Shortbread maker Dean’s of Huntly has put ambitious investment plans on hold because of current high levels of economic uncertainty.
The company has spent around £2million in recent months developing a new warehouse and distribution facility and intends to add a gluten-free bakery and robotics to its production operation once it is complete.
But yesterday managing director Bill Dean said that in light of currrent economic conditions he believed it was “prudent” to pause before proceeding with the development.
He cited a range of factors behind the decision, including rising labour and commodity costs, increased business rates and uncertainty stemming from Brexit as well as the prospect of a second Scottish independence referendum.
“We are holding fire on the next phase of development and waiting to see how things come through,” Mr Dean said.
“It makes sense not to stretch ourselves on borrowing at this time. But it’s not all doom and gloom.”
He was speaking after results from Companies House showed that the firm’s turnover rose by 2.75% to £8.27million in the year to June 30, 2016, from £8.05million in 2014-15. Pre-tax profits came in at £530,922, down form £690,026 the year before.
Mr Dean said rising labour costs had the biggest impact on the company’s profits during the period.
He added: “Wages are on the uplift. It’s not just the living wage, it escalates all the way up and pushes through the whole business.”
The company’s workforce grew to 167 during 2015-16, with the addition of 14 production staff.
Mr Dean said that, in common with many other businesses, Dean’s has had to contend with “huge increases” in commodity prices since last June’s Brexit vote.
He added: “We are seeing real time increases in the cost of commodities of about 12%.
“If businesses get 6% of that passed on to the customer they are doing well. So where is the other 6% coming from? With everything that is happening at the moment, it’s a bit of a ‘perfect storm.'”
Deans of Huntly was launched by Mr Dean’s family in the north-east town in the 1970s and moved to its current purpose-built premises on Depot Road in 1992.
Mr Dean said he was currently unable to predict when the company would open its new warehouse and distribution centre.
