W.E. Smith strikes deal to stay above ground
A RESCUE plan has been implemented for leading manufacturing business W.E. Smith Engineering after it collapsed into voluntary administration this week.
On Monday, PPB Advisory was appointed administrators of the Boambee-based company that produces heat exchange equipment for the worldwide mining and renewable energy sectors.
After experiencing a downturn in the 2014-15 financial year, a financial deal was struck with W.E. Smith's Singaporean parent company - North Field Global - to ensure its doors would remain open.
W.E. Smith director Mike Mutch said the deal provided the capital to ensure the company could continue trading and keep its 101 full-time employees in work.
"The business began in 1923 and our intention is to remain in Coffs Harbour with the same number of current employees for another 92 years," Mr Mutch said.
"It's business as usual - the ownership may be different but the branding is the same."
Despite boasting international contracts valued at more than $20million, Mr Mutch said growing costs of exotic materials had placed the business under recent pressure.
In the global metals supply and manufacturing sector, few exotic materials are produced in Australia, meaning the business had to import valuable metals to work on at home.
"Up to 60% of any one purchase order is spent on materials and that's before production and staffing costs," Mr Mutch said.
He added the slowdown of the Australian resource sector posed wider uncertainties for businesses involved in the supply chain.
"Certainly over the past few months the domestic market has slowed because of budget constraints but not because the cost of iron ore has gone down," Mr Mutch said.
"We face expansion and contraction more than ever."
But Mr Mutch said the value of the W.E. Smith brand would ensure the company would continue to grow into the future.
"We're on the bidders list of every major worldwide client - the quality and technical excellence is the driver of our success," he said.
"At the moment at least 60% of our business is for the domestic market and 40% for the export - our intention is to reverse those figures.
"Manufacturing in Australia is certainly not dead - we're proof of that."
In addition to Monday's deal, the company signed a licence agreement with former owners KNM Group Berhad to use its global purchasing power to procure raw materials.
The first meeting of creditors will be held in Sydney on Tuesday.