Kingspan Access Floors, one of the UK's leading manufacturers of raised flooring, employs 138 people at its manufacturing and head office in east Hull and has recently seen a major increase in demand for its products.
The investment will increase its production capacity by 30% and cut energy consumption by up to 40%.
Speaking to This is Scunthorpe, managing director Terry Newman said: "Although the UK market is relatively flat, the forecasts are for growth in the commercial office sector from next year, so that will be a further boost for Kingspan.
"The commercial office market has been stagnant for the past two years but there are increasing signs of growth in construction from 2013 because of a shortage of quality office space.
"According to leading real estate agents, construction volumes in the summer of 2012 are now three times greater than at the bottom of the market in mid 2008."
Raised flooring is not dissimilar to a suspended ceiling although it's the opposite way round.
It is used to provide a service void for data cabling and power – the system enables these services to be delivered directly to a desk or workstation underneath the floor so that wires are not trailing wires across the room. It is also frequently used to deliver air conditioning throughout modern premises.
The company said most of its demand is coming from overseas markets where Kingspan's international sales have increased by more than a third compared with last year.
Mr Newman said: "In 2011, international sales were £7M and this year, international sales are on target for £10M."
Major orders have come from across Eastern Europe, the Middle East and also Continental Europe where Kingspan's joint venture company in Spain, Kingspan Suelo Técnico, is maintaining a market-leading position.
However, business in Hull is still strengthening the company. Kingspan installed more than 5,000m2 of access flooring in the new Humberside Police headquarters in Clough Road.
Mr Newman said that the investment in the new equipment will bring environmentally friendly benefits.
He said: "The benefits from the investment will be a new, efficient production facility that will consume less energy.
"It will enable Kingspan to offer a fast response to our customers, which is so important when we are operating in the global markets where speed of delivery is essential."
Huddersfield-based Press Techniques has custom- built the new production equipment for Kingspan and will begin installation shortly.
Managing director Alan Penn said: "The equipment is highly efficient, user- friendly and will provide a major payback on power usage."
Kingspan has also recently signed a green energy contract for its electricity and is also installing photovoltaic solar panels as part of its commitment to use only renewable energy on its sites by 2020.
Mr Newman said: "Kingspan is sensitive to its position as an industry leader and, recognising the serious challenges facing our eco-system, we are committed to reducing the impact of its business operations, products and services on the environment."