Distributor Norbain has insisted it’s business as usual after its sudden going into administration and out again – bought by another, electrical distributor, Newbury Investments. But the move will have a knock-on effect far beyond the head office and warehouse doors of Norbain, writes Mark Rowe.
Understandably, rival distributors have been quick to sniff an opportunity at Norbain’s expense. On the day the news broke, Monday, July 2, Midwich Security stressed in an email to customers that – while not mentioning Norbain – it was a specialist security division of trade-only electronics technology distributor Midwich, and offered a ‘stable platform’. The Panasonic distributor CCTV Center sent a similar reminder email to customers.
Also emailing customers, distributor CCTVdirect MD Mark Raine wrote of the Norbain news as a huge blow to the security industry: “This news although still surprising is not unexpected, as we have seen a huge shift away from expensive premium solutions as the recession has taken a greater hold over the UK. Very few installers are winning contracts at the upper end of the market. Instead the market is currently cost driven and value focused, and your clients – despite what they might say – are looking for cost effective solutions. Even many large national installers have changed the products they install to ensure they offer value and win the quotations they raise.” He went on to suggest that installers try ‘alternative specialist CCTV suppliers’: ‘… now is perhaps the time to give us a try and see how we can help you win your next quote’.
Likewise, Leeds-based CCTVDirect tweeted on Monday, July 2, the day of the news, that it was ‘shocked’ to hear Norbain’s news and asked ‘any Norbain customers looking for alternatives please contact us’. That Norbain are alive to the risks of losing face and custom to other distributors was in their tweeted reply to that remark of CCTVDirect, Norbain saying that ‘business is operating as normal and is in better position to serve customers than previously’.
Customers, yes – the installers fitting the products – but what of the manufacturers supplying those products? While manufacturers have been, understandably, not keen to stick their necks out and say what they think of the affair, one small CCTV manufacturer made the mild point that there were ‘questions’ – not least, how much will the creditors (that is, people like him) get? That company also has for distributors Pro-Vision of Shrewsbury and ADI Global Distribution. However, while some electronic security manufacturers may have spread their risk across more than one route to market, installers and manufacturers alike may have regarded Norbain – as the largest electronic security distributor in the UK, regularly one of the biggest exhibitors at IFSEC – as good as a bank. Installers who have lots of credit with Norbain, and some maybe receiving beyond their credit terms, may find that the new Norbain owners want their money – now. If the installer has a problem finding that money, the installer too – and whoever is owed money by that installer – may find themselves in difficulties. The ripple effect of Norbain’s going into administration and straight out again may be long and wide, if manufacturers and installers find themselves too exposed.
As for how manufacturers that do business with Norbain might react, on Tuesday, July 3, one company that decided it was not business was usual was Dedicated Micros. It went public by saying that it regarded all contractual warranties given by DM to Norbain to have ceased; and the company advised buyers of DM product from Norbain to contact DM direct for advice on warranty.
Paxton meanwhile committed to Norbain, who will be supporting the access control product manufacturer to launch their first door entry system, Net2 Entry, when it is released to market on July 16. The distributor will run two preview days on Tuesday and Thursday, July 10 and 12, at their offices in Ashton near Manchester and Winnersh near Reading respectively.
Paxton have designed Net2 Entry with three components that plug together and auto detect on set up. Adam Stroud, Group Chief Executive of the Paxton Group, says: “Paxton and Norbain have enjoyed an extremely strong relationship for two decades now. We are fully committed to continuing this solid relationship and moving towards a prosperous future together. Norbain are a strong brand and a great channel through which to launch our first ever door entry system, Net2 Entry, this month. We look forward to supplying and launching even more of our security innovations with Norbain in the future.”
To run through the events, KPMG were appointed joint administrators of Norbain Group and its UK subsidiaries on Friday, June 29. The administrators at once agreed to sell the assets of the UK business to the electrical distributor Newbury Investments (UK) Limited. That way Norbain kept trading (in the same name); and all UK staff transferred to the purchaser.
In a letter to customers dated July 2, Barry Shakespeare, Norbain MD – who joined the distributor in November 2010, and who stays in position – said that Norbain business, under its previous ownership had ‘experienced some trading difficulties due to the economic downturn and the high level of its bank debt. I believe that under this new ownership the long term future of Norbain has been secured …I am extremely positive about the future for Norbain, and sincerely hope you will feel able to trade with us, confident in the knowledge that we now have the financial strength of Newbury Investments (UK) Ltd behind us.”
It was now for the administrators, KPMG in Birmingham, to do what they could about those debts, to pay what they could to those customers owed by the old, pre-July 2012, Norbain. Will Wright, joint administrator at KPMG, said on July 2: “Norbain’s business was adversely affected by a decline in orders as customers decided to wait and see if the economy would improve before investing in infrastructure projects. The fall in income was a key factor in the company entering into administration. This deal marks a fresh start for the Norbain UK business and puts it on a more solid footing for the future. We received a great deal of interest from buyers keen to turn the business’ fortunes around. We are pleased that the process we ran allowed the company to avoid a full operational administration via a ‘pre-pack’, securing the UK jobs and protecting precious value.”
As KPMG hinted, the ‘pre-pack’ meant there was no drawn-out search in public for a buyer, while confidence in a firm in administration, and morale of staff sank. Suppliers privately, however, have grumbled about how a ‘pre-pack’ would leave them unpaid and worse off.
Last but not least in human terms are Norbain’s 250 staff. While Monday’s official statement from the administrators said that the UK jobs were safe – though Norbain’s companies in South Africa, Belgium and the Netherlands, and Portugal were still in need of a buyer – other distributors are reporting that Norbain staff are ringing them and asking for a job. Only in the June print issue of Professional Security Magazine, MD Roy Cooper in his gossip column was reporting a number of senior people leaving the company: Chris Webster, sales director for eight years, stepped down after IFSEC in May and handed much of his responsibility to MD Barry Shakespeare. Other leavers have included Mark Massie, Heather Cronin, Marie Kemshall, Andy Coles and Heather Constantine.
Reasons for the ‘decline in orders’ as identified by the administrators are not hard to find; it’s hard to find a buoyant sector of the market for electronic security. Schools had been a source of orders, but the public sector – including staples for CCTV such as universities and hospitals – has drawn in its horns, as has the private sector, the construction sector having been the first into recession.
Norbain was careful to point out that their new owners Newbury have a turnover of about £320m and net asset value of £82m, before the acquisition of Norbain, They described Newbury Investments (UK) Ltd as a financially strong group which will underpin Norbain and allow suppliers, customers and employees to be confident in its future trading. Newbury has five trading subsidiaries: Deta Electrical Company; Decco; Stearn Electric, which calls itself ‘a super distributor to the electrical industries wholesale trade’, UK Cables and UK Electric.
Barry Shakespeare, Norbain MD, said: ““We are confident that Norbain’s best in class operations combined with Newbury Investments’ financial strength and complementary distribution experience will secure our future growth strategy.”
The question that only time can answer is the business attitude of the new owners. If they look to sell, when? As Norbain was looking to enter the network security product and storage field, will the real winners be the IT product distributors – a sector Barry Shakespeare knows well, as he came to Norbain from IT. The IT re-sellers are of such a size that they could easily add IP security to their portfolio – network CCTV products bought by IT-savvy installers who could easily plug a network camera into an IT system. It may be that the administration of Norbain proves merely an episode in the take-over of the electronic security sector by IT; and one more episode in the now four-year UK and world economic downturn that shows few signs of turning, in any part of the economy. To take only sport, Rangers Football Club and Bradford Bulls rugby league club have been two names that have this year gone into administration. If Norbain could not make the sums work, the company with one of the biggest if not the biggest stand every IFSEC, pictured, where does that leave the rest of the industry?
