Nestlé has said it will cut more than 500 jobs across two confectionery facilities in the UK amid a plan to close one of the plants in the north-east city of Newcastle.

The world’s largest food company said 475 jobs will go at its Fruit Pastilles brand site in Fawdon, Newcastle, as it proposes to permanently shut the factory toward the end of 2023.

Nestlé said it plans to invest GBP29.4m (US$40.9m) at plants in the northern cities of York and Halifax to support the company’s “long-term success in an increasingly competitive category”. However, that means a further 98 jobs will be eliminated at the KitKat chocolate factory in York as the company moves to improve efficiency.

The Halifax plant is earmarked for GBP9.2m of the GBP29.4m to equip the facility to take over most of the production from Fawdon, while the remainder will be transferred to other Nestlé sites in the UK and Europe, the company said in a statement today (28 April).

Nestlé's York factory will get GBP20.2m of the investment allocation to "modernise and increase production of KitKat in the city where the brand was first created in 1935".

Confectionery is the largest business for Nestlé in the UK and Ireland, although the company did not break down figures for the country segment in its recent first-quarter results. At the group level, confectionery sales were flat at CHF1.7bn (US$1.8bn) versus CHF1.63bn a year earlier out of total company-wide sales of CHF21.1bn for the quarter.

"Our Fawdon factory is home to many smaller, low-growth brands and maintains a diverse and complex mix of production techniques. In contrast, our factories at York and Halifax have clearer specialisms and manufacture some of Nestlé's biggest brands," the company said.

"The decision to propose Fawdon's closure follows significant investment and a sustained effort by the factory team to reduce that complexity and introduce new products in recent years. The skilled and dedicated team at Fawdon have worked tirelessly to deliver those changes and these proposals are absolutely no reflection on their efforts."

Nestlé said it has revealed the proposals ahead of implementing the plans to allow time for consultation with employees and trade unions. The company said it will provide support to the affected workers.

Trade unions GMB and Unite have criticised the proposals, pointing to the efforts among workers to keep the factories operational during the coronavirus pandemic.

Ross Murdoch, the national officer for GMB, said: "To ruin hundreds of lives in a ruthless pursuit of profits, to the very workers who've kept the company going during a global pandemic, is sickening. It's corporate greed at its worst – GMB and Unite will fight for every job." 

His counterpart at Unite, Joe Clarke, who is responsible for the union's presence in food and drink industry, added: "The news about Nestlé's plans for its respective sites in Newcastle and York is a cruel body blow to the dedicated workforces, their families and, more widely, the regional economies. 

"We will be asking for an urgent meeting with the management to ascertain the business rationale for these decisions from a multi-national company which is highly profitable."

Nestlé said the proposed changes would "create a more efficient manufacturing footprint and, in turn, allow greater strategic investment in Nestlé's biggest confectionery brands".

It added: "We believe these proposals would strengthen the UK's position as a critically important hub for Nestlé Confectionery and home to the expert manufacture of many of our most popular brands including KitKat, Aero and Quality Street."