Norbain’s take-over by Newbury feels like a major seismic event – but is it really?
Even as speculation spreads about who the big losers might be – and who stands to gain – there is another, more cynical view, that in a few months not much will have changed.
The story so far:
- Norbain goes into administration, sold by administrators in prepack
- Industry reels at Norbain administration amid warnings contagion may spread
Norbain’s suppliers are the big potential losers. Even if most have insurance or factoring deals to protect them from bad debts, for some the likely delay of several months before they see any money could cause real difficulties.
But however much short term disruption there is – and however much ill feeling among creditors – it’s unlikely to be the end of the story.
Geoff Hilton, managing director of Norbain customer Kent & Sussex Security Ltd, predicted in time that most companies would be prepared to do business with Norbain again in its new guise.
“I suspect eventually they will be prepared to trade with Norbain again, albeit perhaps not on the same terms, thus having the opportunity to earn back past losses from future sales.”
(SecurityNewsDesk will be publishing a longer interview with Mr Hilton later today).
Mark Raine of CCTVdirect agrees – suppliers with limited routes to market will have to “take the haircut”, although many will see it as unfair.
“I find it very irritating. They will carry on trading and even be in a stronger position because the customer debt gets transferred or the debt book is sold. It’s writing off the debt and starting afresh – like not paying off your mortgage but staying in your house.”
Short term, he adds, Norbain may lose a few customers, but after a few months people will forget and carry on buying in the same way as before.
“If I was Norbain I’d be thinking this is a great opportunity.”
(In a previous version of this story, we wrongly attributed Mark Raine’s comments to Mark Thomas of Midwich Security, for which we apologise.)
‘Box shifting’ culture puts distributors under pressure
However, Norbain has been competing in an increasingly difficult market, says Andrew Whelan, MD of integrator IC2.
Before 2007 his company had a substantial account with Norbain but then has switched to specialise in megapixel technology with Avigilon.
“I don’t know how people survive in an analogue market. If you set yourself up as a ‘box shifter’ then you’ve got to have the cheapest price because there’s no loyalty and so much competition with imports,” says Mr Wheelan.
“Installers are pushed by their customers and they just want the cheapest thing on the market. Customers don’t seem to care any more about whether it’s Samsung or Panasonic. They just want any CCTV system for deterrent or insurance.
“As a result you have distributors working on a 5pc margin and people pushing them for credit. Then it only takes a few bad debts for everything to go wrong. As a business model it’s a match made in hell,” he adds.