Chamberlin investing after major deal

The £3.3 million year deal to supply cast and machined turbocharger bearing housings for petrol engines is a first for the company.

And it underscores its move to invest £1.6 million in creating a new machining centre, in the Black Country Enterprise Zone in Darlaston, creating 33 new jobs.

The parts will be cast at the group's Chamberlin & Hill foundry in Chuckery Road and then machined at the new facility, with the first production parts rolling off the line by next January.

To support Chamberlin's move into fully machined components, the new machining facility is to be set up with initial investment of £1.6 million.

This will be funded through a Regional Growth Fund grant and new debt facilities from HSBC and production at the new facility is scheduled to commence in early 2017.

Chamberlin said the new facility, when complete, "will position the group as the only fully integrated supplier of grey iron bearing housings in Europe and is expected to open up significant new long term growth opportunities for the group".

Chamberlin's company chairman, Keith Butler-Wheelhouse, said: "The major new automotive contract win we are announcing today is an important development for our foundry operations at Walsall and we are now committing significant investment to develop our machining capability to support this exciting long term growth opportunity.

"This new contract also demonstrates Chamberlin's ability to delivery of a world class product at a competitive cost."

Chief executive Kevin Nolan and finance director Dave Roberts said they were currently assessing two or three potential sites for the new facility, and a final decision would be made in the next 10 days. 17 of the 33 new jobs will be at the machining centre, with the rest based at the foundry.

The company expected the benefits from the new contract will be felt in the second half of its financial year to March 31, 2017, with production volumes coming on-steam more fully after that.

Meanwhile, in an update on group trading, Chamberlin said it expected its full year figures to show underlying pre-tax profits would be better than had been expected, despite slightly lower revenues.

It comes after the impact of the weak euro and tougher trading conditions saw Chamberlin reveal in November that first half profits had been slashed by three quarters, to just £100,000.

This was despite the continued slowdown in the group's core markets, including the automotive, steel and oil & gas sectors, and Chamberlin said it reflected the benefits of a material construction vehicle contract which was completed in the current financial year, as well as "a satisfactory performance" from the group's engineering operations.

Mr Butler-Wheelhouse added: "While trading conditions remain challenging, the business is making good progress. This reflects the management's focus on cost efficiencies, improving processes and new business initiatives as we continue to target profitable revenue growth."

As well as its Chamberlin & Hill site in Chuckery Road the company also has foundries in Leicester and Scunthorpe and engineering sites at Cannock and in Birmingham, employing around 400 people altogether.