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Food distribution firm warns First Minister of £2m losses and jobs being put at risk

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David Cattrall, managing director of Harlech Foodservice. Picture credit: Mandy Jones

A food distribution company has written to the First Minister warning that jobs will be at risk because a national “firebreak” in Wales and rolling local lockdowns in England will cost them £2 million.

Andrew Foskett, the joint chairman of Harlech Foodservice, based in Criccieth and Chester, revealed, the company had already been forced to place staff on short-time,  resulting in a 40 per cent pay cut for the workforce and the company’s directors.

The company’s main client base was in the hospitality sector and had seen 95 per cent of its business “fall off a cliff” during the first wave of the pandemic.

Harlech navigated the difficult summer months with the net loss of just one job – with 17 redundancies and 16 new roles created – after the newly-appointed managing director, David Cattrall, restructured the company and upped its game in terms of online sales, allied to use of the furlough scheme and the Eat Out to Help Out campaign.

Now, with a new national lockdown or “firebreak” in the offing in Wales and tougher restrictions in other parts of the UK, the prospects are increasingly problematic once again heading into the winter months.

In the meantime, the company has secured a Coronavirus Business Interruption Loan to cover the financial hit while record summer sales will also help.

Mr Foskett is calling for an extension to the Job Retention Scheme (JRS) with companies receiving 80 per cent of staff pay and being allowed to move staff in and out of furlough depending on demand.

He described the Job Support Scheme that replaces it  as “unworkable” and of no benefit to companies like Harlech Foodservice because they were not legally being forced to shut.

The company says the reduction in VAT for the hospitality sector, from 20 per cent to five per cent, should be made permanent.

It was also vital, he said, that food-led pubs and restaurant that operate in a Covid-responsible way were allowed to reopen on November 9.

In the letter, Mr Foskett said: “As a result of your recent changes in legislation our business is forecast to lose in excess of £2m this autumn/winter and staff jobs are again at risk.

“As an established food distributor in North and Mid-Wales, we have been hit hard by the Coronavirus pandemic.

“Pre-Covid we were a profitable Welsh business that employed 170 staff but, as with the majority of our hospitality customers, we are struggling going into the winter period.

“Based on what we currently know in this fast moving situation, the lockdown this autumn/winter will cost us in excess £2m if we do not take drastic action.

“As the tapered JRS comes to an end in October, and with the unworkable Job Support Scheme that replaces it, we have had no other option but to implement a 3/5th working pattern for all our staff so we can protect jobs in the long term – that’s a 40 per cent pay cut to all employees and directors at Harlech Foodservice. Even with this we forecast a £1m loss in the next six months.

“Our award-winning company was established by my father in 1972 and was prospering under the second generation.

“Our dedicated and loyal workforce were in sustainable employment, however there is now a dark cloud over them and the company without further support from your Government.

“I hope you, like the First Minister of Scotland, appreciate the vital role we play in the supply chain for the public and private sector, so to this end, I am appealing for financial support so that Harlech Foodservice and other businesses in hospitality and the supply chain can prosper once again.

According to Mr Foskett, supply chains need the flexibility to respond to demand.

He added: “We require an extension to JRS, with government providing 80 per cent of pay and businesses able to flex the workforce.

“Supply chains operate across county and country borders so companies should be allowed to claim JRS based on their business needs, not simply when the postcode they are based in is locked down.

“The hospitality sector should not be held responsible for the virus spreading so we need to ensure that Covid-responsible food-led hospitality is allowed to reopen on November 9 and is not locked down again.

“Hospitality supports more jobs per item sold than food retail so we need support for the  largely independent hospitality sector in competing with national food retail chains by making the cut in VAT to five per cent permanent.”

Rhys Gregory
Editor of Wales247.co.uk

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