AkzoNobel, the Dutch paint and coatings company, will build a £100m ($160m) state-of-the-art manufacturing plant in north-east England.

The plant is the largest investment in Britain by AkzoNobel since it bought UK-based ICI in 2007, then the local leader in paints and coatings. The company said the investment reinforced its strategic commitment to manufacturing in the UK.

AkzoNobel intends to close its paint manufacturing plants in Prudhoe, Northumberland, and in Slough, west of London, when the new plant opens by the end of 2014.

The plant, to be built within 25 miles of Prudhoe, would treble Akzo’s decorative paint output capability in north-east England.

“This is a good news story for UK manufacturing,” said Guy Williams, AkzoNobel UK country director. He said the investment, was “a step change in the way we do business” and would underpin manufacturing for the next 50 years.

AkzoNobel issued a profit warning last week, saying its second-quarter results would drop 15 per cent year on year due to a sharp rise in the cost of raw materials.

The company has announced fresh investments, with a number aiming to build capacity in fast-growing markets in East Asia and Brazil. Last week AkzoNobel announced its intention to acquire Germany’s Schramm Holding, which makes mobile phone coatings mainly for the Asian market.

The company said the new plant in Britain was one of several investments intended to increase its share of the mature European market.

The facility will consume 60 per cent less energy than the current operations, recycle waste and water and halve the operations’ carbon footprint, the company said. The present Prudhoe site lacked room for expansion, said Mr Williams.

The new plant supports the UK government’s commitment to rebalance the economy towards manufacturing. However, Mr Williams said the company was not seeking government financial support.

Operations would be transferred to the new site by the end of 2014, with production maintained at Prudhoe and Slough until then. Akzo said there would be relocation possibilities for staff with the right skills.

The group employs 89 people at the Prudhoe plant and 131 in Slough. Mr Williams said there would be net job creation in the north-east.

The news follows recent investment of £9m in research and innovation facilities at AkzoNobel’s Marine and Protective Coatings site in Gateshead, also in north-east England.

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