The precarious state of the engineering sector was underlined last week by profit warnings and downgrades at big manufacturers.
Steel stockholder Richardsons Westgarth, whose fortunes are seen as a lead indicator of its engineering customers’ own prospects, had more than 25% wiped off the value of its shares after a profits warning.
IMI shares also dropped after two firms of stockbrokers cut their full-year forecasts following what they described as downbeat assessments of prospects from the company.
Richardsons Westgarth shares fell to 60.5p, a record low, on the back of its profits warning. The firm warned imports of low-price steel had severely reduced its margins. Half-time profits for the six months to the end of June would come in at about £1.5m, well below analysts’ forecasts and last year’s comparative figure of £2.95m.
Managing director Philip Hurst said many customers were postponing the negative effects of the strong pound by sacrificing short-term margins.
He said the company would close one general steels subsidiary, JRS Steel Stockholders. The business was moved to new premises in Fareham, Hampshire last year but had difficulties recruiting an effective workforce.
Molins tobacco machinery maker announced 400 job losses in response to a continued slump in overseas orders caused by the Far East’s financial crisis.
Most of the jobs will be lost in Peterborough after the closure of a plant. More than two-thirds of the 1,350-strong workforce will be retained, but Molins said 400 job cuts were inevitable. Talks with unions are progressing.