MANUFACTURERS in the West Midlands are not getting the support they should from banks and so are being left to fend for themselves – often with dire consequences, one of the region’s best known industrialists has said.
David Groves, chairman of Grove Industries, said many firms were desperate for funding and yet the banks were just ignoring them – partly because the financial institutions themselves were unsure about the whole situation.
“There are a lot of small unquoted businesses in the area who need to borrow money but are simply being ignored by the banks,” he said.
“One problem is that the whole loan application process takes too long – it’s a very tortuous process. Then the banks want their fair share out of it as well because they are having to generate business as well.
“The whole thing is unsatisfactory and needs to be sorted out quickly.”
He also highlighted the Cadbury scenario and its takeover by US food giant Kraft Foods.
“That was disgraceful financial engineering. You have RBS lending an American company £8bn so it can buy a well respected British manufacturer – just imagine how many firms in the Black Country could have been helped if RBS had used that money to support business here instead,” he added.
Grove Industries has just clocked up 20 years and it now controls businesses with more than 1,500 employees and annual sales of over £300m.
“We buy from a range of vendors including private founder shareholders through to international corporate groups and we are involved in a whole range of companies from specialist manufacturers, including a defence business, through distribution and marketing to chemicals and plastics,” said Mr Grove.
He said the aim was to build up the companies over several years by “sticking to our knitting”.
“We look to add value by organically growing a business, that is investing in new tooling, pressing or painting – things that will make the business more attractive to customers.
“This is something the banks don’t seem to recognise. There’s nothing clever about it – it’s just about doing the simple things well.”
He said that despite the banking and financial crisis and the continuing shortage of banking finance, his company had access to funds and was looking for businesses to acquire.
“We have one we’re looking at at the moment, it’s a good fit with our other businesses and we think it will add value,” he said.
He said that with the right approach, firms could prosper.
One manufacturer that has prospered with Mr Grove’s involvement is Coventry based pressings supplier Covpress. Bought from a French group eight years ago and subsequently merged with NCJ Pressings, it has been with Grove Industries since 1991.
Mr Grove said: “Already lean and efficient, Covpress was early to respond to the global financial crisis in 2008 with cost reduction, and the business remained in profit throughout the dark days that followed.
“Now, investment has resumed in both capital equipment and product development, new customers have been secured and Covpress’s profits are already back to where they were before the banking troubles.”
