It must be a very difficult balancing act for governments when major industries decide to close down sections of their business or move them to other areas. There is a fine line between being seen as effectual and being seen as reproachful and initially the Scottish government took too public a stance in the decision of Diageo to close down its Kilmarnock bottling plant and their grain distillery at Port Dundas in Glasgow.
However, John Swinney organised a task force with a remit to provide Diageo with alternatives.
It appears Diageo have dismissed the proposals saying the government-led taskforce had failed to address 'basic economics' and provided a poor business model that neither understood the marketplace in which it operated nor how the proposals would be funded.
I don't believe the taskforce was incompetent and the proposals were so poor. What I do believe is that Diageo made their decision some time ago and were intent on processing their plans.
On Newsnicht last night John Swinney explained his disappointment while Des Browne, the local MP (from a television studio somewhere in Washington DC), insisted Diageo would be contributing towards the social destruction their withdrawal will make to Kilmarnock and its people. He refused to give further details.
The MSM, the labour party and the tories seem determined to pin blame on the Scottish government for their inability to reverse Diageo's decision but Tavish Scott talked sense when he said on Newsnicht, "There was no point in a blame game - that won't bring one job back. Everyone needs to pull together to help those who have lost their job today."
Let us not forget Diageo say they will invest £400m in Fife and will also create 400 jobs there. It is to be hoped many of those skilled workers from Kilmarnock will be redeployed in Fife, thus reducing the impact on the close-knit town of Kilmarnock.
We must show the world that we welcome inward investment and if we want the global companies then we have to accept their terms. No proposal would have been good enough for Diageo to change their minds.
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I see the morning radio show on Radio Scotland is trailing a show later today, I think this morning, as following ( I paraphrase)
Andy Murray
Scotland (Football)
Diageo and Johnny Walker
I paraphrase
Does Scotland set its sights too high and do we need a dose of reality?
The SCottish cringe or what?
We are too wee, too stupid, too unskilled to expect anything good in life.
The hidden message is the we "need" England? We shall see, or hear.
Can you lot listen, phone in and gie em lalldy.
That'll be the 9am programme I should think Faux Cu. I'll tune in.
Sub R
Phone around and send in the Cavalry.
Burn their ears.
Get Alec Salmond to phone in and kick them around.
Rosie,
This is simple business maths and your last sentance is the key one.
Even I posted last month about the accounts of diageo, their size, portfolio, sales offices, sales valve and declared operating profit as a company.
What you dont see is the individual site P&L accounts.
Now the loss of Kilmarnock will be a sad sad blow to the local economy but if we see the site P&L we might get an insight into the reasoning.
It just may show despite the fact Diageo made rakes of cash globally, Kilmarnock may have run at a loss.
What we also do not know is what has been said to unions previous about working prctise changes etc to reduce this loss. Maybe 30 years of union rule is keeping costs to high.
All they are shouting is huge company why close. Eck is using it as a political wedge.
If I had shares I would want all site in the black.
Sadly we wont get to see site P&L so may never know.
I await the hate mail to come flooding in.
Faux Cu, there were plenty nationalists on the programme. I think the BBC had trouble finding a unionist!
Also there was a woman with a in depth knowledge of education. She was saying the level of university education needs to be lifted because too many students do little work and feel entitled to a uni place rather than treating it as a privilege.
She's spot on.
That's very true LotF, Diageo have their reasons for this closure and I doubt we'll ever hear it.
We've reinvented before and we'll do it again but we could do it faster if we weren't controlled by London.
LOTF
I have known Diageo over my working life, in its present manifestation and the old DCL one.
Diageo makes heeps loads of money and they quite simply have two commitments, one to their shareholders and the other to the net present value of their of their future revenues and dividends.
They have no commitment to the Scotch Whisky industry or to Scotland beyond the use of it as a profit centre.
If Scotch whisky had not been defined by Act of Parliament they would have moved their brands to a lower cost production centre years ago to maximise their revenues.
If Diageo could make more money from Irish Whiskey, Cognac, Bourbon, Cachaca or Chinese Rice Wine or Indian Whisky they would be there yesterday and Scotch would slip down their commitment to be eventually harvested by sale to someone else.
If you do not believe me I have a tale to tell about how they tried to trample roughshod over the definition and customs of nomenclature of Scotch.
They developed the brand "Cardhu" which was the product of a single distillery and thus a "single malt" by custom and practice within the industry and by common perception by the public. "Pure malt" was never defined within the Scotch Whisky Acts and was actually a definition by custom and practice.
The Cardhu malt was a marketing success and demand outstripped supply.
Diageo's answer was not to restrict sales to production but to keep the brand, blend other malt whiskies in it and just call it a "pure malt." That in the industry is a vatted malt but centuries old traditions are just customs and practices that meant nothing to their short term market valuations.
http://www.timesonline.co.uk/tol/news/uk/scotland/article1041451.ece
I would venture that Kilmarnock is not losing money; it would never to have been allowed to reach that situation. Kilmarnock is not making enough money. This is an arcane definition because accountants can shift costs and load them into whichever account they want to. That is what accountants do.
How it works, and has worked before in that group, is that each profit centre, howsoever they are defined in accounting terms, is given financial objectives on profitability; profitability as defined by the "accountants".
Local management, who really have limited manoeuvrability, can really only go for economies of scale. Close and consolidate.
I venture that the Kilmarnock site has already been earmarked, if not presold, for housing. I bet the site was worth more for other uses than in its existing one.
Guinness (Diageo)sold their Park Royal Brewery in London for housing on that basis as did Scottish Brewers with some of their breweries in Edinburgh (not Diageo this time)
I say "accountants" but they may or may not be actually qualified accountants, just people whose focus is on the accounts and how that plays with the stock market. These people could have been bankers, money traders, accountants, grocers (HBOS?), philosphy graduates or even oriental studies specialists (honestly). It does not matter, they have to be supreme masters of marketing or finance and dedicated to the bottom line.
Any "commitment" to communities in Scotland is, as we have seen, all smoke and mirrors.
The definition of Scotch Whisky states, in general terms, how whisky if made and stored in a particular manner qualifies fir the Appelation Scotch. Scotch Wisky is not distilled, Plain British Spirit is distilled which qualifies to be called Scotch, as I have said after a period of time in wooden casks in Scotland. It need not be bottled in Scotland and "Blended Scotch" (Johnnie Walker)is also not defined in terms of the ratio of malt to grain whickies.
We in Scotland need to have the power by Act of Scottish Parliament to further protect the Appelation of Scotch by way definition extension.
I believe that during the protected closure negotiations it was rumoured that Diageo would shift their bottling of their Scotch brands to Ireland.
I wonder if Gordon Brown would have rushed through a change of the Scotch Whisky Acts to define in bottling. I doubt it.
I could go on and on but this will have to do for now.
I have just watched Iain Gray at FMQT
The man is a compete DIDDY.
Since April all these jobs have been lost in Scotland because of the SNP.
Nothing to do with hos masters Brown and Darling.
He is not worthy to be an MSP never mind the leader of a political party.
vapid, banal and keich
Many thanks for your comments Faux Cu. I'm sure other readers will appreciate them as well.
I too have just finished watching FMQs and just can't believe how astoundingly mediocre Iain Gray is.
As I'm out until evening, my wee summary will have to wait. Don't be upset now. :)
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