The firm, which manufactures bespoke litho printed envelopes and is the UK’s leading supplier of seed envelopes to the horticultural sector, has cited the administration of most parts of Paperlinx UK, its largest supplier, as the primary reason for its demise.
Christopher Ratten and Lindsey Cooper of Baker Tilly Restructuring and Recovery have today (16 June) been appointed as joint administrators of the company.
The firm had to make 30 of its staff redundant last year following the loss of its largest contract. Staff had already agreed to a 7.3% pay cut in November 2013.
The company subsequently bought and relocated to a purpose-built site on the outskirts of Llangollen later in 2014 after it sold its old site to make way for a Sainsbury’s supermarket.
According to local newspaper Daily Post, Sainsbury’s has recently shelved its plans to build on the firm’s old site and is now looking to find an alternative occupier.
SME investment company Finance Wales had also invested in Dobson & Crowther last year. In response to a Freedom of Information (FOI) request, it was revealed that the group had agreed to support Dobson & Crowther with the aim of saving the business.
David Murray was appointed to Dobson & Crowther’s board of directors following the investment. It was confirmed that Murray had no conflict of interest or connection with Sainsbury’s or J-Ross Developments, which built the firm’s new factory.
Following the relocation and investment, Dobson & Crowther had looked set to trade positively going into this year.
“It suffered a significant setback following the administration of Paperlinx, its largest supplier,” said joint administrator Ratten.
“As a consequence of Paperlinx’s failure there was considerable disruption to the company’s supply chain resulting in lost sales and consequential cashflow pressures.
“In the lead-up to the administration the possibility of further investment or a sale has been investigated. Due to the company’s financial and trading situation it has not been possible to secure such a transaction in the relatively short timescale concerned.”
PrintWeek understands that the Paperlinx administration caused major issues for Dobson & Crowther because of the resulting impact on its seed packet business.
A source ‘close to the company’ said: “The factory is incredibly busy at the moment, largely with seed packet work, all of which has to be manufactured using a particular paper type (formaldehyde free to prevent damaging the seed).
“The only place we can buy that particular paper from in the UK was Paperlinx who held all of our commonly used sizes in stock. When they went into administration, holding hundreds of thousands of sheets of paper allocated to ourselves, we then had to speak directly to the mill on the continent that supplied Paperlinx.
“They were happy to deal with us but gave an eight- to 10-week lead time for the paper, which had a massive impact on our ability to produce horticultural packaging for our biggest and best customers.”
The administrators are now looking at the possibility of continuing the business for a short period in order to fulfill outstanding orders and to establish if there are any parties that would be interested in acquiring the business.
While this is being considered the majority of the firm’s 79 employees have been sent home.
Dobson & Crowther operates equipment including Manroland 905 LV and KBA Rapida 142 litho presses, a Kodak Magnus VLF platesetter, three Sysco cutting machines and three Winkler & Dunnebier (W&D) finishing lines.
The company’s turnover for the year ended 31 December 2013 was £8.9m, down from £9.8m in 2012, according to its most recently filed accounts.
The business had attributed this drop to "continuing challenges in the envelope market and in the commercial print sector as a whole" as well as a weather-related slowdown in its horticultural market.
