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Phased Closure for Hall’s of Broxburn

8 October 2012, at 8:24am

SCOTLAND, UK - International food group VION has announced plans to implement a phased closure of its loss-making Hall’s of Broxburn site.

The news comes following the completion of a 90-day consultation exercise with unions and workers, which commenced on July 5th, and ongoing discussions with a Scottish Government Task Force led by Cabinet Secretary for Finance, Employment and Sustainable Growth John Swinney.

VION UK chairman Peter Barr said: “We have done everything in our power to avoid having to take this extremely regrettable action but we have been unable to identify any viable alternative to the closure of the plant. This is a very sad day for all those involved but, unfortunately, the unsustainable losses which the plant continues to suffer, combined with the challenging economic conditions across all food sectors, have left us with no alternative.

"As we outlined when we made our initial announcement in July, VION has invested tens of millions of pounds in the Hall’s site over a number of years but it continues to record unsustainable losses. The outdated and inefficient layout of the site, overcapacity in the marketplace and increasing costs mean that it has been loss making for a number of years, a position we can no longer sustain."

Mr Barr aded: "Throughout the consultation exercise we have had extensive discussions with our employees and their union representatives to seek alternative solutions but, while some efficiency improvements have been identified, they are not nearly enough to bridge the very considerable losses which Hall’s continues to incur.

"As part of this process, we explored the feasibility of undertaking a major overhaul of the site. However, the investment required to deliver a facility capable of competing with much larger and more competitive plants across Europe would have been enormous. In the current environment that level of expenditure is not an option.

"During discussions with the Task Force, the Scottish Government outlined proposals to buy and lease the site back to the company. While we greatly appreciated this imaginative and genuine offer of support, the level of funding involved was significantly below that required to resolve the site’s major and inherent problems. Consequently, we felt it would be entirely wrong to accept public money, knowing that it would not deliver a sustainable solution for the site.

"In tandem with the Scottish Government, we have been working to find potential new owners for the site and this process has uncovered a small number of interested parties. We are engaged in detailed discussions with these parties to establish if their proposals would provide a viable solution for the Broxburn site. We will be providing the outcome of these discussions at next week’s Task Force meeting.

However the Scottish Finance Secretary John Swinney has confirmed that the work of the Hall’s of Broxburn taskforce will continue, despite the announcement of the phased run down of the site.

He said the taskforce will continue to work with the company to find a buyer for the site, and measures will be put in place to help staff looking for work after the announcement, as well as to mitigate the impact on the wider local economy and he added the taskforce will draw up a recovery plan to address these issues.

The taskforce was established in July after Vion, the parent company, announced plans to close the West Lothian processing plant. It comprises of the Scottish Government, West Lothian Council, Scottish Enterprise, Scottish Development International, Skills Development Scotland, trades unions, the company and local elected representatives.

The next meeting of the taskforce will be on 10 October, which is the deadline Vion has set for buyers to bid for the plant.

The Scottish Government has already been providing support to employees of Hall’s during the 90 day consultation period, which ended on Wednesday, through Partnership Action for Continuing Employment (PACE), and this will continue.

Finance Secretary John Swinney said: “This is disappointing news for Scotland and particularly for those working at Hall’s of Broxburn and their families.

“Since Vion announced the proposed closure in July, the Scottish Government and its agencies have taken every action in our power to secure the future of the plant, working with the company and stakeholders.

“We will continue to do so over the coming days. We are still working to secure a buyer, and the taskforce will meet again next week.

“All possible support will be made available to staff, teams have already been on site and resources are in place to help people who are looking at their options for the future.

“We will also work to address the serious potential impact on the local area, and the taskforce will draw up a recovery plan to address this and to find jobs for those affected by today’s announcement.“

Rural Affairs Secretary Richard Lochhead added: “With around 65 per cent of the pigs processed at Hall’s coming from Scottish farms, this difficult news clearly marks an unsettling time for Scotland’s pig industry. However, I can assure pig farmers that Scottish pork remains an important part of our food and drink offering going forward.

“We are monitoring the supply chain situation closely and Quality Meat Scotland are advising the Scottish Government on options, including an alternative plant capable of up-scaling to process the majority of pigs currently consigned to Halls.“

NFU Scotland’s Pigs Committee Chairman, Philip Sleigh said: “While the phased closure of Halls is a blow to the Scottish pig sector, discussions throughout the 90-day period have never raised expectations that a significantly different outcome would emerge and so this is the news most were expecting. Our thoughts go to the staff of the plant.

“There are some positives. A phased closure suggests there will be an outlet for Scottish pigs through Halls from now until Christmas and into the New Year. That is welcome and it also gives the industry time to look at new or alternative outlets for our pigs. That will involve discussions with processors in Scotland and England.

“The interest expressed in parts of the plant by a small number of parties holds out some hope that elements of the Halls operation may yet be salvaged for the industry.

“Although this is a blow, I believe we have an industry worth building again. Even during the 90-day consultation period on Halls, Scotland’s sow herd will have shrunk with soaring feed prices and a limited improvement in price prompting some to put their herds away. We need to turn that around.

“The job starts now of finding new processing partners who share our positive vision for the Scottish pig sector and the attitude of retailers to stocking Scottish pig products will be key. This week’s examination of shop shelves by NFU Scotland shows that there are a number of supermarkets that could significantly increase their commitment to Scottish pork.

“The pigs task force that met in July to discuss the ramifications that the closure of Halls might bring must meet again as a matter of priority and I call on Richard Lochhead to reconvene this group to kick-start the process of re-building our pig sector.“

VION Food Group purchased the Hall’s site, which employs 1700 people, in August 2008 when it acquired the troubled Grampian Country Food Group. Since that time, significant investments have been made in an attempt to create a profitable and sustainable future for the site. In addition, significant volumes of work have been brought in from other VION locations in the UK and new management introduced from across the group.

Mr Barr added: “If a sustainable solution cannot be identified with one of the interested parties it is our intention to implement a phased closure of the site, with some areas stopping production later this month, and an anticipated full closure by February 2013. We are already in discussions with our employees and their union representatives and will be briefing them fully to confirm the enhanced redundancy terms on offer to them and to outline our plans to support them in the coming months.“