Faltec Europe's diversification plan due to add 'significant turnover' in 2015

The Boldon-based firm wants to reduce its reliance on its traditional Japanese customers

Managing director of Faltec Europe, Chris Pennison
Managing director of Faltec Europe, Chris Pennison

Directors at car parts manufacturer Faltec Europe expect to add significant turnover to the plant this year after diversifying to reduce reliance upon major customers.

The Boldon-based firm, which is part of the Japanese-headquartered Faltec Group, supplies body trim parts to big name vehicle makers, with neighbouring Nissan acting as its biggest customer, followed by Honda.

Over the last two years, sales have been hit by changing demand for its line products as well as customer variation in volumes.

Latest accounts for the year ended December 31 2014 show sales dropped by 11%, from £34.7m to £30.9m, while operating profit also fell, from £676,689 to £178,261. In the previous period sales fell 16%.

Gross profit margins for this period, however, improved by 4% to 20% largely due to improved inventory and cost control.

The business, which employed an average of 321 people last year – four employees up on the previous period – supplies parts to all of the model range made at Nissan’s Sunderland plant and the firm’s manufacturing plants across Europe.

Amongst other lines of work for Nissan over the year, the firm introduced bright work beltlines, a line of work it is looking to expand.

But it added that its second largest customer Honda Europe continued to have challenges across platforms on offer in the EU, and that CRV and Civic sales continue to be disappointing.

To reduce the firm’s dependence on Nissan and Honda, the firm said it is continuing “on its journey of improvement and diversification” that involves exploring other sales opportunities.

In a strategic report accompanying the accounts, managing director Chris Pennison said: “The awarding of work for the new Nissan Infiniti programme that will launch in late 2015 was a welcome boost, and was taken as a growing sign of Nissan’s continued confidence in the ongoing recovery of Faltec Europe Ltd.

“Faltec Europe has committed to support the launch of the face-lifted Civic and continues to prepare for the launch in 2015 on the new Civic R Type which will be a flagship for Honda Europe as it looks to regain some market position across the EU.

“A further key change for 2015 will be the launch of a new Renault programme that will be manufactured in Spain. This will add significant turnover to the plant in 2015 and will mean the reliance on both Nissan and Honda is somewhat reduced. This again is a key part of the diversification plan.

“The directors are pleased to be able to report one such diversification of the business – the development of a dedicated Sequence Centre is now fully up and running and is providing a positive contribution to the overall Faltec Europe business model.

“There also appears to be further expansion of this area, as our customer looks to increase volumes across 2015.

“Another new area is the introduction of lower volumes/higher margin “vehicle personalisation products”.

“Finally the directors are pleased to confirm that the reestablishment of links with BMW is yielding some positive news with Faltec Europe being awarded two platforms for BMW, one launching in 2015 and one launching in 2016.

“This will help the business diversification and also further reduce the reliance on the traditional Japanese customers.

“Overall the business continues to look to improve its gross margin, grow its sales turnover, attract new customers, diversify its product offering, while looking to invest in the future development of the plant.”

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