Are Closures inevitable sometimes?

[QED]

Adams announced their closure today and also Waterford Wedgewood has gone into Receivership.

I don't know the full facts surrounding these but I assume that lack of availibility of credit was the final straw but the companies were unprofitable and it was almost inevitable that they would fail.

I read somewhere that lack of profit kills slowly like a cancer but lack of cash kills immediately like a heart attack.

My question is - What should these companies have done over the past few years to set them up to survive a downturn? Should Adam's have gone down the 'Pennys' route at the first signs of a recession? If there is no longer a market for Crystal Glass & Fine China what could Waterford have done?

Is it fair to say that sometimes cost cutting will not deliver a radical enough solution?

Are there examples of companies being flexible enough to change their products and philosphy quickly enough to survive?

 

[gillarosa]

Both Companies have had their backs to the wall over the past number of years, it could be said that they were struggling and the lack of further credit forthcoming may have been the final nail. In the case of Adams there may have been a better selection more competitively priced in a huge array of other retailers and supermarkets. In the case of Waterford Wedgewood I recall during a previous restructuring they mentioned cheaper items from Asia being a factor in the fall in demand for their product, although as both are a long established premium brand I didn't really understand how that may have been. I think its sad however, that both brands (WW) have been allowed to fail, when we consider the beautiful craftsmanship and artistry involved. At the back of my mind I do feel it may have been greatly mismanaged.

 

[Elphaba]

I dont think Waterford have ever really sucessfully shook the image of the Granny with the crystal in the cabinet. Fair enough they had that bloke with the long hair's range of crystal glasses, and their exports affected by weaker currencies, but I dont think they adapted to an ever changing market by bringing out lots more affordable products with the waterford brand, Here's an idea.....a crystal money box, shaped like the central bank...

 

[Brendan Burgess]

Waterford failed due to a variety of issues. The management actively sought to fix the problems, so I don't think you can call it mismanagement.
1) Very high manufacturing costs in Ireland - they tried to move it to cheaper locations, but this is difficult when the brand is Irish based
2) The weak dollar
3) It's very difficult for a large manufacturing company with a defined benefit pension scheme to become a small company. They can't get rid of their liabilities
4) Changing tastes
5) The general drop in demand - but they were losing money during the boom as well.

I don't really know Adams but retail is a very competitive business. A company can be very successful for a number of years and then they buy wrong and they are stuck with a lot of stock which they can't sell. They can survive a year or two of this if they have kept their profits from the good years. But the British and Irish retail markets are fiercely competitive and only the strong will survive.

I really don't think credit played a very big role. The companies were losing money, so no bankers should have lent to them anyway.

This is capitalism at its best. The weak, inefficient companies fail. Strong ones survive.


Brendan

 

[tara83]

For a personal view point, I have always thought that Waterford failed to move with the times and trends for a long time. Companies such as Newbridge Silver successfully remarketed themselves as did Tipperary Crsytal. (I can't comment on their financial situation) I have always felt Waterford looked old fashioned on the shelves next to these products. Their range of Christmas decorations where very old fashioned and pricy.