Peco, a niche manufacturer of model railway components based in Beer, Devon, is undertaking significant investments and strategic adjustments to secure its future in a challenging market. The company plans to spend between £750,000 and £1 million to modernize operations and ensure continued profitability, according to managing director Andy Lane.

Last year, Peco expanded its retail presence by acquiring Harburn Hobbies, a respected model railway shop in Edinburgh. The purchase was made informally, relying on established relationships and trust to prevent the closure of the store. Apart from Harburn Hobbies and the shop at its Beer headquarters, Peco primarily distributes its products through independent retailers and deliberately avoids selling on platforms like Amazon to support its retail partners.

One of the company’s most critical challenges arose when its long-standing rail supplier, Precision Shaped Wire (PSW), announced plans to cease production. Based near Batley, West Yorkshire, PSW’s decision left Peco facing a potential supply crisis. A rival supplier provided a quote that was 400 times higher than previous costs, taking advantage of Peco’s urgent need. In response, Peco negotiated a lease of PSW’s specialized machinery and installed one of these unique machines in its Beer factory, an effort that cost the company £350,000 this year. The plan is to develop its own manufacturing equipment over the next year to regain full control of production.

Historically, Peco settled in Beer after founder Sydney Pritchard moved the business from Seaton in 1970, choosing a hillside site offered by the local council eager to support employment in the area. The company remains one of the few major local manufacturers, operating alongside advanced robotic machinery imported from Japan and custom-built devices tailored to its specialized product range. Peco recently secured a two-year licensing agreement with Aardman Animations and will launch a line of Wallace & Gromit-themed wagons this September, utilizing a detailed and rapid printing process.

While Peco boasts a committed workforce, attracting young mechanical engineers has been an ongoing challenge, partly due to the remote location. To improve accessibility and efficiency, some equipment is being transferred to a smaller site in Buckfastleigh, about 35 miles away. Though the company acknowledges that relocating to a new, purpose-built facility might enhance efficiency, the Pritchard family remains dedicated to maintaining operations in Beer and supporting the local community.

“We have had these ups and downs before,” said Sydney Pritchard. “I am sure the future is very bright.” Peco aims to return to annual profits of around £350,000 and rebuild cash reserves, confident in the commitment of its staff and its strategic initiatives to sustain growth.