Budelpack Holding calls in adminstrators to save leading contract manufacturer from collapse

With nine operating sites in Europe, 2,150 employees and a turnover of €330m last year, Budelpack began 2008 as a market leader in contract manufacturing for home and personal care products.

L’Oreal, Beiersdorf, Henkel and Unilever all featured in a customer list that read like an A to Z of the largest personal care companies in Europe.

But today the company is engaged in a desperate struggle for survival.

On 13 January a court in Breda, the Netherlands, granted Budelpack Holding a suspension of payments that holds the creditors from the door while the company establishes a strategy for avoiding bankruptcy.

So what went wrong? In a word, COSI. At the end of 2007, Budelpack bought cosmetics contract manufacturer COSI but the investment went sour and in December last year the South Wales-based business closed its doors blaming a 25 per cent drop in sales.

Budelpack had invested in new equipment at COSI’s manufacturing site in Maesteg and was left to pick up the pieces when the business failed.

Administrator Mart Franken from Van Iersel Luchtman told CosmeticsDesign.com the problems at Budelpack Holding stem largely from the failure of COSI.

He said the company lost “a lot of money”​ with COSI, compounding financial problems caused by loss-making operations in Talavera, Spain, where it manufactured personal care products from an ex-Unilever sourcing unit. The Spanish business is now bankrupt, according to the Dutch newspaper BN De Stem.

Budelpack Holdings is left with cash flow problems that it is now trying to solve by selling shares in its good companies, added the adminstrator.

Franken said: “There is a good chance of survival”​ but the statistics are stacked against the company.

Legal firm AKD Prinsen Van Wijmen said that 95 per cent of Dutch suspension of payment cases in 2004 ended with insolvency being declared.

The chances of Budelpack Holding escaping the fate of the majority are further weakened by the financial crisis that presents a difficult environment in which to find buyers. It seems unlikely that Budelpack will continue to operate in its current form and dimensions in the long term.

Conflict has already broken out between the company and one of its main customers Henkel over the Budelpack cosmetics plant in Lièpvre, France.

Budelpack has accused Henkel of acting illegally after it refused to pay for around €2m worth of products manufactured at the site and canceled an order for 6.5 million units.

Henkel responded claiming that Budelpack has still not paid outstanding debts from the purchase of the French factory in 2003 that add up to around double the amount that Budelpack is asking for.

Other operating sites are fighting to remain in business.

Budelpack Hirtler in Germany is in administration, according to German newspaper Badische Zeitung. Management at the soap factory told the newspaper that liquidity problems with the holding company were to blame and that revenue and profits remained healthy. Management is confident that investors will be found for the business.

Similarly, Budelpack March in the UK, the food packaging arm of the group, called in the administrators early in the month. The firm continues to trade and is looking to be sold as a going concern.