WIRELESS telecommunications specialist Filtronic is preparing for full production at its County Durham facility.

Last week, the company, based in Shipley, West Yorkshire, said it planned to put its Newton Aycliffe facility at the centre of its operations.

Yesterday, reporting results for the six months to November 30, the group's finance director, John Samuel, said the former Fujitsu plant would be in full production within the next few months.

And he expected the plant, currently costing £1m a month to run, to be turning in a profit within two years.

He said: "We have never made any secret about the Newton Aycliffe facility costing £1m a month to run. That is exactly what we expected it to cost.

"While we have only been producing test runs of products at the facility until now, we are ready to move into full-scale production. Before the end of the year we expect the output to be more than one million units per month."

That in turn, he added, would be good news for employment prospects at the facility, which currently employs about 300 staff.

"As we increase production at Newton Aycliffe, we expect staff numbers to rise," he said.

"I would anticipate employing at least 500 staff at the facility within the next three years."

Mr Samuel was speaking as Filtronic reported pre-tax profits of £2.2m on group sales of £121.5m.

The Newton Aycliffe facility, now part of the Integrated Products division following the group's restructuring into four business units, reported a loss of £8.2m, an improvement on the £14.2m loss reported in the same period of 2002.

Mr Samuel expects the plant to break even in 2005, before moving into profit the following year.

He said the group was in a much stronger financial position, following its restructuring.

He said: "On February 17, we expect to pay off our US-based debt.

"We have converted it into a £50m bank loan, which avoids currency fluctuations between the pound and the dollar, and saves us £1.5m a year in interest charges alone."

Looking ahead, Mr Samuel said the Newton Aycliffe facility would be producing higher value products during the next financial year.

He said: "While we will produce around one million units this year, the actual value of the work is not great. However, our recent choice as an original equipment manufacturer (OEM) to supply integrated radio frequency head units containing power amplifiers, will be worth a lot more to us in the long run."

Filtronic's first OEM customer is believed to be Siemens.

It is currently in negotiations with another three potential clients.