Faulds' future in peril after business losses

The fate of Scotland's Faulds Advertising hangs in the balance after a series of account losses and a failed attempt to establish a London operation.

David McGlone, its managing director, declined to rule out either administration or liquidation for the Edinburgh shop, but the cash-strapped agency is drafting in financial advisors to see if it can be put back on a sound financial footing.

The agency's 50-strong workforce, which has already been trimmed, is understood to be bracing itself for further significant job losses.

Faulds' problems stem from its failure to replace a string of losses.

They include the £4 million account of the automotive repair chain Kwik-Fit, which switched to BMP DDB in April, ending a four-year relationship with Faulds.

Three months later, the agency's grip on its Auto Trader business was loosened when media buying and planning on the £3 million account moved to MediaCom Scotland.

At the same time, Faulds is said to have overstretched itself with the purchase of Malcolm Moore Deakin Hutson as its London arm. The agency was closed in June after just a year.

Faulds acknowledged at the time of the closure that it knew it was taking a risk by opening in the capital, having gambled on the likelihood that the economy would improve in 2003. Losing the Kwik-Fit account meant Faulds could not continue pumping more money into London.

Industry sources say any new agency that might be formed if Faulds collapses would face an immediate problem in retaining the business of the Scottish Executive, Faulds' biggest client. Rules prevent the government body putting business with any agency under four years old.

Faulds was founded in 1985 by the fomer Harrison Cowley senior executive Jim Faulds. It is owned by Dennis Chester, its chairman and chief executive, who led a £2 million management buy-out two years ago.

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