Diageo is to cut more than 10% of its workforce in Scotland as part of a restructuring of its operations in the country.

The company, which is the biggest Scotch whisky maker, confirmed this morning (1 July) that the "significant" proposals have followed "a major review looking at how Diageo can best ensure the long-term sustainability of its operations in Scotland in the current economic conditions".

The plans, which will be backed by a GBP100m (US$164.4m) investment, will result in an overall reduction of up to 500 jobs in Scotland. Diageo currently employs around 4,500 people in the country.

Diageo will close its Kilmarnock packaging plant in Ayrshire over a two-year period with the loss of around 700 jobs by the end of 2011. Meanwhile, the Port Dundas distillery in Glasgow and the adjacent Dundashill cooperage will close, resulting in the loss of up to 140 jobs.

At the same time, around GBP86m will be used to expand the firm's Leven packaging plant in Fife, with the hope of creating around 400 new jobs.

Diageo said it hopes a number of these new posts would be taken by employees transferring from Kilmarnock. A new GBP9m cooperage will also be built at Diageo's existing site at Cambus near Alloa by summer 2011.

The nearby Carsebridge cooperage would be closed, with the relocation of around 40 roles from Carsebridge Cooperage to Cambus, together with some roles relocating from Dundashill Cooperage, bringing the total number of jobs at the new Cambus Cooperage to about 70.

The Shieldhall packaging plant in Glasgow will benefit from a GBP3m investment, although "some changes in working practices" would result in the loss of 30 jobs at the site, Diageo said.

"These decisions have been extremely difficult to take," said Bryan Donaghey, managing director of Diageo Scotland. "I am sorry for the impact this announcement will have on our employees and their families in Kilmarnock and Glasgow and the difficulty this will cause in Kilmarnock where we are a major employer.

"We will do everything we can to support our employees through this difficult time. We will also work closely with local political and community leaders in Kilmarnock so that together we can seek to address the impact this announcement will have on the town."