‘Sigh of relief’

Hundreds of jobs were saved after a sale was secured this week (January 11) of Coventry-based automotive parts supplier CovPress, one of the largest employers in the area.

The nearly 800-strong workforce at CovPress, the vast majority of whom are Unite members, faced uncertainty after the firm went into administration last September, but now new owners Liberty House have confirmed that all jobs will be secure.

CovPress is one of the UK’s oldest manufacturers, having been in operation for over a century, and presses parts for major automotive companies such as Jaguar Land Rover, GM, Honda and Renault, among others.

The company was bought by Chinese industrial giant Shandong Yongtai in partnership with TIA Treadsetters in 2013 and over the years doubled turnover to about ÂŁ100m. But after the Chinese firm gained another UK acquisition and significantly invested in new machinery, it ran into cash-flow problems, which led to CovPress going into administration despite the success of the workforce.

When CovPress first went into administration in September, Unite sought urgent talks with the company, with Unite regional officer Adrian Ross noting that the union would be “supporting its members to the maximum during this period of uncertainty.”

Constructive meetings

That support from Unite has now born fruit – Ross noted that after Unite held several constructive meetings with Liberty House and worked closely with Jaguar Land Rover, one of CovPress’ main customers, the sale went through successfully, with all pay, terms and conditions, and the final salary pension scheme secured for the workforce.

“Liberty House was from the beginning JLR’s and our preferred buyer,” Ross explained. “All the others were ‘lift-and-shift’ enterprises with no real concern for the long-term success of the business and workforce.”

Ross noted that the relationship so far with Liberty House has been a very positive one.

“Before the sale, Liberty House showed its intentions to work closely with Unite by giving shop stewards a presentation on their proposals and background on the company,” he said.

Liberty House, which has recently stepped in to rescue other sites such as Dalzell steelworks and the UK’s last aluminium smelter, both in Scotland, has said buying CovPress will present an opportunity for the UK automotive industry to inch away from its reliance on imported parts as Brexit looms.

Ross believes that Liberty House will be a ‘perfect fit’ for CovPress – which will now be called Liberty Pressing Solutions – because the company has a stake in every facet of automotive production in the UK.

“From raw steel right up through to the parts for the finished product, Liberty House is invested in quality automotive production in the UK,” Ross said.

Liberty Industries Group CEO Douglas Dawson hailed the “high quality of the operation at CovPress and the skills and equipment in the business.”

He said, “We have drawn up a detailed plan to ensure the future sustainability and profitability of the business. That will include ongoing capital investment, strengthened financial management and the benefits that will come from joint purchasing and marketing with our other operations in the UK.”

Pension scheme

Especially good news for the workforce is that the pension scheme too has been maintained – an unprecedented outcome.

When firms become insolvent, pensions are usually passed into the Pension Protection Fund (PPF), which often means workers lose out on their retirement income – and tax payers foot the bill.

But Ross noted that for what he believed was a first for UK businesses going into administration, this outcome was avoided as Liberty House now has committed to fully honouring workers’ final salary pension scheme.

“Unite welcomes the news that Liberty House will assume responsibility for the pension scheme which protects workers’ past service benefits,” he said.

“However,” he added, “it is not clear is whether changes will be made to pension provisions going forward – and this is something Unite will be investigating with the new owners.

“What is particularly pleasing it that it reverses a trend where companies or potential new owners think they can dump their pension responsibilities onto the Pension Protection Fund, which is underpinned by the taxpayer.”

Timothy Sharples, partner with pension specialists, Lane Clark & Peacock LLP, who advised Liberty on the transfer of the pension scheme during the sale process noted that the solution they arrived at “is a good outcome for all the parties concerned; particularly the members of the pension scheme who can now look forward to receiving their benefits in full rather than reduced benefits from the Pension Protection Fund.”

Ross highlighted that the workforce, which suffered for months of uncertainty after CovPress went into administration, can now breathe a sigh of relief and are in high spirits knowing that their jobs, pay, terms and conditions and pensions are safe.

“We look forward to developing and maintaining a good relationship with Liberty House,” Ross said.

 

Pic for illustration purposes only