Insolvency: Joinery unties the knot: The company that refused to lie down when its parent went to the wall

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The Independent Online
UNTIL recently, Malcolm Birchwood was not sure whether he had a company to run.

In 18 months he had turned JL Joinery's losses to break- even, only to find that the operation, based in Cricklewood, north London, had been put into receivership because its parent company, John Lelliot, had lost its battle for survival.

Hard on the heels of this came a bank letter calling in a pounds 7m Lelliot debt. 'I had no idea that our company was one of several guaranteeing their overdraft,' Mr Birchwood said.

'That, not surprisingly, immediately put us into an insolvent situation, although we had pounds 2.5m of business on the books and a factory working flat out. The lads were just disbelieving when I told them what had happened and that I had to sack them, and myself, there and then.

'It has been a shattering experience, but I have learnt a lot, including that you must make a company search before accepting a managing directorship,' Mr Birchwood said.

Seven weeks later Mr Birchwood had successfully completed a management buyout with three of his managers and a white knight, Dorf Horneman, a Dutch businessman. He has put up most of the money for the buyout and funding for the next year.

Many of the old company's contracts, which include the National Gallery, the Prudential building in Holborn, the Royal Courts of Justice and Waterstone's bookshops, have been renewed. It has also agreed a deal with the Eurotunnel shops in France.

'Most of our suppliers have been absolutely marvellous, supporting us all the way. I am very grateful to them,' Mr Birchwood said.

But he has had to slim down the company. The factory workforce of 70 has been reduced to 45 and office employees from 30 to 15. Projected turnover for the first year is pounds 3.5m, although he is hoping it will be nearer pounds 4m.

'Dorf and I intend to increase that by five times in the next 10 years. We have factory space of 30,000 square feet, and by buying some of the newest computerised machinery can increase our turnover to pounds 15m before we have to find new workshops.'

Mr Birchwood trained and worked as a joiner and workbench machinist for eight years before starting his own company at 24. He sold out in 1955, but stayed until he was head-hunted by John Lelliot in 1991. He still makes his own furniture at his home in Surrey.

'I use all the imperfect pieces, with knots in, which I like and the clients don't. We are very cost-effective in this factory. The off-cuts are burnt in our boiler and used to heat both the factory and the offices. And we know exactly where all the wood we use comes from - it is all from a renewable source.'

He is clear about how he is going to make the business work. 'Marketing is vital now, letting people know that we are back and here to stay. I re-employed my design development manager, John Franklin, who is a brilliant designer, and his job is to talk to the architects in their own language and take some of the problems off their shoulders.'

His wife, Lynda, has given up her job as a school laboratory technician to work with him. She has devised a new computerised payroll system.

'The future of the company is brilliant,' Mr Birchwood said. 'I want to build it into the top joinery firm in the UK. We have the best equipment, excellent skilled workers, most of whom I train myself, and the best will in the world.'

(Photograph omitted)