Feature, IoT/Smart Lighting

Concern mounts as Harvard enters administration

Product quality problems, cash flow issues and a challenging lighting market have all contributed to management calling in the administrators at Harvard Technology.

LOCAL authorities and other major customers with sophisticated wireless control systems from Harvard Technology are becoming increasingly concerned that their installations may be unsupported following the announcement that the company has gone into administration.

The sophisticated and complex EyeNut and LeafNut systems for indoor and outdoor lighting control have been extensively installed across the UK and in Asia.

Happier times: Company founder John McDonnell, centre, with former marketing director Michael McDonnell, left.

However, product quality problems, cash flow issues and a challenging lighting market have all contributed to management calling in the administrators last night. The firm reported sales of £21.2 million for the financial year ending 31 October 2017, with a pre-tax loss of £4.2 million.

Lux understands that there have been 15 redundancies at the company, which is based at Normanton, near Wakefield. These include design engineers, test engineers and software engineers.

Harvard has operated in the lighting industry for the last 25 years and was once a star performer, courted by politicians and royalty as an example of a thriving British business.

The administrators told Lux ‘significant progress’ had been made on a turnaround of the business over the past two years. However, challenging trading conditions and cash flow pressures had led to the board exploring a sale for a number of weeks.

They said: ‘Despite these efforts, the directors have been unable to secure the survival of the company in its current form and could not continue to trade the business given the increasing funding needs.

‘Whilst we continue to explore the possible sale of parts of the business, a number of redundancies have had to be made. Whilst these redundancies were unavoidable, such decisions are always difficult, particularly at this time of year.’

Inside Harvard Technology’s factory in Normanton, Wakefield. Already a number of redundancies have been announced.

The company made significant multi-million investments in quality control and R&D following a tough period which included a financial and ownership restructure and losses due to the rectification of defective product. It even created a special quality team which managed to reduce its product defect rate to 0.05% – but it wasn’t enough to stem the losses.

Engineers were developing a simpler street lighting control system – dubbed BranchNode NG – by removing much of the complexity. It was to have been a key product in the company’s assault on the ‘smart city’ market.

In its worst year, 2015, the firm made a £11 million loss on a  turnover of £30 million, and incurred a one-off restructuring cost of £9.6 million. The restructure coincided with a rash of quality issues, where Harvard had to bear high costs to honour warranties and rectify lighting installations with defective drivers. The company blamed a batch of faulty third party components for the quality issues.

Customers of Harvard’s sophisticated wireless control systems, such as Surrey County Council, above, fear their installations may not get adequate technical support now the company has gone into adminstration

At its peak, the company was growing so fast that its processes were struggling to catch up. It sold almost 20,000 units of its Lux Award-winning CLi15 CoolLED drivers, and sales were increasing. New models, including Dali and analogue versions, were due to be released. 

As a result of that restructure, the private equity investor ECI Partners became the majority owner, with the management team retaining the remainder.

Harvard Engineering, as it was originally called, was founded in 1993 by engineer and former GE Lighting executive John McDonnell. In the early years it manufacturered drivers for ceramic metal halide lamps before branching out into wireless control systems.

  • Sarah O’Toole and Chris Petts of Grant Thornton UK were officially named administrators to Harvard Technology Limited on 10 December 2018 and should be contacted by creditors.