Business as usual at Diageo despite bottling plant controversy

By Guy Montague-Jones

- Last updated on GMT

Related tags Diageo Johnnie walker

Diageo insists that suppliers and customers will be unaffected by plans to close its Kilmarnock bottling plant as pressure mounts from unions and politicians to reverse the decision.

Back in July, Diageo revealed its intention to close the Johnnie Walker bottling plant as one of a series of cost cutting measures in Scotland, which also include the closure of its Port Dundas distillery in Glasgow and the outsourcing of some warehouse operations.

Designed to save the company $120m annually, the plans will cost $200m in charges and result in a net reduction of 500 jobs.

No implications

The restructuring is wide-reaching but a spokesperson for Diageo told Beverage Daily that output will be unaffected and that no implications are expected for customers or suppliers.

But whether the plans will turn into reality is in doubt as community groups, workers and government put pressure on Diageo to make concessions.

First Minister Alex Salmond led thousands of people through the streets of Kilmarnock in protest at the end of July.

Alternative plans

Salmond, who has called plans “unacceptable”,​ has since met with Diageo’s CEO Paul Walsh to discuss alternatives. After an initial meeting, Walsh later said on BBC Scotland that Diageo would listen constructively to the alternative business case put forward by the First Minister.

Trade union Unite is also pushing for a change of plan having accused the drinks company of being “drunk with greed”. ​Unite representative Pauline Doyle said the union was now gathering support for its campaign from a number of fronts including other unions and local groups.

Currently Diageo is in a 90 day consultation period with workers and Doyle said it remains to be seen whether the company will change its mind. She said it is likely to be a long campaign and that it sincerely hopes the company changes its mind.

Business justification

Meanwhile, a Diageo spokesperson said that no changes have been made to the initial plans. Explaining the plans, the company representative said that after reviewing operations Diageo concluded that it had 38 packaging lines, and needed only 28 lines.

To realise this potential efficiency gain Diageo decided to close the Kilmarnock plant citing infrastructure problems. The bottling plant is right in the middle of the town and the Diageo spokesperson said this location coupled with the age of the plant presenting high logistical and infrastructure costs.

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