A MULTI-MILLION pound factory has started construction and will include a prestigious research and development department.

The announcement by Nifco UK, a Japanese car parts manufacturer, means the Stockton plant will effectively become its new European Headquarters.

Mike Matthews, managing director, said: “Our order book is full for the next five years and we have performed above targets for the last ten years. If you’re a gambling man you want your money on the sure bet and we have never let the company down.

“We get it right here and the whole world is beginning to sit up and realise this is where it happens.”

Hinting at future expansion he added: “Before we started building this factory two years ago I was talking about phase two. Now my vision for Nifco UK is £100m turnover and phase two is going to be too small for that.”

The new facility will take the company’s turnover from £40.9m to £68m by 2015.

A groundbreaking ceremony took place today on the 61,000sqft site which will create another 170 jobs, with 20 in the research department. There are 280 people currently employed at the factory.

However some in industry have expressed dismay that growth in the North East could falter because of a lack of skilled workers.

A spokesman for the Department of Business Innovation and Skills (BIS) said: “The North East has a strong track record, a good supply chain and a good workforce. It is a great place to do business in the UK.

“Greater skills are needed though. There is going to be less money in the system, and it is just a matter of how that money is spread around.

“There are things being done, the question is, is it enough?”

BIS are consulting with heads of industry to assess the skills they need and look at how to provide them, and are seeking further assistance from Europe, he added.

The ceremony was attended by the Lord Lieutenant of County Durham Sue Snowdon who said: “Manufacturing in the UK is alive and kicking. This factory is not just making products but is at the heart of designing new ones.”