KEY POINTS:
Work has started on Fletcher Building's new $20 million metal tile factory which is being developed on a large industrial site in Hungary.
The plant for subsidiary AHI Roofing is being built at Varpalota in Hungary's western area, an intensely industrialised zone between Budapest and the border with Slovenia.
Fletcher Building Products chief executive Chris Ellis said the plant would be finished next year and give AHI Roofing a wider global manufacturing presence. The business has plants in Auckland, California and Malaysia.
A 5.4ha site has been cleared and Keviep, a Hungarian building contractor, has been appointed, he said. Their equipment is on the site and initial ground works are starting.
"The factory will supply our existing customers in Europe as well as allowing us to grow. The initial capacity will be six million tiles annually," Ellis said.
The new plant was needed to keep pace with European demand. Sales had increased by 15 per cent annually in the last few years, Ellis said.
"We've grown our share of the market from nothing, so you can get those sort of numbers," he said. AHI Roofing was the world originator of metal roof tiles and sold the Gerard range in Europe and licensed the Decra brand to Denmark-based Icopal Group, he said.
The credit crunch had not dented the products' prospects because metal roofing tiles were a highly specialised niche in the building products market and still in high demand.
"Both the Gerard and Decra brands have had continued growth worldwide, despite the recent credit crunch. Metal tiles fitted into a small, high quality niche of the huge pitched roofing market and the opportunity for growth in Europe was significant," he said.
Fletcher was drawn to the Hungarian area by a regional development authority which provides incentives.
The Hungarian Investment and Trade Development Agency is providing the industrial subdivision, roading, power and infrastructure and Fletcher is paying to have the factory built. The company worked with the Varpalota Council to get the land at a concessionary price.
When the plant begins production next year, it is expected to employ about 100 people from the area and initially produce six million roof tiles annually.
A foundation stone was laid on the site recently in a ceremony attended by the Speaker of the House, Margaret Wilson. Ellis said the stone was laid by Varpalota's mayor Arpad Nemeth and AHI Roofing's European sales and marketing manager Tony O'Brien.
