Page last updated at 14:52 GMT, Wednesday, 9 September 2009 15:52 UK

Johnnie Walker jobs plan rejected

Johnnie Walker logo
Diageo said all discussions on its business plan are now "closed"

Drinks giant Diageo is to press ahead with up to 900 job cuts after rejecting a government-backed alternative.

A business case was submitted to the firm last week for keeping its Johnnie Walker bottling plant in Kilmarnock and Port Dundas distillery in Glasgow.

But Diageo said the proposals were not commercially viable and its dialogue on the matter was now "closed".

Those involved in the campaign to keep the plants open have described Diageo's decision as "catastrophic"

The Johnnie Walker brand has been linked with Kilmarnock since 1820.

It is the most widely distributed brand of blended Scotch whisky in the world.

Diageo announced plans in July to cut 700 jobs by closing its bottling plant at Kilmarnock and a further 200 with the closure of its Glasgow distillery.

It said the job losses would be partially offset by the creation of 400 new jobs in Fife.

The proposals met widespread opposition and a multi-agency Johnnie Walker taskforce - bringing together trades unions, local authorities, Scottish Enterprise and politicians - was formed to fight the closures.

I appreciate their efforts but the taskforce has no workable alternative to deliver what Diageo needs
David Gosnell
Diageo Global Supply

The campaign to save the jobs suffered a blow when an independent report, commissioned by Scottish Enterprise, apparently concluded that Diageo's plans were "sensible".

The analysis by BDO Stoy Hayward was not made public as it contained commercially sensitive information.

However, it is understood to have said it could cost Diageo millions to stay in Kilmarnock, rather than close the plant and open a new one in Leven, Fife.

The taskforce proposals suggested the closure of the existing Hill Street packaging plant in Kilmarnock and the construction of a new plant on a greenfield site near the town.

It was also suggested that the closure of the Port Dundas grain distillery in Glasgow could be delayed pending a change in market conditions.

'No alternative'

But David Gosnell, managing director of Diageo Global Supply, said the alternatives were not commercially viable.

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."

Diageo campaigners at the Scottish parliament
The taskforce staged a high-profile campaign to save jobs

The drinks giant said it had "three key reasons for rejecting the taskforce proposals".

The firm said there would "still be a significant economic gap" that would "embed inefficiencies" which in turn would "put at risk further investment" in Scotland.

It said the taskforce presented "no alternative" for Port Dundas distillery other than "delaying our action".

It also said that under the proposals there "would still be a net loss of around 500 jobs through a reduction in the Kilmarnock workforce and the closure of Port Dundas" with "no investment at Leven and minimal job creation there".

These 900 job losses are a massive blow to the Scottish economy, but this will be catastrophic news for the workers at Diageo's Kilmarnock and Glasgow plants
Tavish Scott MSP
Scottish Liberal Democrats leader

Mr Gosnell added: "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.

"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."

He said the company "now regards the dialogue on its business case with the Scottish Government and the taskforce as closed" and would now "re-focus on the formal consultation process with the unions representing its employees".

Diageo's decision to press ahead with job losses has been described as "deeply disappointing" by Finance Secretary John Swinney.

"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," he said.

"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."

Opposition disappointment

Scottish Labour Leader Iain Gray said Diageo staff had been "let down by the SNP Government".

"I am deeply disappointed that John Swinney has been unable to bring forward a plan capable of convincing Diageo to save these jobs," he said.

"My thoughts are with the workforce and their families and we need to hear from the Scottish Government and Diageo that they will not be abandoned."

Scottish Conservative leader Annabel Goldie said: "We are very sad that the Scottish Government and Diageo have not been able to find another way forward.

"The UK Labour Government and the SNP Scottish Government need to put their differences aside and start working together to do everything they can to help people who lose their jobs as a result of this announcement."

Scottish Liberal Democrat leader Tavish Scott MSP said: "These 900 job losses are a massive blow to the Scottish economy, but this will be catastrophic news for the workers at Diageo's Kilmarnock and Glasgow plants.

"Everyone needs to pull together to help those who have lost their job today get back into work as quickly as possible."

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