Belfast Telegraph

Government may be wary of bailout for coachworks

By Dr Esmond Birnie

In its most recent company accounts, lodged in September 2018 for 2017, Wrightbus said they had delivered a "solid performance" and that they were "industry leaders" in clean technology for buses. Now, however, a substantial loss has been indicated for this year.

A cash injection of perhaps £30m may be needed, perhaps even a new owner.

All this matters a great deal for the Northern Ireland economy. Wrightbus is a flagship business with 1,400 staff, one of the region's largest private sector and manufacturing businesses. It ticks all the right boxes for research and development and exporting. It plays a pivotal role in the economy of Mid and East Antrim, especially since the closure of Michelin and JTI Gallaher's, which were both based in the Ballymena area.

There were a few warning signs. Turnover fell during 2016-17 from £214.6m to £181m. There were two job reductions in 2018, each involving 95 positions. What went wrong? Wrightbus has had some big global orders over the years in the Americas and Asia-Pacific but it remains dependent on the UK for about 80% of its sales.

Unfortunately, the UK bus market is currently in a bit of a lull after a boom in orders as operators adapted to new emission standards. So far, orders for low/zero carbon buses running on electricity or hydrogen have been small.

What should be done? There have already been demands for the UK Government to provide the necessary cash injection, assuming no private investor comes forward. Ironically, this crisis coincides with the start of Boris Johnson's premiership. As London Mayor Johnson had been a major customer of the firm.

The case for intervention is based on the assumption that the current difficulties are temporary and that Wrightbus will have a good order book over the longer term. Historically, private sector companies which have required a rescue by the State sometimes rise like the phoenix - Rolls-Royce aero engines, some American car makers, and if Short Brothers had not been nationalised it would not have survived to be bought by Bombardier. But the operating subsidies provided to many Northern Ireland businesses in the 1970s and 1980s often led to less efficiency and damaging dependency. In this case, as with Harland & Wolff, Government will be very wary of anything which could become a permanent involvement.

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Dr Esmond Birnie is senior economist, Ulster University Business School

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