Government offers firm new factory to save links with Kilmarnock

Published on Wednesday 8 July 2009 22:02

A NEW factory could be built on the outskirts of Kilmarnock to encourage drinks firm Diageo to retain its links with the Ayrshire town.

The idea was proposed by Scottish Secretary Jim Murphy yesterday in face-to-face talks at the Scotland Office in London with Diageo chief executive Paul Walsh.

The firm is proposing to close its bottling plant in Kilmarnock and transfer the work elsewhere, placing 700 jobs at risk. It claims the plant's old-fashioned operations make the task of bottling less cost-effective than at other sites.

Scottish Enterprise, the regeneration quango funded by the Scottish Government, is pulling together options to encourage Diageo to remain in Kilmarnock. This will be based on figures Diageo has promised to pass to an independent third party to allow cost-effective proposals to be made, while retaining the company's commercially confidential secrets.

This business case is expected to be put to Diageo when First Minister Alex Salmond meets Mr Walsh on 22 July.

Mr Murphy said he received assurances from Mr Walsh that the company was "genuinely open to suggestions" on how to reconfigure its operations north of the Border.

Mr Murphy proposed Scottish Enterprise funded a new plant, with East Ayrshire Council speeding through planning permission.

But this could only go ahead if Diageo, which made a global profit of around 1.6 billion last year, offered to guarantee a set number of jobs in return for the public investment.

Mr Murphy said no figures were discussed as the proposal was in its infancy but they would have to be "substantial".

He told Mr Walsh: "To have nothing in Kilmarnock would be a denial of your heritage – walking away from a town you have had contact with since 1820."

The Scottish Secretary admitted that Diageo "would have to be incentivised to stay" but said Mr Walsh showed a willingness to look at all the options.

Mr Murphy said: "I said, 'People are now debating your commitment to Scotland'. He said, 'It's more expensive to be in Scotland but we are going to stay in Scotland'."

Mr Murphy is due to meet John Swinney, the SNP finance minister who is regarded as key to finding a solution, today. Discussions will follow on Monday with Scottish Enterprise.

MPs of all parties are seeking to play the "heritage card" by convincing Diageo that Johnnie Walker would be a less attractive brand if it had no remaining links with Kilmarnock.