MEP demands EU answers on Twinings factory fund

By Ben Bouckley

- Last updated on GMT

Related tags: European union, European commission, European parliament

MEP demands EU answers on Twinings factory fund
Keith Taylor MEP is demanding that the EU Commission discover whether Twinings provided guarantees to Polish authorities that it would not misuse an EU funding award that will see UK jobs relocated abroad

Twinings is consolidating its UK tea production facilities in Andover, Hampshire, with 129 jobs set to go at this site next spring, while the firm’s facility in North Shields faces closure in September 2011 with the loss of 263 jobs.

The cuts follow a decision to transfer operations to a new €45m (£37.7m) factory in Poland and expand a Chinese site.

Taylor’s predecessor as Green Party MEP for Hampshire and Southeast England, Caroline Lucas, originally wrote to the European Commission (EC) on March 25 ​about her concerns over job losses at the Hampshire site.

She asked whether Twinings or parent firm Associated British Foods (ABF) “are, or will be, in receipt of EU funding for the building of a new factory in Swarzedz ​[Poland]

On May 28 the EC replied that it was seeking “formal guarantees”​ from Polish authorities that Twinings was not using EU funds as a share of €10,400,439 (£8.03m) to invest in the site for the “relocation of production or service facilities”​ .

ERDF (European Regional Development Fund) grants, which must concern new investments, are forbidden in such circumstances, which raise the worry of Twinings’ UK workers effectively subsidising their own unemployment as UK/EU taxpayers.

British government investigates

Taylor wrote to the EC on September 21 pressing the commission for a further, promised response to Lucas’ question, a move which closely shadowed the British government's recent decision to quiz Polish counterparts on the same issue​.

Ms Lucas’ motivation for writing was her concern that EU grants made to Poland were being used specifically to encourage businesses such as Twinings to relocate there from other member states. I share this concern,”​ wrote Taylor.

“The Commission then committed itself ​[in the May 28 reply to Lucas] to seeking formal guarantees from the Polish authorities that EU support for the subsidiary of R.Twining and Company will not be used in this way.

“I would be very grateful if you could let me know whether this guarantee has been obtained, and where the process is now (as of May 28 the project had been accepted but not yet signed).

“If a guarantee has not been obtained, ​[then] I would be grateful if you could let me know why this is the case.”

Twinings sales success

Reflecting on the grant, Derek Kotz from Andover Trade Union Congress (TUC) told FoodManufacture.co.uk in late September: “The full contract for the funding award hasn’t been signed yet, but that’s hardly surprising given the...Commission involvement.”

The news come against a backdrop of "encouraging progress” ​for Twinings Ovaltine in ABF’s 12-month trading update for the year to September 18 2010.

It said:“Twinings Ovaltine maintained the sales and profit growth achieved in the first half with particularly encouraging progress…in North America and the UK.”

Given this success, some trade unionists claim that the Polish move stems from greed rather than necessity, although Twinings denies the initial decision was anything to do with a grant; instead emphasising the need for closeness to key continental markets.

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2 comments

It's unlawful state aid pure and simple

Posted by Stanley Millgram,

The press are so unsophisticated. If this happened in Germany the grant would be challenged as unlawful state aid.

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Twinings managers set for increased bonuses

Posted by alice fearnes,

I have worked for a number of multinationals and this is how we decide where to build a factory:
1. How much money will we be paid for building it (local, or central government, development grants etc). The statement that Twinings management didn't know what was available is just a plain lie, every company I have worked for knows all the grants it can get, Before they build a factory, they contact the local councils and business liaison groups to find out what they can get.

2. Is the local site suitable - infrastructure, power supplies, suitably educated population. Again, Twinings will have been in touch with the local political groups and been fully aware of training grants.

3. Tax incentives and rebates. Nobody builds a facility - even Tesco - without discussing the rebates and grants. This is why we have out of town shopping - the land is cheap and the companies get building grants, it has nothing to do with what is good for local communities.

4. Cost of local labour. In fact, labour costs are less important then many claim; automated factories mean that there are less staff, much of the cost is now machinery and automation.

5. Cost to shareholders. This is when the corporate executives get their bonuses for making the company more profitable. The EU payouts will end up in the pockets of the shareholders and the executives, not with Polish workers.

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