[Pixalo]

Online photo service Shutterfly Inc. said Monday it plans to open a manufacturing facility in Charlotte, N.C., that will cut down how long it takes to ship prints and photo gifts to the East Coast.

"As you think about where our customers are in the U.S., approximately 60 per cent are east of the Mississippi river," said Jeff Housenbold, Shutterfly's chief executive officer, but shipments bound for New York can take two days longer than a California order.

Shutterfly currently prints digital photos and makes books, calendars, cards and other photo-bearing gifts at a plant in Hayward, Calif. Analysts see the company's ownership of the manufacturing operations as an advantage over the competition - Shutterfly can keep a closer eye on quality, optimize raw materials costs and keep 4x6 print prices low.

To keep up with growing demand, Shutterfly has boosted manufacturing capacity by about 50 per cent in each of the last five years. The CEO declined to comment on how much the North Carolina facility will expand capacity.

The company said it expects to hire 300 workers in the area over three years, more than the 260 it already employs. Shutterfly said in November it expects sales to grow 30 per cent in 2007.

Shutterfly did not disclose the cost of opening the new plant, but Housenbold said it was funded with cash on hand. In a statement, the office of the governor of North Carolina said the company will invest $31.5 million in the project over the next three years.