Waterford switch to China to cost 1,000 Potteries jobs

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Waterford Wedgwood is closing two factories in the heart of the Potteries with the loss of 1,000 jobs, and is moving production for some of its products to China.

The ceramics and glassware manufacturer is ending 120 years of production at its two Johnson Brothers plants in Stoke-on-Trent.

Johnson makes moderately priced earthenware for the Waterford group, including a range designed by the BBC's Changing Rooms presenter Laurence Llewelyn-Bowen. It has, however, been loss-making for a number of years.

The production of Wedgwood earthenware will move from the Johnson plants to Wedgwood's Barlaston factory, just outside Stoke. This move will save 275 UK jobs. Production of Wedgwood's trademark bone china and porcelain, which has been made in Stoke for 250 years, will remain in the UK. The company will still employ 2,400 people in Staffordshire.

"This is another savage blow for the Potteries area, coming on top of the crisis at Royal Doulton," Paul Farrelly, the MP for Newcastle-under-Lyme, said. "It is now time for regional development money to come in to the Potteries to help the area hold on to its skills and manufacturing base."

Royal Doulton, which is based in Stoke and has cut more than 2,500 jobs in the past five years, outsourced production to Indonesia, Bangladesh andChina last year.

Waterford has spent 18 months researching production facilities in the Far East and has now settled on a plant south of Beijing. Some production will also be outsourced to Thailand and Malaysia. The company is meeting union representatives this week to discuss whether the job cuts can be minimised and kept to voluntary redundancies. It is also negotiating severance pay.

Geoff Bagnall, of the Ceramic and Allied Trades Union, said yesterday: "We are deeply shocked by the announcement. These are considerable job losses and the whole region will be devastated. It has been a difficult time for our membership - it has halved in seven years as more and more jobs go."

Redmond O'Donoghue, the company's chief executive, said the move to China would generate cost savings of up to 70 per cent for the group. It will, however, take a €65m (£47m) charge over the next two years for the relocation.

"We did not take this decision lightly. We did everything we could to make Johnson profitable and it is with much sorrow that we are closing the factories. But it was a drain on the group and put in jeopardy our other 2,400 jobs in the Stoke area as well as the whole future of our business in the UK," Mr O'Donoghue said.

The decision came as the group, chaired by Sir Anthony O'Reilly, slashed its full-year dividend to 1.9 cents from 3.1 cents last year and warned that trading remained difficult. Sales for the year were down 4.6 per cent, and in April and May slipped by 10 per cent.

The deficit in the group's pension fund has leapt to €162m from a deficit of €56m on an FRS 17 basis in March 2002. The group has returned to profitability, posting a pre-tax profit of €7.2m from a €53.5m loss in 2002, but still carries €356.7m of debt.