Car parts manufacturer Kasai 海角视频 is preparing for sales to drop by more than a third this year as Covid-19 continues to impact the business.
The company supplies car components to Nissan and Jaguar Land Rover from its Washington plant and to Honda and Jaguar Land Rover through its Merthyr Tydfil plant, and all three of its major customers shut down for almost three months when the pandemic struck, leading to a drop in its work.
As a result the firm, which makes door panels, finishes and trims at Washington, says it has forecasted sales to fall by 35% as a result of the Covid-19 virus, saying “we naturally forecast an extremely difficult trading in 2020”.
The prediction comes after the firm posted an 8.7% drop in turnover to £88.5m for 2019, also swinging from operating profit of £909,823 to a loss of £5.4m. The downturn came predominantly as a result of ongoing diesel demand issues in the automotive industry, the weakening of the pound and increased labour costs, as well as Brexit concerns which have knocked customer confidence to make large purchases.
Accounts for the firm, which employs around 800 people, show that at the Washington plant, production of parts for the Nissan Qashqai model were down by 15% and Nissan juke model volumes were down by 45%, mainly due to a four month gap in production that came following the end of production of the previous model.
In June 2019 the firm also stopped making parts for the Infiniti Q 30 model came to an end, when Nissan withdrew the model from the European markets several years ahead of original plans. Both the North East and Welsh plants, however, saw the first full year of production of parts for the new Jaguar Land Rover Evoque model.
In the accounts the firm also highlights how it would be affected by a no-deal Brexit, with its business relying upon the production volumes of Nissan and Jaguar Land Rover, adding that it would need to “take immediate reactive steps to reduce operating costs to offset customer sales reductions in this circumstance”.
It added: “Brexit trade terms need to be clarified which will then determine how the company minimises the risk to future operations. The clarification is key to the reaction of our main customers and their commitment to existing operations in the 海角视频.”
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The firm, which forms part of the Japanese Kasai Kogyo Co group, said that, despite the challenging year, it had continue to invest in its assets to the tune of £2.2m “to secure the long-term future that will support all stakeholders and the local economy”.
The company also comments on the decision to close its Merthyr plant when its main customer Honda also closes its site in Swindon.
Last year it emerged that Honda will close its factory in 2021 and Kasai had hoped to seek more business to counter the loss of the Honda work.
However, earlier this year the Welsh Government announced that Kasai would also shut its operation in Merthyr Tydfil in July 2021 with the loss of around 180 jobs, following warnings from the Welsh Automotive Forum that Honda’s decision would have a devastating impact on the supply chain.
In Kasai 海角视频’s accounts, directors add: “the plant is too reliant on this business to continue its operations. In the current economic climate, especially in the automotive sector we have not been able to replace this current Honda business.“