Administration costs Hunslet jobs

A RAILWAY engineering firm has gone into administration with the loss of more than 10 per cent of its staff, due to a period of "production inefficiencies".

Hunslet-Barclays, which specialises in the refurbishment and repair of rail vehicles, has been forced to axe 16 workers at its Kilmarnock base, despite being on track to grow its turnover by more than 10 per cent in the current financial year.

Administrator KPMG said it had already had "some interest" in Hunslet - which in the past has carried out work in both the UK and overseas, including for Scottish rail company First Group and the Glasgow Underground - and added they were confident it would find a new buyer.

The joint administrator and head of KPMG Restructuring in Scotland, Blair Nimmo, said a competitive market combined with difficulties in specific contracts and inefficiencies in the business, had made it impossible for Hunslet to continue.

A series of management changes and a restructuring programme were put into place by the firm, but it is understood a lack of cash, either in the company itself, or from Hunslet's parent company, the Austrian-owned Waagner Biro group, forced it to call in the administrators.

Hunslet-Barclay, which employs 138 staff, including the 16 who are to lose their jobs, had a turnover of 9 million for the year to 31 December 2006, while turnover for the year to 31 December 2007 was on target to exceed 10m.

Nimmo said: "The view from the company is that it is a pretty competitive market at the moment and there were also some inefficiencies, which impacted on cash flow. The business has endured a tough time over the last couple of years as the company focused on quality, possibly at the expense of efficiency.

"The level of losses sustained ultimately left the directors with no choice but to appoint administrators. Whilst it is regrettable, the current financial situation means that the administrators have no option but to make 16 redundancies with immediate effect."

The remaining 122 staff will continue to assist the joint administrators in realising the maximum value from the business and its assets.

Nimmo added: "Our concern is to get the business into the right shape for a sale so that it is attractive to a potential buyer. We are already aware there is a fair bit of interest in the company and we are confident that we can continue to trade the business with a view to securing a quick sale. We welcome any party who may have an interest in acquiring the business to make early contact with us."

He added: "We hope that a buyer would be able to work with the existing staff to turn the company around and potentially, eventually re-employ the 16 people we have had to make redundant."