TMD Friction UK Ltd is adding 68 jobs to its 296 workforce in Hartlepool.
The firm, which has been in the town since 1984, secured a £249,000 grant from regeneration agency One NorthEast to bolster the £2m expansion project.
The investment will help increase the production of brake pads, for domestic and motor racing cars, from 20 million to 25 million a year.
Gerard Doyle, TMD managing director, said: "By investing in new machinery, we can increase plant capacity and create more opportunities within the region.
"This will have a great impact on the future development of our site."
Ian Williams, director of business and Industry at One NorthEast, added: "It is really important to help keep this type of manufacturer in the region, and indeed the UK."
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