Middleton, UK - Foam maker the Vita Group has cut ten percent of its workforce in the north west of England and made redundancies in other parts of the UK, as it struggles in the current economic downturn to service its debt.
Orders for foam are low and macro economic conditions continue to be poor in Vita's traditional end markets in automotive, furniture, bedding and construction, said a Vita spokesperson. Destocking by Vita's customers, which started in the third quarter of 2008, is still continuing.
"Our experience is similar to those of other suppliers," the spokesperson commented. Orders and business in the first half of 2008 held up well, then "in the second half of the year, business dramatically fell away." Consumers are not buying "the big-ticket" items - cars, furniture, fridges --- the Vita spokesperson pointed out.
A report in Crain's Manchester Business said that Vita, owned by US private equity group TPG Ltd, has reached a 'standstill' agreement with its lenders until March 2009, to avoid breaching covenants on its debt. This report put Vita's debt at Euro 663 million ($856 million), but said that it has cash on its balance sheet.
Vita is a major European supplier of flexible polyurethane foam for bedding and furniture and for technical uses in the medical, automotive and construction sectors, from six foam plants in the UK, and more than 20 foam operations across mainland Europe. The group has expanded into eastern Europe in the last decade, setting up plants in Poland, Romania, Lithuania, Slovakia and Hungary, in search of both low-cost manufacturing sites, and new markets for foam in these expanding economies. The business also has facilities in Canada and the US.
Another significant Vita business is supply of thermoplastic sheet from several plants in the UK and Europe, and it also has business units supplying liquid polymers and thermoplastic elastomers. Another operation, Chemical Innovations Ltd, in Preston UK, makes foam tyre fill and bonding agents, with a sister operation, Pathway Polymers, making tyre fill, prepolymers and systems in Chattanooga in the US.