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2,500 jobs lost as distribution firm Palmer & Harvey calls in administrators

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Written by: The Business | Posted 29 November 2017 8:15

2,500 jobs lost as distribution firm Palmer & Harvey calls in administrators

Hundreds of staff serving Gloucestershire businesses and beyond have been told they are losing their jobs after the collapse of one of Britain’s biggest distribution firms.

Bosses at Palmer & Harvey, which supplies the likes of Tesco, Starbucks, Welcome Break, owner of Michaelwood services on the M5, and Esso and Shell petrol stations, were sent workers home from shifts on Tuesday (November 28) after a deal to save the firm collapsed.

The company supplies an estimated 90,000 stores across Britain. It is also the biggest wholesale supplier of cigarettes, but it is not known at this stage how its woes will affect any of its supply chains and whether customer will notice any difference at businesses in Gloucestershire.

It is understood some companies are wholly reliant on the distribution firm, including the Costcutter chain of supermarkets which has outlets in Gloucester and Cheltenham.

According to reports the news has triggered emergency plans to make sure shelves in Costcutter stores are not left empty.

Costcutter Supermarket Group, which owns Mace, Simply Fresh, Kwiksave and SuperShop, said it had triggered its contingency plans following the announcement to “provide alternative sources of supply”.

Pictured: The Palmer & Harvey coldstore in Avonmouth Way, Avonmouth (Image: Google)

Some 2,500 of the Avonmouth-based firm’s 3,400 staff have already been told they are being made redundant and it is understood hundreds of workers at the company's two depots in Bristol are set to lose their jobs.

The decision affects “hundreds of people," one reader told the Bristol Post newspaper, adding: "People came to work and were sent back home.” he added.

P&H's main operation in Bristol is at St Anne's with a cold store depot in Avonmouth, close to the M5.

The P&H group entered exclusive takeover talks with the Carlyle Group in October, but the offer made by the US private equity fund did not progress, and the firm appointed Price Waterhouse Cooper as administrators today.

In a major blow for the company’s workforce ahead of the Christmas period, PwC said it would be 2,500 immediate redundancies at the head office and branch network. About 900 staff will remain in post but at risk of redundancy.

Matthew Callaghan, joint administrator and PwC partner, said: “This is a devastating blow for everyone who has been involved in the business.

"The administration team will focus on working with employees, clients and suppliers to facilitate a smooth and effective wind-down or transfer of operations over the next few weeks.

“The P&H Group has faced a challenging trading environment, and the need for significant restructuring has been recognised for some while.

“The company has insufficient cash resources to continue to trade beyond the short term and the directors have concluded that there is no longer any reasonable prospect of a sale.

“Therefore, the directors have had no choice but appoint administrators.”

PwC said it had secured staff pay for November and was now seeking buyers for the group’s subsidiary businesses, P&H Direct Van Sales, P&H Sweetdirect and P&H Snacksdirect.

It said 450 workers had been kept on in the wholesale business as the operation is moved towards an “orderly closure”.

Mr Callaghan added: “The administrators are working closely with employees affected by the closure of the business to ensure they receive the support they need during this difficult time to assist with their claims for redundancy and other compensatory payments. Our priority is to ensure that all employees made redundant are assisted in processing their claims with immediate effect.”

The fall of P&H comes amid a period of consolidation within the grocery sector, with Tesco agreeing a £3.7 billion deal with food wholesaler Booker and the Co-op sealing a takeover of Nisa Retail.

The Competition and Markets Authority (CMA) gave the Tesco-Booker deal the provisional green light earlier this month, saying the move would not lead to higher prices or hit service for shoppers despite fears raised by a raft of rival wholesalers.

Mark Todd, national officer of the Union of Shop, Distributive and Allied Workers (Usdaw), said: “The union is seeking an urgent meeting with the administrators to clarify what is going on and the implications for Usdaw members.

“Today’s announcement is a massive shock to our members and is an extremely distressing situation for all concerned, especially in the run up to Christmas."

Pictured top: The Palmer & Harvey distribution centre at St Anne's Road, St Anne's Park, Bristol (Image: Google)

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