Hire purchase helps metal coatings firm capitalise on demand for powder coating

Specialist metal coatings firm based in Shropshire is capitalising on regional demand by opening a new powder coating plant with the help of an £86,000 hire purchase facility from Lloyds TSB Commercial Finance.

Shropshire Galvanizers, Oswestry, provides a galvanizing service to a large number of local steel fabricators / manufacturers. The company covers gates, railings, agricultural equipment and bespoke industrial products with zinc, which provides low-maintenance corrosion protection.

Established in 1987, Shropshire Galvanizers is a division of Hereford Galvanizers Ltd, a £5.5 million turnover business which was set up in 1964.

Recently, the company found that a number of customers were utilising its galvanizing services and then sending the steel to separate trade powder coaters to add colour to the steel products.

To capitalise on this demand and provide increased efficiencies for customers, it looked into opportunities to bring this service in-house. Shropshire Galvanizers approached its banking partner, Lloyds TSB Commercial for a funding solution.

The bank introduced the business to Lloyds TSB Commercial Finance, its asset based finance division, which provided the firm with a £86,000 hire purchase facility.

This funding has allowed the company to purchase the necessary powder coating equipment outright, providing the initial outlay required, without significantly impacting its balance sheet. The hire purchase’s scheduled payments also simplify cash flow forecasting, facilitating future growth.

As a result of the new plant, which is located 300m from its Oswestry base on Maesbury Road, the business has taken on five new members of staff and overall sales are expected to increase by £300,000 in the first year, rising to half a million in 2012.

David Watkins, managing director of Hereford Galvanizers, said: “We have worked hard over the past 23 years to cement our standing in the Marches, West Midlands and North West as a quality provider of galvanizing services.

“Many businesses want their steel coloured after being coated for safety reasons, to assert brand image or simply to brighten up working environments. To diversify our services and meet customer demand, we decided to open our own plant offering powder coating.

 “So far, the plant is showing great potential and we are investigating more powder coating plants in new geographical areas in the near future.”

Lesley Williams, regional manager at Lloyds TSB Commercial Finance, said: “Hire purchase is ideal for businesses like Shropshire Galvanizers, which are looking to invest in future growth potential by replacing old machinery or investing in new facilities.

“In this case, the funding has enabled the company to actively capitalise on regional trends to strengthen its service proposition, and increase its customer base and turnover in the long-term.

“Shropshire Galvanizers is a shining example of an expanding firm which isn’t afraid to broaden its horizons to increase its service offering.”

Graham Reed, relationship manager at Lloyds TSB Commercial added: “Shropshire has a rich manufacturing legacy, with its roots deeply imbedded in the industrial revolution and it’s great to see these firms still thriving in the area.

“We worked closely with the business to ensure their day-to-day working capital was not impacted by the investment in the new plant.

“It is encouraging to see the company seeing the benefits after a short time trading with the new equipment.”

July 2011