Casket, which owns the British Eagle, Claud Butler and Falcon marques, plans to produce 400,000 of its Townsend bicycles at the new plant, which will open in early 1994.
The 230,000 sq ft factory, which will cost pounds 5.7m to build, will create 76 jobs and was partly funded by a pounds 900,000 regional assistance grant from the Department of Trade and Industry.
'Once we've got the new factory up and running we should be producing around 600,000 bikes a year,' said Joe Smith, Casket's chief executive.
The factory is an important step for a company that only a few years ago was a rag-bag of textile companies. Since then it has made a succession of acquisitions in the bicycle sector and now has a market share of 25 per cent - second only to Raleigh.
Losses of pounds 3m in 1990 have been turned into profits of pounds 2.85m.
Last year it acquired the licence to manufacture the LotusSport bicycles, which are being made at the company's British Eagle plant in Newtown, Powys.
The first Lotus bikes - made with standard aluminium tubing rather than the state-of-the art carbon fibre - will be in the shops this week. Costing between pounds 600 and pounds 1,500, the range will feature mountain bikes and racing versions.
Bike racers who want to get their hands on the distinctive matt black cycle with the solid rear wheel will have to wait until later in the year. 'The road version of the Boardman bike is still in development though it is being used in the Tour de France this year,' said Eddie Eccleston, director of British Eagle. 'The technological advance of the bike was that it was so aerodynamic, but once you start loading brakes and other features on, that benefit is eradicated.'
Would-be Chris Boardmans might be grateful that they have an extra few months to save up when they hear the price: an Olympian pounds 3,000.Reuse content