Kaiam’s UK and Europe operations appoint KPMG administrators

11 January 2019 Consultancy.uk 2 min. read

Global fibre-optics manufacturer Kaiam has seen its UK and Europe arms collapse into administration, following adverse trading conditions in 2018. The news saw KPMG professionals call a meeting of the firm’s Scottish workforce on Christmas Eve, in which it was decided more than 300 people were being made redundant.

Kaiam is an American manufacturer of optronics equipment for computer networking. Founded in 2009, the global firm is headquartered in Newark, California, but until December 2018 it also had a manufacturing facility in Silicon Glen in Scotland. The Scottish wing of the firm was acquired in 2013, having been founded as Gemfire in 1998. The entity which became Kaiam Europe manufactured components for high speed data transfer in data centres. The Lothian manufacturing premises is owned by subsidiary Kaiam UK.

As the UK economy saw growth slow ahead of significant economic uncertainty in 2019, the company was afflicted with declining work levels last year, which, coupled with a high fixed cost base, resulted in the business facing significant cash flow difficulties. As a result, Kaiam’s UK and Europe operations have gone into administration – though US-based parent company Kaiam Corporation is not subject to this news.Kaiam’s UK and Europe operations appoint KPMG administratorsThe move saw KPMG UK’s Head of Restructuring Blair Nimmo and Alistair McAlinden appointed as joint administrators for Kaiam Europe and Kaiam UK as of late December 2018. The administrators from the Big Four firm convened a meeting of all employees on Christmas Eve at the Livingston, Scotland facility, and, thanks to a host of reasons including trading losses, absence of material customer orders, and significant fixed costs of operating the facility, a decision was made to lay off 310 of the 338 employees with immediate effect. The remaining 28 employees have been retained to help the administrators explore a sale of the business.

Commenting on the devastatingly sudden news – which accompanies one of the most financially troubled times of the year for UK workers – former employee Joanne Baxter told Scottish broadcaster STV News, "I've had to go down to sign on at the job centre – and you think, 'I can't believe I'm sitting here'. It's your independence, you're bringing your wage in, you're meeting all your friends, exchanging stories at your work and having a laugh, working away – and it's that that keeps you going.”

Recognising the difficult position the round of redundancies has placed hundreds of workers in, Blair Nimmo meanwhile remarked, “We fully recognise that redundancies at this time of year are particularly difficult. Our main focus during this challenging period is to work with all affected employees alongside Scottish Enterprise, Skills Development Scotland and West Lothian Council to ensure that the full range of support is available to them... In the short term, we are exploring all available options for a sale of the business and would encourage any interested parties to contact us as soon as possible.”