Norton Motorcycles has gone into administration, as it is pursued by HMRC for £300,000 in unpaid taxes read about this HERE. Whilst the dust on this news settles, we’ve had a dig through our news archive to see what the company has been doing over the past few years – and doing this has raised a few questions, like:
1: HOW DID THIS HAPPEN?
Norton has been very busy over the past three years – acquiring a range of investments, making a range of export and licencing deals and seemingly selling plenty of bikes (well, taking deposits for plenty of bikes at the very least). So how is it they’ve not managed to pay a £300,000 tax bill?
2: WHAT ABOUT THE LINK UP WITH ZONGSHEN? DOESN’T THAT BRING IN SOME CASH?
In August 2017, Norton and Zhongshen entered into a 20 year, multi-million pound Design and Licence agreement based around Norton’s 650cc twin-engine.The 650cc parallel twin engine was jointly engineered and developed by Norton and Sussex-based Ricardo Engineering – and was specifically designed to the requirements of Zhongshen.
A couple of years later in December 2019, the Chinese factory has displayed its Cyclone RK6 tourer and adventure bike built around the Norton licenced engine – so a few weeks ago it looked like It was full steam ahead for the partnership. But with Norton going into administration, it’ll be interesting to see if Zongshen continue to use the engine and pay the licence fee.
The specific value of the 20 year deal has remained private so far – but the initial fee paid to Norton is said to be in the millions of dollars, with ongoing royalties paid on each engine produced.
3: WASN’T THERE A £20 MILLION POUND EXPORT DEAL WITH JAPAN, TOO?
There was. At the start of 2019, news emerged that Norton had signed a new £20m export deal with Japan – which it claimed would support 200 jobs in the UK and see around 1,000 new motorbikes sold to Japanese customers over the next five years.
The deal was announced when Japanese Prime Minister Shinzo Abe met with (then) Prime Minister Theresa May in London – as part of a series of new deals for British and Japanese companies and farmers worth over £200 million.
At the time, Kay Johnson, head of global sales and marketing at Norton motorcycles said: “Norton have an agreement with our distributor, PCI Limited in Japan which will run over a five-year term to manufacture over 1,000 bikes and will achieve an estimated value of £5m. We very much look forward to growing our workforce to support the demand for motorbikes in this territory and, in doing so, continue to build a strong trading business with Japan.”
4: WHAT ABOUT THE GOVERNMENT GRANT?
In July 2015, (the then) Chancellor of the Exchequer George Osborne visited Norton to announce a £4 million investment from the British government.
The government’s Advanced Manufacturing Supply Chain Initiative was intended to allow Norton and its 11 supply chain partners to set up a new British Motorcycle Manufacturing Academy to train and supply the next generation of engineer apprentices, build a new 10,000 square feet manufacturing facility and develop clean motorcycle engine technology in the UK within two years.
The AMSCI funding was expected to result in 159 jobs at Norton – which was expected to grow to 600 direct and indirect jobs, including 200 apprentices, by 2020.
5: THERE WAS A £3 MILLION POUND BOOST FROM SANTANDER TOO, WASN’T THERE?
You’re right. Back in April 2017, Norton announced it was scaling up production and hiring 40 more staff – thanks to a £3 million boost from Santander.
At the time, the factory was turning out a (claimed) 500 units from the 961 Commando range each year – blending traditional techniques with cutting-edge technology. But, thanks to the financing from the Spanish bank Santander, Norton was said to be ramping up production and hiring more staff to increase output and meet demand.
Speaking about the news, Stuart Garner General Manager of Norton Motorcycles said: “Santander has been able to provide a range of incredibly flexible banking services that fit our needs perfectly. After having developed and pre-sold a huge number of machines, we needed financing to be ready to pay our production tools, stock and personnel to allow production to go from 40 bikes per month to over 130 from the summer of 2017.”
The vast majority of the funds were set to be allocated to the all-new 200bhp 1200cc V4 engine and chassis which would eventually form the basis of the new Norton V4 SS and V4 RR models – which went into production in the Summer of 2017.
6: WHAT’S HAPPENED TO ALL THE MONEY?
According to its last full-year accounts, the company had sales of £6.7 million on which it made a £33,701 pre-tax profit. That’s a lot of sales and not much profit. Ok, so Norton will have been making investments in new models and development of the current and ‘next wave’ of Norton motorcycles certainly isn’t going to come cheap – but considering the numerous investments and deals we’ve detailed above, it seems surprising that they’ve failed to stay afloat.
7: WHAT IF YOU’VE BOUGHT A BIKE?
It all depends. At this stage there’s no one answer as there’s still a lot of uncertainty about the future, but if Norton fails to get back up on its feet any time soon then there’s a couple of most likely scenarios.
For the bikes that have actually made it to their owners, it’s fairly likely that the values will tank – with parts, spares and factory support extremely difficult to come by. And for punters who have layed out a significant deposit for a new Norton motorcycle – they’re going to be at the beck and call of BDO who are looking after Norton for the immediate future.
Although it’s no great surprise – It’s a massive shame that it’s come to this, particularly considering Norton’s received a lot of love from the British motorcycling fraternity (including plenty of pre-orders for bikes). It’ll be fascinating to see the story develop over the coming days, weeks and months as we finally get the bottom of what exactly has happened at Norton.Get MoreBikes delivered through your letterbox every month. 12 issues for £15. Click here for more information.