Manufacturer reels as £15m-a-year contract is cancelled
Ossett-based technical plastic manufacturer, Carclo, is counting the cost after a customer it had signed a 10-year framework agreement with in December 2020 said it would not be proceeding with the project.
The West Yorkshire business is now working to try and agree a commercial settlement with the customer in relation to the cancellation, adding that its management “is evaluating the financial impact and taking mitigating actions.”
The deal had originally been struck with a major global OEM for the supply of a range of components for use in its laboratory-based PCR diagnostic systems.
Carclo, which has annual sales of £130m, explains that at full production rates these contracts were expected to deliver incremental sales of between £10m and £15m annually for the life of the agreement. It had expected that production volumes would start building from the last quarter of the current financial year.
The business states: “Whilst the tooling contracts have been substantially delivered, the customer has now informed the Group that they no longer intend to proceed into the production phase of the project.”