Manganese Bronze Share Discussion Threads

[davidosh] 29/10/2008 22:49

The situation regarding the recalls could change dramatically if a TX4 cab currently on the streets with a recent plate actually caught fire as they would need to consider a blanket recall. At present only the first batch have been involved and for some reason it has been age related.

The company will be bracing themselves for the 'loss of earnings' claims which must start coming in soon as the first cabs recalled must now be back on the roads and losses can be assessed. I am told the unions are involved and solicitors so it could be a long while before the full extent is known.

[davidosh] 29/10/2008 22:31

There are at least 5500 that have to be recalled for the modifications and reworking. There are a number of other faults that were found by the inspectors when they tested a number of taxis five weeks ago and so a number of recall notices were issued. I highlighted them here about three weeks ago having found them on the VOSA website.

The cost of all this work and inspections must be well in excess of £4m as the time per vehicle is about three or four days average in the workshops and over a hundred additional engineers and mechanics have been hired for about six months solid work at two workshops.

Mann and Overton are now unable to do routine sercing and repairs so there is a lost opportunity cost there too.

I should add that on top of the 5500 cabs in service there are also 700 or so that the company have in stock or surplus in a field/storage that will also require the rework. Basically all the TX4 cabs built since their introduction in 2006.

[queeny2] 29/10/2008 19:18

i ride in TX4's still on the road quite frequently. they are doing the oldest ones first, but will need to do all of them. they seem to explode after 18 months, so a six month old one is fine, but will need to be done soonish. that's what the cabbies told me.

the electric TX4 stuff is red herring.

re insurance - the drivers will claim on the manufacturer, it's clearly their liability. they in turn will claim on insurance cover, if they have product liability or fault insurance (which i doubt, Ford don't claim on insurance when you get a dodgy one, they fix it for you, so failing that they will try and blame the Italians. some chance. they provide the engine and I BET that engine has been used safly in 100'000's of other vehilces. it's clearly LTI design and build fault, surely.

[shanksaj] 29/10/2008 12:10

Thanks David,

I'm still not sure how many AX4's have been taken off the road. Is it the 600 (currently awaiting mods) or is it the 5000 which will be altered by first quarter of 2009?

It does make a difference!

If there are thousands or even hundreds off the road for several weeks then Manganese is clearly bust several times over......unless insurance will pay up.

So, can anyone give any clues as to whether insurance would pay up? either driver's insurance, manganese insurance, or Italian engine manufacturer's insurance?

Any idea David? Or anyone else?

[davidosh] 29/10/2008 11:44

I should also add that the TX4 cab values have gone down by 15% since the fires surfaced and bad publicity affected sales so there is potential for claims there too as the cabbies depend on those values for their trade ins. Mercedes are refusing to take TX4s as p/x I understand.

[davidosh] 29/10/2008 11:40

CW. The Big hitters would be very welcome as LNG have far improved their risk management and would hedge any sizeable betting patterns. Any more ideas ??

I think LNG comments and views should be on that board rather than here though so will not comment further. This has been a very good board for serious discussion of MNGS

[davidosh] 29/10/2008 11:37

SHANKSAJ.....1000 TX4s with 56plates and certain 07 plates have been off the road and cannot go back until rework has been completed. From the MNGS IMS...

As announced on 26 September 2008, a product recall of all TX4 vehicles was commenced with product actions including modifications to the emission control equipment, the heat management system and under bonnet insulation. To date nearly 400 vehicles have had the rework completed and as a result there are now 600 vehicles off the road awaiting the rework. There are an additional 4400 operational vehicles that will require the rework and this is planned to be completed by the end of February 2009.

That involves about 1200 drivers in substantial claims of many thousands each already.

[catswhiskas] 29/10/2008 11:35

To be honest David I expect both this and LNG to go bust the only thing which one will be first.Youve only got to get some big hitters down at betshop and a long run of unfavourable results and the sh!t will hit the fan.

[davidosh] 29/10/2008 11:31

CW.....You really do like a 'wind up' Is your real name Russell Brand or Jonathon Ross ??

Try doing some research....Geely are shareholders and have a far more profitable business. They are interested in the future of the TX4 as a brand for China. I cannot see them wanting a rapidly detiorating business in the UK but would happily buy the rights to a 100% of their licence to build the TX4. That is the only bit of the business currently worth money plus the 100s of cabs in the field. They do not own the UK plant and manufacuring here is heavily loss making currently.

Hundreds of legal claims and liabilities could be the final straw...

I do not need to worry about LNG as it is a LONG position

[catswhiskas] 29/10/2008 11:26

>SHANKSAJ

"Manganese Bronze, a tiddler company in Coventry, briefly becomes the world's most expensive company by market cap!!!"

If that happens we wont be seeing you posting here you will be too busy trying to arrange your IVA along with your fellow shorters .

LOL

[shanksaj] 29/10/2008 11:20

Cats Whiskers,

I can see the headlines now:-

"Manganese Bronze, a tiddler company in Coventry, briefly becomes the world's most expensive company by market cap!!!"

A bid for Manganese? Yes, not many people know this, but a new runway at Heathrow is under proposal for the new generation of genetically modified pigs with wings.

[catswhiskas] 29/10/2008 11:13

Hmmmm interesting to see davidosh and cliffyburger short on this .What are you guys going to do if a bid comes in ? Look at what happened at VW ,I hope you wont be selling your LNG shares to cover the margin payments .

Beware !

[shanksaj] 29/10/2008 11:12

Thanks David. So all AX4s are off the road until work is done. Right? Please confirm. Thanks.

[shanksaj] 29/10/2008 11:09

The more time to think about it, the more the Geely announcement becomes newsworthy. Yes, it WAS newsworthy.. and its disastrous for Manganese, because it puts back production in China by several months, minimum.

Not sure if Manganese can afford several months.

[davidosh] 29/10/2008 11:07

1 Loss of earnings by taxi drivers


You have only calculated the loss whilst the drivers/owners are having their cabs in the workshops which has this far averaged five days and some have to be transpoted for one day either side to the workshops hundreds of miles away.

Anyway the bulk of any claim will be from hundreds of cabbies who have been unable to work for the last six weeks and possibly for another three to four weeks whilst their cab is off the road and they could not source a replacement anywhere. There are many that share cabs so double the potential claim. It is all those cases that the Cab drivers union see as the potential for a £30m claim it seems.

[shanksaj] 29/10/2008 10:49

Cost of fire rework etc.

Manganese have announced 5400 vehicles will need rework which they estimate will cost £4 million, not including "lost time/work" compensation. Someone might have put some sort of gestimate on these other costs above, but I haven't seen it - except for a fairly wild £30 million.

Costs which might be included:-

1 Loss of earnings by taxi drivers while vehicle is being repaired
2 Legal fees to Manganese Bronze
3 Legal fees of taxi drivers seeking compensation
4 Loss of earnings of drivers going forward because of loss of confidence of paying public
5 Loss to drivers because of reduced second-hand value of vehicle
6 Cost of modifications to MB of new vehicles going out the door
7 Extra insurance premiums to MB going forward
8 Interest payments to MB on the above extra costs
9 Loss of sales to MB because of driver reluctance, and because of the extra insurance costs to driver.

1 Loss of earnings by taxi drivers

I would assume that after doing the modifications on a few hundred taxis the turn around/out of service time could be reduced to 2 or 3 days. Assuming an average of 3 days, lets say half a week. In these depressed times I assume a driver can earn (say!!) £35k a year.. (someone in the know can correct me on this!) after costs, or say £700 per week. 3 days loss, lets say £350 compensation... must admit it sounds a bit low, but these are difficult times.

Assuming a more generous £450 for 3 days off the road (some of drivers costs are still payable, such as insurance even if off the road) times 5400 = £2.4 million.

2 Legal fees to manganese bronze

? Maybe these will be covered by insurance

I haven't time to finish this!!! Don't start what you can't finish. Anyway, I'm getting more and more out of my own depth in any case! But with the £4m modification costs, we are already at near £6.5 million, assuming all the drivers seek and get compensation.

BUT THERE ARE TWO MORE ISSUES ON WHICH I SHALL FINISH. I DO NOT EXPECT MANGANESE CAN CATEGORICALLY SAY THEY HAVE FOUND THE CAUSE OF THE FIRES AND FIXED THE CAUSE TO THE FULL SATISFACTION OF ANY INSURER.

HOW THEN ARE AX4 VEHICLES WITH THE ENGINE FROM ITALY GOING TO BE INSURED? WHAT COST THE INSURANCE FOR MB AND FOR THE DRIVERS?

OR WHAT HAPPENS IF THERE IS A FIRE IN A VEHICLE WHICH HAS BEEN MODIFIED ALREADY?

WHAT HAPPENS IF SOMEONE IS KILLED BECAUSE OF SUCH A FIRE? POSSIBLY IN BAHRAIN?? WOULD GEELY WANT TO TAKE A RISK LIKE THIS because the brand would be knocked for six and the compensation costs would be 'a bit high': overall survival of the company would be put in jeopardy.

I think this may explain why Geely announced on the electric vehicle possibility. I wonder if Manganese are saying they have done enough and they must push forward with sales, but Geely are saying hang on a minute, lets get this right now while the manufacturing process is being implemented in China.

I wonder if the strategy going forward has been thrown into complete disarray. This might slow down the production of anything coming out of China altogether.

There may be a tussle going on between Geely who want to "get it right", and Manganese who are desparate to keep sales going out the door.

[davidosh] 29/10/2008 10:39

The sales in September were due to the new plate for regs and most were pre booked so in the first week of September before the fires story broke. Sales since the TX4 bad publicity and loss of confidence have plummetted. Just wait for the October figure from SMMT.

There will be no revenue gain from the chinese operation until late 2009 at best but they may need to contribute for working capital requirements and investment in the operation.

I agree that Shanghai is still their only hope and the company know that too. However there is at least 15 months of 'survival' needed before they have an olive branch and much can happen with banks and financing between then and now.

[queeny2] 29/10/2008 09:56

rapier I agree, you need to be bearish on Shanghai now, and Geely. Which isn't hard, but a different story to LTI alone.

[rapier686] 28/10/2008 22:45

Just writing to thank Davidosh for bringing MNGS to my attention.

It's been a welcome spot of profit amongst an unhappy remainder of portfolio, but I've decided it's time to bow out and finished closing today. I'm sure I've left plenty for the next man, but that's the safer way to err.

I thought September's SMMT figures were pretty good in what you'd have thought were dire circumstances and the Bahrain order can keep the factory ticking over for a while whilst some of the stocks trickle out to what customers there might be.

I wouldn't dream of being long, but at the lower price find myself without enough reason to stay short.

[shanksaj] 28/10/2008 15:35

Just for interest:-

on the Bahrain deal, here is GB Pounds to Bahrain Dinar exchange rate link:



From the following link it looks as if the Bahrain govt is seeking to fix the Dinar to the US Dollar:-

[cliffyburger] 27/10/2008 17:49

I loved this comment: "The London taxi will provide Bahrain with a premier taxi service and passengers will benefit from a safe, secure and comfortable mode of transport."

Safe? Secure? Only if you like a FLAMING good ride! ;0)

Cliff (short MNGS)

[queeny2] 27/10/2008 15:09

weak £ good for MNGS if they are an exporter. which they never have been yet. Bahrain first.

otherwise weak £ bad for MNGS - Italian engines they specifically mentioned re fx.

weak £ bad for merc? I guess, but don't see them raising price of Vito because of it, but they might.

[shanksaj] 27/10/2008 12:53

Finally, if sterling falls more than the Euro then the Mercedes competition will become more expensive verses the Manganese offerings. How much price will be a factor in deciding their next taxi after the debacle on the AX4 is anyone's guess. And how long drivers will stick with their old vehicle in the current downturn is another matter.

[shanksaj] 27/10/2008 12:28

Shanklin,

You're welcome.

Davidosh,

"of course the weaker sterling will make the cabs prohibitively expensive to overseas buyers in the future"

Again, a weak sterling makes it possible to sell the taxis CHEAPER
to overseas buyers. As sterling falls Manganese could reduce the price in the foreign currency and yet make the same sterling profit.

It is true that sterling might fall against the Euro making the purchase of imported engines from Italy more expensive, but overall a weak sterling means the taxis can be exported more profitably for Manganese. I'm not saying what I'd like to say, being so short on these.

The Italians might continue to use the Euro.. there are rumours (and political moves in Italy) that they might go back to the Lire! If they go back to the Lire then even the engines won't be too expensive because the Italians will be sure to have a weak currency.

Nor should the ability of the Euro politicians to completely mess up the Euro zone economy be underestimated. If they do that, and the Euro falls further than sterling, then the engines will be cheaper, even if the Italians stick with the Euro.

If sterling falls against the currency Italy is using (Euro or Lire) then the engines will become more expensive adversly affecting the profit on taxis sold in London, which remains Manganese biggest market by a long way. The Bahrain deal, by itself, doesn't perhaps greatly alter the fact that Manganese is in deep trouble. But we need to remember that a weak sterling is good for an exporting company... an eye needs to be kept on further overseas sales.