A new boiler shortage has caused the collapse of a Cramlington-based installation and repair business that employed 62 people and had attracted £4.65m investment in recent years.
Ian Henderson, director of Boiler Plan UK Ltd, said his business had been growing well before Covid interrupted the firm's house calls and exacerbated materials shortages that have seriously impacted the number of new boilers available to fulfil orders.
Speaking exclusively to Business Live, Mr Hendson said: "The business was absolutely flying before Covid - we were hitting all of our numbers, we were growing rapidly, hiring new staff and we'd moved into new premises. It was all going really well. Covid hit us hard because we relied on going across the customers' threshold and we had all the challenges business faced during Covid on top of that. But we were well capitalised and we made it through.
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"We won new contracts last year, business-to-business contracts that were really strong, with the likes of E.ON and Domestic and General and we had orders in quarter one for 600-700 boilers per month, which was worth about £1m revenue per month. And then the boiler supply crisis hit us."
Mr Henderson explained that owing to materials shortages - including widespread semiconductor shortages - boiler manufacturers are only producing about 20% of previous years' output. It had a damaging impact on Boiler Plan, which required a minimum of 300 boilers each month in order to break even.
The firm, which was spun out of long established family firm R F Henderson Ltd in 2014, was forced to return customer deposits as it could not fulfil orders. Despite seeking guarantees from manufacturers, Boiler Plan was told there would be no certainty in supply until mid 2023 and funders Maven Capital Partners declined to fund the business further.
Mr Henderson said the debt structure of the company and the impacting boiler supply crisis meant Boiler Plan could not be sold, and administrators at Interpath Advisory were called in.
He added: "It wasn't through bad strategy, bad planning or bad people - it was market forces that drove it down. I worked so hard on the business for seven years. I built it from me and a laptop up to doing £8m revenue and employing nearly 100 staff at one time. It was a good business that was a victim of a materials supply crisis."
Staff at the firm have been directed to the Government's Redundancy Payments Office and customers have been advised to cancel their direct debit payments to the firm.
Boiler Plan received three stages of investment totalling £4.65m from private equity house Maven Capital Partners and its associated funds. That includes an initial sum of £2.15m in 2018, comprised of £1.65m from the Maven Venture Capital Trusts and £500,000 from the North East Development Capital Fund, which was supported by the European Regional Development Fund.
At the time Maven said Boiler Plan was one of the first of a small number of new entrants to disrupt the boiler installation and repair market with a digital solution. Since then, the firm received a further £1m investment from Maven in 2020 - a sum which Boiler Plan said would allow it to create 40 jobs and boost turnover to £30m.
And last year Maven invested a further £1.5m - including £500,000 investment from the North East Development Capital Fund and £250,000 investment from NPIF Maven Equity Finance - partly to allow Boiler Plan to open its training centre.
James Lumb, managing director at Interpath Advisory, said: “Our immediate priority is to assist those members of staff who have been made redundant, and provide them with the information they require to make claims to the Redundancy Payments Office.”
Boiler Plan provided boiler installation and repair, and also offered annual boiler services, cover plans and one-off repairs. The company was FCA-registered in relation to brokering finance agreements to its customers to cover installation costs.
A page on the Boiler Plan website issued advice to customers. Part of that information said: "Unfortunately, as the company has entered into administration and ceased trading, the company is no longer able to complete work under your service and/or cover plan. As such, you will have to make alternative arrangements for your service or cover."
Maven Capital Partners has been contacted for comment.
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