Manufacturing

Tinsley Bridge Ltd (TB) is a Sheffield-based manufacturer, using imported steel bars to make anti-roll bars for truck manufacturers, predominantly in Europe. Following an introduction by our contacts at the Confederation of British Metalformers, we spoke with TB, who had been paying large sums of steel safeguard duties on their imports of steel bars.

The challenge faced

Steel safeguard duty is a charge of an additional 25% on certain steel products imported into the UK, intended as a measure to protect UK manufacturers against a surge in imports. In TB’s case, the quality of steel bar needed was not available from UK manufacturers, however its imports were still caught by the measure.

This particular measure allowed some respite in the form a quota allowance, whereby a predetermined quantity of steel product could be imported free of the safeguard duty, on a first-come first-served basis. Inevitably, the quota was quickly exhausted, and as they operate within a Just-In-Time supply chain, TB could not import all of their required bars at the start of the quarterly quota period, and this quickly left them exposed to 25% safeguard duties for subsequent imports in the quarter.

What did we find?

From discussion with TB, it was apparent that their truck manufacturing customers were based outside the UK, necessitating the export from the UK of their finished anti-roll bars. This developed into exploration of whether Inward Processing (IP) might be beneficial. However, TB informed us that they had previously been told by a government representative that they were not eligible to use IP, and therefore hadn’t explored this further.

IP is a procedure which allows for the relief of import charges on goods which undergo a qualifying process, with the finished product being subsequently exported. By using IP, UK customs charges are avoided on product which does not remain in the UK.

Resulting actions

We went away and obtained confirmation that IP could be used not only for relief of conventional customs duty, but also for other measures, including anti-dumping duty and, importantly, safeguard duty. Seeing no other obstacles for IP, we helped TB to apply for IP, at the same time seeking an effective start date 12 months retrospectively.

When the IP approval was granted, with the requested retrospection, we then set about reclaiming the duties paid over the previous 12 months. This required collaboration with TB to compile the necessary evidence that the processed steels bars had been exported, with an audit trail back to their original imports. The duty repayment claim amounted to over £500,000, and following a couple of verification questions from HMRC, was paid in full to TB.

TB now has the ability to avoid use of the quota on all its future imports, and can use its IP approval to avoid the impact of any future changes to the steel safeguard measures.

Mark Webber, Managing Director at Tinsley Bridge Ltd, commented that:

“Crowe’s support has been crucial in securing this duty refund and setting us up for future savings, and we have been very happy with the quality of their work”.

For further information on steel safeguards and Inward Processing, please contact Ian Worth or Jamie Mcleod.

This company, owned by two individuals, manufactured containers for the food industry. The process involves use of presses that have to be kept hygienically clean and automation of production to enable 24-hour working at minimum cost.

We conducted a strategy session with the client. On the basis of this, they formulated a growth plan that aimed for growth. This culminated in the company, whose turnover had doubled, to successfully buy out a larger competitor.

We assisted in the transaction support associated with the acquisition and the subsequent restructure of the resultant business, which moved from three manufacturing facilities to a single, new purpose-built one, harvesting over £2m EBITDA in synergy savings.

The group was eventually sold for a record sum in the industry.

What we did

• Strategic advice: helped the owners communicate their business plan to management and to make key strategic decisions.
• Advice on serial acquisitions and the problems of integration of staff and processes.
• Supported and advised on their major buy-out transaction by analysing the assets and balance sheet of company they eventually took over.
• Assisted the client’s closure of three manufacturing facilities and moving into a single new one without adversely affecting either production or customer supply.
• Supported their final major sale transaction.

A precision engineering group in the automotive and aerospace supply chain had operated successfully for many years, but by 2007 had experienced a very sudden drop in sales due to the sudden suspension of production at two major clients.

We persuaded the owners not to inject money to meet the short term cash flow need, as it would be soaked up in redundancies rather than supporting the business.

We recommended that a new company be formed, the existing ones they currently traded under being allowed to fail, and that fair market value be paid to acquire the machinery. We helped the new client shape a new winning company strategy that was both affordable and viable.

We were alongside the client during hard negotiations with their bankers, asset financiers and their landlord to secure the machinery, premises and working capital, and the new company entered 2008 with fresh finance, a clear business strategy and a workforce appropriate to the expected future trade.

Today, that company goes from strength to strength, earns good profits, generates cash and regularly wins industry accolades.

We continue to act for the client in a compliance and strategic capacity also and have advised on a series of R&D tax claims too.

What we did

• Strategic planning, including assessing future competitive advantage.
• Financial modelling.
• Supporting the successful corporate restructure, especially where there are significant employment issues.
• Negotiated with asset financiers.
• Research and Development tax claims.

Our client was consistently breaking even or losing money. We carried out a ‘waste audit’ that quickly revealed a major issue with rejects, due to overheating of the forgings, an issue which was resolved by the installation of thermostats at a cost of around £100.

The first year savings in energy costs, combined with the savings on production and a more energised and focused management team, has resulted in this company being the main cash generator of a fast growing group.

The owners were impressed enough to ask us to advise on their acquisition programme. We continue to advise the group on acquisitions, corporate finance and due diligence as well as compliance of course. In addition, we have successfully conducted a series of successful R&D tax claims for group members.

What we did

• Waste reduction process.
• Corporate finance.
• Research and Development tax reliefs.