Last December, Derby-based Parry Group found itself in a difficult financial situation which forced it into administration. But through a pre-pack administration plan, a new entity called Parry Catering Equipment (Midlands) was born, saving 70 employees’ jobs and creating a viable business.
The issues which led to this were spearheaded by a legacy decision in the late 1980s to enter into a final salary pension scheme. Parry Catering Equipment (Midlands)’s MD, Mark Banton told Catering Insight: “The W J Parry Pension Scheme had become significantly underfunded and continued to be, despite concerted efforts over the years to improve the position.”
This included a revised recovery plan in October 2014 which deposited a £750,000 lump sum into the scheme which was raised from refinancing Parry Group’s property, combined with a period of reduced contributions in order to allow the company to grow. Although this helped to keep the business solvent over the following 2 years, it still represented less than 20% of the costs due to expenses incurred administering the pension scheme and the annual fine for underfunding that Parry Group had to pay the PPF (Pension Protection Fund).
However, the final nail in the Parry Group’s coffin was the Brexit decision’s impact, reducing sales by £500,000 in the second half of 2016. “We had to focus on chasing orders and reducing prices to open up more commercial opportunities, but despite these increased efforts we couldn’t achieve budget,” reported Banton.
Taking the advice of professional business recovery firm Wilson Field, Parry Group accepted that pre-pack administration was the only viable option, which took place on 5 December. Creating the new Parry Catering Equipment (Midlands) then safeguarded the current staff, as just three were part of the final salary pension scheme, while the firm could continue its commitments to supply its distributor network and provide its supply chain creditors an opportunity to recover all monies owed to them, rather than the smaller percentage they would have received through a full administration process.
Therefore all of Parry Group’s employees were TUPE’d over to Parry Catering Equipment (Midlands) and the new business took on all the old one’s liabilities, honouring any stock and warranty claims. All of the Parry Group’s final salary pension beneficiaries are now receiving their payments via the Pension Protection Fund, divesting the new business of the financially-crippling legacy.
For the first months of the fledgling outfit, it had to keep everything simple and focus on the daily key business drivers. Banton said: “We supported this by short term rolling forecasts, including a cashflow forecast, because a lack of cash can kill businesses which have been through this process.”
While no redundancies were necessary, he reported that there has been some natural wastage of staff because the business has been remodelled. “We have taken the company from a traditional manufacturer with a typical model of having external salespeople to transforming it into a forward-looking supplier.
“Key to that was listening to our distributors. We accepted the positives but then we focused on what we needed to do better. We asked our distributors to share with us how they were successful at selling to repeat companies so that we could tailor our services in similar ways.”
This resulted in the new firm driving its account management and service in parallel. That means dedicated bespoke account management for distributors and an overall partnership outlook for both dealers and Parry Catering Equipment (Midlands)’s own suppliers. The manufacturer has clear KPIs to achieving this, including on time in full deliveries and controlled continuous improvement.
Banton commented: “We’re able to do this because as well as being a lean manufacturer, now we are an agile manufacturer. We employ bespoke lean manufacturing initiatives that benefit the bottom line, as opposed to those which have benefits that are difficult to measure. There is a distinct difference.
“We have an embedded systematic approach to identifying and eliminating non-value-added activities to ensure we only produce what our customers need when they need it.
“A Parry partnership offers more from bespoke account management, bespoke products on request, reliable quality and value for money, short lead times and marketing and PR support.”
He reported that distributors are already very aware of the improved service they’ve received from Parry Catering Equipment (Midlands) to date. “This is the first stage of our partnership – we recognise that they are the lifeblood of our future. For too long I think this was overlooked a bit. We are now working to a common goal with them. There is oversupply in our market in general so what we do differently is the genuine partnerships which are beneficial to both sides, and that’s achieved by listening to our customers.”
For any distributors who are concerned about working with Parry, Banton said: “Our distributors can be reassured that Parry’s competitive advantage is a culture that is sustainable. Culture is the true source of our competitive advantage. We have an internal customer approach to our in-house operations and we foster an attitude of thinking like a customer in order to learn.”
This approach has already paid dividends, as the manufacturer’s two largest accounts have grown by in excess of 35% in the last 6 months. Banton predicted further growth, but at a sustainable pace. “We won’t try and grow beyond our capabilities because then there would be a reduction in service.”
He concluded: “At the end of the day we want our customers to really value what we do and be happy they are getting value for money.”
Parry Catering Equipment (Midlands)’s main values are:
- Providing distributors with what they need when they need it
- Developing partnerships with suppliers and customers
- Achieving world class performance
- Controlled continuous improvement in all business processes
- Fostering a culture that recognises the contribution from employees and supports their development
- Transparent business processes, eliminating ambiguity for customers