Page last updated at 21:57 GMT, Thursday, 9 July 2009 22:57 UK

Diageo defends 900 job cut plan

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Diegeo executives Andrew Morgan and David Gosnell defend plans to cut 900 jobs in Kilmarnock and Port Dundas.

Drinks giant Diageo has defended plans to cut 900 jobs in Kilmarnock and Glasgow in a restructuring move.

Two executives from the company said that focusing operations on other Scottish sites would save £20m a year.

In a BBC Scotland interview, Andrew Morgan and David Gosnell promised that bottling of the Johnnie Walker whisky brand would remain in Scotland.

They said they remained open to alternative suggestions, but did not envisage any change of heart.

Diageo plans to cut 700 jobs by closing its bottling plant at Kilmarnock, with another 200 to go with the closure of the Port Dundas distillery in Glasgow.

It says 400 new jobs will be created through a £100m investment, mainly at its packaging plant at Leven with some packaging also transferring to the Shieldhall site in Glasgow.

There may be something we haven't thought of. Maybe they can come up with some new grants that weren't available to us
Mark Gosnell
Diageo head of global operations

The Cameronbridge distillery in Fife would also be expanded.

Mr Morgan, president of Diageo Europe, said the decision to close the Kilmarnock plant had been taken "extremely seriously".

"This has been a very big decision for us. We knew it would have a big impact in Scotland. It's all about the competitiveness of one of Scotland's greatest exports," he said.

Global head of operations David Gosnell said they had considered investing in the plant and building a new plant close to the town, but the plan they chose was the most efficient.

Asked by BBC Scotland's business editor Douglas Fraser if there was anything the Scottish Government could do to change their mind, Mr Gosnell insisted it was not a "done deal".

"We've looked at every opportunity we can think of, but we also believe there may be something we haven't thought of. Maybe they can come up with some new grants that weren't available to us."

Open mind

But he warned: "I would find it very difficult to see what they could come up with."

Mr Morgan added: "We have done a very thorough review. We've considered all the options that we can come up with and going to the two-plant configuration is by far the best way for us to remain competitive for this tremendous brand.

"We go, though, into the consultation with an open mind."

He said a planning application to build flats on some land it owned in Kilmarnock was unrelated to the restructuring plan and did not indicate they had decided they were moving on.

Bosses at the world's leading drinks company may sell into 180 different markets, but there's one in particular that is causing them a pain in the corporate neck
Douglas Fraser

He acknowledged the loyalty of the people of Kilmarnock. There would be no compulsory for 12 months and nothing was likely to happen for "a couple of years".

He added: "In working with those people over the coming two years we can have an outcome that is good for the people of Kilmarnock

"We will be very keen to leave some kind of legacy in Kilmarnock that does recognise the links between Kilmarnock and in particular the Johnnie Walker brand and we want to consult with local people on what that might look like."

Mr Morgan said the restructuring was about efficiency and did not indicate any plan to take bottling overseas where excise structures sometimes favour locally packaged products.

"We have almost always found that that is outweighed by the fact that the consumer likes a bottled in Scotland brand," he said.

"I don't see us moving any further in the direction of bottling outside Scotland."

Social consequences

Responding to the interview, Scottish Finance Secretary John Swinney said the consultation over the plan must not be "a sham".

He said: "There are more than five million people in Scotland who believe the company must understand the social consequences - particularly in Ayrshire - of their financial proposals are not acceptable to the people of Scotland."

SNP MSP for Kilmarnock Willie Coffey said the way to reward the loyalty of the town's workforce was to abandon the plan.

Local Labour MP Des Browne has secured a House of Commons debate on the issue, which will take place on Wednesday 15 July.



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