A Dundalk-based food company employing 169 people is to close. The Authentic Food Group, a UK company that produces frozen ready meals, was granted permission by the High Court on Friday to appoint joint provisional liquidators to Dundalk-based TAFC Manufacturing Ireland Ltd.
Ms Justice Caroline Costello was told the liquidators had not sought any power to continue trading and the order sought was to ensure an orderly wind-down.
"Unfortunately, there does not appear to be any alternative," Rossa Fanning SC, for the company, told the judge.
Since it was set up in 2014, the company has had just one profit-making year in 2016-17, when it made €400,000. Projected losses for year-end 2019 are €2.6 million and the parent company is no longer prepared to support it, the company’s petition to the court states.
Shortly after incorporation in 2014, TAFC acquired the business and assets of the Kraft Heinz facility in Dundalk.
This happened because other companies within the group, in the UK and Germany, had reached capacity and there was a need to increase production and outsource to another facility. Dundalk fulfilled overflow orders placed with the UK company.
As of this month, the company owes €3.2 million to its UK sister and €4.6 million to the parent, it was stated.
Among the difficulties it faced were those associated with a new project with the retailer Iceland in 2015, which highlighted the inflexibility and limitations of the Dundalk facility.
This required a €1.8 million investment to enhance Dundalk. By 2017 there was also a €500,000 increase in the cost of raw materials along with further difficulties as a result of the sterling/euro exchange rate fluctuation. Overall there was an increase of €4.5 million in costs, the petition states.
Unforeseen costs
In 2017 a project to develop a new premium range of frozen ready meals for a key customer ran into technical difficulties, leading to further unbudgeted costs, including extra shifts for employees to achieve targeted output.
Despite efforts to rectify the situation, very serious issues remained with the existing facility and the only option was to buy new bespoke equipment costing about €1 million.
Then last February the UK sister company was told a co-packing agreement with Kraft Heinz was to be terminated in February 2019. This placed increased reliance on the need for the parent to continue funding the loss-making operations.
In addition to all this, the TAFC owed nearly half a million in water rates, and despite regular payments to help pay off those arrears, on October 15th it was threatened with water disconnection. It also owed €500,000 in gas and electricity charges and was also threatened with the cutting-off of those supplies.
On October 19th the parent told TAFC it could no longer continue to fund its ongoing losses and the board decided to seek a wind-up.
Ms Justice Costello appointed Ken Fennell and James Anderson of Deloitte as joint provisional liquidators. The case returns to court on November 12th.
In a statement, Nik Basran, managing director of The Authentic Food Company, said: "We have faced some serious business challenges in recent months that have been specific to this site.
“While we have worked tirelessly to meet those challenges head-on and carried out a comprehensive review of the business to try to find a way to make it profitable over the long term, unfortunately, that has not been possible. We have therefore had no option other than to close the Dundalk facility.”
Staff reaction
Staff leaving factory in Dundalk on Friday said they did not know what the future holds for them. Alan Murphy who has worked there for 11 years said, “we just found out at 2 o clock today, they came in and said right, lines shut, finish up and go home the liquidators were coming in.”
Mr Murphy from Riverside Drive, Dundalk has two children and is due to get married next year. He said the communication with the workforce today came from the receiver.
“We have not even got a P45, whether we can claim social welfare, or get another job I don’t know.”
There has been speculation locally for a number of weeks after it appeared stock was not being ordered.
Mr Murphy said, “it is a relief that we actually know now.”
The food company Heinz had worked from the same premises before The Authentic Food Company.
Workers are represented by the Unite trade union, whose representatives met with the liquidators at the plant this/yesterday evening.
Speaking after the meeting, Unite’s Senior Officer in the Republic, Brendan Ogle, said that there are serious questions surrounding the proposed liquidation of the plant, and he said that Unite will be writing to Business, Enterprise and Innovation Minister Heather Humphreys over the weekend to update her on the union’s concerns and seek an urgent meeting. Mr Ogle warned that Unite would not tolerate a repeat of the Clery’s situation whereby workers and taxpayers were asked to pick up the tab for what he termed ‘sharp corporate practice’.
