Diageo (Campaign Against Closures)
The final item of business is a members' business debate on motion S3M-4647, in the name of Willie Coffey, on the campaign against Diageo closures. This debate will be concluded without any question being put. Mr Coffey, you have seven minutes.
Motion debated,
That the Parliament, further to motion S3M-4568 lodged on 6 July 2009, notes that a major cross-party campaign has been established to oppose Diageo's restructuring proposals that would see the closure of plants at Kilmarnock, Hurlford and Port Dundas with the loss of hundreds of jobs in the Scotch whisky industry and a devastating impact on local communities; endorses the statement by the First Minister calling these proposals socially unacceptable; welcomes the action of the Scottish Government in commissioning an alternative business plan for consideration by Diageo, and echoes the call of thousands of people who took part in the march and rally in Kilmarnock on 26 July for a secure and successful future for the workers and their communities and for the company.
Thank you, Presiding Officer.
"Wha could withstaun this haimmer blow!?
Nine hunner joabs at Diageo,
This day we're gaithert tae say ‘No!'
This isnae fair!
Wha wis it helped yer business grow,
Twa hunner year?"
Those are the opening lines of a poem by Rab Wilson, read on an epic day on 26 July, when 20,000 people marched in support of the campaign to keep Johnnie Walker in Kilmarnock and to save the plants at Hurlford and Port Dundas. Led by the First Minister, we marched together: workers; MSPs; MPs; councillors from all parties; the chairman, management and players of Kilmarnock Football Club; trade unions; churches; and local traders. This afternoon, I welcome to the Scottish Parliament many of those who marched that day.
The scenes that I witnessed at the Johnnie Walker plant on 1 July will always be with me. What do you do when you hear that 189 years of history are to be consigned to the dustbin? What do you do when you are confronted by women and men too upset and shaken to talk after such a body blow? Well, you stand up, dust yourself down and set out to persuade those who made such a decision that they got it wrong.
Since 1 July, one question has never left my mind: what have our folk done to deserve this? Loyalty and dedication are easy words to throw around, but they are in abundance within the Johnnie Walker workers. Surely this is no way to treat such people.
With support from the unions and the community, the cross-party team, led by Councillor Dougie Reid, who cannot be with us today, and Councillors McKay and Cook, has been tireless in its efforts. Des Browne MP has also made a great contribution. Our petition to Diageo contains thousands of signatures from Kilmarnock and all across the globe.
I remind Diageo that Johnnie Walker was a real person, not some corporate gimmick. In 1820, he set up his shop in Kilmarnock and started blending whiskies. These were the forerunners of red label and, of course, the famous striding man, who, with his able assistants, graces us with his presence today.
Johnnie Walker quickly became a world-class product, and the fact that its Kilmarnock roots are still there for all to see is a source of pride for many. In the hands of a company concerned about product integrity, heritage and tradition, such roots should be regarded as a major strength, but Diageo would have us believe that no one cares where things come from. The only way is to make things cheaper and wherever we can. According to Diageo's description of the problem, there are 38 lines when only 28 are needed, and three plants where two would do. Oh—and it tells us that it contributes £30 every second to the UK balance of trade.
In the briefing that Diageo circulated yesterday, I counted about 25 figures in support of its case. However, one figure that it missed out was the small matter of its £2.5 billion profit. How on earth could that have escaped its notice? Did it not think MSPs would know that its profits amount to £80 per second?
Oscar Wilde once said:
"Whenever a man does a thoroughly stupid thing, it is always from the noblest motives".
There might be shades of that in the proposals that Mr Walsh has endorsed. The more Diageo states its case, the more ridiculous it sounds, set against the backdrop of such profits.
Last week was the defining moment in the campaign to keep Johnnie Walker in Kilmarnock. I congratulated the company on its results, and Mr Walsh was right to say that he would not apologise for running a profitable company. However, when we set Diageo's profits against the social and economic consequences of its closure plan, we are entitled to ask the chief officer to reconsider the damaging proposals. Diageo's latest public relations moves attempt to drive a wedge between communities—between Kilmarnock, Hurlford and Port Dundas on the one hand and Shieldhall and Leven on the other.
The case for the closures fell apart with the profits announcement. For such a profitable company, there is surely more than one way forward. We need to hear why Diageo thinks that it is right to put 700 loyal Kilmarnock workers on the street and to ditch 189 years of history and heritage without blinking an eye. Diageo has made it clear that the closure plan is not a response to current economic conditions but part of a long-term strategy. From beyond Kilmarnock, concerns have been raised about Diageo's strategy and the future direction of the Scotch whisky industry. The Parliament must understand where that vital industry is going. I have asked the Economy, Energy and Tourism Committee to conduct an inquiry on that, and I look forward to receiving support for that request.
Johnnie Walker grew and prospered for 177 years before Diageo, and Diageo is simply the present custodian. Properly managed, Johnnie Walker will survive after even Diageo has gone. I say to Mr Walsh that he should not let Diageo become another corporate entity that knows the price of everything but the value of nothing. I ask him to look beyond the numbers to see the damage that will be done to Kilmarnock, to Johnnie Walker and to Diageo. When the going was tough for your company, Mr Walsh, your workers did not walk out on you. I am asking you now not to walk out on them.
I started with Rab Wilson's poem, so perhaps it is appropriate to end with a clip from Robert Burns, who wrote:
"O wad some Pow'r the giftie gie us
To see oursels as others see us!
It wad frae monie a blunder free us".
If Diageo pays heed to the campaign and the debate, I believe that we can help it to avoid a spectacular blunder. Johnnie Walker is bigger than Diageo and its Kilmarnock history cannot be erased. Diageo—don't walk out on Killie.
I thank Willie Coffey and congratulate him on securing the debate, which gives members the opportunity to express publicly their support for the Diageo workers, many of whom are with us in the public gallery this evening.
There has been a distillery at Port Dundas for almost 200 years, but if Diageo has its way that proud history will come to an end and some 200 people will lose their jobs. Last week, we had the announcement of Diageo's profit for the year, of £2.02 billion. It was a drop from the previous year but, given the worldwide recession, it is a profit margin that most companies would be proud of, but Diageo seems to have overlooked the very people who make its profits possible—its workforce. I praise the workforce at Port Dundas and Kilmarnock, and those at Leven, Shieldhall and Hurlford, too, for the determination and dignity that they have shown throughout the campaign to retain the jobs. I also praise them for their commitment to Diageo over many years—a commitment that has made the company the world leader that it is today.
Why close the Port Dundas plant? I must say that the case is less than convincing and that the briefing that Diageo provided for MSPs does not make a compelling business case. Port Dundas sits in a prime position with easy access to the motorway network around Glasgow, which is not the case for all distilleries. It sits on a 22 acre site with room for expansion but, in recent years, investment in the site and the plant has been limited to a new computerised operational system and a £700,000 gas compressor, which was delivered in June but has now been mothballed.
Diageo seems intent on using spirit from the North British Distillery Company here in Edinburgh, in which it has a half share. The other half is owned by the rival Edrington Group. Diageo currently takes approximately 17 million litres per annum from the North British distillery, but it plans to increase that. It seems to place its commitment to North British higher on its list of priorities than its commitment to its own plant at Port Dundas, which produces 40 million litres per annum and has the capacity to produce more.
Diageo also wishes to move to a new distilling plant in Fife, but it assumes, first, that the plant will be up and running with no hitches and on time and, secondly, that the plant will never need to be shut down unexpectedly. Any prudent manager would surely ask, "Where is the back-up?" The answer from Diageo seems to be, "There isn't any." If we add in the industry predictions of rapid growth in demand for whisky from China and India in the coming years, it seems very strange that Diageo should wish to limit its potential for growth when all other distillers will be looking to expand their market share.
Given the consequences of the proposals, it is regrettable that the company did not accept the workforce's sensible proposal—a point that Iain Gray has emphasised—that the consultation period should be extended beyond the statutory minimum. How much faith should we place in Diageo's consultation? Does it want to hear alternatives, or is the matter a done deal? When I put that question to management back in early July, I was told that the proposal was the company's final decision and was a done deal. As recently as last Friday, senior management at Port Dundas had a meeting with the workforce at which the workers were told that closure was a done deal. Not only is that cynical during a consultation process, the fact that it happened in the absence of union representatives raises serious questions about the Diageo management's commitment to the consultation process and its willingness to consider other proposals seriously.
Despite the limited time that there has been for scrutinising the Diageo business plan, other options are available. Despite the many months over which Diageo formulated its closure plans, the short period for the consultation has allowed other options to be identified. Now is the time for those options to be refined and put to Diageo. The Cabinet Secretary for Finance and Sustainable Growth will no doubt have those in mind when he meets Diageo tomorrow. A lot rests on that dialogue, so the cabinet secretary has our best wishes as he prepares for that meeting.
There is concern that the retention of jobs in Port Dundas and Kilmarnock might be to the detriment of jobs in Fife, but I do not believe that that is the case; we are fighting for the retention of high-quality, skilled, permanent jobs, not the out-sourced, short-term or temporary jobs that might be on offer. That is recognised by the unions and by the workforce in Diageo sites throughout Scotland and it is why I want to see alternative proposals that promote investment in the current jobs, both for existing workers and for future generations of Scotch whisky workers in Port Dundas and Kilmarnock and throughout the Diageo estate.
You must finish now.
I want Diageo to show the same commitment to its workforce that its workers have shown to their employer. That its workforce is what has made Diageo such a success is recognised across the world. I sincerely hope that the support that has been shown to the workers by the public and by parliamentarians will make Diageo think again. I hope that Diageo will see the sense of retaining and investing in jobs in Port Dundas and in Kilmarnock. I wish the cabinet secretary well in his meeting tomorrow.
I remind members that speeches should be of four minutes. I will extend the time for the debate at some point later, if the minister agrees.
I congratulate Willie Coffey on securing this valuable debate on an issue that is of great importance to people not only in Ayrshire and Glasgow but throughout Scotland. Willie Coffey has been at the forefront of the campaign: he has lived, breathed and slept the Johnnie Walker fight for months now.
I have been involved to a lesser degree as one of three MSPs—including Willie Coffey and John Scott—who, along with Des Browne MP, attended the petition launch on 3 July. I marched through Kilmarnock on 26 July with colleagues of all parties and helped to collect 1,358 signatures in North Ayrshire against the proposed closure. In Kilwinning, Largs and Saltcoats, folk queued up to support the Kilmarnock work force—not just locals, but lovers of Johnnie Walker from Canada, Australia, France and Luxembourg who were shocked at this turn of events.
Scotland has a long and proud tradition of whisky production, which is envied and enjoyed the world over. The industry is synonymous with our nation, and its heritage and exceptional quality are second to none.
Since 1933, whisky has been defined and protected by law, which emphasises that for whisky to be labelled Scotch whisky, it must be produced and matured in Scotland for at least three years. It has also been given European Union protected geographical indicator status, which assures consumers that what claims to be Scotch is the genuine article. That is the same status that is afforded to other world-famous produce, such as champagne and Aberdeen Angus beef.
It is no coincidence that the maintenance of such strict guidelines, coupled with an adherence to traditional techniques and specialist knowledge, all of which ensure unparalleled quality and excellence, mean that Scotch whisky has consistently been one of our greatest and most successful exports, which now accounts for more than £4 billion annually. Scotch is regularly responsible for a quarter of all UK food and drink exports, and Johnnie Walker is the most successful of all.
Why does Diageo, which is a company that made profits of more than £2 billion this year alone, wish to tamper with what is clearly—excuse the pun—a winning blend?
The Scotch whisky industry has already lost nearly 1,400 jobs over the past decade. There have been knock-on effects for those who work in the industry—there are 41,000 in Scotland, of whom more than three quarters are employed indirectly. Further job cuts would have catastrophic effects not only for the industry but for Ayrshire—perhaps 3,000 jobs may be lost in the county—which already has an unemployment rate that is higher than the Scottish average.
To allow the proposed closures to go ahead would be to betray a hard-working and committed workforce that often includes more than one generation of the same family and that has made Johnnie Walker the highly profitable global brand that it is today. Every business must work hard to remain competitive; no business does that by forgetting its roots.
Moving the bottling of Johnnie Walker from Kilmarnock would not only impact on the workers who were thrown on the scrapheap; it would have negative implications for the overall image of Scotch whisky, which in turn would be undesirable and self-defeating for Diageo.
Although the carrot of 400 jobs in Leven has been dangled as part of a divide-and-rule strategy, it is scant consolation to the Kilmarnock, Hurlford and Port Dundas workers. There is an implied threat from Diageo that jobs could ultimately leave Scotland altogether.
In previous years, whisky producers attempted to cut costs by bottling the produce abroad. Ultimately, exported produce became vulnerable to adulteration and contamination, not to mention competitors using the far superior Scottish produce to bulk up their local brew. Surely the prospect of sullying the name of Scotch whisky, which trades on its proud heritage, tradition, excellence and quality, is not a risk worth taking and it could only have negative repercussions for Diageo.
Article 7(1) of the draft Scotch Whisky Regulations 2009 produced by the Department for Environment, Food and Rural Affairs, which are due to come into force on St Andrew's day, state:
"A person must not label, package, sell, advertise or promote a drink in any other way that creates a likelihood of confusion on the part of the public as to whether the drink is Scotch whisky."
Surely if malt whisky cannot be branded Scotch unless it is bottled in Scotland, the legislation should be extended to include all whisky that seeks to be labelled "Scotch".
Finance secretary John Swinney has established a task force to build the case to reverse Diageo's proposals. The task now is to take the evidence received from the consultants to build an alternative proposition, which Scottish Enterprise will take forward for discussion with Diageo. The focus of that alternative will be to protect employment at Port Dundas, Kilmarnock or Hurlford, subject to rigorous preparation by Scottish Enterprise, which is working with trade unions and local authorities.
Diageo must stick to its word and await the alternative business proposal to be put forward by the Scottish Government before it makes any decisions. I am hopeful that we can still persuade the company to work with us to secure a successful future for Ayrshire and Glasgow.
I call David Whitton, to be followed by Linda Fabiani.
Thank you for calling me so early in the debate, Presiding Officer. I apologise to other speakers, because I will be unable to stay until the end of the debate.
I wish to focus my remarks on the Port Dundas distillery, which faces total closure. Many of those who face redundancy are from my constituency.
Like other members in the chamber, I received a copy of the briefing note from Diageo, which attempted to justify its position and which makes interesting reading. As Mr Coffey has pointed out, Diageo is a profitable company; it makes a significant contribution to the Scottish and UK economy. That is precisely the point. The board of directors do not make that profit by themselves—although they are handsomely rewarded for their performance—they are part of the Diageo team, and the efforts of workers in places such as Kilmarnock, Port Dundas and Leven are also crucial to the company's productivity and profitability.
The Diageo briefing says that the company spends £500 million—£0.5 billion—each year on the promotion of brands that are made in Scotland. I ask members to note those words: "made in Scotland"—distilled and bottled here, in the home of Scotch whisky.
Two years ago, Richard Bedford, the grain distilling director for Diageo, told a meeting that was attended by more than 200 workers that the company had a demand for 175 million litres of whisky annually. At the time, Cameron Bridge, in Fife, was producing 66 million litres and Port Dundas was producing around 40 million litres, so everyone thought that there was scope for increased production. The company is investing around £65 million to increase production at Cameron Bridge to 105 million litres, but that will not come on stream for another two years. Now, Diageo is saying that it does not need the Port Dundas distillery. What happened to those demand predictions? The company blames the global recession, yet I am told that the market for whisky in India is increasing by 6 per cent per annum—the equivalent of 6 million cases of whisky a year.
The Fife distillery is to be powered by a new biomass plant that has still to be commissioned, yet Diageo wants to put all its distillery eggs in the one basket in Fife. As Patricia Ferguson asked, where is the back-up? As we heard from her, the answer is here, in Edinburgh. Diageo holds a 50 per cent stake in the North British Distillery Company distillery at Murrayfield. The other 50 per cent is owned by its rival, the Edrington Group. Two Diageo directors are on the board of Lothian Distillers, the operator of that distillery. At present, the 60 million-plus litres that are produced there are split—one third goes to Diageo, one third goes to the Edrington Group and one third goes for sale on the open market—but there are reports that the distillery will stop selling to the open market and that Diageo will take two thirds of the output—roughly 40 million litres. By coincidence, that is nearly equivalent to the output of the Port Dundas distillery. If Diageo were not to take that output, there would be no reason to close Port Dundas but, according to the BDO Stoy Hayward report, the company has ruled out that option, just as it has ruled out selling Port Dundas despite its belief that it is surplus to requirements. It is estimated that pulling out of the joint venture will cost around £20 million, which is roughly the same amount that would be required to modernise the Port Dundas distillery and keep it and its jobs in Glasgow. I am told by the Port Dundas workers that, with some investment, they could increase capacity by at least another 5 million litres a year.
The workers at Port Dundas have proved their worth and deserve a stay of execution for at least two years, to see how the market develops and until the new facility at Cameron Bridge is ready for production. By then, if the £500 million brand campaign bears fruit and if sales in places such as India, China and Russia continue to increase, the closure of a productive distillery such as that in Port Dundas could be seen to have been a hasty decision. As Mr Coffey said, it is still not too late for Diageo to change its mind.
As a Central Scotland MSP who is concerned for the future of Kilmarnock following Diageo's proposals, I wish that the debate were not necessary. Nevertheless, I thank my colleague, Willie Coffey, for initiating the debate and for initiating—with Kilmarnock Football Club—the petition that is moving towards its aim of attracting 100,000 signatures. The wide spread of signatures that the petition has received from all around the globe emphasises the reach of the Johnnie Walker brand.
East Ayrshire Council, too, has been extremely effective in developing a response to Diageo's proposals. Councillor Dougie Reid and his team, with the support of opposition group leaders and their respective teams, have provided important leadership in the community's response to the threat to the local economy. The threat to the local economy is major—a fact that has been recognised and acted on by the Cabinet Secretary for Finance and Sustainable Growth and by the Scottish Government.
In questions on the cabinet secretary's earlier statement on Diageo, I spoke of the importance of heritage and provenance to the premium brand that is Scotch whisky. The importance of the Johnnie Walker brand was a feature of the speeches that we heard from Willie Coffey and other members in the debate. The whole Scotch whisky industry is widely respected around the globe—its reputation has been hard fought for and built up over many years.
Recognising the presence of whisky in the international market, I was surprised to see the analysis that was carried out by Donald Blair, which highlighted the poor rate of growth in the production of whisky since the 1970s. Apart from a short upswing in the lead-up to the recession, growth has averaged no more than about 1 per cent per annum for the past 25 to 30 years. Diageo's decision to shed such a large number of jobs has turned attention to the industry in a way that has not happened for many years. Communities and workers up and down Scotland are asking, "If jobs at Johnnie Walker—the world's leading whisky brand—are not safe, what jobs in the industry are safe?"
Willie Coffey's suggestion that the Economy, Energy and Tourism Committee conduct an inquiry into the future of the industry is helpful. That could help Parliament and the Government to identify barriers to growth of the industry, and give further consideration to the issues of heritage and provenance. That could help to set the industry on the path towards sustainable volume growth—not the growth in value that helped Diageo to pile up more than £2 billion of profit while throwing hundreds of workers on to the streets. The committee could address how we might gain a proper understanding of the place of whisky in the UK domestic market. Despite significant growth in the consumption of spirits in the UK, sales of whisky have declined by some 40 per cent. I understand from Willie Coffey that Johnnie Walker Red Label is not even offered for sale in some supermarkets in the Kilmarnock area. Also, despite its international profile, Johnnie Walker does not feature in the UK's leading brands.
The committee could also consider alcohol duty. Some have said that the Johnnie Walker issue has no link to the debate on alcohol duty, but the future of the industry cannot be examined without consideration of all the issues. A unit of alcohol that is bought in the form of whisky costs the consumer 23p, whereas the cost of strong cider is just 4p. That is not fair at the best of times, but it is unacceptable at a time when hundreds of jobs are going in the whisky industry. Such issues must be addressed where they should be addressed, which is by those who have the power to address them properly.
Willie Coffey spoke of the dedication and loyalty to Johnnie Walker of the Kilmarnock workers. By contrast, dedication and loyalty of Diageo to the Kilmarnock workers is lacking. In looking at Diageo's corporate responsibility policies, I found nothing on Scotland, but note that Diageo Ireland says:
"Our business is driven by the belief that we have a wide responsibility to the communities and the environments of Ireland."
I say to Diageo: you also have that responsibility to Scotland. Start showing some.
I congratulate Willie Coffey on securing the debate on this important topic for the economy of Scotland as a whole.
The bald figures, including on the 900 job losses, are well known and have been well publicised. However, the concentration of those job losses in relatively small geographical areas will lead to devastation for those localities. It is an obvious statement to say that 900 families will be directly affected, but the companies that directly supply the business will also see a loss of orders that could have big impacts on their incomes and jobs. Equally, their sub-contractors and the supply chain as a whole will be affected. In addition, shops and businesses in the affected areas will, although they do not have direct contractual links to Diageo, lose business if Diageo employees reduce their spending. Those shops and businesses are bound to be affected.
It is worth reflecting and focusing on the hard work that campaigners and the Diageo task force are undertaking. There is the work of the cross-party group of MSPs and MPs, local councils, trade unions and workers. Everyone has worked hard; people are pulling together to try to create some kind of positive future. We had a march that was attended by about 20,000 people and which left no one in any doubt about the strength, breadth and depth of feeling. We also have the sitting down around the table and the rolling up of sleeves to look at the hard facts and do the number crunching to try to come up with some kind of workable proposal.
I wish the cabinet secretary the best of luck in his meeting tomorrow. The success or otherwise of the meeting will depend entirely on whether there is anything genuinely new and innovative in the proposals. Through the newspapers, Diageo management have made it clear that, if a proposal has been considered and rejected, there is not a great deal of hope in putting it forward again. I totally understand the cabinet secretary's reasons for not outlining the proposals that will be put tomorrow and I hope that he has some genuinely new proposals that will lead to the possibility of progress.
All of this comes against the backdrop of increasing unemployment in Scotland. It could not have come at a worse time. The most recent figures for Scotland show an increase of 31,000—or 20 per cent—in unemployment in the past quarter. It is worth the Government's while to note that although unemployment in Scotland is still lower in percentage terms than in the UK as a whole, the rate of increase in unemployment in Scotland over the past quarter was double the rate of increase south of the border.
Mr Swinney can do his best tomorrow, but ultimately it will not be in his gift to decide the future of Diageo and Johnnie Walker. What is within his gift is what the Government does or does not do in its legislative programme. I highlight to Mr Swinney and Mr Mather the issue of minimum pricing, which could in the future be far more damaging to the whisky industry than just about anything else that has happened so far. It will not only increase the cost of whisky in Scotland but hurt our exports even more, which is more damaging, according to the Scotch Whisky Association. So far, the issue has been viewed purely through the prism of health. I seriously urge Mr Swinney and Mr Mather to view it through the prism of business to ascertain what can be done to prevent minimum pricing from going ahead and damaging our industry in the short, medium and long terms.
I congratulate Willie Coffey on securing the debate. I have been proud to stand four square behind the workers at Port Dundas and Kilmarnock. The cross-party unity in the campaign to save jobs has been vital—it has been a real strength of the campaign.
I have met the workers and unions at Port Dundas on a number of occasions, and I have organised a round-table meeting with a number of stakeholders—including Glasgow City Council, the unions and Scottish Enterprise—specifically to consider the case for Port Dundas. I thank Partick Thistle for hosting that meeting and I commend Partick Thistle and Kilmarnock Football Club on their support for their local communities. I also commend other politicians who have strained every sinew to save jobs, including Willie Coffey, Des Browne and Patricia Ferguson.
Central to my concerns as a Glasgow MSP is how the workers at Port Dundas have been treated. They recently showed loyalty to Diageo by accepting a pay deal that showed great restraint. They have continued to consider ways of improving working practices to make them more efficient for the company—they are a committed workforce. The reason for the pay restraint and for the flexibility in relation to working practices was that the workforce was led to believe that that would secure jobs. Workers at Port Dundas have invested by the sweat of their brow in Diageo. All they ask is that the same loyalty and respect be shown to the workforce by the company. As we have heard, the other day Diageo announced operating profits of £2.6 billion—a 4 per cent increase—with £1.2 billion going to its shareholders.
Let us be clear: Port Dundas makes Diageo money and Kilmarnock makes Diageo money. The company is not cash strapped. The issue is whether Diageo maximises its profits at the expense of its loyal and hard-working workforce and their communities and, in doing so, damages its brand image. I am sure that the proposals that will be put to Diageo by the Scottish Government task force will consider ways to make the retention of operations at Port Dundas and Kilmarnock more attractive to Diageo. I very much hope that Diageo will listen and realise that a balance between unfettered profits and meaningful corporate and social responsibility—including investment in communities—must be struck. In the long term, investing in communities will strengthen the brand and increase profitability. It is also the right thing to do.
I support Willie Coffey and Linda Fabiani's calls for an inquiry into the whisky industry. I have spoken to Diageo and it is clearly choosing to buy white spirit from rivals or to produce it at distilleries in which it has part ownership. There appears to be an awful cosiness between companies that are otherwise market rivals. Perhaps that needs to be examined, along with other parts of the industry.
The Scottish Government-led task force has concerns over the extent of the exposure Diageo is leaving itself open to in the marketplace. Patricia Ferguson and David Whitton mentioned the danger of Diageo putting all its eggs in one basket. I agree with that analysis. I believe that the way ahead is to continue with the Port Dundas distillery for the next few years. We need to work with Diageo to reduce overheads and analyse how to help it with its cost base. In two years, the market could look very different.
Diageo markets Johnnie Walker as Scotland in a glass. It views the dram that people take worldwide as a premium Scottish product. It must now pay a premium to Scotland's communities and invest in Kilmarnock and Glasgow. It is with great good will that I wish the cabinet secretary well tomorrow in what will hopefully be constructive discussions with the company.
I am delighted that this matter has been selected for a members' business debate this evening. I congratulate Willie Coffey on securing the debate and on his work on the issue. I also congratulate Des Browne, the MP for Kilmarnock and Loudon, on the immense amount of work that he has done, on the debates that he has held at Westminster and on his work elsewhere.
Like others, I thank Kilmarnock Football Club for immediately stepping up to the plate when the closures were announced—although, with due respect to my good friend Patricia Ferguson and to Bob Doris, the pre-season visit of Partick Thistle to Kilmarnock is not one of the evenings that I want to remember.
I offer my thanks to the trade union Unite, of which I am a member, for its tireless campaigning on the issue. It is worth remembering that the campaign has been and must be trade union led—the trade unions are the ones who speak on behalf of the workforce. Whatever we do, we must be prepared to support the trade union in seeing the process through.
The issue has united the town of Kilmarnock, and the sustained campaign is a credit to everyone who has been involved. It is a vital issue not just for Kilmarnock but for Ayrshire and the whole of Scotland. As we have heard, the Johnnie Walker brand is synonymous with the town of Kilmarnock. The plant dominates the skyline. I remember coming back in the car from the far-flung parts of what is now John Scott's constituency when I was a child. When we came over the hill and I saw the Johnnie Walker sign lighting up the sky, I knew that I was almost home.
The plant has been central to the history of the town, and Johnnie Walker must be vital to its economic future. Its reach in terms of employment and economic impact goes much wider than Kilmarnock. Many of my constituents in Carrick, Cumnock and Doon Valley are employed in the plant, and many local businesses provide services for it. Almost everyone in Ayrshire will know someone who has worked at Johnnie Walker at some stage. It is estimated that it has an economic impact of more than £20 million in our local economy. The closure of the bottling plant would not only devastate Kilmarnock; it would affect lives and businesses across Ayrshire.
I have seen many changes in my constituency over the past 20 or so years. I have seen whole industries killed off—manufacturing and textiles, which followed on from the pit closures—and I have seen small businesses struggling to survive. After this debate, I am going to the first meeting of a newly set-up cross-party group on industrial communities, where we want to consider what more can be done to repair some of the devastation that those communities have experienced in the past.
The success of the Johnnie Walker brand has been achieved by the hard work and commitment of the workforce. We have heard that time and again tonight, so it would be absolutely disgraceful for the company to cast aside the workforce in Kilmarnock and Port Dundas in a blatant attempt to squeeze ever more profit. It seems incredible and absolutely unjustifiable that, although Diageo's profits stand at nearly £2.5 billion, the company is seeking to cut the links between the Johnnie Walker brand and a community that has served it loyally for nearly 200 years.
Let us put it in perspective: Diageo is not a company on its uppers, struggling to survive. The move represents greed on a breathtaking scale. That is why thousands of people, me included, walked through the streets of Kilmarnock in protest. That is why hundreds of thousands of people have already signed the petition in protest against the move. That is why many of us signed the pledge today to support Unite and the workforce in their campaign.
Johnnie Walker, the striding man, has always been associated with Kilmarnock. It has become a symbol of the town. The cabinet secretary told us in a statement earlier today that he is meeting representatives of Diageo tomorrow. I hope that he will convey the very clear message that the reputation of Diageo will be forever tarnished if it goes ahead with the closures.
Willie Coffey started the debate with some words from my good friend Rab Wilson, the unofficial poet laureate of Ayrshire, and I will finish with some words from Rab.
"Here's Labour, an the SNP,
Wha staunin here the day agree,
Tae sing frae this same sheet yer plea,
Fir aa yer workers,
Let sense and justice bear the gree—
Save Johnnie Walkers!"
Before I call Hugh O'Donnell, I am minded to accept a motion without notice to extend the debate.
Motion moved,
That, under Rule 8.14.3, the debate be extended by up to 30 minutes.—[Tricia Marwick.]
Motion agreed to.
Earlier today we heard a statement from the Cabinet Secretary for Finance and Sustainable Growth on his on-going battle with Diageo. I think that that battle is welcomed by everyone in the public gallery. Willie Coffey and Des Browne deserve our heartfelt congratulations on how quickly and how well they have pulled the process together.
I do not understand why Diageo has treated a loyal, reliable, productive and profitable workforce in the way that it has done. It makes no sense. It also makes no sense that one of the biggest contributors to the Scottish economy gave no Government of any shade a heads-up on what it was planning. I support the people who have recently called for an inquiry at which we can begin to get to the root of those decisions.
Like Linda Fabiani, I am a member for the region in which Kilmarnock lies. Central and west central Scotland always seem to bear the brunt of a dismissive corporate attitude to people, families and communities. Do companies think that people in those areas do not deserve any better? That seems to be so in the case of Diageo. As Gavin Brown said, it is not just about the 900 jobs in the company, serious as that is; it is about the corner-shop grocers, the petrol stations and so on.
I take issue with the estimate by EKOS, to which the cabinet secretary referred, that the plant's closure will take £15 million out of the local economy annually; I think that the figure will be much bigger. Diageo should hang its head in shame. It has promised to invest £100 million, but over what period? In 10 years, its actions will take £150 million out of the local economy, so there will still be a £50 million deficit. That is not acceptable.
I look forward to success for the cabinet secretary and others in their negotiations with Diageo, but I regret that, like Gavin Brown, I suspect that it will be hard to make the company change its mind. We should remind our communities that such companies are not to be trusted when it comes to the interests of the communities in which they operate and that we should all be wary of promises that were made about the globalisation of the business world.
I congratulate Willie Coffey on securing the debate and fighting for his constituents, as I would expect a good local member of the Scottish Parliament to do. My colleague John Scott has had to leave the chamber, but I am sure that he will fight equally hard for his constituents in Ayrshire.
I would have preferred that no Diageo jobs be lost anywhere in Scotland, but I am sad to say that that is not the situation that we face. It seems certain that, whether Diageo sticks with its original plan or accedes to the draft proposals that the cabinet secretary's task force has put forward, 500 Diageo jobs will be lost in Scotland.
It is my responsibility as a member for Mid Scotland and Fife to try to ensure that no action to save the Kilmarnock and Glasgow jobs puts Diageo's long-term future in Fife at risk. Despite what the cabinet secretary said this afternoon, that is a possibility. Mr David Gosnell, Diageo's director for global marketing, made it clear in a television interview last week that future investment in Scotland as a whole could be at risk if there was undue Government intervention in the company's business. He warned that the distilling of non-whisky clear spirits such as vodka and gin could be particularly vulnerable. Those are, of course, principal products distilled at Cameron Bridge.
Scotland is set to lose bottling jobs because Diageo has decided that, in the present economic climate, its operations can be run more efficiently. The basic question seems to be whether it is better for £70 million of public money—that is an estimate—to be spent on retaining 500 bottling jobs at Kilmarnock or for us to support the creation of 400 extra jobs in Fife at no cost to the taxpayer.
I am well aware of the devastation that the removal of 900 jobs from Kilmarnock and Port Dundas will wreak on those communities. As we have heard, their local economies are fragile at best. Methil and Leven, too, have fragile local economies. They have had to survive their former dependence on the coal industry and, in more recent times, the loss of the oil platform yard at Methil. Over the years, Fifers have built an admirable reputation for the production of Britain's top-selling vodka—Smirnoff—as well as Gordon's gin, Tanqueray and top-selling whisky brands. They have already attracted an extra £86 million investment from the parent company.
In my experience, the truth is that Government attempts to direct businesses to areas with unemployment problems have met with relatively little success over the years. I am sure that Jim Mather, who is approximately in my age bracket, will be able to attest to that in relation to motor car building at Bathgate, the aluminium smelter at Invergordon and the pulp mill at Corpach. I could go on and on.
I will address the loss of heritage brands and the Kilmarnock connection, to which Willie Coffey referred. As he will be aware, the grain whisky basis of all Johnnie Walker blends is Old Cameron Brig, which is produced at the distillery of that name in Fife just up the road from Leven. Various malts are added to the mix—one from Skye and others from Speyside—and blended into the various Johnnie Walker brands at plants throughout Scotland, including at Cameron Bridge and, as we have heard, here in Edinburgh.
Despite the historic Johnnie Walker roots in Kilmarnock, the Ayrshire town now contributes a bottling and packaging plant to the brand—and, doubtless, 700 excellent and loyal workers. However, it takes little imagination to see why Diageo wants to consolidate its bottling close to the site where the basic grain spirit necessary for all Johnnie Walker blends is distilled. That is Cameron Bridge and, of course, there are excellent bottling facilities just down the road at Leven.
I hope that, even at this late stage, the cabinet secretary will be able to come to an agreement with Diageo that provides something for everybody, with guarantees of employment in the west and in Fife. However, as Gavin Brown and others have said, experience suggests that that is not likely to be possible. Nonetheless, I wish John Swinney all good luck in his efforts while making it absolutely clear that, as a Mid Scotland and Fife MSP, I will continue to campaign for the £100 million investment and 400 additional jobs at Leven.
I congratulate my good friend Willie Coffey on securing the debate tonight and on the commitment and leadership that he has shown to his constituents in his determination to secure the Johnnie Walker jobs in Kilmarnock.
As I said earlier to the cabinet secretary, the task force of local politicians, local authorities, Scottish Enterprise and the trade unions has worked extremely hard in a short period of time to maximise the campaign to persuade Diageo to stay in Kilmarnock and Glasgow. However, as the constituency MSP for the Diageo plants in Leven and Cameron Bridge, I have a duty no less than Willie Coffey's to ensure that those plants have a long-term and sustainable future and I know that he understands that.
No one wants to see any jobs lost anywhere in Scotland, but my first priority is my constituency. I was grateful for the cabinet secretary's assurances this afternoon about the future of the Leven and Cameron Bridge facilities. However, there is real concern about the long-term future in Leven if all the promised investment is to be switched from Leven to Kilmarnock, as the task force is reported to propose. Diageo in Leven employs 500 people and is the largest employer in the area. Cameron Bridge has been producing whisky on the same site for almost 200 years. It is not some fly-by-night operation that has just come in from nowhere—it has been there for 200 years. Cameron Bridge is close to Windygates and at one point it employed practically the whole of Windygates. My friend Councillor David Alexander from Windygates is the first person in his family for almost 150 years who has not worked at Cameron Bridge. We therefore have a whisky heritage, too, and it is important that that is recognised.
Diageo in Leven and Cameron Bridge also has a loyal workforce. Leven houses 17 production lines, five of which are dedicated to whisky. As Ted Brocklebank said, the base product of Johnnie Walker whisky is Old Cameron Brig, which is almost impossible to buy anywhere round about the constituency. The remainder of the lines in Leven—this is very important—are dedicated to bottling white spirit, including Gordon's gin, Smirnoff vodka, Captain Morgan rum and Tanqueray, and another 135 Diageo product lines. I understand the desire to keep jobs in Kilmarnock, which is the home of Johnnie Walker, the leading brand of Scottish whisky. However, it is essential that Diageo continues to invest in the Leven plant.
I support the desire to bottle all whisky in Scotland, but I also support the workers in Leven. Some of the arguments that are being used in the campaign leave Leven in a very vulnerable position, given the range of other national drinks that are bottled there. Leven won those products against internal competition from other Diageo companies around the word; it won because the productivity is high there and, more important, investment has been put into the plant. In addition, the workforce is first class. Diageo must continue to put in investment to secure and improve the existing lines, or we run the risk in the long term that the lines and jobs in Leven could be lost not just to somewhere else in Scotland but overseas.
I appreciate the cabinet secretary's comments today, but I urge him to be careful with the task force proposals in case Leven is disadvantaged by them. Like Kilmarnock, Levenmouth is an area of high unemployment. We know what it is like to lose jobs and what it was like when the mines shut down and the shipyard shut down. We have one of the highest unemployment rates in Scotland. We have three generations of people who have never worked. We need to ensure a long-term, sustainable future for Diageo in Leven and Cameron Bridge. My constituency of Central Fife has the third-lowest average wage of any constituency in Scotland. It is imperative that we keep and sustain jobs. The long-term sustainability of Leven is imperative, and I am happy to work with the cabinet secretary or anybody else to assure it.
I, too, congratulate Willie Coffey on securing tonight's debate and, more important, on the drive and energy that he has given to tackling his constituents' problems. I congratulate the Westminster MP Des Browne on that, too. The fact that they have engendered cross-party support for the campaign is extremely important.
I agree with all the detailed comment that was made early in the debate, but I want to address one issue in particular. There is a word that I think Patricia Marwick managed to use three times and Linda Fabiani once and which is an extremely important element in this debate—that word is "sustainable". Sustainable economic development is something to which, quite properly, the cabinet secretary and his Government are dedicated.
We may require a debate on or an inquiry into the whisky industry, but the one thing that we do not need an inquiry into is why all this came about, because we know that the decisions that have been taken in Kilmarnock and Glasgow are the product of unsustainable economic thinking. They are the product of thinking that we should progress on the basis that people and plant do not matter—that they are merely commodities that can be used or abused when it suits people and dropped like a stone when they are not needed. The thinking is that companies should move on, tear up another part of the country to build a spanking brand new factory, and employ more people who will then be dropped when it suits them. We do not need an inquiry to find out about unsustainable economic development. The product of such development is humankind consuming at a rate that would require three planets to sustain. All members know perfectly well that we have only one planet.
That fundamentally flawed thinking is at the heart of the stupidity of any major organisation that believes that it can simply dump people, dump Kilmarnock and dump Glasgow and say, "We are making a profit. By the way, the cost of this unsustainable exercise is nothing to do with us; it's for Government to pick up the tab and for Governments to pay the costs across the globe." It is fundamentally flawed to say, "Ah, yes. We, Diageo, will make profits, and we do not expect any silly Government to interfere with what we are doing, but we expect the Government to pick up the tab for the costs that we cause to the environment or humanity as a result of the number of people we simply dump when it suits us."
The Government is seeking to do excellent work to persuade Diageo of the falseness of its case. However, given that the cabinet secretary's remit specifically covers sustainable economic development and that what we are discussing is an example that all members should be united on, he should make it absolutely clear that the approach that has been taken represents exactly the kind of unsustainable economic development that we are seeking to reverse. A fundamental issue is involved that the cabinet secretary's Government espouses, and I hope that he will make more of it in the days and weeks to come in making his arguments. It is at the heart of the matter.
International companies must be persuaded of their obligations. Of course they employ companies such as BDO. I do not for a minute suggest that that firm is not a perfectly reputable firm to prepare a report, but it will not take into account the opportunity cost of destroying Kilmarnock or of making 900 people unemployed. It simply goes by the old rules, which are proving to be unsustainable.
Therefore, my plea to the cabinet secretary is that, in addition to all the excellent points that have been adduced in this very good debate about the fundamental flaws in the Diageo case, he should bring to the forefront the sustainable economic development part of his portfolio and volubly make the case for sustainable economic development to the business community. When I was on holiday, I read with despair that business leaders are saying that the Government should not be involved and that they cannot have it tampering with the way they do things. They say, "It's excellent that we use three planets. We'll be able to go on like that because we're business and we know best." Businesses know how to run business, but they ought to be properly accountable. If they are going to tell us what profits they make, they should also tell us the costs of acting in the way that they do and propose to do in places such as Kilmarnock and Glasgow.
I congratulate Willie Coffey on securing this debate, which is on an issue that is important to his constituents and to Scotland, and I recognise his commitment to the Diageo workforce. I also recognise Patricia Ferguson's efforts in fighting for the Diageo workforce at Port Dundas, and that there has been cross-party support for the motions lodged by her and Willie Coffey. MPs, MSPs, councillors, unions and the workforce have shown what can be achieved by people working and campaigning together. I commend their efforts to save jobs and communities.
Today, I was pleased to meet Unite members and show my support for their efforts and their campaign to keep jobs in Scotland. The situation that families in Kilmarnock will face if the plant closes and jobs go will be devastating. We all accept that it is an area of Scotland that will find it difficult to absorb unemployment, and we know how difficult it can be for an area to recover from the loss of such a significant employer.
The workforce and the unions must be satisfied that every option to secure the plant has been explored and that Diageo is listening and giving serious consideration to alternative proposals. It is disappointing that the cabinet secretary has not provided us with more details on the task force's proposals, but I look forward to details of the options being presented.
We are all bitterly disappointed by Diageo's announcement to cut jobs in Scotland. As a Fife MSP, I know that the company has been a good employer in the area and that it has strong relationships with its workforce, the trade unions and the community. I think that we all recognise that Diageo has been a valued company in Scotland. Now we are looking for it to show that it values the workforce in Scotland. We know that, in difficult economic circumstances, Diageo announced healthy profits just last week. It must seriously consider its commitment to Scotland and the extent to which its success and profitability are due to what it has gained from Scotland.
I believe that we cannot have a debate in Parliament about Diageo in Kilmarnock without having a debate about Diageo in Leven, and I am concerned that that is where the Government has been short-sighted. Members will know that it is not often that I find myself in agreement with Tricia Marwick, but as the constituency member for Glenrothes, she is right to stand up for Diageo in Leven. As a Fife MSP, I will support her in her questioning of the Government's approach to the Leven plant.
I am afraid that in its intervention on Diageo, the Government does not appear to appreciate fully what the investment that is proposed for Leven will achieve. During this afternoon's statement, we found out that there had been no engagement or discussion with Fife officials on the issue. The investment in Leven is not just about jobs; it is about securing the long-term future of the plant. I was disappointed that when it was pressed during the statement, the Government could not give assurances that any proposals concerning Kilmarnock that it makes to Diageo will fully take into account the impact that they might have on Fife in future. The Government must be careful that it is not seen to be prepared to sacrifice investment in Fife for investment in Kilmarnock without giving any consideration to the impact that that will have on the Leven area and, importantly, on the long-term future of the Diageo plant in Fife.
I need to be convinced that any plans that are produced in the interests of Scotland take full account of the impact on Fife. Reflection on the cabinet secretary's statement indicates that that does not seem to be the case. As the trade unions have made clear and as Diageo's profits show, Diageo is a profitable company, so we should all try to maximise its investment in and commitment to Scotland. While members in the west rightly fight for their communities, members in Fife will show their commitment to the Leven plant. I know that the constituency MP and MSP have visited the site in recent days and I, too, will visit it in the next few days, because it is important that local members show their support for a workforce whose members are at risk of feeling unsupported by Government.
I congratulate Willie Coffey on securing the debate and on displaying in his speech and in his interventions over the past two months, which have been extremely difficult for his constituents, the passionate and personal local leadership that all of us who have had the privilege to know him for many years knew that he would be able to provide for the community that he represents. He has forcefully made the case on behalf of his constituents, as we always expected that he would.
In her quoting of Rab Wilson, Cathy Jamieson gave us a unique sense of the atmosphere that has been created around the issue. As well as paying tribute to Willie Coffey, I pay warm tribute to Des Browne, the member of Parliament for Kilmarnock and Loudoun, who entered the House of Commons at the same time as I did. With the assistance of modern technology, I had the pleasure of watching the adjournment debate that he led on the issue in the House of Commons, which brought together many members of Parliament of all shades of opinion. It was a debate of the same character as the debate that we are having tonight, in which the importance of protecting employment in the Kilmarnock and Port Dundas areas was emphasised.
There has been understandable concentration in this debate on the impact on Kilmarnock and Glasgow of Diageo's proposals, and some have asked why the Government has become as heavily involved in this case as it has. I make no apology for the scale of the Government's involvement and intervention in this issue, for many of the reasons that Mr Finnie eloquently explained in his speech.
Mr Finnie—in contrast to Mr Brocklebank—captured the fact that Diageo's proposals represent a real cost to Scotland. Mr Brocklebank said that there will be investment in Fife at no cost to the taxpayer, but I am afraid that that does not consider both sides of the balance sheet, as the UK Government and the Scottish Government will be faced with enormous financial pressures in the Kilmarnock area if the proposals are not in any way changed. East Ayrshire Council, which contains Kilmarnock, has the highest claimant count of any local authority with which we would normally compare it, and Glasgow City Council has the highest claimant count of any local authority in the country. That explains why the Government feels the need to bring together all the interests and parties to try to ensure that a different course is taken. That is important to ensuring that we do not end up with the desolation that will occur in Kilmarnock if the jobs are lost. We are talking about the loss not only of the largest private sector employer but of the largest private sector employer by a country mile, and Government must be attentive to that.
Linda Fabiani and Bob Doris mentioned questions of corporate social responsibility. What troubles me about the approach that Diageo has taken in this case is that it runs contrary to many of the practices and approaches that it has championed and demonstrated on a number of occasions around the country. I want Diageo to understand that it is a valued company in Scotland—of course it is; it is a big employer—and that the Government wants to work with it. However, we also have a wider responsibility to ensure that our communities are protected from the type of economic impact that will be felt by Kilmarnock if the proposals are not changed.
Diageo has presided over the Johnnie Walker brand in recent years. The brand is a valuable commodity and I appeal to Diageo, in advance of the discussions that we will have tomorrow, to recognise the significance of the investment that it has made in acquiring and developing the Johnnie Walker brand and the real danger that it will lose that value if it does not take a different course. I cannot believe that anyone who is advising Diageo can tell it that the events of the past two months have been good for the Johnnie Walker brand or the reputation of Diageo—a company, I stress, that has demonstrated and articulates the values that we think are important in building partnerships between employees and management. That point is illustrated by the willingness of the workforce to undertake greater efficiency in working practices to improve the financial performance of the plants, which Patricia Ferguson and Bob Doris mentioned. The workers themselves have been among the most surprised by the scale of the changes that Diageo proposes to make, because they are in regular contact with the company and did not expect such a sharp change in direction to occur.
Part of that sharp turn in direction is embodied by the judgments that Diageo has made about the marketplace and the market for distilled grain product. In that regard, I think that the company is taking a risk that, by any assessment, is too great to bear in the short term. In that regard, Patricia Ferguson and David Whitton marshalled good arguments for why the company should reconsider.
I appreciate that this debate is difficult for members, and I assure them—including my colleagues from Fife—that it has not been easy for ministers, either, to take a decision or an approach. I hope that colleagues who represent Fife understand the necessity of Government action to protect wider interests in Scotland from the economic and social damage that could be created.
I said in my statement earlier today that I and those who have considered the issues that are implicit in the debate recognise the strength and importance of Diageo's investment in Fife, in Leven and Cameron Bridge. That should give a great deal of confidence to those who are concerned about the prospects in those areas.
I assure Claire Baker that, as I have said—I do not know which part of my earlier statement she did not listen to—I have kept Fife Council involved in the proceedings. Her speech tonight was a terribly confused example of exhorting the Government to take action on the one hand, while disapproving of the action that the Government takes on the other. The Government is acting on the matter because we can see that one part of Scotland will be severely affected if we do not try to secure a different course of action.
I appreciate the good will that members from all parties have expressed during the past couple of months, and in particular I appreciate the work that has gone into the task force. I assure members that the proposals that will be set out to Diageo will use the Government's and the task force's approach to engage in dialogue about how we can make progress on the issue and minimise negative economic impact.
However, that will depend crucially and utterly on—as Gavin Brown said—the willingness of Diageo to consider alternatives and to compromise with a wide range of interests. The unity of opinion that has been expressed in the Parliament tonight is that we need to take a different course to protect vital communities in our country and ensure that a company with a strong reputation is able to live up to that reputation and properly promote a brand in which it has invested so heavily and on which its credibility so much depends.
Meeting closed at 18:17.