Collapse puts about 1,200 jobs at risk and is second major UK insolvency this week

This article is more than 1 year old

This article is more than 1 year old

The maker of the revived Routemaster bus and one of Northern Ireland’s biggest employers has collapsed into administration – leading immediately to 1,200 redundancies.

The failure of Wrightbus, which comes after a breakdown in 11th-hour rescue talks, represents the UK’s second significant insolvency of the week, following the demise of the holiday group Thomas Cook.

The Ballymena-based engineering company had been scrambling to find a buyer.

An expected sale evaporated at the end of last week when the Chinese engineering group Weichai and a firm led by the JCB heir, Jo Bamford, pulled out of talks. That double blow came days after the Northern Irish businessman Darren Donnelly also withdrew from making a potential bid for the firm.



Timeline Boris Johnson's failed 'New Routemaster' bus project Show Hide The original Routemaster bus was mostly withdrawn from service in London to comply with the Disability Discrimination Act 1995. The original 1956 design was not accessible for wheelchair users, and was difficult for people with limited mobility or with pushchairs. Boris Johnson, then the Conservative mayoral candidate for London, announces he is contemplating introducing a modern-day Routemaster. Now elected mayor, Johnson announces the New Bus for London competition to design it. The requirements are for a low-floor red double-decker bus with at least one internal staircase, a rear open platform, and one other entrance/exit with doors. Six manufacturers are invited to compete to design and build the new bus, with Northern Ireland-based vehicle manufacturer Wrightbus awarded the contract in December. The final design is unveiled the following May. Johnson drives an early prototype of his bus in a public demonstration. The new bus goes into service for the first time, on the No 38 route between Clapton and Victoria. Johnson commits to ordering 600 of the buses at an anticipated cost of about £160m. Modifications to the design of the rear doors mean the buses will be operated with only a driver, and the “hop on/hop off” rear platform will be closed while the bus is not at a stop. This breaks Johnson’s election promise that the buses would be operated by two crew members and removes the unique “hop on/hop off” flexibility the original Routemaster had brought to London’s streets, the main reason for introducing the new design. Tfl spends an additional £2m fitting opening windows on the top deck of the buses, which Londoner nicknamed ‘Roastmasters’ for how hot they get inside. Temperatures had been recorded as high as 32.5C, higher than the legal limit for transporting live cattle. Sadiq Khan, Johnson’s successor as London mayor, declines to order further new routemaster buses. A TfL response to n freedom of information request reveals that the total capital cost of the vehicles is about £346m - approximately £430,000 per bus, nearly double the cost of purchasing conventional buses. It is announced that Wrightbus, the bus manufacturer Johnson contracted to build the buses, is goes into administration. Martin Belam

The accounting group Deloitte, which had been running the sales auction for the company, has now been appointed administrator for a collection of the businesses within the group, including Wrights Group, Wrightbus, Wright En-Drive, Wright Composites and Metallix.

The firm’s collapse came after Boris Johnson told parliament his government would do everything it could to help Wrightbus. Ian Paisley, the MP for North Antrim, also told the Guardian last week he believed the government had already demonstrated it could help the stricken manufacturer without breaching state aid rules by directing state-controlled companies to place orders with Wrightbus.

However, a government source strenuously denied any such assurances had been given. A source close to the company’s board also denied government support had been offered.

Michael Magnay, who is joint administrator, said: “We recognise the companies are crucially important employers in Ballymena, and this will be devastating news for those who worked there, their families and the town, which has already suffered from a number of manufacturing closures in recent years.

“The joint administrators will explore all remaining options for the business and assets, and would encourage any parties with an interest to contact them.”

The firms have about 1,250 employees and just 50 will remain to assist with the winding down if no buyer can be found.

Paisley said: “Administration, I hope, offers an opportunity to attract a sale on amended terms to the last month’s negotiations. I can’t imagine a situation where Ballymena would be without its bus building company and I hope we can get this matter resolved quickly.”

Workers dragged heavy toolboxes out of the factory after hearing the news. Gordon Mairs, who has been with the firm for 22 years, said many workers were angry with management.

“I haven’t really digested it yet,” he said. “It’s heart-wrenching. There’s been a lot of people with a lot of thoughts on the matter, but if anyone has questions to answer it’s the man at the top, Jeff Wright [the major shareholder of Wrights Group’s holding company].”

Ballymena has lost several major employers in recent years including the closure of sites operated by tyre maker Michelin and tobacco firm Gallaher.

Susan Fitzgerald, a regional secretary for the Unite trade union, said: “This town hasn’t recovered from Michelin, from Gallaher’s, [or] Blackbourne Electrical. In the last week, 100 more [jobs have] gone. It has to end at some point.

“Boris Johnson as his hobby makes buses out of wooden crates. What he needs to do is stop with his hobby and engage now straight away in a rescue plan to save these jobs and save this area. What future is there for young people in Ballymena?”

Unite added that it estimated a further 1,700 jobs were at risk in the supply chain. One Wrightbus supplier said: “There’s going to be a lot of debt out there. There’s a lot of local suppliers. For Ballymena and everything it’s not good.”

Sir William Wright, Jeff Wright’s father and the head of the family owners of Wrightbus, advocated Britain leaving the EU during the 2016 referendum. He also nominated Paisley as the Democratic Unionist party’s Westminster candidate. The DUP is a staunch backer of Brexit.

The parent company of Wrights Group also donated more than £16.1m to charity between 2012 and 2017. Those donations helped to fund the expansion of Green Pastures, an influential evangelical church in Ballymena run by Jeff Wright .

Workers said they planned to protest at the church on Sunday. Lee Kyle, who has 17 years’ experience of coach building at Wrightbus, said: “I think it’s disgusting. There’s 1,200 people put out of work because of the church. The men are destroyed. This is all they know since school. Where do they go?”

Following the donations, Wrightbus has increasingly been struggling with its finances and made two rounds of redundancies last year, with 95 jobs going in February and June. It had recent sales successes, including a Transport for London order in May for 20 hydrogen-powered buses, which each cost about £500,000 and only emit water as exhaust.

However, the mayor of London, Sadiq Khan, cancelled further purchases of the New Routemasters in 2016, which had been launched with a huge fanfare when Johnson was running the capital in 2012.

The UK bus market has since slowed. Operators have taken a cautious approach to new orders after ordering a large number of vehicles in recent years to meet stricter emissions standards.

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In its last set of accounts, for the 12 months to December 2017, Wrights Group made sales of £227m and a profit of £1.5m – down from £264m and £10.7m on the year before. The financial position of the company is thought to have deteriorated significantly since the last financial update.

Before the potential bidders pulled out of talks last week, the company had raised staff hopes that a deal was imminent. On Thursday, Wrightbus management told employees it was “now in a race to complete a final deal with credible bidders”.

It added: “This ongoing business and its employees are our number one priority and we are confident that a positive outcome can be delivered over the next few days.”

Wrights Group did not comment.

Northern Ireland’s fallen industrial icons

Workers at Wrightbus are not the only employees in the Northern Irish manufacturing industry who have faced the loss of their jobs in recent years. Despite unemployment hitting record lows, work has stopped at some of the region’s industrial icons, taking away well-salaried jobs.

Harland and Wolff

The historic Belfast shipyard that built the Titanic was placed in administration last month, threatening the jobs of 140 workers. Harland and Wolff’s distinctive yellow cranes form the backdrop to the capital’s skyline, but workers still hope that the yard could be saved from permanent closure.

Bombardier

Bombardier, the Canadian aerospace company, put its Belfast operations up for sale in May as part of a wider restructuring. In June, Mitsubishi Heavy Industries bought the company’s regional jet fuselage manufacturing arm, which carries out work in Belfast. However, a buyer has yet to be found for the rest of the Belfast business, descended from the pioneering Short Brothers, which makes wings and fuselages for aircraft such as the Airbus A220.

Michelin

Production at Michelin’s tyre plant in Ballymena ended in 2018, costing 860 jobs. The French company cited a downturn in demand for truck tyres in Europe after the financial crisis for its decision, while relatively high energy costs made the plant less competitive than other factories. Local politicians sought to attract luxury carmaker Aston Martin to take on the plant but Ballymena lost out to a site in Wales.

Gallaher

Japan Tobacco International announced the closure of the Gallaher’s cigarette plant in Ballymena in 2014, amid a decline in the number of European smokers. The final closure came in 2017 but Wrightbus took over the Gallaher’s site, initially providing some hope to the local economy before Wednesday’s closure.