Domino effect of First Tech liquidation

Smart Joint South Africa is a relatively young business involved in Polyethylene systems. <a href="http://www.fin24.com/Multimedia/Smart-Joint-SA-fears-shutdown-20130801">View gallery</a>. (Supplied)
Smart Joint South Africa is a relatively young business involved in Polyethylene systems. <a href="http://www.fin24.com/Multimedia/Smart-Joint-SA-fears-shutdown-20130801">View gallery</a>. (Supplied)

The liquidation of engineering firm First Strut (trading as First Tech) is affecting more than the up to 7 000 employees directly employed by the company and its subsidiaries.

Michael Heyl, director of Smart-Joint SA, a supplier of the First Tech Group writes:

I am a director of a company, which has not even been trading for a year, and I have been affected by the liquidation of the First Tech Group.

This is really a blow to me. I feel so sorry for all the First Tech employees who have lost their jobs, but it does not just affect them.

It affects companies like mine who have now had to incur a huge loss. Maybe not quite as large an amount as others have lost, but to a small company like mine it is a huge amount.

We are a wholesaler and distributor of all thermoplastic fittings and machinery servicing the mining, agriculture, water transportation, sewerage and gas sectors.

We currently have ten permanent employees and have been operating since October 1 2012 when I started the business from my home.

We have since been blessed to obtain a 630m² factory.

I now run the risk of having to close my doors and retrench my staff.

Now I cannot help but wonder how many other innocent parties and suppliers are in the same position as me.

I feel this is so unfair and such a common trend in our country.

My concern in general is that I am trying to create a company not just to make money for myself, but also to create jobs and success for other people and families.


Smart Joint South Africa is a relatively young bus

At the end of the day it is the loyal and hard working companies and people that get affected, while the underworld and business-depriving thieves make millions and their lives go on.

I have a son and want him to have a good life or at least get through life not struggling like me.

I am sure there are many others in my position, but what is being done about this?

When a company is liquidated a company like mine stands no chance of recouping that money and getting some of the pie due to be paid by the liquidators as we will only be in the category which is third in line.

On a more positive note, I have been privileged to have a direct link to our manufacturing plant in China and have given them a share in our business so that we can ultimately carry enough stock and have some payment terms.

This has really helped me make a success as the banks won’t help a small business like mine and I therefore don’t have any overdrafts. Everything has been cash up front.

I try and develop my staff by training them and try to promote and encourage them to achieve and move up the ladder as the company grows.

I have moved a driver into internal sales a few months ago and he has been very successful. If he leaves or moves on, at least he has developed and has more skills.

Independent business consultant Anton Ressel has some advice for Michael:

This issue has certainly affected thousands, not least the approximately 7 000 people who lost their jobs.

The ripples will be felt far and wide and for some time to come, as you are no doubt experiencing.

Your chances of recouping any losses are sadly very slim, and in any case there will no doubt be months if not years of investigations and unravelling before any creditors do get paid out.

My only advice is to accept that this ship has sailed and look to the future.

Could you recoup and re-use materials/stock elsewhere?

Could you negotiate with your staff to possibly look at working short time for a period until you are back on your feet?

Could you tighten your belt in any other way to see you through this tough period?

The reality is that things like this do happen and while you are no  doubt brimming with rage at the injustice of it all, your business needs you to look forward now and not get distracted and derailed by what has happened already.

On a final note, it is also a lesson in spreading risk. While we all want those key accounts, it is always a dangerous strategy to put too many eggs in one basket.

I sincerely hope you can survive this setback and emerge stronger for it.

- Fin24

Are you in a similar position? Let us know.
 
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