EACH year, more than 46 per cent of Royal Mail's post handled in the North-East comes from a warehouse in Peterlee.

The MetroMail business, part of the Saga group, handles 200 million items of mail each year, which is printed, put into envelopes and sorted by a team of 236 staff.

Many of the credit card offers, brochures and catalogues that slide through the letterbox each week come from Peterlee.

MetroMail is an important employer in job-starved east Durham - and an increasingly successful one.

This year, its results, incorporated in Saga's, will be its best ever - partly due to the productivity levels in the mailing house.

Managing director Alan Purvis says that, while competitors make margins of five to six per cent, MetroMail makes 19 per cent margins - for the sole reason that staff are so much more productive.

This is thanks to an exercise in which MetroMail looked to Nissan in Sunderland - Europe's most productive car plant - when it was retraining staff.

Mr Purvis says: "We looked outside our industry, because our industry isn't actually that productive.

"We decided to look at component part assembly operations, because that is similar to what we do, so we looked at Nissan and how Nissan might approach it.

"We ended up getting in touch with their training company and training all our staff in the techniques that Nissan use.

"Since then, every person within the business is undergoing productivity improvement training, helping to create a more productive workforce, which is also more motivated."

But Mr Purvis, 37, who took over as managing director last year, said MetroMail was not always such a streamlined operation.

Before Saga took over, he admits there were bad wages, poor working conditions, and MetroMail had a very bad reputation in the Press.

He said: "That just didn't fit in with the Saga group's way of doing things.

"They're a high-quality, blue-chip organisation based in Kent and the management here had to turn the MetroMail business into that when Saga took over in 1989."

The majority of mail sorting is now done by machine, and Saga has invested in the business almost every year since 2000, with almost £10m being poured in, and productivity being improved through new machinery and processes.

While the business is unlikely to grow in terms of staff numbers, because faster and better machines help capacity grow rather than there being a need for more staff, profits are growing each year.

Mr Purvis said: "Our equipment actually has the ability to make decisions about what is going into the envelope.

"So it knows not to send information about gardening to someone who lives in a top-floor flat.

"The type of customers we serve have moved away from the junk mail image to target their potential customers with relevant mail.

"Actually, we don't call it junk mail, we call it targeted direct marketing.

"So instead of getting ten items of junk mail each day, you may get one or two targeted items which are actually relevant.

"The days of sending one million of the same leaflets out are over. Everyone is now sending more sophisticated marketing items.

"Our customers send us the data, we do the sorting."

Clients include blue-chip companies, credit card firms, direct-sell and holiday companies, and any organisation which sends out a lot of mail.

MetroMail even has a British standard for information security - one of the first to receive the standard - with information provided by clients very strictly controlled.

Mr Purvis said: "They supply us with the database, we produce the mail and then we get rid of the information once the job is complete.

"When our customers send us information, it is very strictly controlled.

"Our premises are secure and we operate strict confidentiality agreements. Data is a very important thing, particularly this kind of personal marketing data, and people get very nervous about it being misused. So we have to be at the top of our game."

Mr Purvis, who was once a shipyard engineer who retrained in IT when the yards began to close, says the key to productivity is a happy and motivated workforce, and he tries to avoid forcing workers to be more efficient.

"It is quite a hard job," he said.

"That's something that we can't change, but I am trying to change the culture so that people actually enjoy their day at work. I won't see supervisors hanging around prodding people with sticks.

"At the same time, I don't expect people to come bounding through the door at 7am, desperate to start work. However, I don't want to see them desperately trying to get out of the building at 4.15pm.

"We just like to have a bit of fun in the management team, and our staff do too.

"The thing that has made us so profitable is the people who work on the floor, so we know how important it is to keep them happy."