Linley Engineering is a small Coventry company providing a range of subcontract metalwork and engineering services including welding, profile cutting, riveting, grinding and fabricating. It also undertakes intermittent contract fabrication of a range of trolleys, an outwork arrangement made five years ago with the trolley manufacturer, a Birmingham based company specialising in palletisation and material handling systems. This work, never particularly profitable or reliable, has for the past two years amounted to no more than an occasional batch order from the Birmingham company, which itself is now troubled by recessionary difficulties.
In 2003 Linley had a monthly turnover of approximately £70,000 and had 22 employees. Since then, it has suffered severely from the effects of regional decline in manufacturing, and has not markedly recovered even during the short-lived upturn of 2006-7. It now has only 14 employees and turnover has fallen to £42,000 per month. It has recorded a small loss in each of the last 3 years.
There are some 1100 accounts in the customer records but only about 120 have been active during the last eighteen months. Of these, ten accounts produce 70% of the company’s sales. Order sizes vary from ‘‘one-off’’ jobs costing £100 to a long-standing contract worth £6,000 per month. Profits per job are known to vary somewhat, though the company has not succeeded in its periodic attempts to plan profits or purposefully provide for future growth.
Sales contracts are currently handled by the Managing Director, John Linley. Apart from a listing in a local trade directory, the company spends no money on advertising or publicity. The company has a secretary/works accountant who costs all jobs and prepares estimates and quotations. Design, production and purchasing are handled by a production foreman, under the direction of John Linley.
In recent months John Linley has been giving some thought to the...