UK: Diageo to press ahead with Scotch job cuts

By | 9 September 2009

Diageo is to press ahead with plans to cut around 10% of its workforce in Scotland, after rejecting an alternative business proposal put forward by ministers and trade unions.

Diageo said today (9 September) that the alternative proposals "do not provide a sound basis" for the drinks giant to build a sustainable Scotch whisky business and leave a "significant economic gap".

An opposition 'taskforce', led by Scotland's finance secretary, John Swinney, presented the proposals to Diageo last week.

They called for the Port Dundas distillery at Glasgow to remain open, at least temporarily, and the construction of a new Johnnie Walker packaging plant near Kilmarnock - having accepted Diageo's decision to close the current plant in the town.

"The taskforce proposal does not address the basic economics of our business, current developments in the marketplace or funding for the suggestions it does advance," said David Gosnell, managing director of Diageo Global Supply.

Diageo plans to cut 900 jobs from its workforce of 4,500 in Scotland, including 700 by closing the Johnnie Walker Kilmarnock plant, but will create 400 new jobs by expanding its packaging facilities near Fife.

The drinks giant said today that it regards discussions with the taskforce as closed.

Gosenell said: "Diageo has never sought public funding for our proposals. We would prefer public money to be directed to the economies of Kilmarnock and Glasgow while we focus our own investment on sites critical to the future sustainability of our operations in Scotland."
Bryan Donaghey, MD of Diageo Scotland, said: "We now need to focus on the dialogue with our employees that will continue through the formal consultation process."

Scotland's finance secretary Swinney said today that he was "deeply disappointed" by Diageo's decision.

"We shall meet as a task force to consider our next steps. As a Government we will work unstintingly with our partners to mitigate the serious impacts and assist the people and communities affected by Diageo's decision-making."

Sources close to the taskforce previously told just-drinks that alternative business proposals for Diageo were not as strong as hoped. 

Diageo CEO Paul Walsh told just-drinks last month that he expected "eyes will be rolled" at alternatives to the group's restructuring plan.  

Sectors: Spirits

Companies: Diageo, Johnnie Walker

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Diageo has fought a successful public relations rearguard action to shut the door on alternatives to its proposed job cuts in Scotland.

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