The Made in Britain label is an important badge of honour for Durham-based manufacturing firm Ebac. It was one of the first companies in the country to have its very own ‘water-cooler moment’ – manufacturing these machines when they first took off in the Nineties. It was also the first British business to mass-produce dehumidifiers for the home in 1980. And now the business is preparing to launch its own washing machines – the first of these appliances to be built in the UK for decades.
“We moved into appliances because we wanted to grow,” says Ebac managing director Pamela Petty. “We thought about buying them from Europe and selling them with our badge, but we support UK manufacturing and want it to take off again.”
Lombard, the UK’s largest asset finance company, is also keen to see the UK’s production lines fired up. An existing relationship with Ebac meant a funding solution from Lombard was able to support Ebac in installing a new production facility.
“We first discussed the project with Ebac about 18 months ago,” explains Tim Kenyon, senior corporate relationship manager at Lombard. “With a big production line like this, our expertise is in understanding the business and the asset. We spent a lot of time helping Ebac find the best solution.”
This turned out to be sale and hire purchase, meaning that Ebac paid for the new production line safe in the knowledge that Lombard would reimburse the money once the equipment was in place. Ebac now has fixed repayments for five years, after which it will fully own the asset.
Advertisement
“When we begin to look at a project like this, it is a huge investment and change for a company of our size,” explains Ebac finance director Graham Currie. “To raise those funds, we had to go to someone who really understood the business. We needed a facility that would grow with the working capital needed when things took off.”
Along with an important boost from the Regional Growth Fund, Ebac was able to confidently invest in the new facility by taking a solution from Lombard – part of the Royal Bank of Scotland – as well as invoice finance and a revolving credit facility with the Royal Bank of Scotland itself. “With a three part finance structure like this, a number of elements have to come together. Having it all in one place has been a huge advantage,” says Currie.
Working with Lombard has offered Ebac a number of benefits. Because Ebac owns the asset at the end of its repayments, it can take advantage of the government’s Annual Investment Allowance, a scheme that allows small and medium-sized businesses to write off 100% of qualifying capital expenditure on tools and equipment against taxable profits in the year of purchase.
Lombard’s solution also offers security as the fixed-credit facility can’t be taken away or reviewed, as is the case with an overdraft. With Tim and the Lombard team, Currie and Petty were able to sense-check their plans.
“The whole process has been pretty straightforward, and even I appreciated it when Lombard asked challenging questions,” says Currie. “Being able to answer them meant that we weren’t all daft.”
Advertisement
With the washing machines to launch next spring, their partnership looks set to pay off: Ebac now expects to double its workforce from 200 to 400 people. “This factory has a community purpose,” says Currie. Manufacturing is important to us,it’s in our blood.”
Security may be required and product fees may apply.