Qioptiq logo Raytheon

MTL ARISES FROM THE ASHES – THE BLAME GAME CONTINUES! By Julian Nettlefold, BATTLESPACE

mtl27 Feb 15. It was announced on February 25th that WEC Group had acquired the assets of MTL Group (See BATTLESPACE ALERT Vol.17 ISSUE 05, 05 February 2015, MTL ENTERS ADMINISTRATION).

However, in discussions at IDEX the Editor was to find differing stories as to who was to blame for the demise of MTL, one of the UK’s leading steel fabricating companies.

During IDEX held in Abu Dhabi this week, a number of companies stated that Nimr, the UAE government-owned vehicle specialist who had a multi-million pound contract to build armoured vehicle cabs with MTL had been the cause of MTL going into receivership as Nimr owed MTL £4 million.

However, it became apparent from sources at IDEX who told BATTLESPACE that quite the opposite was true.  Sources suggested that a contract had been awarded to MTL in 2013 and several months later cracks began to appear in the management of the contract and Nimr renegotiated the contract in 2014 to give MTL breathing space to fix management problems. However, this did not stave of the bankruptcy announced earlier this month.

The same sources told BATTLESPACE that the consequences of the bankruptcy have not only resulted in Nimr facing late payment penalties but wider issues regarding current negotiations regarding the UK’s performance in the battle against IS.

The speed of the new Company arising from the ashes, not for the first time,  has not, for the moment, solved Nimr’s problems as it is not known whether a new contract will be negotiated with the new management.

Sources told BATTLESPACE that Nimr were looking at every avenue to resolve this issue and regret that they are being blamed for a problem which was MTL’s lack of management and not theirs as MTL had a confirmed Letter of Credit, now cancelled, to draw on, for all deliveries.

WEC Group Acquires MTL

WEC Group, one of the UK’s largest engineering and fabrication companies, has funded a partnership deal to acquire the business and certain assets of metal manufacturing specialist MTL Group out of administration, saving 135 jobs.

The Administrators of MTL Group Limited chose the deal offered by WEC Group as the best option. It will allow the South Yorkshire company to move forward with WEC as a new, major force in the UK’s fabrication and engineering sector.

MTL Group encountered difficulties on a large overseas defence contract which resulted in losses and cash flow problems. Despite best efforts to secure new investment or a sale of the Company, the immediate cash flow pressures left MTL Group unable to meet its creditor obligations and the directors took steps to appoint Administrators from EY on 2 February.

The Joint Administrators John Sumpton and Hunter Kelly of EY’s Restructuring team continued to trade MTL Group, before agreeing the sale of the business and certain assets to WEC Group.

John Sumpton, Joint Administrator of MTL Group and Executive Director at EY, said, “We are pleased to have secured this deal for MTL Group, which safeguards the future of 135 employees and represents a strong strategic fit for WEC Group. The support of the business’ loyal customer base was critical in enabling the company to continue trading, attract strong interest from a number of parties and, ultimately, deliver a rescue deal. A going concern sale represents the best outcome for the company’s creditors.”

MTL Group’s sales director Karl Stewart, finance director Howard Kellett and operations director Darren Bradley remain in the senior management team following the creation of the new partnership with WEC Group.

Wayne Wild, commercial director of WEC Group, said: “We are delighted to have reached an agreement which will save the jobs of more than 130 workers in South Yorkshire.

“The restructuring deal we have completed will see us work in partnership with MTL Group’s previous directors and shareholders to grow and develop the business for the benefit of customers and staff. We are looking forward to continuing to work with the current customer base whilst securing new orders.”

The addition of MTL Group more than doubles WEC’s engineering capacity. It will now have almost 600 staff working across eight sites in Lancashire, Yorkshire and Merseyside.

Karl Stewart, sales director of Rotherham-based MTL Group, is excited for the future and the opportunities that now exist.

He said, “The synergy with WEC Group is very strong and this deal makes both businesses much stronger entities. It enhances our capabilities and capacity and that is a major advantage to all our customers. MTL Group has certain specialities that WEC hasn’t been involved in which can now be offered to their customers, including our large laser cutting and bending capabilities. And WEC Group has operations and areas of expertise that we haven’t been involved in, such as its new powder coating division. The additional capacity is another massive positive that comes out of this deal.”

The partnership creates the largest laser cutting operation in the UK’s fabrication and engineering sector.

WEC Group, with its headquarters in Darwen, East Lancashire, has a turnover of more than £35m and MTL Group currently has an order book of more than £20m.

MTL operates from a 300,000 sq. ft. capacity factory in Rotherham which more than doubles WEC Group’s overall manufacturing space. It will also increase its purchasing power and its ability to handle larger metal cutting work.

Wayne Wild added, “MTL Group is a really great fit for our business. The company has a great track record, working with big name customers and has an impressive order book, despite the problems it has had. This move greatly increases our metal purchasing power, and it will also allow us to offer MTL Group’s expertise to our growing customer base whilst giving its customers access to the work the wider WEC Group can deliver for them. The partnership with MTL Group also makes us the largest laser cutting operation in the UK, with 18 machines servicing our clients. It means we can offer all our customers more.”

MTL Group’s manufacturing facility includes laser cutting and bending, high definition plasma cutting, waterjet cutting, gas profile cutting, robotic plasma tube cutting and robotic bending.

It also carries out CNC machining, fabrication with robotics, and has semi-automated and manual welding stations. Founded in 1995, at its height MTL Group processed and fabricated 30,000 tonnes of steel annually.

The contract manufacturing specialist is capable of handling all sizes and types of work from carbon steel to aluminium and it works in a range of sectors including defence and security, construction and quarrying, offshore and renewable energy, recycling and rail.

Privately-owned WEC Group is one of the largest engineering and fabrication companies in the UK and has a 35-year track record in investment and job creation.

It invested £500,000 in the latest technology earlier this year to set up a new job-creating powder coating operation in its home town of Darwen.

The company, formed in 1979, has an extensive customer list across a wide range of industries including rail, automotive, nuclear, offshore oil and gas and aerospace, has also purchased a six acre site at the Walker Business Park in Blackburn for future expansion.

Its manufacturing ranges from footbridges and bus frames, to log-fired stoves and street furniture across 12 divisions and with operations in its home town of Darwen as well as Blackburn, Knowsley on Merseyside and Leeds.

Steve Hartley, WEC Group founder and managing director, said: “In 35 years of trading we have always grown the business in a strategic and sustainable way.

“Adding MTL Group to our family is a logical move for us and for MTL and we look forward to the future with confidence.”

WEC Group also continues to invest in the future, with the only in-house welding and fabrication training academy in the country – ranked in the Top Three in the UK as an apprenticeship provider.

Fourteen per cent of its workforce is now made up of apprentices as it works to tackle the skills shortage in the industry.

EY appointed Administrators of MTL Group Limited

John Sumpton and Hunter Kelly of EY’s Restructuring team were appointed Joint Administrators of MTL Group Limited (‘the Company’), a Rotherham-based contract manufacturing specialist in the metal sector, on 2 February 2015.

John Sumpton, Joint Administrator of MTL Group Limited, commented: “Although the Company was historically profitable, it has encountered difficulties on a large overseas defence contract which resulted in losses and cash flow problems. Despite best efforts to secure new investment or a sale of the Company, the immediate cash flow pressures left MTL Group unable to meet its creditor obligations and the directors took steps to appoint Administrators.”

Continuing, he said, “We are assessing our options to keep the facility operating in the short term whilst seeking a buyer for the business and are continuing to provide product to certain customers. We would encourage any interested parties to come forward.”

On appointment of the Administrators, a total of 157 employees were made redundant across the Company’s head office and manufacturing facility in Rotherham, South Yorkshire.

146 employees have been retained to assist with ongoing operations whilst a purchaser is sought.

Employees affected by redundancy are being offered appropriate advice and support in making claims from the Redundancy Payments Office for outstanding wages, as well as redundancy and notice pay.

Concluding, Sumpton said, “It is with regret that 157 people have been made redundant. We will work with those affected to help them claim outstanding wages and other payments from the Redundancy Payments Office.”

 

Back to article list