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Focus on rebuilding after WR collapse

Well, it has been another month with no shortage of activity in the cooling industry. That well-known Chinese curse “may you live in interesting times” comes to mind. 

The major issue is how the supply industry is coming to terms with the consequences of the fall of WR Refrigeration. Inevitably there will be a lot of soul-searching about what it says about the climate in which the cooling industry, particularly retail refrigeration operates. And anger, too, that the lessons of history don’t seem to have been learned.

You will see on p17 of RAC Magazine, December edition the somewhat exasperated view of a seasoned campaigner who has spoken out after seeing the same story of low margins and unrealistic customer expectations played out too many times. It is a personal view which may prove provocative, especially his conclusion as to where the blame lies (on both sides). We would welcome your responses.

But make no mistake, the fall of WR has left a trail of devastation in its wake. At the most fundamental level there are a lot of companies out there who have been left with sizeable unpaid bills, from national companies with six-figure invoices, down to much smaller outfits – and as an industry built on entrepreneurism, it is dominated by small businesses – who are now faced with prospects like remortgaging houses to cover the shortfall.

Some have carped that suppliers should have seen it coming and avoided doing business with WR, but that ignores the reality of this industry.

There can’t be too many companies who would turn down the chance of a decent order supplying a national retailer for a start. It is also an industry which is no stranger to high levels of bank debt – the City folk call it “gearing” to make it sound more palatable. But above all, it is an environment where much is done in good faith – and whatever you think of the management, they weren’t trading out of a cardboard box, or a PO Box.

At the same time, those former WR staff who have found work now have to come to terms with new employers, new T&Cs and sometimes very different ways of working. So it is no surprise there is currently a certain sense of unease among the engineering fraternity at the moment.

There is a strong sense that there are lessons that must be learned if the industry is to survive, let alone thrive into the future – more so than ever when we are faced with an era of inevitable change for refrigerants.

Our Retail Question Time (p12 RAC Magazine - December) confirms that supermarkets are continuing expansion of natural alternatives, and this inevitably will require extra attention from suppliers and no doubt extra costs for training, too.

And if the most severe of the F-Gas proposals are accepted, the accelerator may need to be pressed on R404A conversions from a wide range of customers outside of the supermarkets too. So surely it is time for everyone to focus on the fundamentals of good engineering practice and excellent customer service – and then to ensure they charge a realistic price for delivering it.

Readers' comments (3)

  • The demise of W R Refrigeration and the subsequent fallout ,will no doubt effect the way in which the small suppliers and contractors who serviced the Larger Refrigeration Companies, undertake the way in which they carryout their current business and future business.
    There have been many comments that it is the fault of the suppliers in not taking our "Insurance for the failure of a client".

    We have for a decade, had it drummed it to us that the way to a successful business is partnerships, between the supplier and client. This will be on the basis of trust and improving standards with in the industry.

    It is obvious that this has not worked and therefore T&C's will have to re-written with a strict attention paid to guarantees of payment. Companies will have to consider Insurances. However this will have two consequences,
    i) Costs will have to increase to incorporate insurance costs and compliance of stricter T&C's.
    ii) Suppliers who do not adhere with i) will have to accept even smaller margins.

    Smaller margins could result in a collapse of the industry as margins have been reduce to a point where the are already not stainable.

    The clients would have to accept an increase in cost. If not the UK Refrigeration industry will have to become reliant on using imported Labour and goods.

    This will mean that there will be a drop off in service, quality higher stock losses and a reduction in the trust of suppliers.

    A UK supplier train has served the industry well over the last 100 years , there has been a trust and understanding of what the clients expectations are required.

    It is about time as suppliers and contractors we all stood together and stabilised a Cost regime which the industry can support.

    Perhaps this should be laded down in tablets of stone, by a independent body.

    Lets hope that 2014 will be a starting point for regeneration of the Refrigeration in the UK. Built on co-operation and not on who is offering the lowest cost.

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  • Andrew is absolutely right in that the consequences of the WR collapse will be felt far and wide in this industry. WR's suppliers will suffer in the first instance but the riddles will spread much further and be with us for some time.
    Who is to blame? The only people responsible are the management of WR, no one else. Of course the management blame the supermarkets, of course they blame the fierce competition, of course they blame the tax man for collecting what was due. It seems they blame everyone but themselves.
    Management is a verb as well as a noun. The management decided how to run the company, not the customers or competitors.
    They have taken a lot of suppliers for a huge amount of money. This sounds like mismanagement to me.
    I am as quick to blame supermarkets for all the ills in the world the same as the next man. Their obscene profits make me sick, and yet I still shop there every week and I look for bargains too. That is human nature. But I would never work for them. That is a choice I have made, and it is one that the managers at WR could have made.
    Instead they chose to parade themselves as award winning contractors at every opportunity. Who pay for those awards and the dinners? The suppliers who are now not getting paid.
    Yes there are lessons to be learned, but the only lesson the industry should really learn is employ professional managers next time.

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  • Jason is absolutely correct, the blame lies with the management of WR, no-one else.
    My understanding is that many of those responsible, including Mike Nicholas, have found themselves new jobs with Integral, to whom the liquidators have sold some of the WR business.
    Whilst other employees, and many suppliers, are left to deal with the consequences of their failure.

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