United Biscuits, the privately-held biscuits and snacks group, has announced plans to reduce its production capacity in the UK as part of its ongoing programme of restructuring.
UB announced earlier this week that it would be closing its biscuit production facility in Ashby de la Zouch in the English Midlands at the end of 2004 in order to transfer production to other sites and improve its operating efficiency. The move follows similar production rationalisations at the Fontaneda biscuit group in Spain.
Malcolm Ritchie, UB's chairman and chief executive, said: "We are a successful business, operating in an intensely competitive marketplace. That's why we sometimes have to make proposals like this. Hard as it is for the Ashby biscuits site, the reality is that we need to move production to our other biscuit sites which are bigger and have greater capacity for the investment we need to further modernise and grow our business."
He continued: "Implementing this proposal will, we believe, significantly reshape and improve our business. This proposal in no way reflects the commitment and quality of our employees at the Ashby biscuits site, but we believe it is the best solution to secure the long-term successful future of UB's biscuits business in the UK. Clearly we will be discussing our plans with our employees and their representatives during the collective consultation process that we will now enter."
The factory is one of three UB operations in Ashby de la Zouch, and nearly 900 jobs are expected to be lost as a result of the plant closure. However, UB said that there was also the possibility of creating a further 500 jobs at its other UK biscuit plants as a result of transferring production from Ashby. UB said that it would retain its national distribution centre and snacks factory at Ashby, where an additional 900 people are employed.
Ritchie said: "We regret the loss of jobs that may occur as a result of this proposal and will do all we can to mitigate the impact for our employees. As a successful manufacturer, we need to continue to make market leading products, continue to be profitable and to safeguard the jobs of our other 7,000 employees around the UK."
In the two years since its acquisition by three private equity groups and the US food group Kraft, UB has successfully turned around its biscuit business. The flagship McVities brand and UB's other UK market leaders have posted growth of 7 per cent per annum over that period, helped by a substantial increase in marketing investment (5 per cent) in both new and existing brands.
This turnaround has led to increased speculation about the future of UB, most of which has centred around the possibility of a buyout by Kraft of the shares held by the capital investment groups, although both Kraft and UB have distanced themselves from the rumours.