Black cab fault sees Manganese Bronze sink into the red
The Coventry manufacturer of London black cabs has announced a plunge into the red after a spate of under-bonnet fires led to the recall of thousands of vehicles.
Manganese Bronze, whose Coventry-based London Taxis International (LTI) makes the vehicles, said recalling 5,700 TX4s, the model affected by the overheating, cost £3.8 million.
The company said the expense covered its work on the recalled vehicles, with LTI carrying out modifications to the taxis' emission control equipment, their heat management systems and under-bonnet insulation.
Manganese knows of three class actions from driver groups wanting compensation over the recall, as well as a "small number" of direct claims from drivers, but has made no provision for compensation, following legal advice.
The recall costs contributed to pre-tax losses of £14.2 million for 2008, compared to profits of £4.9 million in the 17 months to the end of 2007, after the company switched its year end from July to December.
Manganese was also hit by a significant downturn in sales and margins in all its markets, with the slump particularly marked in its core London market.
UK sales of the TX4 were down 37.5% on a like-for-like basis to 1,951, with drivers reluctant to commit to buying a new taxi because of uncertainty about the economy, the company said.
Management did not believe 2009 would be any easier than the "very challenging" 2008, warning that early signs suggested UK volumes may well be lower this year.
Manganese has cut costs, reducing overall headcount from 469 in December 2007 to 389 in December 2008, while last month all employees agreed a 10% reduction in salary.
The company employs almost 400 people, mostly in the UK, with around two thirds of the workforce employed in the Coventry factory, where staff are now on a four-day week.