Recalling a cab hits taxi firm

Group chief executive John Russell said 2008 had been a challenging year for the company’s UK taxi manufacturing operation coupled with significant progress towards our international ambitions. “While sales and margins were under pressure in the UK, our Chinese joint venture passed significant milestones,” he said. “Commercial production of the London taxi has now commenced in Shanghai, with indicative orders for 8,000 vehicles. Current trading continues to be adversely impacted by the wider downturn in the automotive market whereas our confidence in the medium term prospects for the group continues to grow." Along with most of its automotive peers, Manganese Bronze had a very challenging year with a significant downturn in vehicle sales and margins in all markets but was particularly affected by its core London market. This, combined with the £3.8 million impact of a product recall for its flagship cab, the TX4 (pictured), had severely impacted the group’s 2008 financials resulting in a pre-tax loss of £14.2 million (17 months ended 31 December 2007: £4.9 million profit – the unusual comparative period is caused by realigning the company's year end with that of its Chinese joint venture). The TX4 recall followed a number of under bonnet fires in early production models and the need for modifications to the emission control equipment, the heat management system and under bonnet insulation. Manganese Bronze said declining sales had led to a reduction in headcount by almost 20%, reductions in fixed costs, short time working, reduced daily output, and a pay reduction for all employees and directors. The overall headcount has reduced from 469 in December 2007 to 389 in December 2008. During the year, a total of six weeks production has been taken out and from the beginning of February 2009, all employees agreed a 10% reduction in salary to be earned back in the event of cash generation exceeding expectations. During the year, daily production rate swung from a peak of 16 vehicles per day to 12 vehicles per day and the company’s Coventry plant is currently working a four day week with production of 12 vehicles per day.