Dutch food group Vion has insisted it has no choice but to close its loss-making Broxburn meat plant in the UK.
The company’s plans to shut the Scottish site, which employs over 1,700 people, has drawn criticism from unions.
However, Vion said years of investment at the plant has not been able to stem its losses, which it described as “clearly unsustainable”.
Peter Barr, chairman of Vion’s UK operations, said: “This is an extremely sad day and one we have strenuously tried to avoid for the past four years, but the huge losses being incurred mean we believe we have no alternative. Every possible step has been taken to secure the future of the business but we are currently losing GBP79,000 (US$123,000) per day at the site, which is clearly unsustainable. There is significant over-capacity in the UK meat industry and market conditions are extremely challenging.”
Vion took on the plant in 2008 as part of its acquisition of UK firm Grampian Country Food Group.
The company has made a series of changes to its UK operations in recent years, with plants closed but others seeing investment. Vion was also hit by a strike this year in the UK after a pay dispute.
Vion signalled last month jobs in the UK could be under threat after it announced plans for cuts across Europe. The company’s profits fell last year on the back of higher raw material costs. It said yesterday its latest accounts show the financial performance of its UK arm had seen “a significant deterioration” year-on-year.
The Scottish government has set up a taskforce, including representatives of the Hall’s of Broxburn site, union officials, politicians and members of the meat sector to look at the future of the plant.
John Swinney, Scotland’s Finance Secretary, said: “The taskforce agreed that its key focus is maintaining continuity of business at Hall’s of Broxburn and we are entirely committed to that exercise. We have drawn together all of the relevant government agencies, local agencies and political representatives to focus on ensuring we deliver a positive economic future for the workforce and community of Broxburn. The taskforce has had a positive start and will take forward a number of practical actions before re-convening on July 30.”
At Vion, Barr said four years of work at the plant had not been able to make the site profitable.
“Over the past four years, we have restructured this plant, invested heavily in the site and have brought in new management from across the group in an attempt to stem the losses, which have arisen in part due to the complexity and inefficient layout of the plant. Regrettably the plant remains very heavily in the red despite our best endeavours.
“We have also invested significantly in a modern apprenticeship scheme at the plant which attracted the offer of grant support from the Scottish Government. While we were extremely grateful for the support offered, clearly, in the circumstances, we have not and will not be drawing on those funds.”
Vion will now take part in a 90-day consultation process with workers and union officials.