Rocketing construction costs may stifle growth

Factory construction costs have rocketed so much that Robert Wiseman Dairies would not have relished starting work on its latest Bridgwater processing facility in the current economic climate, according to its md.

Speaking at the plant’s official opening in Somerset last week, nine months after it began processing in December last year, md Robert Wiseman said: “I wouldn’t want to have been starting work on it today. It would have cost a lot more.”

The facility cost £80M to build, plus a further £20M for processing equipment. But a spokesman for the company said that current estimates would now put the total at £100M for construction alone, just 18 months after the project began.

However, the company is already considering further expansion in the south of England. “Are we going to need another major dairy constructed?” asked Sandy Wilkie, sales and marketing director. “There’s not much milk supply based in the south east. Maybe we need another, bigger distribution site.” He added: “Acquisitions may crop up as well, so there could be opportunities there.”

Robert Wiseman is due to kick off a 50M litre annual contract to supply 440 co-op stores in the south east at the end of September. The deal adds to existing supply contracts between Wiseman and the Co-operative Group and is expected to take Bridgwater closer to its annual processing target of 500M litres of milk. Its annual processing capacity is currently 250M litres.

Wilkie said the Co-operative Group’s acquisition of Somerfield could boost Wiseman’s business further. “We have very little Somerfield business in the south east at the moment. The Co-op had to accept contracts that were already in place with Somerfield when it took over, but there may be opportunities for us going forward.”

The Bridgwater facility incorporates significant eco-friendly features, including a £2.5M effluent treatment plant, which allows it to re-use water for purposes such as external and internal vehicle cleaning. Production manager Julie Walker described the investment as “the best £2.5M we have ever spent”. She said the eventual aim was to channel as much water as possible back into the plant for re-use in processing. Wiseman is also harvesting rainwater from the buildings at Bridgwater.

“Our three main plants use 0.5 litres of water to process one litre of milk, whereas most dairies use 1.5 litres of water,” said Walker. She added that Wiseman was also “revisiting” the concept of using a biomass boiler at the site. “Perhaps it’s better to use renewable fuels rather than gas for the boiler,” she said.