Oregon Timber Frame is investing a significant six figure sum in expanding its manufacturing capacity as it looks to capitalise on the demand for new housing.
The company, which makes timber frames for house builders, is buying an empty retail store adjacent to its current site in Selkirk.
Joint managing director Peter Wade said the additional space will effectively double the size of operations there.
The building has already been granted planning permission for conversion into manufacturing premises.
Mr Wade suggested a further six-figure sum will be spent fitting out the new site and installing machinery.
Work on that is pencilled in to start early next year and the facility may be operational by the summer.
The existing manufacturing plant in Selkirk along with a smaller site in Burton-on-Trent have capacity to take the business to around £20 million in turnover.
Mr Wade said the additional premises being built in Selkirk will allow the company to grow to up to £40m of orders and help to keep up with demand from its customers.
Mr Wade said: “The factories we have at the moment can do about £20m of turnover. This new factory will give us about £10m per shift, so if we run it on twin shifts that is where we are getting the doubling of capacity from.
“That won’t happen on day one. We are not going to kit it out and man it out straight away. What we are doing is giving ourselves the room and capacity to grow our business as and when the demand requires.”
That came as the business reported a near eight per cent rise in turnover from £13.9 million to £15m in 2014.
Pre-tax profits slipped from £627,060 to £506,000 which Mr Wade attributed to tight margins and the investment in staff and equipment the company has been making.
He pointed out that even though conditions in 2014 had improved from that seen in recent years many of the sales orders fulfilled would have been placed in 2013.
Mr Wade said: “The volumes started recovering during 2014 but the margins were still very tight and it was still very competitive. The stuff we were making last year was probably priced in 2013 when it was still quite tight. So even though we saw the volumes and prices starting to recover last year it is really only this year [2015] when we have seen the improved margins coming through.”
Employee numbers were around 80 at the start of 2013 and are now close to 120.
Mr Wade said: “If you can see the increase [in volumes] coming then you need to get people in and get them trained and ready to go.”
According to Mr Wade the business is now reaping the benefit of the ongoing strong demand for new housing and is on course to report turnover in the region of £18m for 2015.
Chairman Roderick Lawson said: “The company is experiencing a high level of growth in the current year, and we are very pleased to have made this purchase, as it allows us to continue to increase capacity.
“The housing industry remains busy and besides expansion plans by our existing customers, there are UK housebuilders starting to use timber frame as an alternative to brick and block.
“With supply chains increasingly stretched by shortages of skills and materials on site, we believe that we can offer a dependable system and maintain service levels through controlled growth in the years ahead.”
Oregon works with a number of house builders including Cala, Miller, Wates and Dawn.
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