors is often used by viable companies which are facing cash flow problems.
AEI reported the loss for the year to the end of March 2012 in figures just published by Companies House.
The business made 124 people redundant in May 2011 without warning and it is currently appealing a court ruling that ordered it to pay five weeks’ wages to each of the former staff, because it failed to consult with workers and unions for the statutory 90 days beforehand.
In the year to the end of March, turnover fell to £28.8m from £54.7m and the business made a £2.2m operating loss.
In addition to entering the CVA, staff agreed to a 12-month freeze and the company has withdrawn from the “unpredictable” house wiring market to concentrate on the design and manufacture of cabling for defence, transport and industrial customers.
AEI said: “The business experienced further aggressive competitive pressure, particularly in the house wiring cable market.
“A combination of low price imported cables and volatile copper prices created an adverse effect on margins in this sector.
“Whilst the price of copper and other overhead increases have been recovered through sales price increases in the industrial sectors, it was not possible to do the same in the house wiring market.”
AEI said remaining in the house wiring market placed stress on its working capital as high stocks had to be kept and customers demanded “extensive” credit facilities that were not matched by suppliers’ terms.
The business now provides cabling for industries including construction, defence, industrial, fire protection, mining, oil and gas, power and rail.
Current projects include the design and manufacture of a range of cables for the Royal Navy’s Queen Elizabeth class aircraft carrier programme, and AEI has also delivered cables for prestigious projects such as Manchester Airport, the White City complex and Queen Elizabeth Hospital, Birmingham.
Abroad, it has supplied to the Masdar Project and the Central Market in Abu Dhabi and the Russian coal mining market.
