YORKSHIRE-based engineering company 600 Group is closing its manufacturing subsidiary in Poland, following a review of its machine tools and engineered components business.
The company also revealed that it is moving its head office from Leeds to Heckmondwike, in West Yorkshire.
600 bought a factory in Poland as part of a strategy to take a significant proportion of its manufacturing in-house.
Last year, David Norman, the company’s former chief executive, told the Yorkshire Post that the decision to expand in Poland, rather than Yorkshire, was partly due to a skills shortage.
Mr Norman sealed the purchase of a machine tool company in Tarnow, Poland in late 2010. 600 Group bought the 100,000 sq ft site from weapons group Bumar for 1m euros.
However in a statement issued yesterday, 600 Group said that since its inception, the Polish subsidiary had not met the anticipated level of output, and had presented operational challenges as a result of escalating costs in the material supply chain and employment. As a result, the Polish subsidiary had incurred significant trading losses and absorbed working capital from group resources.
Following the appointment of Nigel Rogers as chief executive in March, the group’s board started a strategic review, which “has now concluded that it is unlikely that the required improvements in the operational performance of FMT (the manufacturing subsidiary in Poland) can be achieved within an acceptable timescale”.
The statement said: “The group board has decided to withdraw the provision of ongoing financial support to FMT, and consequently the directors of FMT have determined that they will initiate insolvency proceedings for FMT in Poland.”
Mr Rogers said: “The strategic review has clearly identified areas where we need to rationalise our operations and reduce costs in order to improve the performance of the group.
“This will protect the brand heritage, and maintain the reputation that the group has for quality and reliability.
“We have listened carefully to the considered views of our key distributors across Europe over the last few weeks, and customer demand for our products remains strong.
“Our priority now is to improve lead times and delivery performance so as to drive increased revenues.”
Mr Rogers said the Polish operation “had reached a tipping point”. He confirmed that the 200 workers employed there would lose their jobs following the announcement.
Mr Rogers stressed that he wouldn’t describe the decision to buy the Polish factory as a mistake. However, the progress that was anticipated in Poland hadn’t been made, he said.