Danish firm’s packaging move triggered by exchange rate insecurities
The Denmark-based company said exchange rate insecurity caused by Sterling’s 25% drop in the last few years against the Euro and Danish Krone was a major factor in deciding to open a plant in England.
The firm said it had previously implemented a series of measures in a bid to offset these but decided that opening a facility in the north east region of Durham was the most effective long-term option.
UK hub
Faerch Plast, which produces trays for ready meals and fresh meats, this month announced plans for the site to supply product into the UK market. It is hoped that within “several years” the plant, which it bought from Veriplast, will supply all its UK packaging material.
Development of the 14,000 square metre-factory, due to begin operation in summer 2012, is part of a strategy to reduce lead in times, cut costs and boost efficiencies, said the company. It has also purchased land adjacent to the site that would more than double this capacity to accommodate any future expansion.
The UK is a major market for Faerch Plast but currently packaging destined there is made in Denmark and the Czech Republic.
Revenues from UK sales account for about 30% of the company total, Joe Iannidinardo, managing director of the firm’s UK division, told Food ProductionDaily.com.
In 2010, total revenues reached £110m (€128m /DK 934m), said the company.
Exchange insecurity
He added that the firm presently has costs in both Danish Krones and Sterling. Opening the UK site and shifting some equipment from its Danish and Czech operations would enable it to rebalance this and provide greater fiscal stability.
“The move also means economic security,” said CEO Lars Gade Hansen. “Over the past four years, we have witnessed a sharp fall in the exchange rate for the British Pound against the Danish Krone. The insecurities this has created for us, as well as for our customers, will be reduced by manufacturing a large part of the plastic packaging in the UK.”
Iannidinardo said the move was primarily an expansion and it would not trigger any closures at its mainland European sites.
“We are a growing company and will be looking to extend our product range at the Durham site,” he said.
