The number of companies entering into administration in the Midlands increased by almost 40% during the third quarter of the year, according to analysis from KPMG.
A review of notices filed in the London Gazette shows that the number of companies entering administration in the Midlands increased from 36 in the second quarter of 2019 to 50 in the third quarter. This also represents a considerable increase over Q3 in 2018, when 39 appointments took place.
Despite a string of high profile appointments nationwide, such as Jack Wills and Laterooms, the Midlands has primarily seen small and micro companies facing insolvency. The region makes up 12% of administrations nationally, but only 2% of those had turnover over £5 million; a sign of the strength of the Midlands’ larger businesses.
Locally, the industries most affected were infrastructure and industrial manufacturing, which accounted for 14 and 16 of the appointments respectively. Infrastructure remains an industry with a high level of insolvencies, averaging 14 per quarter since the start of 2017. However it is the industrial manufacturing sector which has seen the sharpest increase over recent months, rising from 11 appointments in Q2 to 16 in Q4. This was largely driven by the metal subsector, making up 9 out of 16 appointments.
Chris Pole, restructuring partner at KPMG in the Midlands, commented: “2019 has been a troubling year for manufacturing businesses in the Midlands, with many facing a lack of investment due to continued political uncertainty. This has been exacerbated further by a slowdown in volume in the automotive space, which is a key sector for many manufacturing supply chains locally.
“The metal subsector has been particularly hard hit by a significant fall in the steel price throughout the first three quarters of 2019, caused by the availability of cheap steel from overseas. The sector has also been affected by delays to large construction and infrastructure projects.
“The good news is that many companies are now proactively addressing long-term issues and attempting to place themselves on a more sure financial footing, ahead of any further macro-economic challenges that are coming down the line. From CVA proposals for retailers, to refinancing in other sectors, there are definitely options out there, and they seem to be paying off for those firms that have opted to take a fiscally cautious approach.”