Birmingham-based engineering group Metalrax has announced the closure of one of its structural steel businesses as part of a company restructure.
The closure of Down & Francis in Kings Norton puts 36 jobs at risk, although Metalrax said it would try and redeploy workers at other companies within the group.
Metalrax chief executive Andy Richardson said the group had been trying to sell the company as a going concern for some time but had not found any buyers.
"The decision to close the business has not been easy but it is just one of the difficult decisions I have had to make since I joined the company last year.
"Down & Francis has been losing money for the last three years and while no one likes to close firms down, this had to be done for the sake of the whole group.
"I have a duty to the 1,700 staff at Metalrax as well as countless shareholders and if we don’t sort out the group then more jobs could be at risk as well as substantial investment," he cautioned.
Down & Francis, which has produced steel structures for projects such as hospitals and airports, is valued at around £1.7 million. The company has incurred trading losses on a monthly basis for over three years due to inadequate sales revenue.
Actions to strengthen management and systems have not achieved sufficient impact, order intake has not improved and significant losses have continued, Metalrax said.
In the year ended December 31, 2007, Down & Francis incurred an operating loss before interest and central charges, but before exceptional costs, of £481,000 and after exceptional costs of £2,422,000. Gross assets of the business, excluding cash, at that date amounted to £2,080,000.
Metalrax has said the savings from the continued losses incurred by Down & Francis would strengthen its financial outlook.
In addition, the closure of the business will free up 23,495 sq ft at Metalrax’s freehold property in Ardath Road, Birmingham, which also houses the group’s head office.
Since the end of the year the group has also sold its Bacol Fine Blanking business, which had customers such as Land Rover and General Motors, to Rical and next on the block will be the group’s operations in Romania.
The group, which announced last month it intended to step down from the main market, is undergoing a review that is expected to see it restructured into two divisions: consumer durables and specialist engineering.