UK Mail to move central hub from Birmingham to Coventry following Government deal
BIRMINGHAM-based UK Mail Group has reached agreement with the Department for Transport (DfT) over the relocation of its central hub in Bromford.
It needs to move as it is on the planned route of the HS2 high-speed rail line but the move to Coventry may come as a surprise to some observers who expected the firm to stay in Birmingham.
But now it says that agreement has been reached with the DfT and it will support the relocation of the hub to a new 200,000 sq ft facility in the Coventry area, subject to planning approval.
Details of the DfT’s financial arrangement with UK Mail have not been disclosed.
UK Mail said construction is scheduled to commence in early 2014 and the move will take place over a period commencing in spring 2015.
“This timescale supports our plans to introduce significantly increased automation of our operations from spring 2015 onwards, with new automated sortation equipment being installed at the new hub,” it said.
“The cost of replacing our existing facility and associated relocation costs will be funded by HS2 Ltd. UK Mail will fund the costs of deemed upgrades to our existing facility, expected to be some £10m; this is in addition to the previously announced investment of approximately £20m in the new automated sortation equipment.
“Of this combined investment, £10m is expected to fall into the current financial year and £20m into the year to 31 March 2015. The investment will be funded from UK Mail’s existing cash resources and new bank facilities.
“We continue to expect a double digit net return on the investment in automation, with the full run-rate of benefits expected from September 2015.”
Guy Buswell, CEO of UK Mail, said: “This move will represent an important component of our plans to develop UK Mail into one of the leading and most advanced parcel carriers in the UK, with a new state-of-the-art, highly automated hub at the heart of our network.”
Beth West, HS2 Ltd commercial director, said: “We are pleased to have reached this agreement with UK Mail. This is a significant step forward and provides clear evidence that HS2 Ltd can work successfully with businesses to secure long-term benefits for both.”
Law firm DLA Piper advised UK Mail on the deal.
Kate Creer, partner and compulsory purchase specialist at DLA Piper, said: “We were brought in by UK Mail to advise it on the relocation of its UK hub and advised that an agreement for advance purchase, giving UK Mail certainty and reducing the potential compensation payable from the public purse, was the way forward.”
Fiona Thomson, partner in the Real Estate group at the law firm added: “We are delighted to have advised UK Mail on the successful conclusion of this agreement with the Department for Transport. As a result, UK Mail is able to develop a state-of-the-art hub and HS2 Ltd has demonstrated its ability to work with businesses to secure long term benefits for both.”
