Telford engineering firm is upbeat on operation

GKN employs more than 700 people at its 114 acre Hadley Park site in Telford, which is part of the engineering giant's Land Systems arm, which makes chassis, wheels, and other structural parts for large vehicles such as tractors and diggers.

While the company as a whole saw sales fall by one per cent to £3.8 billion thanks to currency fluctuations, in Land Systems they fell by 13 per cent to £426 million in the first six months of 2014.

That was in part because of a number of contracts ending in the second half of last year, and also because of a decline in sales to the agricultural market.

Philip Swash, chief executive of GKN Land Systems, said: "Agricultural markets have been particularly hard hit, and the larger vehicles have been impacted more than smaller ones.

"Those markets have softened considerably year-on-year, and we don't see them particularly picking up in the second half, although construction and industrial markets are showing signs of recovery.

"We have also had the cessation of a number of autostructures contracts for the likes of the Range Rover and Transit ranges.

"But considering that softening in the market, our message is pretty good – we are not disappointed in the results, it's a cyclical market."

GKN has invested in its Telford operation recently, developing its work on wheels and hybrid vehicle systems.

That has helped it land a new contract to fit its Gyrodrive systems to 500 buses for transport firm Go-Ahead, after testing of the systems on buses in the capital.

Mr Swash added: "We have put the first significant investment into Telford for a number of years. This latest contract is a great order that ramps up slowly over the next quarter.

"The restructuring work we have done over the last couple of years has got Telford into a good position. In spite of the currency being as good as it is, Telford is a very competitive unit. It has still got opportunities for growth, and with hybrid power it is something we have invested in on a 10 to 20-year cycle. It's a long-term technology move and we are very confident we can take it to a higher place.

"We are well positioned and competitive in all our end markets over a longer term cycle we will grow as the population grows."

Overall, GKN's pre-tax profits have improved by six per cent to £296 million.

The Driveline division, which makes components for the automotive industry, was the largest sector after a two per cent rise in sales to £1.8 billion, while GKN Aerospace fell by two per cent to £1.1 billion.

On an organic basis, stripping out the effects of currency fluctuations, overall group sales increased by six per cent.

Group chief executive Nigel Stein said: "We have continued to outperform our key markets and report good underlying financial results in spite of sterling's strength and some end market weakness – we expect these trends to be maintained in the second half. GKN is continuing to make encouraging progress against its strategy."