Flying Blind - again

Administrators called in at Auto Windscreens

The Times - Marcus Leroux

Last updated February 15 2011 12:01AM

One of Britain’s largest windscreen repair companies collapsed into administration yesterday without enough cash to pay its 1,100 workers.

Deloitte was called in as administrator after the company received a winding-up petition from Revenue & Customs over unpaid tax bills. Lloyds Banking Group, the state-backed lender, had earlier appointed Deloitte to try to find a buyer in an attempt to limit its exposure.

Matt Cowlishaw, a Deloitte partner, said: “It is extremely disappointing to see such a well-known business enter administration. The company worked extremely hard to try to recapitalise the business, but unfortunately this could not be achieved in the time available.We are now in urgent discussions with the key stakeholders and interested parties in an attempt to save the business.”

The company, the largest in the market after Autoglass, was well known to football followers as the sponsor of the Auto Windscreens Shield in the 1990s. It turned over £63 million last year. In 2009, the last year for which records are available, it lost £5.3 million on revenue of £77 million, compared with losses of £18.7 million on revenue of £99 million in 2008.

Sad, but from the figures quoted here, inevitable. They fail the common sense test.

With sales at £57,000 per employee, how might anyone expect this type of business (operators in vans with stock) not to lose money? And how can "re-capitalisation" be relevant when the cost base is so obviously too high and the revenue line too low?

This is a company with low Comparative Competitive Strength, and it has been so for some time. And now, inevitably, it has hit The Abyss. An objective view of its Competitive Strength could have seen this coming at least 4 years ago, time to have done something effective.

Probably an unnecessary failure, so it is sad for the employees, they have been badly failed by their management. Once again it looks as though the people on the flight deck have deluded themselves that all is OK, the wings have not fallen off, the fuel tanks have not run dry and the oh too solid ground is not 2 feet below them and approaching fast – “all we need is a little more time” (i.e. new wings, fuel , airspace = someone else’s money).

How often do we see management teams in failing businesses convincing themselves that they are “OK Really” when they really are not? How many allegedly professional advisors support such leaderships in this wishful thinking because, let’s not beat about the bush here, this is where their fees come from?

However, bankers, accountants, financiers and creditors could have looked at their Competitive Strength long ago, and taken precautions. They did not, so they deserve no sympathy.

Actually they should be hung, drawn and quartered for Wasting our Nation’s Wealth

The funds they have allowed to be squandered here could have been used to support other companies with the High Competitive Strength that can grow the economy and create jobs. So they have not only kept afloat a ship that should have sunk – but denied opportunities for success to others who deserve, and who we all need, to succeed

Until the financial decision makers and key influencers grow up from their dependency on accountancy practices and traditional indicators, they will forever be looking backwards. That means that they will continue to focus on the craft that haven’t crashed yet, watching where they have been to guess where they are going. This is because they don’t know how to look forward, how to recognise those businesses that can and will soar.

The Comparative Competitive Strength point of view can sound tough, but it does look forward not backwards.

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