Bodycote warns that it might have to close more plants
The economic downturn is beginning to have an impact on British “niche” engineering, as Bodycote’s share price suffered its biggest fall in almost 18 years.
The shares fell 22%, and the company is having to halve a £260 million payment to shareholders. Bodycote has seen demand for its metal strengthening and heat treatment material services fall sharply, and is warning that it may have to close more plants.
Bodycote’s processes place metal under intense weight and heat to improve durability. This makes parts suitable for high-stress applications, such as in jet engines and Formula One racing cars.
The company, which supplies Ford and Rolls-Royce, said it had been affected by a downturn in automotive orders, and was anticipating that the decline would continue as car and truck makers close production facilities during winter. The company has closed five plants in the US this year, and plans to shut one UK plant and close a department in another.
Bodycote chief executive John Hubbard said: “The challenge is in Europe, where the social laws are such that shedding our number-one cost, people, is more difficult.
But 10-15% of our workforce are on temporary or short-term work contracts.”
© PE Publishing, 26 November 2008
