Builder ‘Boris Bus’ on the verge of bankruptcy
The Northern Irish bus builder, Wrightbus, has filed for bankruptcy. There are 1.400 jobs at stake at the company, known for the New Routemaster, the red double-decker buses it built for Boris Johnson in his time as Mayor of London. According to the Unite union, there are also 3.400 indirect jobs threatened through the manufacturer’s supply chain.
Last week, Wrightbus’ takeover talks with the Chinese company, Weichal, and the British entrepreneur, Jo Bamford, failed. They made the second major bankruptcy of the week in the United Kingdom inevitable, after the bankruptcy of Thomas Cook last Monday. The British car industry, which is under heavy pressure because of the Brexit, is also receiving a new blow: Wrightbus is the last UK-owned bus manufacturer.
Cash flow problems
According to the latest annual report from 2017, the company made a profit of 1,5 million pounds (about 1,7 million euros) on sales of 227 million pounds (257 million euros), but since then the results are reported to have deteriorated sharply. Prime Minister Johnson promised this summer that his government would do ‘everything possible’ to save the company. Not so.
The Wright family, who founded Wrightbus in 1946, said global changes from diesel to electric in bus technology had caused a sharp decline in demand for buses in the UK. The company even moved work from its facility in Malaysia to Ballymena, which is less than 40 km northwest of Belfast, in a bid to secure local jobs. But cash flow problems and not finding new investors or a new owner are now creating a crisis.
600 Boris Buses
However, the future still looked pretty good in 2012, when the then London Mayor Johnson ordered six hundred new buses for the British capital (the contract was worth 70 million euros). The new ‘Routemaster buses’ were to be a green and modern version of the traditional red double-decker buses, including a platform on the back of the bus to allow passengers to get on and off the bus. The new bus soon became popularly known as the ‘Boris Bus’.
But the new buses were expensive to buy and use, and had to contend with reluctant batteries that made the hybrid diesel buses a lot less environmentally friendly. There were also design problems, including poor ventilation that generated uncomfortable onboard heat for passengers. In 2016, the new Mayor of London, Sadiq Khan, decided to discontinue the purchase of the new bus.
This coincided with a cyclical downturn in Wrightbus’ home market. Uncertainty about environmental legislation prevented public sector companies from new purchases. Meanwhile, the company complained about the currency headwind: the fall of the pound in the aftermath of the British EU referendum made parts import very expensive.
The demand for new buses in the UK, the critical market for Wrightbus, was also very weak. For example, figures show that in the second quarter of this year new bus and coach registrations were down 30% compared to the same period last year.
Donation to a religious charity
The consultancy firm Deloitte has now been appointed as trustee, and the hope is that a buyer can still be found. Discussions with the investor, Darren Donnelly, broke down earlier this month.
The administrators are meeting unions later on Thursday, amid calls for Prime Minister Boris Johnson to intervene to aid staff. At the same time, Wrightbus is also facing questions over 15 million pounds (16,9 million euros) in a donation to a religious charity. According to the BBC, the Green Pastures charity, which is led by Wrightbus’s majority shareholder, Jeff Wright, received the money over six years. The donations helped it to develop plans for a vast church and village complex known as Project Gateway.