Smith & Nephew plans to close five factories

Click to follow
SMITH & NEPHEW, the healthcare and toiletries company, is shedding 574 jobs as part of a restructuring programme that will mean closing the last denim manufacturing plant in Britain.

The group, whose products range from Elastoplast to hip replacements, is closing five factories in Lancashire, four near Burnley and one close to Preston, over the next nine months.

As well as ceasing the manufacture of denim it is also pulling out of spinning cotton into yarn, which was used for denim and other cloth products.

The closures mean the medical fabrics division will be left with two sites, at Brierfield in Lancashire, producing cotton wool - for which Smith & Nephew has more than half the British market - as well as fabrics for plasters and other surgical dressings. It plans to invest pounds 6m in these sites over the next two years.

John Robinson, chief executive, said the reorganisation was driven by 'cost-competitiveness, not recession'. The cost of labour and cotton meant the business could not compete with suppliers in Asia and the Far East, which are now the main suppliers of denim internationally.

The denim business is a legacy from the 1950s, when the group bought some of its key suppliers. Although it had been trading profitably results have suffered in the past two years because of competition from the Far East.

The redundancies mean that numbers employed in the division will almost halve from the present 1,200. But Mr Robinson said the programme should have only a small net cost because it expected to be able to sell the sites.

Although there will be no significant savings this year, margins should be increased over the next two to three years.

The closures are the latest in a series of restructuring moves by the group in the past few years, aimed at focusing on the international health care market.

In November it sold its US pharmaceuticals business, Solo-Pak, and last month it disposed of its Nivea skincare business.

The shares lost 0.5p to 156.5p.