Rallying call to save Royal British Legion clubs
- Today's leader
530 jobs go as firm folds
Tuesday 10th March 2009, 3:45PM GMT.
By Kirsty Smallman and Business Editor Amy Bould
A Shropshire building company today folded after more than 40 years in business with the loss of 530 jobs.
Bosses at the Wrekin Group, which owns Wrekin Construction, based at Lamledge Lane in Shifnal, told workers the company had gone into receivership and all staff had lost their jobs.
A total of 260 of the workforce are based in Shropshire, including 120 staff at the firm’s Shifnal head office. Other axed workers are based in Wellingborough, Bradford and Runcorn.
Receivers from Birmingham-based Ernst & Young arrived at the site this afternoon. Peter Greenwood, managing director of the Wrekin Group, said the workforce was “gutted”. He said: “It’s cash that we have run out of effectively and there has been a total lack of support from our bank RBS.
“Today the bank have sent a formal demand that we repay our overdraft of £2.8 million. We cannot do that because they have frozen our accounts so the bank has appointed receivers.”
Mr Greenwood added: “We have offered the bank shares in the business and the chairman David Unwin has offered to stand down but the bank is only intent on cash.
“The irony is we have £40 million of work secured this year and £4 million next year and an extra £1 million will be in the bank by the end of the week.” Workers who were working on multi-million pound projects across the country today downed tools and were asked to travel back to the headquarters following the announcement.
Last week staff wages were paid 24 hours late which was blamed on a banking error.
One worker, who did not want to be named, watched as heavy plant machinery was moved off the site this morning.
He said: “Everyone is pig sick but there is a great feeling of sadness more than anything.”
Wrekin MP Mark Pritchard was planning to raise the company’s failure on the floor of the Commons later today.
Mr Pritchard said: “This is a major blow to Shropshire and the West Midlands as a whole. The blame lies entirely at the steps of 10 Downing Street, given that the Government is the major shareholder in the Royal Bank of Scotland.
“This is a long-standing and profitable company which employs hundreds of local people. The failure of the Government and the RBS board to act to ensure cash flow will cause extreme hardship for many families and the local community.”
Last month the company was awarded the RAF Menwith Hill Northern Perimeter Patrol Path contract by Defence Estates, which was due to start this month.
Just weeks earlier the award-winning company won a £13.3 million three-year package as Halton Borough Council’s partners to deliver bridge maintenance. In November bosses revealed they were bucking the current recession by acquiring two companies and saving more than 50 jobs.
The company bought one of Staffordshire’s most respected civil engineering and construction firms, Toft Johnson (Construction) Ltd, and also added window manufacturer Watson Dallas to its portfolio.
The Wrekin Group and Wrekin Construction, launched by Tom Frain in 1960, was bought by the current owners in 2007.
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As a share holder in this bank, and now lloyds, i would have given the ok for a share swap for Wrekin Group. How ironic that every individual in this country as been forced into saving to of the banking “giants” but when a 40 year old company, with the promise of new contracts, let alone the unfinished contracts, asks for help, the banks simply say no.
Maybe our looney government can learn from RBS and just say no, when they ask for more taxpayers money.
Good look to all the employees.
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What a shambles, The banks take our money as tax payers but when local business’s need help they dont want to know.. No wonder there is a credit crunch..
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Well that just sums up the banks. When they are in trouble we are expected to bail them out, but if anyone else is in trouble they withdraw help, When its fine fine a bank will lend you 2 umbrellas as soon as it starts raining they will want them both back
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This is terrible news. How much of the now unemployed workers money has been poured into RBS and now they just desert them.It really is strange but loyalty is only required from the bottom up. A disgrace to the lives of good normal working families.
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As the MD of a company operating within the construction industry I can well understand the frustrations of the board at Wrekin Construction .Although my company does not trade with Wrekin they have a good reputation with a skilled workforce which has worked on several contracts crucial to the local economy. It has a reasonable order book and prospects for the future , a situation envied my many companies in the construction sector facing desperate times. How many times recently have we heard from Government ministers that the billions of taxpayers money handed to banks was to enable them to start lending again. It is clear that this is not the case and that those huge amounts of money serve only to keep RBS afloat The sad reality is that as large as those government funds are the banks are still desperate for money and now seek to claw back money from their customers where they see the slightest risk. The fact that RBS is now state owned makes the situation intorable. If the government refuses to intervene which given their past record is quite likely perhaps all companies and private individuals who bank with RBS should consider changing their bank.
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I know times are hard in the constuction industry and it has been for the last six months at least. so why didn’t the managment of this firm see that they could not continue at the size they are with diminishing prospects for work.
They should have done what the rest of us have to do in hard times that is downsize the business to to suit the work that they do get.
Then when things pick up they can once again expand. afterall they have all grown from small companies at sometime.
My sympathy goes to the workers and the people that they owe money to who may never see any of it.
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What was the bank thinking – did they think of the billions we taxpayers have been forced to spend to bail out their greedy and incompetent directors, did they think of how they could get there hands on the houses of the workers who have lost their jobs, or were they doing the standard small minded typical bank process of looking after themselves and to hell with the rest of us.
I agree completeley with Peter Greenwood – someone needs to be shot – and not too subtley so all the others realise the fate that awaits them if they fail to help firms out rather than just deepening the recession.
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H.St. John Peasbody, please read the following article on the express and star website before judging the management of this company. It opens your eyes to the disregard big banks have for british companies. http://www.expressandstar.com/2009/03/10/530-jobs-lost-at-builders/. How can a company repay any money to RBS, when all of thier accounts have been frozen by them.
£40 Million in ongoing contracts and new contracts for 2009, and already £4 Million in contracts for 2010. How can this company be held responsible for the actions of our Bank. Lets not forget how much taxpayers money went in to RBS to bail them out.
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The banks were given £Billions of our money to use to help support British industry.
They have kept it all. And not used it. Time for thegovernment to DO something to support British industry.
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brillaint now people will realise that labour isnt working, we will sort this mess out by injecting money through tax cuts for businesses
down with labour down with the EU
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Somebody at Wrekin should be shot.
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I can only see a parallel here with the thriving railway companies nationalised into British Rail, and governed by the dead hand of Whitehall.
The only incentive shown now is to grab the cash and find every excuse not to use it.
Its called “progress”.
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Sack the business editor and get an investigative journalist willing to ask some tough questions on the case. Blaming the bank is a cheap shot and the Tory MP attempting to score points is a fool. This is a company which has been systematically pillaged and destroyed for personal gain.
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The real cost of all of this is people like my partner who is in the middle of a contract with Wrekin, a total of 42K is now owed to him. We have no hope of seeing this money either from Wrekin or RBS. I hope the people at RBS see how this effected a great number of people and compaines. The goverment must act before it costs anyone else their health and future.
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Expanding outside the envelope of civil engineering into general construction was the catalyst for the downfall.
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An extremely sad demise for what is, or was, a very respected Telford business.
I wait with bated-breath for all the empty and meaningless excuses shortly to be offered by their bankers(did I spell that right?) as to why they refused to assist.
It must be said that although the bank refused to assist, it should be noted that the government(being the major shareholder of the bank)must have had some input into its new policies, so ultimately our illustrious goverment and its windsock premiere must surely be held ultimately responsible.
Like Peter Greenwood said, ‘Somebody should be shot’.
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I agree with Peter Greenwood-someone at the RBS should be shot and a few more in govererment.I now am unemployed and will have to claim from the state after many years in the construction. They should hold there heads in shame. I for one shall never have anything to with RBS and hope that others sit up and take notice as it could be them next.
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RBS seem to be very cutthroat at debt recovery. They pulled the plug on Lifeboat financial at the wrong time,
Also pulled the plug ok Whitehouse hotels, althought the owner did buy 4 hotels in one go instead of one at a time.
Know other banks do this but slot of the it seems to be RBS.
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this is an outrage
OUR BANK, Our money, who says they cant lend it to small firms?
Im happy for it to go to this firm (as a loan for say a year or two), surely if we all feel the same the board are bound by the will of us the shareholders?
the trickle down effect doesnt work it should have been more bottoms up, give people the moeny, they will give to businesses, who will then bank it,
the government got it the wrong way round
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This decision is being blamed on the corporate body called RBS.
It was actually made by an individual like you and me.
That individual has wrecked a company, wrecked the lives of the workers, lost the suppliers thousands of pounds, impacted local shops, pubs etc. Cost we taxpayers the redundancy costs and the ongoing benefit costs.
Could Peter Greenwood please supply all of us with the name, telephone numbers, and if possible the home address of this doubtless very well paid individual who has caused this problem.
The workers who have lost their jobs and we the public who will suffer could then contact this individual and ask for explanations!!
In the second world war the nazi’s slaughtered millions but the individuals who carried out this crime were not allowed to hide behind the corporate facade of tne nazi’s or use the excuse that Hitler told me to do it – they were brought to justice many years on – the same principle must apply in this case.
Don’t let the incompetents hide behind the corporate facade – let them be seen for what they are and they might just think more carefully about what they are doing.
Come on Mr Greenwood – name them and shame!!
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this is one of the most important stories of the week and featured on this mornings bbc today programme. here we have a company wrekin construction with orders of 50 million pounds and 25 million in the pipeline. the royal bank of scotland have pulled the plug on this company for refusing them a temporary loan in addition to their 2.8 million overdraught. the rbs is owned by us and this is a true test of how serious the government is in providing credit to big and small business’s. the government must sack the directors of this bank and install managers and directors who can sensibly run a bank.
. these 600 jobs must be safeguarded without delay otherwise the employees will be on the dole. shame on our bankers and shame on rbs/natwest bank. wrekin with their orders deserve to be in business and an overdraught of 2.8 million is peanuts compared to existing and future orders
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It is a disgrace that this is being allowed to happen. The company obviously has the means to repay any money leant to them in this difficult time, for example they have just won a £50 million contract over the next 5 years! It is awful that nobody is willing to step up and save not only the company but also the hundreds of workers and their families; many of which have laboured 60 hour weeks for years.
I echo the comments of those saying that the bank was saved by the public but ultimately they are not willing to offer a hand to those in need.
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im am very angry will we get paid this thursday all the money we are owed some one shud be shot yet more unemployed people in the uk its time for a change
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this is an outrage, they are profitable for god sake, why cant they apply for a loan direct to HM treasury like the banks and auto makers did?
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toadie, if they were profitable they wouldn’t have the need for a 2.8MILLION pound overdraft.
If Wrekin are such a well run company they’d have enough capital to cover this.
Mark Pritchard MP has done wonders by getting eveyrone to blame RBS (and the Govt.) but the blame for this company’s failiure rests firmly on it’s managment.
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i would lend them money myself if i could, but i dont have any cash to hand as the government has tied it all up in RBS
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As a Wrekin employee and RBS account holder, I am dismayed by the banks stance. RBS freezing our account effectively strangled our trading. We could no longer buy materials, hire plant or pay subcontractors.
As RBS are only interested in cash, I will adopt a similar position. I will be closing my RBS account effective immediately. I suggest others do the same.
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Martyn has said what I said yesterday….but my comment was deleted.
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I wish people would consider the families affected by this situation without posting misguided comments.
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Martyn…
You said
“toadie, if they were profitable they wouldn’t have the need for a 2.8MILLION pound overdraft”
May I suggest that you don’t understand how business works??
Profit does NOT mean cash in the bank!!
In fact -a classic failure of newer businesses is that they grow too fast (and appear profitable), have a large order book, but simply run out of cash because of delays in getting paid, and funds being already tied up in materials purchased etc.
Credit and cash control is a major part of running a business – and if you get one or two large creditors failing to pay (like the MOD I understand) – then what do you do??
Take your large (and probably best) customers to court for non-payment? – or do you apply gentle pressure in the hope they will pay up ? (so that you don’t lose future sales??)
A business MUST have liquid cash funding. If the bank suddenly removes a line of credit (usually removing an overdraft facility) then what , as a director do you do?? It might be feasible for a small business to raise say 10-20 thousand pounds maybe from personal sources, but for a business turning over several million pounds .. then what?
What would YOU do as a director??
Seems to me the directors of W.Construction allready offered their souls to the bank – and STILL they were turned down .. so UNLESS there is something we don;t know .. then this defies belief !!
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martyn, do the maths. They had a 5 million working overdraft with a turnover of 90million using this overdraft to operate with large contracts. The overdraft was frozen at 2.8 million when wrekin needed an additional 2 million to continue their work. The issue is not bad on behalf of wrekin but RBS for pulling their operational overdraft even though it is clear it could be re-payed.
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As a business owner myself, albeit on a vastly smaller acale, my heart goes out to Mr Greenwood.
Surely -if there is any justice in all this .. there has to be a way of saving this company. The cost of not doing so would far outweigh the cost of saving it.
RBS should hang its head in shame.
It really is time this whole farce of a banking industry was brought to book.
Billions of pounds of OUR money pumped in to the bankks .. for damned good companies to be treated like this.
It seems as though the only problem this company has is cash flow – and so – unless there is NO GOOD reason why not – then LET’S SEE another bank step in NOW – and save this company, and all those jobs from extinction.
So.. all you local bank managers, (who REPEATABLY tell us at chamber of commerce meetings that they are there to help local business .etc etc … OVER TO YOU ….
So, lets have ….
….. The next post from a bank manger pledging to save this company.
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A bank manager would not have the clout.
A board director of a major bank would but as they are all hanging the oversized heads they have in shame that is very unlikely.
Given that it will cost more to make all 500 people redundent plus the cost of benefits for the next 2 years would it not be logical for the Government to offer Wrekin construction a 3 million pound loan to keep going? After all Wrekin are owed 2.8million from the MOD for a contract completed?
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if the government does not step in and save this company we shall know they are not serious about our banks helping out business, it will be the goverment that will miss out at the ballot box, next election
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not fair
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Well said “QS”
Anyone connected with this company knows the truth and who’s really responsible for the failure.
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HSJP, perhaps the reason that your comment was deleted is that you are quite obviously trying your hardest to become the resident ‘Have your Say’ troll.
I congratulate the Shropshire Star on finally realising your ambitions and look forward to reading less of your inflammatory nonsense in the future.
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we must not let the banks do this
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Commercial Manager..
you will see in my posts I added the caveat
“UNLESS there is something we don’t know”
And from what you are QS implying – seems like a VERY serious allegation if true and …..
WHEN the final report on the company is issued after liquidation is complete, we shall see “who” was to blame
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as the government have not stepped in and saved wrekin construction means they can no longer be trusted. step forward david cameron
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i work for mcphilips……… my jobs ok…
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id like to see some politians help them
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sad sad day for the workers and their families i feel for them all
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looks like more giro deliveries for me!
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thank you to all the people who have shown thier support for this once great company,Wrekin Construction
its workforce are fantastic people, more friends than just some one you work with always there to share your highs and your lows lend a hand when needed this week has been like watching your family torn apart to see grown men cry is not an easy thing to witness
lets just hope the truth will out and we do get to find out where the blame truly lies most of us ex employees already know and we do not wish him well
good luck and future happiness to you all
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surely the answer is for the MOD to pay WC what they are owed, thus unfreezing the overdraft and creating cash flow – thats the best way for the government to help by actually ensuring that public bodies pay their bills in full on time.
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its not going to happen, many good firms will go to the wall whilst unreformed public services like the royal mail, the dodgy banks, and foreign car firms churning out polluting goods which arent fit for purpose will be bailed out by our taxes, bring on the revolution
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Surely if we had a government with a positive and optimistic view of the future, building firms like this could be at the vanguard of a green industrial revolution, with massive contracts for insulation, green conversion, green power etc etc provided by the state.
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not good, this will lead to more closures and cuts
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