Region set to lead the way in move to low-carbon economy

The Business Secretary announced an 80m loan for Sheffield Forgemasters to help pay for a new forging press which will place the company at the top of the 40bn supply chain for the new wave of nuclear power stations.

Speaking to the Yorkshire Post, Lord Mandelson said: "What Yorkshire has is tremendous industrial experience, expertise, knowledge and aptitude in this whole area.

"It is capable of grasping the advanced manufacturing and engineering opportunities that have been created by this dramatic transformation to a low-carbon economy. These are the strengths and capabilities that need growing. They will only grow with government intervention and this sort of investment."

The 15-year loan will be used towards a 160m project to install a 15,000-tonne forging press capable of manufacturing the biggest components for the next generation of nuclear power stations to be built in the UK and overseas.

Westinghouse, the US nuclear reactor provider, is backing Forgemasters with 40m worth of advance orders, while the balance is made up of support from Lloyds Banking Group and private equity.

Tom Riordan, chief executive of Yorkshire Forward, said the investment "is the key to unlocking probably thousands of jobs" in the region's nuclear sector.

He added: "Anchor companies like Sheffield Forgemasters give us the ability to create critical mass in the supply chain. There are only a few of these forges in the world. The fact we have one in Yorkshire is a massive boost for us in terms of assets in the economy." Lord Mandelson said the investment would transform the prospects of Sheffield Forgemasters, which has fought its way back to profitability after administration in 2003.

But he added: "The loan is not just a matter for one company, it is about building on the industrial competitiveness of this country. That's why I had no hesitation – once I had received all the paperwork – in coming down firmly on the side of Sheffield Forgemasters.

"This company is already a leading global supplier with a very hard-earned reputation for quality and a high-skilled workforce. I congratulate you for building up that capability and reputation."

In the last year, Lord Mandelson has been championing a policy of industrial activism to promote manufacturing, engineering, specialised services, logistics and the creative industries as the future drivers of economic growth.

He said: "That does not mean we are going to displace the private sector or the markets but it does mean that when only government can intervene and put its hands on necessary levers to bring about a strategic, transformative intervention that is what government must do.

"I regard what we are doing as a hugely significant development of British industrial policy and I have taken huge pride in being the British Business Secretary who has the opportunity to announce it today."

Graham Honeyman, the managing director who led the management buyout of Sheffield Forgemasters in 2005, said the company had spent two years in hard negotiations with the Government over the financing deal.

PricewaterhouseCoopers is acting as corporate finance adviser. Stuart Warriner, a PwC partner, said talks continue with a number of private equity houses.

Good news stories for manufacturing sector

South Yorkshire has been the focus for three major – and positive – announcements since December.

First there was 25m for the Nuclear Advanced Manufacturing Research Centre at the Advanced Manufacturing Park in Rotherham; next came Rolls-Royce's announcement of a new civil nuclear facility in South Yorkshire and yesterday Lord Mandelson, pictured, confirmed the Government's support for Sheffield Forgemasters in the form of an 80m soft loan.

"I can't remember so many good stories to do with manufacturing in the last 40 years," said Nigel Tomlinson, chief executive of the Sheffield Chamber of Commerce.

Graham Honeyman, Forgemasters' MD and main shareholder with 49 per cent of the company, said he was "over the moon".