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Business News

Diageo under attack for job losses

The Scottish Government hit out at drinks giant Diageo yesterday for turning down a proposal to save hundreds of jobs.

The company has rejected a proposal put forward as an alternative to 900 planned redundancies, saying the plan did not address "the basic economics" of its business.

But John Swinney, the Scottish Finance Secretary, said: "I really do think there was a strong and credible, workable alternative. Diageo chose not to take it."

He questioned the "corporate social responsibility" of the drinks giant.

In a further barb, he contrasted the lack of warning that the Government received of Diageo's plans with the warning given by contact lens maker Bausch & Lomb, which plans 500 job losses at Livingston, West Lothian.

Diageo said it was pressing ahead with plans to close its Johnnie Walker whisky bottling plant in Kilmarnock, with the loss of 700 jobs, and the Port Dundas distillery in Glasgow with the loss of a further 200 jobs, although 400 jobs would be created at a plant in Fife.

A government-backed taskforce suggested building a new bottling plant in Kilmarnock and delaying the Port Dundas closure, but the firm said this was not a workable alternative.

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."

Mr Swinney told BBC Radio Scotland's Good Morning Scotland that the gap between the taskforce proposals and Diageo's plans was about £3m to £4m, before taking into account any public sector support.

Diageo had recently announced £2bn profits, and the cost to the public purse of the Kilmarnock closure would be £14m a year, he said.

"I was appealing to Diageo to accept they had a corporate social responsibility, which they certainly promote in their material and their publications, to the people of Kilmarnock who have served them well," he said. "I am deeply disappointed they have not accepted that."

Of Diageo's argument that the plan failed to address the economics, Mr Swinney said: "There's two points of basic economics at stake in this.

"The first point is the fact that the Kilmarnock economy will be devastated and the Scottish Government and the UK Government will have to pick up the pieces, at a cost we estimate at £14m a year.

"The second point of basic economics is that when you come to a proposal with a financial gap of let's say £3m to £4m, and a company is making profits of £2bn, I don't think it's an unreasonable proposition to say to the company you have a corporate social responsibility to protect communities that have served you well."

Mr Swinney said the Scottish Government had three weeks of private talks with Bausch & Lomb before the firm made its statement.