Mailcom shuts down Boldon DM business blaming fall in orders

07 April 2010

Business

Nearly 80 staff have lost their jobs at the Boldon, Tyne and Wear facility of Mailcom following the appointment of administrators last week.

Bond & Partners were appointed to the direct mail and customer communications business on 31 March and, as a result, all of the Boldon site's direct mail print and production was transferred to the company's site in Milton Keynes.

At the time of writing, the precise details of the deal were unavailable and Bond & Partners declined to comment. However, according to Companies House, a new company, Mailcom (UK), was incorporated on 11 March.

The new business listed Mailcom chief executive Neil Shotton as sole director and uses the same Milton Keynes address as Mailcom.

Mailcom cited a major drop in the direct mail volumes processed at its northern facility coupled with "volatile" pricing for the need to "restructure".

Shotton said: "We have experienced a big decline in revenue in direct mail in the North. This is mainly due to customers using alternative forms of media, but is compounded by the effects of pressure on pricing. We have seen a five-fold year-on-year increase in email and digital media so running two sites was unsustainable."

More than 100 staff employed as contact centre agents at the Tyne and Wear plant are unaffected by the administration at Mailcom, which serves clients including financial institutions, high-street banks, telecomms firms, utilities suppliers and government bodies.

Shotton added: "It is extremely sad when you have to make job cuts, particularly when you have worked so long with these people who are loyal and hard working.

"Unfortunately, the market is showing no signs of recovery and we have prepared for it to contract even further."

Transactional work generates around half the firm's turnover, while data and contact centre work provides another 40%. The remaining 10% stems from DM, which suffered badly in 2009.

Shotton said that the company's short-term priority was to ensure its core business in a tough climate.

"Diversifying the business base is still an integral part of our long-term strategy, but in these market conditions, protecting the core business is a short-term priority," he said.

Mailcom recorded sales of more than £12m in 2008 and in November last year had a staff of 260. Tony Burke, assistant general secretary at Unite, said the decline within the direct mail sector was cause for "great concern".

He said: "Shorter print runs and the rise of electronic media are hitting DM hard."