Diageo and RSA

RSA is Regional Selective Assistance which offers taxpayers' money to certain areas of Scotland which have been designated Assisted Areas.

Like all business who met the criteria, Diageo applied in 1999 for a grant and received £1m towards the expansion of its Kilmarnock plant - which is now to close with the loss of 700 jobs.

Then in November 2001 the then labour/libdem Scottish government awarded a further £1.6m towards the cost of a bottling line at Leven in Fife, where the firm plans to boost its operations.

Patrick Harvie MSP has called Diageo "extremely disingenuous" for accepting public funds to protect jobs at the Johnnie Walker site in Kilmarnock - jobs to be axed in favour of investment in Leven. He also hit out at the further grant used by the company to safeguard jobs at Leven, which he claimed undermined Kilmarnock's position.

However, Tricia Marwick MSP for Central Fife, said the company had worked within the rules.

Mr Harvie added: "Diageo have apparently persuaded successive ministers to ignore their massive profits and to use our money to fund their redundancies.

"Scottish Ministers must now promise not to squander any additional public money in this way.

A spokesman for Diageo said, "Diageo is totally comfortable that all obligations placed on the company in relation to these grants have been met."

Quite amazing how a company which yields massive profits is provided with taxpayers' money albeit legally. Reminds me of the Queen applying and receiving taxpayers' money from some other government scheme, for erecting miles of fencing round perimeter of Balmoral Castle - all in the name of keeping deer clear of the road.

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Diegeo Rejects Taskforce Proposals

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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The Diageo Business

As some workers looked on from the public gallery today, John Swinney updated the Scottish Parliament on the campaign to try to save the jobs of 700 Diageo workers. A further 200 workers may lose their jobs at the Glasgow distillery. Drinks giant Diageo announced at the start of July that it wants to shut the bottling plant in Kilmarnock but create 400 jobs at the packaging plant in Leven, where there would be an £86m expansion programme.

Mr Swinney also estimated that the cost to the public sector for every job lost may be as much as £20,000 a year.

"Nine hundred job losses in the west of Scotland, particularly in the current economic climate, represent a body blow, not only to the individuals likely to be affected, but to the wider community and local economies."

He said the fact that Diageo had not approached either the Scottish Government or Scottish Enterprise before it made its announcement is a "matter of real regret."

Alternative proposals were agreed last week by a task force which has brought together trade unions, local authorities, Scottish Enterprise and politicians. If adopted, the proposals may see production continue in the Glasgow distillery, together with a new plant created in Kilmarnock.

Where does this leave Fife? Central Fife MSP Tricia Marwick has warned that she will not accept anything that threatens the long-term future of Diageo's operations in her constituency as the row continues.

Mrs Marwick said "I will not accept any proposals which could affect the long-term future of Diageo's bottling plant in Leven or the distillery at Cameronbridge. My first duty is to the people who elected me to put their interests first and that is what I intend to do."

She added, "In my view a new bottling plant in Kilmarnock threatens the long-term future of Leven."

I'm sure we all understand the dilemma here but how much more interference will Diageo take before they throw up their hands and say, "Enough"?

One solution already muted is that Diageo could turn Kilmarnock into a Johnnie Walker Heritage Centre which could employ many of those whose jobs would go. People come from all over the world to visit whisky distilleries and with Johnnie Walker being a top seller there is no doubt it would quickly attract visitors.

As for Tricia Marwick, I applaud her stance. She ignored calls at the weekend to boycott the Diageo sponsored Johnnie Walker golf tournament at Gleneagles and attended to give her support.

Businesses will be watching this matter carefully. Our politicians can't afford to mishandle it and be more of a hinderance than a help.

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Scotch Isn't on the Rocks

According to Craig Robertson Scotch isn't on the rocks. He admits 2007 was an exceptionally good year for whisky and 2008 wasn't far behind, but industry expert Alan Gray says the depressing turnaround is firmly down to the global recession and that the underlying future for Scotch remains bright.

Alan, a whisky analyst at brokers Sutherlands of Edinburgh and author of the Scotch Whisky Review, is confident the Diegeo and Whyte & Mackay job losses, although devastating, are not a taste of things to come.

"The years from 2005 saw tremendous growth, an average of 6% a year compared with a norm of 1.5% and there was always likely to be a wee bit of reaction to that. Then the recession kicked in. The first quarter of this year saw exports down 18.8%, however in April and May they were down just 9.9%."

By its very nature, making whisky is a long-term business. A bottle produced today cannot be drunk for a minimum of three years and more likely nearer 10 if it's a single malt. Distillers are bound to think ahead.

Alan Gray has some wise words for Diageo.

"They're making cuts when they don't absolutely have to. I think it's the wrong thing to do. I believe there's a strong case for keeping Johnnie Walker open."

"From a heritage point of view they should be doing more with Johnnie Walker. They have a small visitor centre at Cardhu but it's a long way from anywhere. They should have a heritage home in Kilmarnock, really play up the link with the world's top-selling whisky."

"There are 195 million bottles of Johnnie Walker sold a year. That's a lot of whisky and lots of potential visitors. With an archive and a bottling plant where people could see Johnnie Walker or another whisky being bottled, they would be on to a winner."

Some very sensible and free advice from Alan Gray there. Are you listening Diageo?

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Kilmarnock United

I'm sure there are many people in Britain who didn't have a clue where Kilmarnock is or had even heard of the town. Now it's firmly on the map since the MSM picked up on the story of the good folk of Kilmarnock's struggle with the town's biggest employer.

For those of you who don't know the details, Kilmarnock is where Johnnie Walker whisky is bottled and the name Johnnie Walker has been associated with the town since 1820. The drinks giant Diageo want to close down the plant and move the bottling to Fife. They say the redundancies would be offset by the creation of 400 jobs at its packaging plant in Fife.

Thousands of people took to the streets on Sunday in a march and rally organised by East Ayrshire Council, part of the alliance seeking to reverse the closure decision.

The First Minister Alex Salmond, along with Des Browne and Annabel Goldie attended the rally. Mr Salmond said, "This rally marks another step forward in the joint campaign to perduade Diageo of the substantial economic advantages in retaining their long established and hugely beneficial links with the communities of Scotland. Next month the campaign will present an alternative business case to retain this iconic brand in Ayrshire and to demand fairness for their workers across Scotland and Port Dundas in Glasgow."

Annabel Goldie stated, "Across communities, across political parties and across organisation the message is: Do not tarnish the legendary reputation of scotch whisky and do not abandon the legacy of generations of skilled and loyal employees who have made Diageo the hugely successful company it is today. Corporate success should never exclude corporate responsibility."

The people of Kilmarnock ought to hold their heads up high because they've shown that community spirit is not dead. Radio phone-ins have recorded complete support for their case and I wish them all the luck in the world.

Source: BBC

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Diageo Update

With my thanks, RantinRab has brought to my attention the fact that Diageo planned months ago to turn part of the Johnny Walker plant in Kilmarnock into luxury flats.

They lodged a planning application to convert their staff car park into a residential development eight weeks ago.

Nobody within the council put two and two together by the sound of it. Read the story here.

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Labour and Unite Union let Diageo off the Hook

Some months ago I wrote about the distiller Diageo and their tactic of using loopholes in the UK system.

Today the Scotsman and the BBC are running articles about Alex Salmond 'snubbing' the chief executive Paul Walsh. It appears Mr Salmond's office requested an urgent meeting with Mr Walsh to discuss the crisis at Diageo's Kilmarnock plant. Mr Salmond was due to appear on the Daily Politics show on BBC2 yesterday and he was already in a London BBC studio when he was offered a meeting.

Mr Salmond decided to send Mr Robertson, the SNP's leader at Westminster, to the meeting. Mr Robertson, who has many whisky interests in his Moray constituency, described the discussions with Diageo as "constructive."

However, as Leaves on the Line (welcome back) writes, Iain Gray of labour and the Unite union have now decided to turn this serious issue into a political football by insisting the First Minister should have attended, thereby diverting the crisis from Diageo to Mr Salmond. Do they really think this is a smart move? Of course the Scotsman and BBC have aided and abetted them to the best of their abilities, although the Scotsman article reads far more like a labour press release than the BBC report.

I do hope the media return to subject - that is Diageo's plans at the Johnny Walker plant in Kilmarnock where 700 jobs are involved, plus 200 in Glasgow.

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