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SPRING 13

SUCCESS STORY

As the UK plunged into recession, the withdrawal of a £1m loan facility left Cab Automotive with just £50 in its bank account and on the verge of collapse. Four years later, managing director John Faulkner is successfully leading the car parts firm into annual revenues of nearly £40m. Steve Dyson reports on the dramatic change in fortunes It was a dark, cold and damp morning on Friday 12th December 2008 as John Faulkner arrived at Cab Automotive’s factory in Tipton, in the Black Country. But the atmosphere was about to get much chillier during that fateful day’s meeting with the company’s bank manager. “The economy was faltering, and the bank had been coming in to see us every two months, then every month,” recalls John, now aged 55. “We sat down as usual and tried to show them our books, but on that day they simply said: ‘We don’t need to see your data because your customers are also our customers and we know where the automotive sector is heading.’ Basically, the message was: ‘We want our money back within 14 days.’ At the time, Cab Automotive’s combined overdraft and loans amounted to around £1m, and the withdrawal of these debt facilities coincided with a sudden freeze in orders from the firm’s clients, resulting in a cash flow crisis. “The bank was pretty accurate with its information,” admits John, “because from two weeks before Christmas until two weeks after, no-one ordered anything. “With zero revenue and the bank wanting its money back, at one memorable stage we had just £50 left in the bank.” Back in 2008, as much as 93% of Cab Automotive’s work had been with Jaguar Land Rover (JLR) and, in retrospect, with the car maker struggling to cope with its own major wobbles, the knock-on effect for such a dependent component firm was inevitable. John says: “JLR had been our main work, but suddenly the portcullis had come down. It was

like tumbleweed blowing through the shop floor – no work at all. To start with, we were in a bit of a daze, asking ourselves ‘what does this mean?’ and ‘surely the bank won’t really take the money back’. “But the realisation soon came that they were serious and, because this money represented 100% of our working capital, these were desperate times. Then the penny dropped that our usual orders had stopped, and it was a pretty awful feeling all round.” John, who was general manager at the time, did not remain shell-shocked for long. He’d joined Cab Automotive in 2007 after 33 years with Land Rover, he knew that this was a time for difficult decisions and positive action. “We took a view that we’d just created a new management structure within the company in 2007 and had had a good year with costs and quality. And in 2008 sales were good, with our JLR work going well. So we said to our management team, we either shut up shop or put up a fight.” The fight started with an immediate survival plan. Cab Automotive accepted 12 voluntary redundancies and some 50 agency staff were laid off from a workforce of around 200. Next came a complex piece of accountancy from

the company’s financial controller, resulting in John and the management team carefully talking to suppliers, customers and investors about outstanding invoices, revenues due and loans to somehow keep cash flows going. “We sort of declared UDI,” remembers John, “and at one stage even considered whether we needed a bank, as we knew so much detail about our own finances.” Importantly, during what was a bumpy period, Cab Automotive “never missed a delivery” as it steadied the company to face the future. They looked at all sorts of options, even developing marine seats for high-end leisure craft which, while they never went into production, taught Cab Automotive a lot about its capabilities. It was during this time that John acted on a very simple but challenging option – to start insourcing various jobs that had previously been outsourced. One of the company’s main products was seats, assembled from various basic parts like steel, plastic, foam and coverings. Rather than just assemble the seat, John decided they would start to make each part from scratch. “I started by looking at all the foam we used in head-rests and seats which we bought in >>

JLR had been our main work, but suddenly the portcullis had come down. It was like tumbleweed blowing through the shop floor

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BUSINESS QUARTER |SPRING 13

BQ WEST MIDLANDS issue 1  
BQ WEST MIDLANDS issue 1