Erwin Hymer is set to axe around 190 jobs at its County Durham plant amid a sharp decline in its main market, the ChronicleLive reports.
The company made the announcement that it proposes to lose 118 direct labour staff, 55 indirect production workers and 18 fixed labour employees, outlining efforts how it has sought to cut overhead costs in the wake of challenges.
Erwin employs around 500 people at its County Durham plant.
Most recent company accounts for the caravan and motorhome specialist, which is part of US group Thor Industries, show the UK business swung to a loss of £4.55m in the year to the end of July 2022, at a time when it was grappling with component supply challenges which have dogged the automotive manufacturing sector.
At the time, the firm talked about how lingering Covid impacts had reduced the number of chassis available to produce its models but said the market was otherwise buoyant.
As recently as 2021, the North East plant was said to be earmarked for £15m of investment which at the time Erwin said would guarantee the employment in the area for the next 15 years.
At the same time the creation of 200 jobs was announced, coming on the back of a boom in staycation holidays created by the pandemic.
In a letter sent to colleagues, managing director Chris Short tells staff: “Despite our best efforts to continue to maintain and grow a profitable operation in Consett, it has become clear that general sales have been in decline across our business and the wider UK leisure vehicle market in 2022 and further still in 2023.
“As I shared with you recently – caravan sales have now reached a 20 year low at circa 11,000 units over the previous 12-month period and Motorised vehicles sales a 13 year low at circa 4,000 units.
“It has also become clear that the cost-of-living crisis has further negatively impacted our end customer base.
“As a business, we have been heavily impacted by rising energy and fuel prices, increased labour costs and a supply chain affected by global, political, and economic instability.
“We have attempted to counteract these cost pressures by running a multitude of cost reduction exercises whilst also reverting to a single shift production operation within the Bond Shop.
“We will continue to try and find ways to reduce our overheads and wider cost base where possible but at our current level of sales, we will find it very difficult to justify the need to manufacture leisure vehicles at the current production fate.
“As we track the vehicle stocks on the dealer forecourts, we can see stock levels increasing whilst the market declines in size.
“It is clear to me that doing nothing is not an option if we are to build a viable business that supports sustainable, long term employment opportunities.
“We are informing you at this early stage that we are proposing that we may need to make significant changes to the way we operate. The changes that we are proposing will allow us to remain competitive in the current climate.
“Our proposal at present is that we would reduce our workforce across the factory, business support functions and operational management teams by approximately 191 roles.
“The company is making this announcement at the earliest opportunity to allow for full consultations with employees that will be directly affected by these proposals and to also allow for full assessment of, and more detailed planning for, these proposals over the coming weeks.
“Job losses are, of course our least preferred option, and we will do all we can to seek alternatives that would have less impact and not result in redundancies.
“We have a duty to consult on an individual and collective basis with all employees directly affected from the companies proposals.
“The individual consultations are expected to take place from March 11 through to April 4.
“With all employees directly affected to be informed of the need for an individual consultation by March 8.
“This will also be an opportunity for an employee to see an estimate of what they would be entitled to in a statement of redundancy if the company was to move forward with its proposals.”
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1 comment
I feel for the staff loosing their jobs, the problem was obvious, COVID got many people into the market and the manufacturers increased their prices and output but the market was temporary and is levelling back. This and the ever increasing costs of buying at motorhome means the bubble has now burst.