Devro investment to boost food industry Food firm announces significant factory investment

by Simon Bain - 07/03/2011

"SCOTLAND’S key food manufacturing industry will be boosted this year by a £12 million investment in Lanarkshire from sausage-skin maker Devro."

Devro Scotland, the UK subsidiary of the world’s leading manufacturer of collagen products for the food industry, yesterday announced the £12m investment in its Bellshill factory, to increase the plant’s manufacturing capabilities and take advantage of the encouraging growth being seen by Devro in its global collagen casings market.

“The investment will be used to install new cutting edge technology that will enable high speed manufacture of quality casings intended for use in the production of continental European wiener sausages,” the company said.

“This investment brings together the best of Devro’s global technical capabilities, strengthening the product portfolio servicing this key market segment.” It would see “significant changes” within the Bellshill plant.

Devro has been in Scotland since 1964, being bought out by its management from Johnson & Johnson in 1991 and floated two years later. It employs 479 people in its manufacturing plants in Bellshill and Moodiesburn near Glasgow. Last year it sold casings to 50 countries worldwide from Azerbaijan to Venezuela and Albania to Vietnam.

Alan Kilpatrick, managing director of Devro Scotland, said: “This is a substantial investment, which will have a real impact on the manufacturing capability of the Bellshill plant and our operations in Scotland, ensuring that we continue to play a key role in Devro’s global supply chain as the business continues to grow, and reinforcing the importance we place on the highest quality of manufacturing in Scotland.”

He added: “The investment is a great boost for all the staff at Bellshill. It is a key employer in the area.”

Work on the installation of new production lines would start soon and should be completed by the end of 2011, which would be “an exciting year for our employees”, Mr Kilpatrick said.

In an interview with The Herald 15 months ago Mr Kilpatrick, who joined the business 15 years ago and was installed at the helm in 2007 to turn round failing performance, said there had been “dramatic” improvements in productivity, and stronger margins despite rising energy and raw material costs.

He cited Devro’s “progressive manufacturing methods”, supported by the Scottish Manufacturing Advisory Service, and said there was a big opportunity to exploit the continuing market move from gut casings to collagen product, now used for 70% of UK-made sausages.

The autonomous Scottish subsidiary, largely serving the UK and Irish market, contributes significantly not only to global sales, but to technical support and innovation, and employs 2,200 worldwide through overseas subsidiaries.

Devro Scotland has developed casings specially for the Italian, French, American and Korean markets to suit native tastes, and can offer an orange-coloured skin for a toffee-apple sausage.

Meanwhile, the UK’s appetite for bangers has been sharpened by the economic squeeze, with supermarkets reporting increased sausage sales.

Investec, the house broker, noted last October that Devro had upped its capital expenditure plans over the next two years from £28m to £30m, suggesting that Lanarkshire is getting a substantial share of new global investment.

Investec expects Devro to announce pre-tax profits of £37.4m, a rise of 41%, driven by “solid growth” in the developing markets of Latin America, Eastern Europe and the Far East.

Panmure Gordon said last Friday it expected profits of £36.6m, the market consensus, as margins rose due to improved efficiency in product manufacturing.

More Details: http://www.heraldscotland.com/business/corporate-sme/devro-investment-to-boost-food-industry-food-firm-announces-significant-factory-investment-1.1086268