£20m boost for manufacturing defies slump

A WELL-KNOWN manufacturer plans to invest around £20m in its Yorkshire operations as it gears up to win more clients in the Middle East.

The Pegler Yorkshire Group (PYG), which makes fittings, taps and valves, plans to modernise its Doncaster factory and build a new warehouse in South Yorkshire's Dearne Valley.

Martin Dowling, the company's operations managing director, said it had created 30 jobs in Yorkshire since February, despite the global economic slump.

PYG was formed through the merger of Leeds-based Yorkshire Fittings and Doncaster-based Pegler earlier this year.

PYG is a subsidiary of Aalberts Industries, a Dutch holding company which has 11,000 staff worldwide.

Altogether, PYG employs 840 staff at its sites in Doncaster, Leeds and Barnsley and has an annual turnover of around 160m.

PYG has become the latest tenant to sign up at the Brookfields Park in the Dearne Valley, through a deal brokered by property consultancy Knight Frank.

The pre-letting of 104,000 sq ft development for a distribution centre and warehouse facility will see PYG consolidate its Leeds and Doncaster-based warehouse in early 2010.

Big names such as Next, Maplin Electronics and Garnett Dickinson have already taken space at the 85-acre site, which is being marketed by Knight Frank and Lambert Smith Hampton on behalf of St Paul's Developments and Tritax.

Ian Howarth, the financial director at PYG, said: "With two centuries of shared history to draw on in Yorkshire, the new business, following the amalgamation by Aalberts Industries, has a firm foundation from which to build.

"We have been looking for some time for a suitable site in West or South Yorkshire.

"This is an important strategic step for the business and confirms Aalberts Industries commitment to continue to invest in the PYG even during these difficult economic times."

In February, it was announced that PYG planned to make a large investment in its Doncaster factory.

The announcement was made during a visit to the Doncaster site by Business Minister Pat McFadden and Minister for Yorkshire Rosie Winterton, who were launching the Transition Loan Fund, which has been set up to support regional businesses during the recession.

PYG was awarded a grant for business investment of up to 3m through Yorkshire Forward and the Department for Business Enterprise and Regulatory Reform (BERR).

Bosses at PYG said the support – separate from the Transition Loan Fund – would allow the firm to invest a further 12m in new machinery, safeguarding jobs for the future.

In February, PYG closed its factories in Doncaster and Leeds for a week to address oversupply problems.

Mr Dowling said: "While both those plants have been affected to some extent by the economic downturn, we're bringing new products into those plants because of their inherent efficiency. We've actually created 30 jobs in Yorkshire over the past three months."

"We're the only significant producer of plumbing products still in the UK. The underlying reason why we are still manufacturing in the UK is because it's the cheapest thing to do for high volume mass-produced products. One of our biggest export markets is the Middle East, where there's a strong preference for British manufactured products.

"We can see that some of our competitors have made mistakes by outsourcing all their manufacturing to the Far East. If you have all your manufacturing based in the Far East, you are exposed to currency fluctuations, which you have no control over. We, at least, have only a partial exposure to such events."

He believed that UK manufacturing could be poised for a comeback.

He added: "The clock is going to turn back to some extent because the environmental cost of transporting goods around the world will be something that attention is drawn to. We would never see the time in which all building materials will be produced outside the UK."

However, he acknowledged these were uncertain times.

He added: "I've worked in this industry for 27 years and I have never seen things change so quickly as has happened over the past six months.

"Everybody who is producing (economic) forecasts is, frankly, guessing. One of the biggest issues we are facing is how unpredictable the demand for our products is going to be.

"There's a need still for significant spending in hospitals, in school refurbishment programmes and the refurbishment of existing housing stock."

Tapping into local industry

The Pegler Yorkshire Group was formed from Pegler's merger with Leeds-based Yorkshire Fittings – formerly known as IMI Yorkshire Fittings and, before that, Yorkshire Copperworks.

It manufacturers and supplies a range of copper pipeline components to the plumbing, heating and mechanical services industries.

Doncaster-based tap and valve maker Pegler was founded in 1899. Pegler's Doncaster factory is where footballer Kevin Keegan started work.

Since the beginning of this year both businesses – both owned by the Dutch-based international industrial group, Aalberts Industries – have operated under the Pegler Yorkshire Group brand.