Economic impacts of Diageo restructuring

In July 2009 Diageo announced a major restructuring of its Scotch Whisky operations in Scotland, involving the closure of their Kilmarnock bottling plant and related facilities in Port Dundas, and the creation of new facilities in Leven and Clackmannan. EKOS was commissioned by Scottish Enterprise (SE) and East Ayrshire Council to carry out an economic impact assessement of Diageo’s proposals. The focus of the research is primarily on understanding the potential implications of the restructuring plans.

The following research methods were employed: consultation and meetings with Diageo; collection and analysis of company performance data; an economic impact assessment; a review of relevant local economic and labour market baselines; and consultation with a range of relevant organisations including relevant trade unions, the SE Food and Drink Team, the SE Economics Team, the Federation of Small Businesses, Jobcentre Plus, Skills Development Scotland, Business Gateway, Glasgow City Council, Fife Council, and Glasgow North Regeneration Agency.

It was estimated that: the closure of the Kilmarnock plant could result in 1,120 FTE job losses in Scotland of which 780 FTE would be in Kilmarnock; the closure of the Glasgow plants could result in 279 FTE job losses in Scotland of which 177 FTE would be in Glasgow; the construction of new facilities in Leven and Clackmannan could create 74 FTE jobs in construction, and an extra 44 jobs in total in Fife and 163 in Scotland; the loss of GVA in Scotland could amount to £14.2 million per annum; FTE job losses overall could be 710; and the costs of job losses to the public sector could be around £10-£20K per person per annum but could be exacerbated by the loss of tax-base, increased benefit costs and long-term health effects.

There were no recommendations as this was not in the remit of the evaluation.