The investment, announced two years ago and which will safeguard 460 jobs, will develop the Hexham site into one of the most advanced in Europe.

More than 300 workers have been working on the site using a European method of modular construction that has allowed rapid progress, Egger said.

Industry sources believe the impact of the additional capacity will not be seen in the market until the second half of 2007.

The new plant will have an improved and simplified layout, and extensive landscaping before the old buildings are removed. The reconstruction will also put sawdust and recycled wood out of sight in new silos, leaving only logs and large wood chips outside.