Forgemasters reaches GBP 50m investment milestone
26 October 2012
A £50m milestone has been reached through the capital investment programme at Sheffield Forgemasters’ 200-year-old site - 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, pressure vessel and steel processing industries, have pumped £50m into plant, equipment and processes since a management buyout in September 2005.
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: “From day one, this company’s business strategy has hinged around the supply of high quality, complex engineered products to niche markets, which require the very best equipment, technology and systems to produce.”
The capital investment programme is funded by Forgemasters’ continual re-investment of its entire profits back into the business, with the support of its shareholders – all of whom work at the company, including a large proportion of the 800 strong shop floor and staff workforce.
Neil added: “Fifty million pounds is a great milestone for us and it is already paying dividends in terms of the level and complexity of innovative projects that we are geared up to undertake. It has been supported by the creation of our seventh subsidiary, Sheffield Forgemasters RD26 Ltd, which specialises in research and development.
“The decision to maintain our levels of investment into plant and equipment during these harsh economic times is a strategic measure to enable us to capitalise on improved trading conditions when the global economic downturn starts to reverse. There are no dividends taken by any of this company’s shareholders.
“It is a very bold strategy and of course, it carries some risk, but a reduction in reinvestment is not an option for us. The capital investment initiative is not just essential in a business with this kind of material 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.”
Investments have ranged from £15.5m 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 £0.5m for a fully integrated, group wide, Enterprise Resource Planning IT system.
The most recent investment covers the installation of new lifting equipment and beam-slung cranes in the company’s melt shop, where all of its molten steel is produced.
Its heavy plant continues to receive significant investment, with £2.0m spent to overhaul and increase the capacity of cranes in the heavy forge together with full refurbishment of ultra-large furnaces for greater operational efficiencies.
The completion of the new North Machine Shop at £8.2m and a 4,000 tonne press costing £9.1m also form a major part of the investment programme, as does its creation of a new £0.5m pattern shop to create the huge wooden patterns required to make the world’s largest cast steel components.
In the quarter-mile long South Machine Shop, Forgemasters’ mammoth lathes have received almost £0.7m 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 health and safety for all staff and to reduce the environmental impact of a long established engineering operation. Within this are a £0.3m wildlife area and improvements to dust extraction systems.
Forgemasters’ RD26 Ltd has installed an electron microscope and computer cluster at a combined investment of £0.2m which forms part of a pioneering project to create ultra-clean steel.
Photo: Forgemasters’ melt shop – new cranes being installed as part of its £50m capital expenditure programme.