THERE was no choice but to close the five Manx Electricity Authority shops because they were ‘haemorrhaging’ money, its chairman Eddie Lowey MLC has admitted.
The Castletown and Peel showrooms will close at the end of May while the Douglas, Ramsey and Port Erin showrooms will be closed by the end of September.
Mr Lowey said redundancies among the 24 retail staff members were inevitable – but added he hoped as many as possible would be redeployed within the state-owned MEA and across government.
‘This is sadly the end of an era,’ he said.
Related article: {http://www.iomtoday.co.im/news/isle-of-man-news/mea-shops-to-close-1-4467414|MEA shops to close}.
‘However, MEA Retail is not alone in struggling on the high street. Many of the larger names in retail are also closing shops due to declining sales.’
There have been repeated calls for the loss-making retail operation to be closed. In January, the Liberal Vannin MHK for Douglas South Kate Beecroft tabled a Tynwald motion calling for the showrooms to be closed ‘as soon as practical’.
Former chief minister Tony Brown was opposed to the closure of the showrooms, insisting they provided an important community service in the island’s towns.
An independent review was carried out in 2008 which led to a three-year plan, which saw a number of changes.
The Douglas showroom was relocated to Strand Street, the shops stocked a wider range of products, savings were made in the warehousing and delivery facility and the number of staff was reduced.
Mr Lowey said the MEA was ‘instructed by Tony Brown the shops had to be open for social reasons’.
He said: ‘When the new administration started the first thing we asked was “Are we still bound to keep the shops open?”.’
A review was launched, and Mr Lowey said the decision was made that it was not possible to turn the business around from its loss-making position.
Mr Lowey said he thought Mr Brown was right not to allow the shops to close under his administration.
But he added that it would be ‘irresponsible’ not to take that decision now, saying: ‘We gave it our best shot. We are still haemorrhaging money and that can’t continue.’
The MEA has seen reduced turnover and higher losses in its showrooms.
In 2009/10, turnover was £3.6m and losses were £414,000. The following year, turnover was £3m and losses increased to £592,000. In 2011/12, turnover is expected to be £2.5m and losses higher.
The MEA owns all of the sites except the Douglas showroom, in Strand Street. The properties will be put on the market following consultation with government departments.
Mr Lowey said that warranty work on electrical appliances will be honoured.
And he said that customers will be informed on alternative methods of paying their bills and prepaid meters.
Chief Minister Allan Bell MHK said that the Council of Ministers had agreed with the MEA’s decision.
‘This is a vey disappointing decision, for me personally, to have to make. I have grown up with the MEA showrooms almost my whole life and they have been a very important part of the retail proposition on the island.
‘I am sure they will be sadly missed by many people.’
When asked if he thought the shops should have closed sooner, he said: ‘Certainly there have been strong arguments put forward over the last couple of years that we should have bitten the bullet and closed these down before now.
‘The previous chief minister and Council of Ministers had a certain view on that.
‘I think the time has come, difficult though it might be, that we have to let our heads rule our hearts.’