A two-year £25m capital investment programme at Sheffield Forgemasters, including the re-investment of all profits, is set to gear the business up for greater post-recession recovery.
Management at the Brightside Lane based business, which exports large-scale, highly engineered components to the defence, civil nuclear, oil & gas exploration, power generation, and steel processing industries, have pumped more than £25m into plant, equipment and processes over the last two years in a strategic move.
The investments, which have seen upgrades to existing equipment and new purchases across its entire operations, aim to maximise operational efficiency and to keep pace with the company’s intensive research and development programme.
Neil Maskrey, Forgemasters’ chief financial officer, said: “We have always built our business strategy around the supply of high quality, complex engineered products to niche markets, which require the very best technology and systems to produce.”
The capital investment programme is funded by Forgemasters’ consistent re-investment of its entire profits back into the business since a management buyout in 2005, with the support of its shareholders – many of whom are shop floor staff.
Neil added: “We took the decision to maintain our levels of investment into plant and equipment during these harsh economic times as a strategic measure to enable us to capitalise on improved trading conditions when the global economic downturn starts to reverse.
“The move to spend heavily on capital investment projects is not just essential in a business which carries this kind of physical heritage, it is paramount to keep up with the cutting edge work of our research and development team in seeking out state–of-the-art engineering solutions and creating new products.”
The investments range from £6m for ‘loose tooling’, such as new moulds for higher integrity ingots and tooling for the company’s 4,000 and 10,000 tonne presses to create a greater diversity of forged products, to £300,000 for a fully integrated Enterprise Resource Planning IT system.
Its heavy plant continues to receive significant investment, with planned expenditure of more than £500,000 to create a new pattern shop and pattern storage facility to amalgamate equipment and layout the facility from first principles. £2m has been spent to overhaul and increase capacity of cranes in the heavy forge with full refurbishment of ultra-large furnaces for greater operational efficiencies.
The completion of the new North Machine Shop and the 4,000 tonne press also form a major part of the investment programme.
In the quarter-mile long South Machine Shop, Forgemasters’ huge lathes have received almost £500,000 of refurbishments to improve yields and deliver a higher quality of output.
Also tied in with its capital expenditure are rafts of measures to improve the environmental impact of a long established engineering operation. Within this are a £250,000 wildlife area and improvements to dust extraction systems.
Forgemasters’ research and development team has recently taken delivery of a electron microscope and computer cluster at a combined investment of £160,000 which forms part of a pioneering project to create ultra-clean steel.