Scottish & Newcastle to cut 1,600 brewing jobs

NIGEL COPE

Scottish & Newcastle, which became Britain's biggest brewer following its acquisition of Courage last summer, is to cut 1,600 jobs and close two breweries as part of the integration programme. The cuts represent 20 per cent of the group's 8,000 beer production employees.

The company plans to close the Fountain Head brewery in Halifax, which produces Webster's and Wilson's bitter as well as Foster's and Molson lager. Also to close is the Home brewery in Nottingham, which brews Home Ales and Matthew Brown beer.

The Fountain Head brewery, which will close by October, has been making beer since 1828 and employed 184 people. Nottingham's Home brewery, which will be a phased closure, has been brewing local ales since 1875. The remainder of the redundancies will be made at 13 distribution depots that will also close.

The company said: "It is sad, particularly as these are longstanding industrial locations with a strong tradition and heritage. But the beer industry in 1996 is very different to what it was in the middle of the 19th century."

However, the Labour Party immediately criticised the job losses, which include 250 in the Rushcliffe constituency of the Chancellor, Kenneth Clarke. Ian McCartney, the shadow employment secretary, said: "These employees are the latest innocent victims of the merger mania running riot through Britain's boardrooms. It is a calamity that such a successful company can blight the lives of so many of its local employees."

The redundancies are part of a radical restructure at Scottish Courage, Scottish & Newcastle's newly created beer division. In a move designed to streamline production, distribution and sales it is reducing its number of depots from 41 to 28.

The company said the cuts would yield annual savings of pounds 75m. The company has already announced pounds 150m of provisions to cover the restructure. This includes pounds 80m in cash and an asset write-down of pounds 70m.

In future S&N's brewing will be concentrated at seven sites in Edinburgh, Newcastle, Tadcaster, Manchester, Masham, Bristol and Reading. Home Ales will be produced by Mansfield Breweries in North Nottinghamshire. The brewing of Webster's and Wilson's will be transferred to other sites.

Last month Scottish & Newcastle reported interim profits that were at the lower end of expectations. Pre-tax profits rose from pounds 145m to pounds 154m. The company announced then that it would be closing breweries but refused to be drawn on which might go. Some analysts speculated that as many as four might close.

On sales of pounds 300m Courage contributed profits of pounds 9m to group operating profits for the 11 weeks following the takeover. Analysts are forecasting group profits of pounds 312m for the full year.