A representative from Culina Group has confirmed the contents of the letter are genuine, adding that “a period of meaningful consultation has now been entered into with those colleagues affected.”
For those who have not seen the leaked memo, it begins as follows:
“Following a full strategic review of the Lurgan business, it is with regret that on behalf of the Morgan McLernon Board of Directors, that I announce the proposed cessation of activity and the site closure in Lurgan. As a consequence, it is also proposed that the Fowler Welch managed GB operations in Appleton and Cairnryan will also cease.”
The letter, which has the name of Fowler Welch CEO John Kerrigan at the bottom, then goes on to explain the company’s tough financial situation:
“The business has for an extended period continued to operate in an unsustainable financial position, not helped by Brexit and many other external factors. Despite the efforts of all colleagues involved, the increased pressures on the company in terms of reduced volumes and increased operating costs now reflects the urgency of the situation and has regretfully led to the business having no option, but to consider shutting down its Northern Ireland based operation.”
The document then explains how the business “has undertaken huge efforts to tighten cost control in all aspects of the operation” but has “not been able to achieve the necessary financial performance, or commercial targets”.
As regards what the future lies for the company as a whole and the staff, the internal communication says:
“In terms of the next steps, there is now a prescribed consultation process that we will follow. Whilst we do not currently foresee a way to preclude the site closure as the Board believe the business is unsustainable, the purpose of the consultation period is to listen to any ideas from you to avoid redundancies/or mitigate their effects. We will seek to address all questions that arise and ensure that all colleague concerns are dealt with as swiftly as possible.”
The memo then concludes with the following:
“I fully recognise the concerns you will have as we enter a difficult period ahead. I thank you in advance for your professionalism and commitment during this period. The local and wider Culina Group management team will be on hand through the process to support you at this time.”
Morgan McLernon’ last annual financial results registered with Companies House, which date back to October 2022, showed that the haulier recorded a loss before taxation for the financial year ended 31 December 2021 of £339,272. The year before had seen the company turn a profit of £3,982,675.
In its reasoning for the losses, the Northern Ireland haulier said:
“The main contributing factors for the company going from a profit to a loss year on year, were higher fuel and labour costs mainly due the effects of Brexit and global inflationary pressure.”
Since the end of 2021, there has of course been additional inflationary pressure as a result of Russia’s invasion of Ukraine. Meanwhile, despite the Windsor Framework, issues with post-Brexit Northern Ireland-GB trade have not been entirely resolved.
Regarding potential risks that could impact the company in the future, the October 2022 document referred to intense competition and post-Brexit UK-EU trading relations:
“The key business risks and uncertainties affecting the Company are considered to relate to competition from other haulage companies. In order to mitigate this risk the directors focus on driving efficiency and ensuring the Company maintains competitive prices. The continued impact of Brexit on future trading relations between the UK and EU is viewed as a potential risk to the Company. Management continue to assess the risks as negotiations on future arrangements develop.”
In addition, the document says that Morgan McLernon’s operations expose it to a variety of financial risks that include “price risk, credit risk, and liquidity risk”.
Commenting on the news yesterday, John Martin, RHA policy manager for Northern Ireland, had following to say about the Windsor Framework:
“If you’re investing tens of millions of pounds in a business, you need clarity and surety and that hasn’t been coming from government. I think the concern is if they tell us the detail, everybody will realize that it’s not what the prime minister promised.”
Concerning Morgan McLernon, Martin added:
“In the Morgan McLernon group, you’re talking about hundreds of jobs. But they’re not the only company that’s under pressure at the moment. A number of other haulage companies and manufacturing companies are already looking at the viability of their businesses in Northern Ireland.”
Photo: EDDIE / Flickr / CC BY-ND 2.0