Few businesses have been unaffected by the coronavirus in some way.
As the lockdown is eased and companies look to recover from the affects of the pandemic, NatWest has brought together a group of business leaders from around Yorkshire and the North East to discuss the theme of “Re-start, Re-open, Re-build”.
The session began with an introduction from Steve Mawdsley, NatWest’s regional director for corporate banking in Yorkshire and the North East.
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He said: “We’re keen to try and understand issues that you’ve faced and are continuing to face, how you’ve overcome those challenges, how have you adapted the business. There’s some really interesting topics that I hope we’ll get the chance to cover.
“From a NatWest perspective, there are things we’ve had to consider and prioritise in terms of getting people through the last few months. Supporting customers and the communities they’re part of has been the first aspect, and the second is protecting and keeping our staff safe - making sure they’re well is at the heart of everything we do.
“In terms of the customers, the real positive that I’ve taken from this is that there was a significant effort that went into deploying resources quickly. We realised that at a time of need we had to respond quickly to what customers wanted.
“The bank responded very well and gave us a lot of delegated authority. It streamlined processes and that enabled us to react quickly and deliver for our customers.
“Across the various loan schemes, we’ve done about 185,000 Business Bounce Back Loans and about 13,000 CBILS loans. That’s supported a lot of companies, and a lot of famlies and workers who depend on those companies. So getting out there quickly and supporting businesses has been one massive effort from the team.
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“Around staff, we’ve got a lot of processes and that can slow us down at times. If you asked me a few months ago to work out a plan to get all my team working from home, I wonder how long that would have taken. We did it in two weeks, and we’ve managed a working process that’s got us talking to each other more frequently than we were previously.
“We’ve got some really positive wellbeing practices going on on a daily basis, and we’ve also had some really good support from the top of the bank, showing that people really do care. The feedback from both customers and our staff has been really positive.
“What it’s made me think about is how we do things differently going forward. We’ll always want to have face-to-face meetings with clients. But by using technology it’s made me realise that we can effectively communicate with customers by Zoom, and if you think how that plays out for long-term sustainability and the environmental agenda, there’s some real wins we can have in the long term.
“I’m confident we’ll come through this and hopefully take some real positives to drive the long-term agenda as well.
Lizzie Hay, financial director at Wakefield firm Sewtec Automation said: “We make machines and full production lines for various businesses across the globe so we found significant impacts from the travel restrictions. We’ve also found a lot of businesses have been hanging on to cash, so that does have a bearing on orders that have been placed.
“But I don’t think we’ve been as hard hit as a lot of businesses. We furloughed a few staff initially and everyone is now back at work. We’re reasonably busy and things are starting to pick up again, albeit not quite as quickly as we would like.
“It’s certainly been interesting to navigate. We had everyone who could work from home doing that initially.
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“We’ve got a new site that we’ve been building so thankfully we had a lot of space. We can spread out so that the two-metre rule can be adhered to and everyone can work safely."
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NatWest is the national partner of BusinessLive.
The banking group is teaming up with BusinessLive on a series of events throughout the year aimed at entrepreneurs and business leaders.
Alongside a wide range of banking services, NatWest offers businesses specialist sector knowledge in areas such as manufacturing and technology, as well as access to specialist entrepreneurial support.
Similar themes were reported by Paul Smith, managing director of HLA Services in Boldon, South Tyneside.
He said: “Overnight we reduced from 130 staff down to 13, and we’ve been rebuilding from there. We’re back to around 70% capacity. We’ve still got a few tradesmen on furlough. “Our mechanical services business ranges from air conditioning to ventilation to all types of plumbing.
“Getting paid has been an issue, getting debtors to release money – we had more in than I expected but we’ve still got outstanding debtors.
“My worry going forward is just the lack of work. I’m not sure where the turnover’s going to come from and who’s going to spend the money. It could be a bunfight for what work is out there and there’s a race to the bottom already which we’re avoiding.”
James Berry, CEO of Myers Group in Huddersfield outlined some of the issues that had been facing the construction industry.
He said: “We’re a construction supply company and we have four separate divisions. It’s been very different by division.
“What we’ve found is that anything linked to the retail and DIY, it’s demand like we’ve never seen before. One of the upsides of furlough is that everyone’s been at home, getting paid and they’ve identified a whole host of jobs they would not normally have had a chance to do.
“We suddenly became a retail business through our builders’ merchants rather than a trade business.
“In our concrete business, which is very much more in the construction sector, that demand dropped off quite significantly. That had massive benefits for us in terms of cash because the retail business is generally a cash business. That’s worked in our favour. In the last two or three weeks we’ve seen a shift to the trade coming back as sites are opening up, and probably less retail as people have gone back to work.
“In terms of money in, we were really worried about that. But our ledgers have never looked as good. Everyone’s tried to work together to get through this, particularly working with privately-owned, smaller businesses. There’s been a definite drive to support each other. We’re quite fortunate in terms of the markets we’ve been serving.
“People doing single houses, extensions, renovations – they seem very confident about their prospects and the pipeline of work for the next 12 months. The bigger contractors, that seems to be a lot more negative in terms of their outlook.
“My concern is in the side of the business that supports the bigger sites, it’s going to be tough and we’ve cut our cloth accordingly, while investing in the builders’ merchant side where we think the demand will remain for the foreseeable future.”
The major problems facing the travel industry were outlined by Ian Henry, CEO of Leger Holidays in Rotherham.
He said: “For our sector it’s been total meltdown. We’re a tour operator and specialise in tours to Europe, generally for people aged over 65. So it’s been a perfect storm of not being able to operate.
“From about three weeks before lockdown we got the vibes of customers calling with concerns. Northern Italy closed and that seemed like a nightmare, but it was just the beginning of not being able to operate.
“As soon as lockdown began, we furloughed pretty much everybody apart from our call centre staff who were tasked with ringing customers to try and get them to move holidays to next year. At that point it was important to trade next year and also aid cash flow for this year. We rotated our call centre staff, we furloughed them on a rotation basis because it was quite demanding for our staff.
“We thought it was highly unlikely we’d be able to do anything this year. It was a bad time of the cycle for us because January, February and March is when you spend a lot of your marketing money, April onwards is when people travel on holiday. A lot of our costs had gone and we were waiting for the income to flow.
“Lots of people did re-book for next year, around 65%, so we’re quite well set for next year. Next year’s marketing budget will be low because we don’t need to attract customers that are already there.
“The big worry is when this will end in terms of ability to travel.
“The other interesting twist in the tale is that our biggest competitor went into administration – Shearings. They’re about four or five times the size of us. We managed to pick up their database from the administrator and as a launchpad for the future, it’s massive for us if we can travel at some point. The majority of their business was 海角视频 holidays so it’s a natural diversification.
“In terms of staff, we’ve brought all of our call centre staff back because once we got the Shearings list our phones were flooded. Our operational staff are still furloughed because we’re not running holidays, and our marketing and IT teams, we kept a skeleton team to keep the systems alive. We’ve had to boost that back up recently but it’s all a bit virtual.”
Joanne Flanagan, financial director of Sheffield firm Pro Roll, said: “We manufacture metals from melting to our hand rolling mill. When the lockdown started there was no way that we could implement the social distancing without putting some thought into it.
“We put the whole team on furlough early doors, really until we assessed what was happening. We were lucky in that our customers paid us the amounts on our debtor books, we were off about six weeks and have been brought back over the last few weeks. We’re all back apart from a few individuals who, for personal shielding reasons needed to be away.
“We had a good order book before this all started. The first few weeks back have been extremely busy. The processes we’ve had to put in place have been very largely welcomed and accepted by the team.
“The team have had to put a lot of effort in that – they have to work together, in-sync. We’ve been catching up on the work pipeline we had before. We are still getting work in but the order book isn’t building like it was before. It’s not getting back to the levels pre-lockdown.
“It’s been phenomenal to see people adapt to home working but it’s taking longer to get those orders through because the teams need to get together and maybe they’re not in offices. So something that would have taken a few days or a few weeks is just taking that little bit longer. There’s a bit of a lag with some of that communication, certainly with larger customers where a number of departments have to sign off orders, I think that has created a bit of a hiatus.
“We’re looking carefully at scenario planning over the next couple of months, about potentially using the flexible furlough scheme, just managing it as we go because things are changing daily.
“We’re very much still working to the same markets and our customers are still talking to us about orders. The large changes have had to be about how people work and interact within the mill because they don’t naturally fit with the social distancing rules. We’ve had to be very conscious about how we work.”
A particular set of challenges was outlined by Gus Saggu, financial director at KSC Worldwide Limited.
He said: “We are a multi-site retailer - we own and operate petrol stations. We were fortunate in lockdown because both from transport and food services we were classed as an essential business and didn’t have to close down.
“We had had concerns in February and we put together a six-scenario plan. By the end of February we shared that with the bank so when lockdown came I had a phone call with our relationship director and we were a little bit ahead of the curve in being able to respond.
“As with our plans, it wasn’t scenario two, three or four, it was a combination of different ones. What that enabled us to do was get ahead. We were concerned because lockdown happened on the evening of the 23rd and on the 24th we had a 65% drop in footfall. Commuters stopped, and our fuel sales, which drive a lot of our working capital, essentially fell off a cliff.
“But the bank was absolutely superb. Within eight days we had funding lines in place that covered a worst case scenario. That enabled us to focus on tactical and operational issues rather than liquidity issues - I can’t overstate the value of that bandwidth.
“The other complication is that we run the business from the South East but our business is in County Durham. We had to make sure from 300 miles away that we ensured protection of our staff. We were upfront about it, we were asking them to stay in the front line with customers that may or may not be taking protection seriously.
“Back in March when we started scenario planning, it was very much a South East issue. We could see it was something and a lot of our staff thought we were bonkers to plan for site closures and putting screens up and full masks. We re-did all our HR protocols because if anyone got infected sites would have to close for four days and be decontaminated which would critically affect the business.
“We put in a twice-weekly Zoom call with site managers - one operational, one welfare - to reassure them. We put in place rolling leave and if they felt the site could afford it, people being able to take a half day off, to help ease some of the pressure that can build up with anxiety levels. We also did full risk assessments of all 90 staff and made sure that those that were vulnerable were put in shielding.
“We had a member of staff stuck in Australia who worried she wouldn’t get paid - we told her she would and she should focus on staying safe and getting back. Being strong and consistent on welfare - we’ve had payback on that multiple times with incredible teamwork, people going over and beyond.
“Volumes are back to around 80-90% on fuel. And the thing that’s really helped and saved the business is that shop sales are consistently about 125% of pre-lockdown levels and most of our margin is from shop sales. From cash flow, losing the fuel sales wasn’t great but from Ebitda and profitability point of view, it’s been beneficial.
“We’ve been looking at a recovery plan and looking at the opportunities this has afforded us. We want to make that stick. The big prize is to make as much of it stick as possible and retain those shopping missions.”
David Beckford, managing director at Pronto Industrial Paints in Chesterfield, said: “A lot of our customers carried on during the crisis but we saw about half of our business drop away.
“We decided to do sanitiser to help. We already had the raw materials on site as they normally go into paint so we ended up getting a licence and started making hand sanitiser in fairly large quantities. That’s been a new bit to the business which I would never have done if it wasn’t for the virus.
“Gradually we’ve seen the industrial market return. It’s fairly buoyant again. The hand sanitiser is there as an add-on now.
“I’ve been quite impressed with the Government on the business side of things. HSE have been very pragmatic and helped us get the licence sorted.
“It’s helped us internally. Quite a few staff were reluctant at first, they didn’t think it was essential. When we started making the sanitiser I made a decision that we would donate so much to good causes - the goodwill returned among the team quite quickly. We had quite a lot furloughed but we’ve now got everyone back and we’re donating boxes of sanitiser to care homes, local shops and facilities - they feel quite proud of what they’re doing now.
“The biggest change for me has been the sales team. Their mileage has evaporated - I’m really happy to be spending less on fuel and they’ve got so much more time on their hands. There’s less ‘dead time’ travelling around to see customers. I’m not in a huge rush for that to return to normal, whatever that is.”
A view from the accountancy profession was provided by Lisa Leighton, managing partner at BHP Accountants.
She said: “My takeaway from this is that I’ve been given the gift of time. You’re no longer in the car all the time and I wonder why we used to do some of the things we used to do.
“I’ve spent far more time with clients, staff and with my family. It gives us a great opportunity going forward, and my biggest concern is not wanting our teams to go back to how we used to be.
“At the start we were in crisis management in terms of cash management - I’d like to thank the team at NatWest because it was really easy to get the paperwork in place to make sure that our capital repayment holiday was done.
“Our corporate finance team have been helping clients with Bounceback Loans, CBILS and we’ve also worked really well with NatWest on that.
“Right at the outset, it was crisis management. We did scenario planning and it was that it could be curtains for Quarter One because no-one puts their accountant at the top of their payment list. We took a very pessimistic view and furloughed half of the team. We got the negativity out of the way and we’ve still got around 60 on furlough.
“One of the big things we did on the business is keeping a list of things that were good and things that were bad, and things we’d never do again. We picked out 12 key projects that would transform our business within 60 days - some of that was around interacting with customers that significantly reduced work that some of our teams do.
“Looking at my client basis, the outlook is mixed: some have gone back and are cautiously optimistic.”
Also at the sharp end of the crisis was Adrian Berry, restructuring partner at Deloitte.
He said: “Overnight we went to remote working. We haven’t furloughed anyone within the practice but we have allowed staff to access reduced hours which many have found helped support them.
“From a restructuring perspective, it’s the eye of the storm for us. We’ve reacted to help clients respond at the early stages and help people get various forms of funding.
“The banks have generally been very supportive, as has the Government. We’ve got to remember that half the economy was probably just bubbling along at best, regardless of the pandemic, and what we’re seeing is that corporates are looking strategically at this and how they can review and restructure their business.
“We’ve been working with a lot of corporates about how they run their business, their cost structures and working capital - we’ve heard a lot about how parts of a business are adding little to profitability but are helping cash flow. It’s balancing those in our new way forward.
“We’re getting busy in supporting businesses, particularly in certain sectors such as travel, hospitality, leisure, retail automotive and aerospace - they’re going to be affected for longer periods of time.
“HRMC are coming to the point where PAYE needs to be paid and they’re coming to deductions over furlough payment. There is generally a concern on how HMRC will support time for payment. At this point in time in the cash cycle, the concern is: what do we do, how do we do it and what’s the risk to cash flow?
“Without a doubt, it’s going to get worse. Unfurloughing staff is a critical point - do you need staff back or will there redundancies? There are going to be business fatalities as a result of being unable to deal with pent-up cash pressure.
“There will be some businesses where their markets disappear. We are working with a lot of retail businesses with regards to CVAs and contingency planning alongside.
“The question will be to what extent there will be an addressable market for those businesses. There may be some insolvencies where it’s a route to a new ownership structure, but some will be a route to a closure. That will probably come through in Q1 in 2021.”
Steve Mawdsley from NatWest rounded off the discussion, saying: “It’s great to hear that the bank is supporting businesses.
“Looking at the discussion, one of the things that has jumped out is adapting to trends and new ways of thinking. There are opportunities and can businesses adapt to them.
“Technology and driving efficiencies - as leaders it’s crucial that we don’t drop back into the old normal. If all we do is go back to the office and sit two metres apart, that wouldn’t be the most effective way to come together.
“Speed of execution is brilliant but you’ve got to maintain control.
“The last thing that was really powerful was around purpose and community and staff feeling part of that, how engaging and motivating that can be. That really stuck out for me - helping communities motivates people and you get it back in bucketfuls.
“There’s been some great themes there.”