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Whyte & Mackay axes sixth of workforce

Published: 05/08/2009

By David Maddox

Whyte and Mackay plans to shed up to 100 jobs

Whyte and Mackay plans to shed up to 100 jobs


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RELATIONS between the Scottish Government and the country's whisky industry were last night described as being at "an all time low" after another major distiller announced plans to shed up to 100 jobs.

Whyte & Mackay yesterday confirmed a proposal to shed up to one sixth of its Scottish workforce, citing the recession and the "punitive UK legislative climate" as factors.

At the same time as announcing the job cuts, the company warned further jobs would go across the industry if the SNP administration pushes ahead with its plans for minimum alcohol pricing.

The situation prompted the Scottish Government to call a summit to discuss the state of the whisky industry. Major distillers, unions, industry bodies and politicians will all be invited to the event, first proposed by the GMB union.

Whyte and Mackay's announcement comes on top of the furore over Diageo's restructuring plans which could see 700 jobs lost in Kilmarnock with the closure of the town's Johnnie Walker bottling plant and another 200 in Glasgow with the Port Dundas distillery shutting down.

But industry insiders told The Scotsman that the government's rhetoric on Diageo combined with plans to introduce minimum pricing had left relations between the Scottish Government and one of the country's biggest industries "at an all time low."

They also warned that more companies in the sector, which represents 20 per cent of Scotland's exports, would be shedding jobs in the coming months because of the recession.

And they insisted that if their concerns over minimum pricing were not heeded, it would cost many more jobs because of the impact on domestic sales. It would also undermine the industry's efforts to stop foreign governments in important new markets like India from setting punitive import taxes.

"It is fair to say that the relationship is at rock bottom," one senior insider said. "Minimum pricing has a lot to do with that."

However, ministers insisted the Whyte & Mackay job losses had nothing to do with plans to introduce minimum pricing but were due to the recession and punitive tax regimes set by the Treasury.

The offensive is the strongest attack on the SNP's flagship policy to tackle Scotland's alcohol problem, but the Scottish Government defended the policy which is currently under consultion before being included in a public health bill.

"Minimum pricing is about tackling Scotland's £2.25 billion alcohol misuse problem by ending high-strength beers and ciders being sold for pocket-money prices, while not affecting the position of premium and quality products such as Scotch whisky," a spokesman said.

First Minister Alex Salmond has already been criticised by CBI Scotland for joining a march protesting against Diageo's proposals which is said to have soured relations between the government and company further.

Yesterday CBI director Iain McMillan welcomed the "more constructive response" to Whyte & Mackay in difficult economic times. And enterprise minister Jim Mather praised Whyte & Mackay for "handling a difficult situation in a socially responsible manner" and not closing any of its operations around Scotland.

But there were questions over why the Scottish Government had taken a different approach to the two companies, with suggestions that Johnnie Walker's connections to a key Labour/SNP marginal seat in Kilmarnock and the by-election seat of Glasgow North-east played a part in ministerial thinking.

However, the Scottish Government claimed the two cases are different because Whyte & Mackay plans to spread 85 job losses between different plants, mainly believed to affect the bottling plant in Grangemouth and the grain plant and distillery in Invergordon. A further 15 international sales jobs may also go.

A spokesman added that ministers did not agree with the assessment that relations were bad with the whisky industry or that the minimum pricing issue had affected it.

PROFITS GALORE IN NATIONAL DRINK

THE whisky industry is seen as one of Scotland's most profitable, particularly in the export market.

It is estimated that whisky represents about 20 per cent of Scottish exports.

In addition, figures from the Scotch Whisky Association (SWA) show that the industry directly supports 10,000 jobs in Scotland with a further 30,000 relying on it as farmers, suppliers and distributors.

The SWA estimates that the industry generates £800 millioln in salaries in Scotland and £1.3 billion in the UK. In the UK as a whole it is one of the top five manufacturing earners, with annual export revenues in excess of £2.8bn.

The SWA also points to the fact that more than £800m a year is generated for the Treasury coffers in excise duty and VAT while tax accounts for more than 70 per cent of the retail price of a typical bottle of whisky.

It also has enormous potential for expansion in new markets, particularly India and China.

At present, about 90 per cent of whisky is sold abroad. However, there are fears that marketing opportunities could be undermined by a combination of cheap copies of the product made abroad and punitive import duties set by foreign governments.

The rules state that a drink can be described as Scotch only if it is made in Scotland, but it is not stipulated that it must be bottled in Scotland, which has led to concerns over the export of jobs.

Already between 15 and 20 per cent of Scotch whisky is bottled overseas.

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