Nissan deal fuels growth at plastic components manufacturer Mecaplast.
A £1.9m investment from the North East Local Enterprise Partnership has provided vital funding to allow an automotive components supplier to expand its premises and create jobs to handle some major new contracts from local carmaker Nissan.
Mecaplast Peterlee Ltd needed additional space after winning significant new work from the Japanese car giant to manufacture parts for a number of new models being built introduced to the plant in Sunderland.
The company’s average workforce of 85 to 90 has doubled in the last six months as a result of the orders and the funding for additional space on North West Industrial Estate.
Mecaplast’s general manager Steven Tyson said: “After the initial launch period we expect to have around 165 to 170 people, so a net gain of around 80 jobs due to these investments, as well as the safeguarding of many others.”
The company required an additional four large injection moulding machines and the space in which to house them in order to take on the Nissan orders. The enterprise partnership provided £1.9m through its North East Investment Fund loan scheme, via the Regional Growth Fund, as part of an overall investment of £6m in extending the plant and purchasing new machinery.
A £2.5m debt finance deal with RBS/Lombard and Mecaplast’s own investments secured the equipment, while money from the North East LEP financed an extension providing an additional 1,200 metres of production space, 960m2 of warehouse space and 1188m2 of covered vehicle loading space.
Mr Tyson said: “The current commercial property market is quite difficult. Banks are ready to support investments in generic equipment but the big challenge lay in finding finance to extend the plant.
“We’ve spent £2.2m on the building. We applied to the North East LEP for £1.9m, so around 90% of the building costs were financed by this loan. The North East LEP has been very supportive.”
Paul Varley, North East LEP board and investment panel member, said: “Mecaplast is an important part of the Nissan supply chain, and by providing the £1.9m investment financing towards the company’s increased production capacity, the enterprise partnership is supporting jobs at both the car maker and the supplier.
“The automotive industry is a key employer in the region and we applaud Nissan’s decision to award large contracts to a fellow North East firm, keeping the money in the regional economy and creating more and better jobs.”
Mecaplast supplies parts to other car makers from its site in Peterlee including Toyota, General Motors and Renault, but had a turnover of less than £10m during the recession when the car industry was one of the major victims of the economic downturn. The new Nissan contracts will enable the business to significantly increase its activity level.
Mr Tyson said: “This is an enormous investment for a business of this size and we like to see it as the pay-off for some years of hard work in very uncertain times, when we continued to focus on improving our daily operational performance and supporting our customers. This, I believe, convinced them to place orders with us for some important new vehicle programmes.”
“To be sustainable we must be competitive and to enable this we needed to increase our activity level and load our facilities efficiently. Winning these additional contracts against some very stiff competition will help us to secure the medium and hopefully the long term future of the business.
“The nature of the products we make is that they are quite large and don’t lend themselves easily to long distance shipping. We can thus find competitive advantage in being located near to our customer. This obviously makes Nissan a key client in this respect.”
The business, which is part of the larger Mecaplast Group with 26 plants worldwide, now has 15 injection moulding machines, including 3 large 2000T units, running on a five-day, three-shift production pattern.
Cllr Simon Henig, who chairs the new North East Leadership Board of seven councils, said: “The North East LEP’s decision to support this investment shows what can be done when the North East public and private sectors work together for the good of the region.
“I am delighted that Mecaplast has been able to secure its future and has been able to create additional jobs in County Durham.”