In December last year, Vincent Gruau from the French office furniture manufacturer Majencia filed for suspension of payment explaining that the cash flow problems were the result of slow payments by their customers. Last summer, in excess of € 25 million was owing to them of which more than € 14 million was overdue.
Majencia has taken action against its largest customers to recover € 6 million. However, according to Gruau, payment arrears continued to increase, making it necessary to apply for suspension to reduce the pressure on the company.
Suppliers demanded direct payment
The problems had already started a year before when in 2017 Majencia lost money and the company had to restructure its operations with the assistance of CIRI, the French Commission for Industrial Restructuring. Although the CIRI normally work confidentially, the procedure became public last year. According to Gruau this was the reason that credit insurers cut suppliers’ credit cover on the company and suppliers demanded direct payment, which, in combination with payment arrears, rapidly worsened the situation.
Factory closure, focus on rationalization and the project market
To help the situation, two factories (in Angers and Chartres) with a total of fifty employees were closed. In addition, another production location of the company in Guise was sold. As a result of the sale and closures, just two production sites will remain and the company is planning a future based on half of the current turnover of € 110 million. Gruau will present a plan for the future of Majencia in April. He already admits that the company “must concentrate on a dozen large clients instead of the current fifty with many diffuse projects. The portfolio of the company will be rationalized, and Majencia will focus on the project market.“