Falling pound post-Brexit forces 260 job losses at Tonbridge firm Southern Salads
PUBLISHED: 10:28 17 August 2017 | UPDATED: 10:28 17 August 2017
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Administrators said the food supplier struggled to buy overseas-grown salads which were required during winter
Some 260 jobs have been lost at Kent food supplier Southern Salads after the Brexit-hit pound forced the company into administration.
FRP Advisory has been appointed administrators of the Tonbridge-based firm, which will cease trading immediately, leaving hundreds of staff out of work.
The family-run company operated for 30 years, weathering “competitive pricing pressures from supermarkets and other retail chains”, and had invested heavily in its production facilities in 2014.
However, the expected increase in turnover never materialised following those investments, and the business was not able to ride out the effects of the Brexit vote which increased the cost of overseas greens.
“Despite successfully producing over 50 tonnes of salad per day for its array of customers, the company faced an unprecedented pressure on cash flow in the immediate aftermath of last summer’s EU referendum vote,” joint administrator and FRP Advisory partner Ian Vickers said.
“The sudden decline in sterling was not foreseen by the company, leaving the business grappling with an immediate fall of between 10 per cent and 20 per cent in its purchasing power for overseas-grown salads required for the winter and early spring UK market, which in turn put a severe strain on cash-flow.”
Southern Salads failed to negotiate new pricing terms with European suppliers of fruit and vegetables in countries including Poland, the Netherlands, France, Italy and Spain - and without sufficient currency hedging in place, collapsed under rising costs.
Market jitters have resulted in a major devaluation of the pound in the wake of the Brexit vote, with the UK currency dropping more than 16 per cemt from its pre-referendum high of 1.31 against the euro to lows of 1.09.
Remain-voting MP for Tonbridge and Malling, Tom Tugendhat, said he was “sorry to see a recognisable, family run Tonbridge business stop trading”.
However, Kent MEP and Brexiteer Janice Atkinson suggested the troubles were not related to leaving the EU, and that the company’s salads were “not great” and that it was “overtrading” and “run badly”.
FRP said its “immediate priority” would be to help all staff who were made redundant as a result.