BARLO, the engineering and plastics group, is cutting its 1,200 workforce by 180 as part of a major restructuring which will cost the group £5.9 million in the 1996 and 1997 financial years. However, none of the redundancies are to come from the group's Irish operations.
Barlo's chief executive, Dr Tony Mullins, has said that the group's results before the restructuring charges for the year to the end of March will not be far short of current profit forecasts of £5.5 million. The absence of a profits warning reassured the market and the shares dealt unchanged on 34p, with the restructuring costs having already been priced in to the shares.
Dr Mullins said current trading is mixed, with the Irish market which accounts for 20 per cent of activities doing well, while there is some evidence of the beginnings of stability in the British market which accounts for 40 per cent of the business. Continental Europe which accounts for the balance is still very difficult "aggravated in early 1996 by very severe winter weather conditions".
The restructuring announced yesterday is wide ranging and embraces virtually all the group's businesses, with the exception of the Irish operations which are trading reasonably well. According to Dr Mullins, recession in Europe and the strength of the Belgian franc have affected the British and European operations.
He added "Significant measures to improve product competitiveness and control costs are being effected on an accelerated basis in both the radiator and plastics operations in Belgium and the UK." Overall, 180 jobs are to be eliminated, about 15 per cent of Barlo's total workforce.
In the Veha radiator business in Belgium, there has been a major redundancy and early retirement programme, while production capacity, customer service levels and product quality have been maintained at previous levels.
In the IRG Plastics operation in Belgium production of sheet plastic is to be relocated to the Czech Republic with the resulting loss of jobs at the Geel plant. The transfer to a low cost eastern European location "will serve to protect margins and improve competitiveness" and will also give Barlo a base to exploit the eastern European market, said Dr Mullins.
There are also redundancies at the Manchester radiator plant, while manufacturing has been transferred from Belgium to the UK plant which is now "a very efficient UK producer". Having sold two small plastics businesses in the past year, Barlo is in discuss ions on some further small disposals.
As a result of the restructuring, Barlo will take a £1.9 million charge in the year to the end of March 1996. A further charge of £2.4 million will be taken in 1996-97, although this will be covered by cost savings. In addition, Bario is to provide £1.6 million in the current year in respect of the future cost over 13 years of the early retirement scheme.
