ENGINEERING firm Darchem is to spend £8m building a new factory on Teesside which will see the creation of at least 85 jobs.
The Stockton company hopes to see its revenues grow from £75m to £100m over the next five years as the plant allows it to meet growing demand for its products from the growing global aerospace and UK nuclear power industries.
The boom in the Chinese and Indian economy has boosted the market for the metal parts, insulation and fire protection equipment which Darchem Engineering makes.
The 54-year-old business suffered in the recession and had to shed around 50 jobs three years ago after revenues slipped to £45.5m in 2010. But it has since won big contracts with the likes of Boeing and Airbus and boosted its workforce by around 200 to 650.
Managing director Graham Payne said: “The potential in this sector is excellent for us at present. We have already won a multi-million-pound contract to supply precision engineering to support the nuclear sector and there is the possibility of us adding even more substantial orders. The local workforce is highly skilled and has a good work ethic, which helps us to achieve our potential.
“We now export 60% of our output and that is increasingly going to the Far East. The next phase of the nuclear power station building programme in the UK is also very promising for us.”
The firm has been planning on an expansion of its main plant in the village of Stillington, near Stockton, for years, but Payne said the funding for the factory was only confirmed by its owner US Aerospace and defence firm Esterline Technologies a fortnight ago.
“We have a £1m grant from the Government’s Regional Growth Fund (RGF) for this and it really tipped the balance for us to get the funding for the factory,” he said.
“The demand for our products is really strong. If we hadn’t got the factory we may actually have had to turn work away.
“The grant is a great statement by the Government that they are willing to back our growth. I’m not saying that Esterline wouldn’t have made an investment but it may have gone somewhere else.
“The decision was made substantially easier by the RGF money. It has only been finally decided a fortnight ago. I am very relieved.” A £300,000 grant from One North East in 2009 helped it build its last £4m extension. The firm has built three extensions at its Stillington factory over the last three years, with the introduction of new technology bringing its investment in the plant to more than £8m.
Councillor Bob Cook, leader of Stockton Council, welcomed the news: “These new jobs are fantastic news for our borough.
“Darchem is a major manufacturer with a great track record in innovation with blue chip customers all over the world.
“We are also extremely fortunate they have such an established apprenticeship program which supports their current and future skills needs.”
Darchem discovered last year it was one of 15 firms across Teesside to benefit in the first round of RGF funding, a £1.4bn, three-year fund designed to boost activity in the private sector.
Stephen Catchpole, managing director at Tees Valley Unlimited, added: “Darchem’s Regional Growth Fund bid demonstrated the company’s world class expertise and higher levels of productivity and to be starting work on a new facility so soon after the bid was approved further underlines their ambition strength and dedication to the area.”
Teesside is currently hoping for more good news and investment from the latest round of RGF funding. The Evening Gazette has made its own £30m bid to drive business growth and potentially create 3,600 jobs in the region.
TVU has also endorsed a further 15 RGF applications, worth £68m, that could create or safeguard 1,800 jobs on Teesside over the next decade.
Deputy prime minister Nick Clegg said: “86 new jobs is excellent news for Stockton. This £1m investment in Darchem’s plant in the town is precisely why we set up the Regional Growth Fund – to unlock the private sector funding that creates jobs and boosts local economic growth.
“At least £5 of private sector cash is put in for every £1 of public money, letting businesses in the North East like Darchem thrive.”
Work will start on the factory at the end of this year, on a brownfield site next to its main current factory, and completion is due by late 2013.