Nineteen people have lost their jobs and a further 21 positions are under threat after a Coventry-based automotive supply firm collapsed into administration.
Administrators at KPMG were called into LIC Components, a £2.2 million turnover business supplying turned metal parts to the automotive, hydraulics fittings and electrical cable fittings industries, when the company was overwhelmed by the current difficult market.
Mark Orton and Andy McGill, of KPMG Restructuring, were appointed joint administrators and are keeping the business going while they look for a potential buyer.
LIC Components, which is based in Curriers Close, Canley, employs 40 members of staff but KPMG said 19 had been made redundant as part of the administration process.
KPMG’s Andy McGill said: “The problems within the automotive industry are well-known and unfortunately the knock-on effect for suppliers into the sector has resulted in very difficult trading conditions for the company. We are continuing to trade the business whilst we seek a buyer.”
The collapse of LIC Components comes as the automotive supply chain finds itself in a slightly improved position compared to one year ago when it saw a steady stream of companies going under.
Rachel Eade, the operations manager of Accelerate, the body which supports the region’s supply chain, said the rate of firms in the sector closing their doors was lower than at the end of last year.
“Compared to this time last year it has slowed down but it is still happening,” she said.
“It’s not a daily occurrence and not necessarily even a weekly occurrence, monthly maybe.
“Cashflow is still a big issue in terms of volumes of business but it’s beginning to grow and become more stable compared to a year ago.
“But as much as volumes are growing – and the scrappage scheme has helped a lot – they are not anywhere near what they were 18 months ago.
“There are still some companies who are on short working weeks, there’s no overtime and all those extras, they haven’t returned.
“We have still got a couple of companies that are working a four-day week every other week. Cashflow is still very tight and after Christmas we are expecting there may be some more cashflow difficulties.”
But despite the issues, Ms Eade said there were companies in the West Midlands that were picking up new business, many of them riding on the strength of the euro, and there were companies who were beginning to win business back from eastern and central Europe.
“It’s a very mixed picture,” she said.
“It’s not fantastic but there are signs of new business opportunities and for companies that are prepared to work hard, and also if they draw in support from groups like Accelerate, Business Link and the Manufacturing Advisory Service, then they can make the most of it.”
Last month Accelerate was handed a temporary cash lifeline when the regional development agency Advantage West Midlands said it would continue to fund the programme for a further three months until March 31, 2010.
Funding for the project was previously extended for 12 months but was due to end on December 31.
Talks are believed to be continuing to find ways of maintaining the programme, which began in 1996, beyond next spring.
Accelerate says that since 1996 it has helped more than 5,000 manufacturers to adapt to global competition in the automotive industry.
Through strategic advice and financial assistance it has helped to safeguard more than 60,000 jobs and has generated sales in excess of £2 million for the regional economy.
It provides business mentoring, supply chain development, support and guidance to companies of all sizes and is working with the Manufacturing Advisory Service – West Midlands on delivering the £4.5 million Automotive Response Programme focused on helping companies emerge from the downturn and prepare for the predicted upturn in 2010.
Doubts over Accelerate grew when it emerged that AWM has had its own budget slashed by £48 million under the Government’s spending cuts. Some 65 regional regeneration schemes have been denied funding as a result.