Birmingham-based engineering group Metalrax has announced the formal closure of its structural steel business Down & Francis with immediate effect.
Metalrax, which supplies specialist engineering and consumer durable products, said the closure was part of a company restructure.
Actions to strengthen management and systems at the Kings Norton firm had not had the desired effect with the result that order intake failed to improve and losses continued.
The closure had been expected following the company’s announcement in May that it planned to shut the business subject to employee consultation.
The closure will result in the loss of 36 jobs although 10 staff have been retained for the next three months in order to complete outstanding contracts.
Metalrax chief executive Andy Richardson said the group regretted the closure but had been left with no alternative after failing to find a buyer for the business. He said Metalrax had been trying to offload the business for three years but had failed and the decision to close had been taken for the good of the whole company.
He added that the group now intended to focus on its restructuring which will see the company reorganised into two divisions: consumer durables and specialist engineering.
“The closure of Down & Francis, although disappointing, is another step forward in the strategic and structural turnaround of Metalrax following the review of the business announced in January,” said Mr Richardson.
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.
In addition to the savings resulting from the closure, the move will also free up 23,495 sq ft at Metalrax’s 39,000 sq ft freehold property on Ardath Road, Birmingham, which also houses the group’s head office.
The board said it anticipated that the closure of Down & Francis would be cash neutral, before taking into account the net proceeds of the intended property disposal.
The restructuring announced involves the phased sale of its high volume, low margin metal bashing businesses, in particular those connected with the automotive industry.
This will allow it company to shift focus to sectors such as healthcare and aerospace where margins are higher and the rewards better.
Metalrax has already sold its Bacol Fine Blanking business and next on the chopping block will be the operations in Romania.