Devro to shut Scottish plant with loss of almost 100 jobs

Devro, the Scottish sausage-skin and food casings producer, plans to shut its Bellshill site with the loss of some 90 jobs.

The food casings firm has Scottish operations in Bellshill and Moodiesburn. Picture: Jeff Holmes

The group said it had undertaken a review of its global manufacturing footprint in an effort to gain “further efficiency improvements”.

While the firm proposes to close its Bellshill operation, it is looking to increase the range of products manufactured at its nearby Moodiesburn site in Lanarkshire and relocate some of the manufacturing assets from Bellshill within the wider group.

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Releasing a trading update, Devro told investors: “In line with our strategic priorities, the group has undertaken a review of its global manufacturing footprint with the aim to pursue further efficiency improvements, as well as to align available capacity to the group’s growth ambitions.

“Following consultation, we expect Bellshill to close during 2020 with the loss of circa 90 employees.

“Additionally as part of the global manufacturing footprint review and the intended closure of Bellshill the group is analysing its ongoing supply strategy.

“This is expected to result in non-cash exceptional impairment charges in [financial year] 2019, primarily relating to partial write-downs of the China and US plants.

“These plants continue to be an integral part of our global footprint and the revised supply strategy will enhance the agility and flexibility of the group’s supply chain whilst staying focussed on our long-term growth ambitions.”

Unite regional industrial officer Wendy Dunsmore said: "The announcement by Devro to close its Bellshill site with 87 job losses is devastating for the workforce.

"It’s vital that everything is done through this consultation period to ensure there are no compulsory redundancies. The company has stated that it wants to increase the range of products at its nearby site in Moodiesburn.

"We are calling on the company to guarantee job security and a future for the Moodiesburn site. As part of this process, it will be vital to protect and safeguard all modern equipment in Scotland."

Sales momentum

The Moodiesburn-headquartered food supplier noted that sales momentum had improved during the third quarter of 2019 with 1 per cent volume growth in collagen casings.

It added: “During the period we saw good trading in North America, where we benefited from continued growth in snacking categories, and also in China, due to continued strong growth albeit at margins below the average for the group.

“These positive performances were offset by a further deterioration in market conditions in continental Europe and weaker-than-expected sales in Japan. As anticipated, UK and Ireland and Australia saw similar trends to H1 2019.”

Shore Capital analyst Darren Shirley said: “Looking into Q4, management is guiding to a further ‘modest’ acceleration in volume growth. Management has also announced it is proposing to close its Bellshill site in Scotland and relocate some of the manufacturing assets within the wider group (we expect primarily into the Czech Republic).”

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