Growing wood panel manufacturer Egger is constructing a vast new shipping warehouse at its Hexham plant as part of a £13.65m spend on growth investments this year.
The expansion – creating a unit measuring 5,760 square metres – will be the firm’s largest outlay this year, yet it also forms part of a continued strategy of significant investment, both in new plant and machinery for growth as well as maintaining the facility.
The strategy has resulted in strong financials for the year ended May 2014, with turnover reaching £234m, and the business said it is on target to top £255m this financial year.
The firm’s chipboard products go on to be used in a host of every day items, including kitchenware, wardrobes and units in bedrooms; desks and drawers in offices; furniture and wall panelling in hotels; counters and shelving in shops and structural flooring in the house-building industry.
Over the last five years the Austrian family firm, which has 17 plants across the world, has invested £94.9m into the Hexham site, around a third of which was ploughed into maintenance investments alone, while seeing rapid sales growth in the same period, with turnover increasing 61%.
As well as the construction of the warehouse, which soon gets under way, the firm has this year invested in installing a second impregnation line, following on from investment of £9m made in 2011 to replace the first line, a glue kitchen and a hot air filtration system.
Previous investments include the construction of a new Campact glue making plant, installation of a Dynasteam machine which can rapidly speed up processes, and the opening of the Engineering Building and Training Academy.
Financial director Bernd Steinlechner said Egger’s continuing success was a direct result of it being a family-owned firm committed to making investments to secure the long-term future of the business rather than for short-term gain.
He said: “During the last five years, when other businesses have been cutting staff, overheads and spending, we have invested more than £90m in the Hexham site to maintain its position as one of the world’s most advanced wood-panel manufacturing operations.
“The recession created difficult trading conditions in the main sectors we serve such as housebuilding and on big ticket items such as fitted kitchens and bedrooms. But we have increased production, grown market share, introduced innovative new products and repaid the support of the Egger Group with a 61% increase in turnover during that period. And we confidently expect to hit our target of £255m at the end of this financial year in May.
“We still face ongoing challenges such as potential wood shortages caused by the growth of Government-subsidised biomass energy plants, and the need to encourage more young people – particularly females – to take up careers in engineering.
“But on the recruitment side in particular, we have invested heavily in forging stronger links with local schools and universities, and the huge turnout at our apprentice open day earlier this month was very encouraging.”
Egger - which won the manufacturing award at last week’s North East Business Awards, run by The Journal - acquired the Weyroc plant in Hexham in 1984, marking the Austrian group’s first overseas investment.
Back then, the firm had just 149 employees and produced 60,000 cubic metres of chipboard a year.
The UK arm of the business – which also includes a small operation in Barony, Scotland – now has 665 staff members and produces more than a million cubic metres of products a year.