The majority of the 450 staff at Fairline Boats have been made redundant after the luxury yacht maker went into administration last week.
Administrators have kept on 69 workers to keep the business running and finish existing orders, but the remaining 381 have been told not to return to work after they were sent home last Wednesday, reports The Guardian.
Most of the retained staff are at Fairline’s factories in Corby and Oundle in Northamptonshire, where the 52-year-old company designs and manufactures a range of luxury boats under the Targa and Squadron brands, ranging in value from £350,000 to £2.5m. A few are still working at the boat testing site in Ipswich, Suffolk.
The joint administrators, Geoff Rowley and Alastair Massey of FRP Advisory, are attempting to arrange a sale of the business or its assets.
Unite said the workers had been “sacrificed on the altar of uncaring capitalism”, claiming the firm did not pay the employees’ pension contributions for the last three months, while still deducting contributions from staff pay packets.
“While not unexpected, the news today is a real financial body blow to staff facing a grim Christmas and who will be searching for new employment in the new year,” the union said. “The adverse knock-on effects to the Northamptonshire economy cannot be overestimated.”
The union also said staff had not been paid for 10 weeks.
A supplier to the powerboat maker Fletcher, which is also owned by Fairline’s private equity owner Wessex Bristol, told the Guardian that Fairline’s suppliers had not been paid for three months, while many of Fletcher’s suppliers were also waiting to be paid.
About 185 staff had already been suspended and encouraged to resign in recent weeks after Jon Moulton’s private equity fund Better Capital sold Fairline to Wessex Bristol, for a deferred £2m in September.
At the end of March, the boat maker was still valued at £13.5m, but it has been hit by a slump in orders from wealthy Russians who have been affected by a deepening recession, falling commodity prices and a weak rouble.
Better Capital, which also owned the collapsed parcel delivery firm City Link, said it put Fairline into administration to protect its interests as a senior creditor, after Wessex Bristol failed to inject promised funds into the boat maker that were “essential for it to function as a going concern”. Better Capital bought Fairline for £16.6m in 2011 and invested a further £24.4m in the business.
The private equity fund said it had hoped that a “sale to such an experienced and apparently well-funded buyer would secure the future of the business, but this has not been the case”.
Wessex Bristol is backed by a Middle Eastern sovereign wealth fund.
Ayiaz Ahmed, who runs Wessex Bristol, told the BBC he was “gutted” by Better Capital’s decision. He claimed he could have “turned the business around”, saying: “We had a plan, and now the administrators are in, our plan has been halted.”
The administrators said they were liaising with unions and assisting workers who had been made redundant so they could submit timely claims to the Redundancy Payments Service. The administrators promised to help all staff, including those who had been suspended.
Massey said: “Since the appointment of administrators, our focus has been on liaising with staff, customers, suppliers and agents to ensure value can be realised from servicing existing orders whilst we explore options for the business, including marketing it for sale.
“We request interested parties to get in touch – Fairline is a proud brand and has an array of loyal customers.”
Unite has called for a government investigation into the way private equity firms operate.