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Wanted: Principals with principles

Oblivion may be staring one of the industry’s movers and shakers in the face but there is still time for Sussex and Berkshire to drag itself from the brink of disaster.

Managing director Derek Moore attributes the situation to a cash flow problem caused by late payments by UK customers who hold on to S&B money for as long as possible and machinery suppliers overseas who pay S&B commission on machinery sales. He believes that this is part of a bigger picture affecting the UK packaging machinery industry.

The habit of machinery buyers to sit on a percentage of payments after delivery is bad business practice and one that has brought down many a giant.

There is no doubt that this practice has become more difficult to tolerate in such a competitive market but it is worth remembering that, under the European Agency Directive, machinery commissions should become due at point of delivery whether the principal has been paid or not.

Perhaps, UK agents do not realise the importance of the EEC Agents Directive and how they can gain from it.

Retaining agency business is another problem that faces all agencies and S&B was no stranger to this. It must be very difficult to fill a gap either by taking on new agencies or by diversifying into other activities like manufacture and project management.

The saying goes that an agent can lose business in two ways – by not selling enough or by selling too much. The secret lies in being mediocre – sell enough to keep the principal happy but not so much that the principal wants to set up a sales subsidiary on its own!

This is not a new phenomenon for agency companies. If truth be known, S&B is simply the latest in a line of well respected agency companies including TI Packaging Machines, H Erben and Mortimer Plastics who were too good at their job.

They helped major principles to establish strong markets in the UK and then paid the price when those principals decided to set up subsidiaries of their own.

What the industry needs is principals with principles or has ethical behaviour long gone out of fashion in today’s slick and cynical business world?