Aerospace manufacturer Hampson Industries collapsed despite the industry flying high after struggling with delays to major projects after increasing debts, experts have said.
Brierley Hill-based Hampson, which makes tools for the production of the F-35 Joint Strike Fighter, collapsed this week after struggling to cope with a £55 million debt pile.
The company was founded in 1947 by Tom Silk and employed thousands at its peak, but in recent years it has dwindled to employ only a handful of staff in the West Midlands and has been involved in some high profile court cases in recent years.
However, industry experts say the sector is in rude health – orders for Rolls-Royce engines and Airbus planes helped the UK aerospace industry post a 4.7 per cent increase in revenues to £24.2 billion last year.
Darren Jukes, head of manufacturing at PwC, said Hampson’s troubles began about three years ago when the company focused on composite, rather than metal-based production.
He said that while this was the right strategy it may have sparked some financial stress to the firm coupled with delays in some of its major programmes.
He said: “The strategy was a very good one but the timing of the project combined with a slowdown in some parts of the sector – in the regional and business jet area – along with a delay on a big US programme meant they ended up with this gap in terms of cashflow.
“It was almost like a perfect storm with major delays combined with a global downturn in these areas and some destocking in the supply chain from some major manufacturers.”
Hampson appointed Simon Kirkhope and Chad Griffin of FTI Consulting as administrators and has sold both its US business and Wigan-based BHS Components – representing all but a handful of its employees – in the space of a week.
It brings to an end a torrid 18 months for the company which has also been dogged by production problems in the US. It had been worth as much as £295 million in 2008, but was put up for sale in February after the value of its assets fell to less than half of its share capital – but no buyers could be found.
According to the British aerospace trade body, ADS, the industry boosted workforce numbers by more than 4,000 employees to 100,658 last year, while R&D investment rose by 11 per cent to £1.97 billion – despite cuts to defence spending.
Graham Hampson-Silk, former shareholder and son of founder Tom Silk, said: “It could and should have been a successful business. They are in the right area, it was the right strategy but the management made a number of bad decisions.
“They had issues with the companies over in the States as well as in this country. It wasn’t that the economy is in a bad position – there are aerospace companies in this areas that are performing very well.
“For it all to go so spectacularly wrong the buck stops at the manager’s door.”
Hampson agreed a £1.7 million settlement with the former owners of two American firms it bought late last year over claims they had been “misappropriating and treating as their own private property” the assets and funds in the business.
However, the company lost out in another court case last year and was ordered to pay £1.6 million after a judge slammed its “fraudulent” £3.1 million deal to sell off an ailing car parts firm. Meanwhile, profits dipped and debts rose.
Rachel Eade, supply chain specialist at Manufacturing Advisory Service, said the company was paying the price for over-stretching itself and its collapse would mean job losses elsewhere in the supply chain.
The company, which supplies tools and components to planemakers Airbus and Boeing, suspended its shares earlier this year after struggling to find a buyer.