Distributor Frontline has begun transferring its high-end technical business to Datech as the final part of its move to cut costs and carry only commodity products.
Datech, Frontline's fellow Computer 2000 subsidiary, distributes Cad and video conferencing products and is set to gain most of Frontline's high-margin business, including its database software products and Unix and workstation divisions, from the restructure. Datech will gain around 20 per cent of Frontline's business, worth u100 million on last year's figures.
Earlier this month, Frontline dropped 29 personnel to cut costs and concentrate on commodity products (PC Dealer, 10 April). But sources say that both companies are recruiting as a result of the switches to Datech and no more staff will be laid off.
The previous job cuts are now seen as preparation for this week's changes which position Frontline as Computer 2000's UK commodity wholesaler and Datech as its technical distribution company.
Frontline joint managing director Allan Mack would not be drawn on any details of the speculated changes. 'We will be in a position to discuss what our plans are later in the week,' he said.
A source said that the move merely substitutes customers from Frontline to Datech. 'The costs will not disappear; they will simply move from A to B within Computer 2000 companies and will stick with the same bank.
'I agree that there will be cost savings but not enough to meet the extra costs that Datech will have to take on. If Frontline, with its efficiency, can't make enough money out of technical products, then why can Datech?' Staff have historically moved between the two companies, including Mack and Frontline financial director Andy Gass, but Datech has stuck to its niche Cad and video conferencing in the past.
Frontline is expected to retain the Apple, networking, PC components and supplies divisions as well as low-end PCs, peripherals and software products, which constitute around 80 per cent of the firm's overall sales.
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