Electric vehicle parts innovator Sevcon cheered a “huge” result for the North East as it secured a deal worth a potential $50m to supply components to South East Asia.
But the firm’s chief executive Matt Boyle has warned he would have to look outside the region to recruit a capable workforce for the project, because the North East “has not produced the right skills” in recent years.
Speaking to The Journal as the NASDAQ-listed firm also reported a swing into profitability in 2014 – reaching operating profit of $1m from losses of $948,000 – Mr Boyle said the deal was big news for the region.
Despite the positive move, he said Sevcon will need to recruit engineers from further afield to service the project which will see the Gateshead-based firm supply advanced motor controllers for a new line of hybrid electric, four-door passenger vehicles.
Mr Boyle said: “It’s hugely gratifying for our company to produce such profit, particularly in a year when we had to write off nearly $700,000 in one-off costs.
“This deal is really the culmination of work which has taken place in Gateshead over the last three years.
“To secure such a project requires a company like Sevcon to meet extremely stringent requirements – which goes to show the strength of our technology. I don’t want to blow our own trumpet, but make no mistake, this is a big win for the North East.”
The contract with an undisclosed tier-1 automotive supplier based in South East Asia has the potential to generate $50m of revenue by 2020.
Mr Boyle put to rest fears that a slowdown in the Chinese economy could impact the North East firm, saying the country was now eager to develop green transport technology to combat its escalating emissions.
He added: “This part of the world faces huge environmental challenges as it grows. That’s why the Chinese have been so keen to develop hybrid technology. It’s a great opportunity for us to act on.”
Under the terms of the contract Sevcon will provide test units for their customer by June next year, before full-scale production goes ahead in 2016.
The news comes just weeks after the firm revealed plans to begin manufacturing in Malaysia after a successful Chinese joint venture secured a major order worth £1.4m.
The success is reflected in Sevcon’s accounts for the year ended September 30, 2014 – which show a move into the black driven by a continued improvement in underlying demand.
Despite costs of nearly $700,000 in its fourth quarter, relating to the formation of the Chinese joint venture and charges arising from a brankrupt customer in France, operating profit rose to $1m.
Commenting on a good year for the firm’s bottom line, Mr Boyle added: “Since the first quarter of fiscal 2013, we have seen consistent improvement in underlying market demand, order visibility, shipments and revenue in most of our markets, although Western Europe continues to lag.
“Customers are embracing Sevcon’s modular, easily adaptable powertrain solutions that only our engineering expertise and application knowledge can provide. These highly flexible products allow us to address ever more applications, assisting us to scale up cost effectively.”