The Scottish Government proposed a new £57 million factory to save 500 jobs at the threatened McVitie’s factory but offered no public money to underpin the plan.
The biscuit maker’s owner Pladis, part of a Turkish-based conglomerate, announced last week that plans to shut the factory in Glasgow would go ahead, ending the company’s links with Scotland after 182 years.
A 21-page counter-proposal to closure, drafted by an action group led by the Scottish Government and Glasgow City Council, suggested building a new factory to replace the ageing plant in Tollcross.
However, despite revelations that closure would result in a £49m per year loss to the Scottish economy, the blueprint contained no proposals to underpin the investment with enterprise grants or other public money.
A food manufacturing grant of up to £4m was mentioned but the proposal focused on methods of financing the new factory, including a developer building it and leasing it back to Pladis, or asset financing – seeking funding from the manufacturers of equipment for the new factory.
The proposal also suggested redeploying the estimated £35m it will cost Pladis to close Tollcross towards a new factory instead.
It was revealed in 2019 that the UK Government pledged £80m to Japanese car maker Nissan to secure thousands of jobs at its plant in Sunderland.
Business grants quango Scottish Enterprise, which has a £340m budget, is part of the Pladis Action Group.
Ministers urged to revise offer
A source close to negotiations said: “The counter-proposal is credible in terms of the operational analysis, but the absence of public finance is a notable omission. The key pillar is how it would be paid for, and there is no pledge of state financial aid.”
Pauline McNeill, Labour MSP for Glasgow, said: “The loss of these 500 jobs would see a domino effect in the east end of Glasgow and across Scotland, so state aid would make sense as an investment. The Scottish Government need to have one last push to turn this around.”
The Pladis Action Group is due to meet on Friday.
Unions, meanwhile, claimed Nicola Sturgeon told them she received assurances regarding the factory during an online meeting with Pladis’s global chief executive last month.
Robert Deavy, Scotland organiser with the GMB union, said: “The company says it expected more in the counter-proposal. Our Scottish secretary met this week with the First Minister, who said she’d had assurances regarding the counter-proposal when she discussed it with the company on July 29. We would like to understand what these assurances were because, just days later, closure was announced.
“If the Scottish Government is serious about Scottish manufacturing, it is going to have to make a clear pledge of money to support this counter-proposal.”
The counter-proposal states: “Consideration would be given to the most tax-efficient structure for parties involved, including VAT and available tax reliefs. The Food Processing and Marketing Grant scheme delivered by Scottish Government is also available. This provides potential to access up to £4m to support capital investment for businesses.”
It added help from development organisation Clyde Gateway could include “grant contributions towards feasibility studies and design fees, potential for capital contributions towards funding gaps, and land within Clyde Gateway’s ownership”.
Closure of the Tollcross factory will result in the loss of 500 direct jobs and an estimated 400 more in a knock-on affect across Scotland.
Pladis said: “The alternative proposals did not present a viable alternative to the original proposal. The rationale is to address excess capacity across Pladis’ UK sites and protect the long-term sustainability of the business. Production from Tollcross will move to other Pladis sites within the UK and the factory is expected to cease operations in the second half of 2022.”
The Scottish Government said: “We’re extremely disappointed in Pladis’s unexpected announcement to proceed with closing its Tollcross site. Ministers were prepared to engage with Pladis on how best to progress a commercial proposal that would retain jobs and manufacturing. However, before discussions had begun, Pladis confirmed their intention to close Tollcross and stated they do not believe the proposal is viable.
“Our overriding priority remains the welfare of the staff and their families and we want to reassure them that we will leave no stone unturned in trying to find a positive outcome.”
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