A planned expansion of an Andover business worth millions of pounds has been cancelled after the ‘catastrophic’ impact of Brexit.

Follmann Chemie, based in Germany, had planned to expand its factory at Sealock, an adhesives business in Andover, to export more products to the EU. However, following Brexit, the firm’s shipping costs have risen significantly, causing the £2.5 million pound project to be cancelled.

Henrik Follmann, the chief executive of Follmann Chemie, told the Financial Times that Brexit had been “a catastrophe” for his firm.

“Brexit has been a nightmare, building up costs and time,” he told the paper.

“We were going to build extra production and storage to supply customers on the continent, but we delayed it and have now taken a strategic decision to cancel this and to expand in the EU instead.”

Follmann Chemie was founded in 1977, and is a family business specialising in chemical products based in Minden in eastern Germany.

Three years ago, it bought Sealock, a firm which produces industrial adhesives such as hot melt and aqueous products for a range of purposes. It also produces tailor made adhesives for specific industries.

At the time, Henrik Follmann said the purchase was a ‘perfect’ fit for both firms, saying: “In selling these products through the Follmann organisation, we will be able to develop significant growth opportunities, especially for the German market, where Sealock Ltd is not running any business activities yet.”

The firm had planned to expand its exports to the EU by investing in upgrading the production and storage facilities at its site on Scott Close in the Walworth Industrial Estate. In 2018, this saw a warehouse extension completed, increasing the amount of storage at the site by 30 per cent.

Chris Young, the managing director of Sealock, said the move would “allow further room for production expansion needed to support our continued growth.”

However, this further expansion has now been cancelled after Follmann decided to upgrade facilities within the EU instead, after revealing its shipping costs to the UK have increased by 30 per cent following Brexit changes. The CEO described the UK’s departure from the European Union as “a catastrophe”.

The news follows the release of figures from the Office for National Statistics which show UK exports to the EU fell by almost 41 per cent in January, with imports falling by almost 29 per cent.