Boss's call to invest in modern plants to compete

Mike Saunders, the managing director of Pegler Yorkshire, was speaking as the company unveiled a new 5.5m rod extrusion plant at its Doncaster factory.

The new machinery is part of a 12m three-year programme of investment, which includes a 3m grant from the government. Pegler Yorkshire, which turns over 160m a year, manufactures fittings, taps and valves for customers in the UK and abroad.

Asked if British manufacturing has a future, Mr Saunders said: "I certainly hope so because I believe passionately in it. It only will do with investment in more modern automated plants."

Aalberts Industries NV, the Dutch engineering giant, owns Pegler Yorkshire and its founder and chief executive, Jan Aalberts, visited Doncaster yesterday for the official launch of the new machinery.

Speaking about the future of manufacturing, Mr Aalberts said: "Labour is going to be minimalised by doing the right investments where you have more unmanned production."

Pegler Yorkshire's cost base is now comparable to a Far East manufacturer, said Mr Saunders. "It's taken a number of years," he added. "There was a fire in 2002 and part of the site had to be rebuilt. That was the start of the investment in more modern equipment. The equipment we are replacing goes back to the 1960s and is well past its sell-by date. It is one of the final pieces in the jigsaw puzzle of creating a modern plant."

The company takes in scrap metal at one end of the factory, melts it down and feeds it into the rod extrusion plant to create brass rods of various shapes and sizes, which are processed by machine or forged into components.

These are used to make finished products.

Mr Saunders said: "We are slightly unique in that we are a fully integrated plant, taking scrap metal and producing finished products at the other end. We are the only facility remaining in the UK that does that."

The machinery will be used to supply the parent company's businesses in Germany and France. It will be manned by up to a dozen workers, which is three times less than the old equipment required.

Pegler Yorkshire supplies to large merchants such as Wolseley and BSS, mechanical and engineering contractors such as Crown House, Balfour Kilpatrick and Mitie.

The business also supplies to local plumbers through independent merchants. It exports around 40 per cent of its products to 110 countries across the world.

Mr Saunders said that while a lot of products come from China, he is seeing a move back to source directly from UK manufacturers. "Our key customers can have products delivered from our warehouse in Rotherham within two days," he added. "If they order goods from China, they are waiting 10-12 weeks. They can order a few of what they want as opposed to a container coming from China."

The company employs around 1,400 people at sites including Doncaster, Rotherham and Leeds. Aalberts Industries acquired Yorkshire Fittings in 2002 and Pegler in 2006 and later merged the two businesses to create Pegler Yorkshire.

Speaking about the future of the company, Mr Saunders said: "We will continue to grow. We have recently expanded our tap business and our valve business and are moving into new product areas. We spend 2m a year on new product development."

Mr Aalberts said he was "very optimistic" about the future of the business "otherwise we would not have done the investment".

Flexible workforce the key to success

Dutchman Jan Aalberts founded his business with four people in 1975. As of last week, Aalberts Industries had 10,328 employees. Last year it had a turnover of 1.4 billion euros.

The 70-year-old industrialist said the group was hit by the economic downturn – revenues were 1.7bn euros in 2008 – but the difficult trading conditions had helped improve the business.

He said: "We will come out of it better than when we went into it because we did learn in the storm things were not optimal."

Mr Aalberts is predicting a slight economic improvement in England and the continent "but it is not going to be the same speed as it went down."

He said the key to success is having a flexible workforce. "The flexibility has enormously improved in the majority of people. When you are not flexible you could kill yourself. The workforce have to have that mentality which is not always easy to do. That's how life is."