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Business News

Diageo rejects plan to save whisky jobs

Hopes of saving hundreds of whisky jobs were dashed today after drinks giant Diageo rejected a Scottish Government-backed proposal to counter their factory closure plans.

The company had announced it wanted to close its Johnnie Walker bottling plant in Kilmarnock and the Port Dundas grain distillery in Glasgow - affecting 900 workers across the two sites.

David Gosnell, managing director of Diageo Global Supply, today said that alternative proposals put forward by a Scottish Government-backed taskforce had not provided a "workable alternative to deliver what Diageo needs".

A massive cross-party campaign was mounted to try to persuade Diageo to rethink its proposals, with 20,000 people marching through Kilmarnock in a protest rally.

And less than a week ago Finance Secretary John Swinney presented bosses at the firm with details of alternative proposals, which would have seen production continue at Port Dundas and the creation of a new plant in Kilmarnock.

Those proposals had been drawn up by a taskforce consisting of politicians, trade unions, local councils and Scottish Enterprise.

Mr Gosnell had described last Thursday's meeting as "positive".

But today he said: "We examined the alternative proposals thoroughly. They don't deliver a business model that would be good for either Diageo or Scotland.

"We need a sustainable Scottish operation that supports our international spirits business and provides a future for the 4,000 people we would employ in Scotland after this restructuring is completed.

"I appreciate their efforts but the taskforce has no workable alternative to deliver what Diageo needs."

The company said there were three key reasons why it had rejected the taskforce's proposals.

The company said the plans would still leave inefficiencies, and added that the alternative model presented no other option than delaying the closure of the Port Dundas site.

And it claimed there would still be a net loss of around 500 jobs, through a reduction in the Kilmarnock workforce and the closure of the Port Dundas distillery.

Diageo also said that the alternative proposals would mean there would be no investment in Leven and only a small number of new jobs created there.

The drinks giant has already said the redundancies at Kilmarnock and Glasgow will be "offset" by the creation of 400 jobs at its packaging plant in Fife.

Scottish Finance Secretary John Swinney said Diageo's decision to reject the taskforce proposals was "deeply disappointing".

He said: "I led a task force which worked effectively to put together the strongest arguments and substantive proposals to retain production and jobs at Port Dundas and Kilmarnock.

"We could not have had more co-operation from the workforce, trade unions, the local authorities and parliamentarians to identify concrete, deliverable and cost effective proposals.

"I still do not believe that Diageo appreciate the social consequences of their financial decision in turning their backs on 200 years of history in Port Dundas and Kilmarnock.

"We shall meet as a taskforce 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."

Diageo said 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".

The Scottish Government had said previously that public money could be made available to the firm.

But Mr Gosnell 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. Regrettably, we must reject these proposals."

It has been claimed that the closure of the Kilmarnock bottling plant could cost the local economy more than £15 million a year, while every job lost may cost the public sector up to £20,000 a year.

Mr Gosnell continued: "We fully understand the need to address the impact of our proposed restructuring, and at the appropriate time we would plan to engage with Scottish Enterprise and other agencies to discuss the regeneration of impacted communities."

In its response to the Scottish Government, Diageo said it now regards discussions on its business case with ministers and the taskforce closed.

The company will now focus on the formal consultation process with the unions who represent the workers.

Bryan Donaghey, managing director of Diageo Scotland, said: "We now need to focus on the dialogue with our employees that will continue through the formal consultation process.

"This has been an extremely difficult and lengthy period for all concerned, with continuing uncertainly for our employees across Scotland and it has been particularly hard for people in Kilmarnock and Hurlford and at Port Dundas.

"I fully appreciate that the decision that we cannot take forward an alternative will be another blow to their hopes, but I believe we now need to continue our engagement with our employees and their unions about how we move forward from here."

Diageo's proposals - which are backed by a £100 million investment in the Scottish business - would see an overall reduction of up to 500 jobs.

The closure of Kilmarnock and Port Dundas would lead to the loss of up to 900 jobs over the next two years, while around 400 new jobs would be created through the expansion of the Leven packaging plant in Fife. A new coopering centre would also be created in Clackmannanshire.