"Irritated" is the first word of the Times article on the recent spat between the Scottish Government and Diageo over the expected loss of some 500 jobs.
It's an appropriate word as the conversation has dragged on for too long now and, as if Scotland doesn't have its own international relations problems already, it is well and truly time to leave Diageo be to make its own mind up what is best for its future as a company before we cultivate a reputation for being anti-business.
I mean, how cheeky is it to go to a company that's just made a £2bn operating profit and propose a new business plan? Particularly when the Managing Director of the company almost immediately dismisses said plan as not detailed enough.
Per a Government spokesperson:
“The details of the proposal put to Diageo will focus on continuing production activity at Port Dundas in Glasgow and the development of a new bottling plant in Kilmarnock on a greenfield site.
“The plan is detailed, deliverable and the result of the joint efforts of the taskforce — including unions, Glasgow and East Ayrshire Council, local politicians and Scottish Enterprise.”
That's fine, but I think someone, somewhere is putting too much faith in our councils and unions. Finance and forecasting is a different ball game in the depths of Diageo plc I reckon.
Don't get me wrong, along with local MP Des Browne, the SNP have fought the workers' corner manfully and admirably but the party has to tread very carefully with this issue or it will find it is not only Diageo who are finding it 'irritable' when it tries to push private companies around.
Aside from everything else, if the whole issue is left with Salmond and Paul Walsh (Diageo CEO) on bad terms, then the honest endeavour of the Scottish Government will have to be penned down as a fail.
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6 comments:
I think the business side should now be left to Diageo but the politicians focus on legislation.
Which parliamant can introduce primary legilation regarding the branding and requirments for 'Scottish' Whisky?
The government needs to protect the Scottish Whisky' brand, what this means to the consumer and the sector as a whole in the same way that the French protect their industries.
The Scottish Whisky Association is part of the problem: It IS Diageo.
Diageo, in the pursuit of profit, has been abusing the indusrtry through various means since a while.
Have a look at this article:
http://forargyll.com/2009/07/diageo-the-real-issue-is-the-scotch-whisky-industry/
An interesting article and David provides futher thoughts for cognitive reasoning!
I'm a Springbank/Macallan man may have to watch what else I drink to ensure purity.
I have a choice and drink a small amount of good quality malt.
Surprised about the vodka situation, mind you they brew Gin in Spain - and at 5 Euro a bottle who cares - didn't it originate in India?
I wonder who has the balls in Holyrood to take the decision needed to protect our heritage yet not stiffle business, but then Diageo don't like competition, do they?
CD
I tend to agree with Jeff here. Its time to say 'it was worth a try' and move on. However I find the whole episode sadly reactive. Kilmarnock is my better half's home town, and it has been going slowly downhill, with zero inward investment, for as long as she can remember. The sad fact is that Diageo is the last major employer left. Rather than fighting a losing battle, the government should be looking at how it came to this, and trying to change it. Kilmarnock isn't alone. I'd nominate Hawick as the Scottish Borders equivalent, for instnace, and I mean no slight on Hawick by say that. Scottish Enterprise have been so focused on creating jobs in Fife and Lanarkshire they seem to have forgotten the rest of the country.
But its not just Scottish Enterprise. The one thing that Fife and Lanrkshire have, their USP, is transport links the rest of the UK. The M77 may help Kilmarnock get some business as we come out if recession. Hopefully the govt will put a few things in train to help here. The usual answer is a business park, and that is something that is missing in Ayrshire. Unfortunately, many other areas, such as Hawick, there is even more work needing done first.
Good points about legislation, I certainly overlooked that relevant point and I agree with Mav, there is a definite short-termism about this episode although even if the area has been steadily going downhill over the years, a sudden loss of 500 jobs is bad in anyone's book.
Someone pointed out to me recently that Agilent has went from a 2,000+ workforce to a few hundred in the space of a year or two.
A cynic would say its products aren't 'Scottish' enough to fight for as hard for as whisky is...
Dissagree strongly and I'm totally disgusted by Paul Walsh's threats to the Scottish People. Something of a pot and kettle interface there.
If ther recession and the potential for job losses from a company £2 billion in profits is boring you, fell free to let us know. But im afraid that Diageo is only a small part of a bigger debate about what should Scotland make/do, and the protection of its historic products.
I happen to think that Diageo are making a mistake if they want to pull out of Kilmarnock. I drew the parallels with Robertson's on my own blog, im sure there are other examples of companies who left the area they originated in and found that they lost touch with what made their product special.
If it really makes a difference, why does no-one seem to mind that 80% of Johnnie Walker whisky is now packaged in Shieldhall? I'm not convinced by the importance of Kilmarnock either. I suspect that the cases where people are asked about Johnnie Walker because they come from Kilmarnock is more to do with others knowing of Kilmarnock because of Johnnie Walker rather than the other way round. Consumers would probably just start asking East Fife supporters instead.
As for Diageo's recent results, once you strip out exchange rate movements, their sales were flat. Their profit was at a similar level to the previous year as a result of changes in the price/mix and cost cutting across their production process.
However, although the overall business has been resilient, Scotch net sales fell 3%, with Johnnie Walker net sales falling 6% and production 11% (as a result of destocking and consumers trading down to less premium brands). Just because the company did well, does not mean Johnnie Walker did too.
Ultimately, employment is subject to the requirements of the service. Why should any profit-seeking organisation retain an inefficient plant for the sake of a small number of employees (5% of the workforce). Diageo don't just want to replace the existing plant, they want to consolidate their 3 plants (Shieldhall, Leven and Kilmarnock) into 2 for economies of scale.
One other issue I find the hypocritical about this matter (and this applies across the political spectrum) is the number of people going on about how Whisky is a Scottish product and should be distilled, matured and bottled in Scotland. Yet I suspect they were delighted when Diageo brought production of various other national or regional spirits to Scotland.
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