Forterra, the Northamptonshire-based producer of manufactured masonry products, has made the decision to suspend all business operations as soon as possible until further notice in light of new Government guidance, and in order to protect its workforce.
The company noted that in some cases shutting down facilities in a controlled and safe manner will take several days, and welcomed the Government’s announcement that funding will be available to ensure employees can still be paid a proportion of their salary during a period of furlough and expects to make use of this facility.
In a statement Forterra said: “Given the unprecedented level of uncertainty we now face with significant economic disruption ahead, the Board has taken several immediate actions to protect the Group’s liquidity position.”
This includes cost reduction and cash preservation. “Prior to the decision to temporarily cease operations we had already taken actions to halt all non-essential discretionary expenditure,” Forterra said. “Existing commitments for capital expenditure will be honoured although we expect our suppliers and contractors to also face significant disruption in the coming months. No new commitments will be entered into. The Board remains committed to the completion of the new Desford brick factory although the phasing of expenditure will be flexed according to circumstance.”
The company has also taken the decision to suspend its 2019 final dividend.
In a letter to customers, Stephen Harrison, Chief Executive, said: “We are in unprecedented times which requires global action and significant change across every community and business in the UK. I wanted to write to you personally as I feel it is important to share with you some of the many steps we are taking to ensure business continuity during this challenging time.
“I am very proud of what our committed team of almost two thousand people has achieved over the last five years as Forterra. Protecting the health, safety and wellbeing of our employees, as well as that of the wider community, remains my primary concern. We continue to follow Government guidance, have implemented homeworking for many of our colleagues to maintain high levels of customer service and are actively engaging in social distancing to ensure those who have to be at their workplace to carry out their jobs can do so as safely as possible.
“I do however have to look at the security of our business for the long term and have announced to the workforce temporary production breaks at many of our factories starting from the end of this month and including the bank holiday periods. This decision has not been taken lightly, however in light of the current economic uncertainty it is felt to be the best available option today.
“We are coming out of the winter months with high levels of inventory which is more than sufficient to cover these production breaks so I am confident your orders can be fulfilled with a high level of service. The reason for these production breaks is to avoid further inventory build which would have a very negative impact on our cash position. Looking forward, I need to be sure that we have sufficient cash to continue to pay our employees and suppliers so reducing the risk of excess inventory build is essential.
“Our commercial team will be available throughout this period for customer contact, and our management team will continue to monitor both stock levels and demand to ensure we continue to supply your needs. Please can I be clear that production breaks are not closures and we have the agility to flex production to ensure inventory levels are sufficient to meet your ongoing requirements. Needless to say that if sales volumes continue as originally expected, we will delay production breaks or recommence production.
“May I take this opportunity to thank you for your business and support. We will continue to communicate with you as the situation changes but please do not hesitate to get in touch should you require any further information.”