Friday, January 11, 2019
By NEIL HARTNELL
Tribune Business Editor
Taylor Industries’ principals say three years of losses, combined with a harsh economic climate featuring escalating cost and tax hikes, gave them no choice but to close and lay-off 40 staff.
The 74-year-old electrical retailer and contractor, confirming it had closed its doors for good on Monday, revealed that it was insolvent and will be naming a liquidator to wind-up its affairs due to a “significant liability” related to employee terminations.
The company’s statement, explaining the reasons for the closure, represents a case study of the pressures facing many Bahamian-owned businesses in the current low growth/fiscal austerity environment, again highlighting the need for urgent action to tackle the cost and ease of doing business.
Besides blaming a five-year “depressed” economy with annual growth at one percent or less, Taylor Industries said the construction industry - upon which its electrical contracting business relied heavily - had been particularly “severely impacted”.
Meanwhile, the retail side of its business has been squeezed by the shift to online shopping and Florida, at the same time it has been forced to cope with value-added tax’s (VAT) introduction and subsequent hike to 12 percent, plus rising electricity and fuel costs.
Taylor Industries added that cash flow had been “severely depleted” by delinquent and uncollectable debts owed by customers, known as accounts receivables, which were too expensive and time consuming to collect through the court system.
It also cited employee theft as a major problem, together with “inflexible and draconian labour laws that made it financially impossible to appreciably reduce staff numbers in order to downsize”.
In what appears to be a final nail in the coffin, Taylor Industries said Bahamas-based commercial banks had declined to provide restructuring financing despite being provided with what was described as “adequate collateral”.
“The company has been operating at a loss for the last three years, but has continued to have to pay a regressive business licence tax on gross income, further deepening those losses,” Taylor Industries said. “The economy for the last five years has been depressed with growth at one percent or less, the construction industry in particular being severely impacted.”
It also pointed to the “escalating cost of doing business due to increasing government taxation and astronomical electricity and fuel costs. The increase in VAT to 12 percent without a corresponding reduction in Customs duties, and a shift to online shopping has further impacted our retail business”.
Turning to its cash flow woes, Taylor Industries said: “Recovery through litigation with the state of the court system was not a realistic option.
“Theft has been a major contributor to the yearly losses despite every effort being made to minimise or eradicate it. Inflexible and draconian labour laws made it financially impossible to appreciably reduce staff numbers in order to downsize.
“A consequence of the termination of the employees has been the crystallisation of a significant liability that has now rendered the company insolvent. As such, the Company will be appointing a liquidator who will be responsible for winding up the affairs of the company.”
Taylor Industries’ statement did not explain what this liability is, and the company’s principals declined to comment further when contacted by e-mail. It is unclear whether this refers to severance and other monies potentially owed to former employees.
Graham Taylor, Taylor Industries’ sales chief, told Tribune Business in a brief reply: “I can say that it is with deep regret that we had to close our doors to the Bahamian public, and that it was a difficult decision to make. However economic opportunity left us with no choice.”
The company’s statement concluded: “Lastly, [it was] the clearing banks’ refusal, despite their liquidity, to provide financing for restructuring even when provided with suitably valued collateral. The closure of this still family-owned business has unfortunately resulted in 40 staff members, many of long standing, being made redundant.”
However, several sources suggested to Tribune Business that Taylor Industries’ business model had failed to evolve and keep pace with changing market demands and competition, and that its brand had become worn down and tired as a result.
“They didn’t keep up with the times,” the source said. “It’s just sad. The whole thing is sad. What can I say?”
One construction industry source, speaking on condition of anonymity, told Tribune Business that Taylor Industries and all sector players had been hit hard by a combination of VAT and a stagnant housing market that most small contractors rely on for work.
“Taylor Industries surprises me but doesn’t surprise me,” they said. “2014 was up 30 percent over 2013, but VAT kicked in from 2015 and we were down 30 percent at the end of the year. In 2016 we got back to where we were in 2013.
“It’s like somebody flipped on a switch in January 2015. I don’t think anyone in government knows or doesn’t care. We’re all fighting for the crumbs. We’ve had to go looking for new products to sell.”
Taylor Industries, according to its website, was founded in 1945 by cousins Charles and Archie Taylor. Its store was originally located on Bay Street until 1957, when it moved to its current Shirley Street site, and it retained its status as a family-owned company throughout its history.
It sold multiple heavy-duty electrical appliances, including ovens, air conditioners, freezers, dryers and dishwashers from brands such as Maytag, Westinghouse and Lakeshore. Fans and lights were another of its staple product lines.
The company also offered full electrical contractor services, along with shipping, delivery and salary deduction/financing for government employees only.
Tribune Business reported previously that Taylor Industries’ closure is another sign of the shake-out occurring within the Bahamian retail sector and other industries, which has already claimed other well-known, long-standing brands such as City Markets and John S George.