Fury over Diageo job losses and closures

DIAGEO, THE drinks business formed from the merger of Guinness and Grand Metropolitan, found itself at the centre of a jobs row yesterday after it announced 850 job losses and the closure of the group's Edinburgh head office.

The company is closing two bottling plants, one in Laindon, Essex, with the loss of 220 jobs, and another in Strathleven in Dumbarton with 500 redundancies. The closures are set to take place by autumn 2000.

However, the most controversial move is the decision to close Distillers House, the Edinburgh head office which employs 250 staff. More than half of these will be made redundant with the rest either moved to the operating businesses or located in a new, smaller head office in the centre of Edinburgh.

It is a decision even Ernest Saunders, the disgraced former Guinness chairman, did not dare make after he finally won the bitter takeover battle for United Distillers in 1986.

However, Diageo denied it was reneging on promises to retain close links with Scotland and said it was not removing decision-making power from the country which produces some of the group's best-selling brands.

Local MPs and union leaders were furious at the decision and bungled handling of the announcement, which had to be brought forward after news leaked on BBC Scotland.

John McFall, MP for Dumbarton said the action was outrageous and a betrayal of the loyal workers. Guinness said it had taken the decision after a five-month review.

It will invest pounds 50m in a programme that will bring all Scotch whisky production and the UK white spirits production facilities into Scotland. The three remaining plants are in Leven, Fife, Kilmarnock in Ayrshire and Shieldhall near Glasgow.

The action is part of Diageo's previously announced plants to cut 2,000 jobs as part of cost-cutting programme that is set to save pounds 200m a year.