The towbars allowed the family business to survive – that’s what happens when your business is on the brink of collapse
Since the start of the corona crisis, they have come up every now and then: names of companies that have gotten into trouble and have to take tough measures. Large companies, such as KLM, FrieslandCampina and Booking.com. And smaller companies cannot escape it either.
But there really aren’t many such emergency operations yet – quite striking, given the severity and duration of the crisis. In 2020, the number of bankruptcies even reached its lowest point in twenty years. However, this is expected to change once government support is phased out, and perhaps sooner.
The three major banks have already strengthened their special management department to cope with the expected crowds, ING, ABN Amro and Rabobank previously informed. NRC. Companies that are in trouble end up in that department. Restructuring advisers say they are no busier than before corona – much to their own surprise. But they are also counting on this to change in the course of the year. Credit insurer Atradius, which conducts research into the creditworthiness of its customers for its insurance customers, foresees a significant increase in bankruptcies in the coming year: 45 percent more than last year. And researchers from consultancy firm PwC and Leiden University write in their latest Special Management Barometer that they expect a peak of companies in need of money after the summer.
If the predictions come true, a lot of companies will be in trouble this year. What happens when this happens and you have to keep your business afloat with emergency measures? Two companies that have gone through restructuring, one before and one during corona, share their experiences. How did they survive?
Bosal ‘Everyone is looking: does the director look nervous?’
Saving your company from destruction? Shareholder Karel Bos of the Bosal family business now knows: “It costs a huge amount of money.” He estimates the cost of the restructuring of his company, which took place a few years ago, at 80 million euros. And that while Bosal, maker of car parts, was in need of money – that’s what the whole restructuring had started for.
59-year-old Bos is still angry when he thinks back to certain moments. “The bank did nothing for us,” he says. “We have been customers since the 1960s!” And then all those advisors who were brought in, also something that still excites him. “We hired them to make the bank happy. But they cost a fortune and we couldn’t afford that at all.”
After a considerable search, Bosal (2,100 employees) found a party that was willing to borrow money. Not a bank, but an American hedge fund, which charged hefty interest rates. Bos: “We borrowed 110 million euros for a period of nine months. That cost more than 20 million in interest, arrangement fees, and some other stuff like that.”
The towbars ultimately saved Bosal. “Our crown jewel,” says Bos. The trailer hitch division, the largest and best-running business unit, was sold in 2018 to TowerBrook Capital Partners, a British-American investment company. Difficult, says Bos, son of founder Karel Bos senior. “I once helped build that division myself.” But Bosal was able to repay his debts with the proceeds: with the Belgian bank and the hedge fund, and the accumulated accounts of the many advisers.
Because the bank no longer wanted to borrow, Bosal ended up with an American hedge fund, which charged sky-high interest rates
The acute financial distress was thus averted, and the real, operational restructuring could finally begin. The company also had to restore confidence a bit. “Our own people all walked around with their heads bowed,” says René de Wit, who became director of Bosal in 2018. But customers – car manufacturers – and suppliers also had to be reassured. “We had to show: we have a future, we have a plan.” De Wit visited as many people as possible in person, in Europe and the United States – that was before corona. “Everyone then looks: is the director nervous? You have to be confident.”
And in the meantime, of course, to put things in order in the company. That starts, says De Wit, with ‘being very close to the finances’. With weekly financial reports, but also by knowing everything about your material use, your waste. And then look: where do we lose money, where do we make money? Is the factory organized logically? Are there the right people? In the end, none of the sixteen factories were closed and there were no major layoffs, says De Wit. However, just about all employees in key positions have been replaced.
Has Bosal recovered completely? Both Karel Bos and René de Wit nod. In 2019, the company made a profit again: 3.5 million euros on a turnover of 464 million. And corona? “Because we had just had that restructuring, we quickly had the situation under control,” says De Wit. “We immediately started calculating scenarios and immediately stopped all kinds of expenditure.” Although all factories have been idle for a while, 2020 was also a profitable year, according to De Wit. However, he cannot name an amount yet.
And if it is up to Karel Bos, the farewell to his favorite car part was only temporary. “We are entering the towbar business again. In such a way that we come back stronger.”
Ampco Flashlight ‘If we didn’t intervene, we would be on the road to bankruptcy’
Where Bosal was in trouble before the corona crisis and digested 2020 quite well, it was exactly the other way around with Ampco Flashlight. Before the crisis, the company was the largest Dutch rental company for lighting and sound equipment. Until the lockdown of 2020, the company was doing well, with a turnover of almost 43 million euros in 2019 and a profit of just under 760,000 euros.
But the corner in which Ampco Flashlight is active, of the major events, has been hit hard by the corona crisis. Not a single major event has been held since the start of the pandemic. So no lamps were rented and there was no demand for Ampco’s sound engineers. The turnover for 2020, including the good months at the beginning of the year, was 20 million euros. But at the bottom was a loss of 4.5 million.
Director and owner Dick van Berkum soon came to the conclusion that Ampco Flashlight – he is director of several companies – would not survive the old way. “We realized that we were heading for bankruptcy without intervention. We looked at a restart, but I had a moral objection to that. This would mainly cost our suppliers and our staff would lose many rights. While we were still fully operational just before that.”
So Van Berkum looked at a restructuring of Ampco Flashlight, which then had 153 employees on its payroll. At lightning speed, because he had understood from a cabinet press conference that the following packages of emergency aid would be considerably cut back. “In my eyes they said at the time: companies must adapt before October 1. That’s what I based my plan on.”
Competing on price, as usual in the event industry, Ampco no longer does
Van Berkum set to work with his management team and an employment lawyer. The company had to become smaller and more manageable. “In the past, in addition to our own people, we often had 175 people walking around as a temporary worker or on a freelance basis. We don’t do that anymore.”
Van Berkum has decided no longer to compete on price, as is customary in the industry. He is looking for permanent partners who understand that his people provide great added value and are willing to pay for it. “There are several concert venues where the sound is not easy to control. My people know how to do it, how the systems work. Then 30 to 40 euros per hour, which we could often ask now, is completely out of proportion to what is put there.”
The new strategy, in which costs have been reduced by 45 percent, sent a sour message to his staff. His proposal was to employ 95 people at half-power. Fifteen would continue to operate at 100 percent. About 40 people should be fired. Van Berkum wanted to arrange this with great speed – in order to be ahead of the austerity of the corona support.
Matters that normally take months – arranging a social plan and handling it neatly – Van Berkum wanted to arrange in a few weeks. All employees had to agree to this individually. Ger IJzermans, chairman of the trade union LBV involved, believes that this approach does not deserve the beauty prize. But even though the union advised negatively on the proposal, it also recognized that there were special circumstances here. “Ampco cannot be blamed for the corona pandemic. Turnover was largely lost. In the end there was no more. Employees went along with it, grinding their teeth.”
Van Berkum also received support from the special management department, where his financier Rabobank had placed him. “During the last crisis, the banks made me very expensive, with unnecessary advisers. But this time we worked well together. I also said: if there is now an advisor who knows how the corona crisis will end, I will pay for it. After that it was quiet.”
Despite the ongoing lockdown, Van Berkum sees the future reasonably positive again. His company is a partner in the pilot events in the Ziggo Dome; some of the people who had to work at 50 percent are already being deployed more. As far as he is concerned, the support fund for the events industry is good news. “There is light at the end of the tunnel. The most important thing is that we master corona. That we can do things in a responsible way. With rapid tests and with vaccinations. Whether in June, July or later, the country will open again.”