“I suspect that this could be first in a long line of businesses looking to produce in eastern Europe where availability of labour and employment costs are more attractive,” the industry expert told FoodManufacture.co.uk.
“This is all about cost of manufacture and availability of labour, and this absolutely is the tip of the Brexit iceberg. We have to recognise that Nestlé is a global multinational and to them producing in Poland is no different to producing in the UK, except it’s cheaper.”
Many of the UK manufacturing sector’s 100,000 EU workers will currently be considering moving home due to sterling’s weakness, and manufacturers will follow them, the industry expert predicted.
‘The work follows them’
“All of those who have been so keen on Brexit and the UK controlling the free movement of labour will find that employees from eastern Europe head back home. They are already doing so because sterling is now worth 15% less than pre-referendum – and the work follows them.”
The source was responding to the GMB union general secretary Tim Roche’s claim that Nestlé’s decision to move production was the “tip of the Brexit iceberg”.
But, city analyst Shore Capital said cost analysis was likely to have underpinned the move.
Black told FoodManufacture.co.uk: “Managements will look at medium-term operating costs and market access environment, and allocate capital accordingly. Doing so at this time, with so much uncertainty on UK–EU relations, is noteworthy but they will have done their homework and have their reasons.
“With sterling’s weakness, one could argue that import substitution and greater export potential should be the order of the day for many food products. Clearly, not low price, low value added biscuits.”
Cut nearly 300 jobs
The comments came after Nestlé yesterday revealed plans to cut nearly 300 jobs, and move its iconic Blue Riband production to Poland after 81 years in the UK. The manufacturer planned to standardise shift patterns at factories in York, Fawdon, Halifax and Girvan.
A Nestlé statement yesterday said: “Nestlé UK is informing employees of proposals to make some changes to the factory operations within its UK confectionery business. These proposals span four different sites, and may result in a reduction of 298 roles, predominantly at York and Fawdon, through 2017 and 2018.
“Nestlé UK appreciates that this is an uncertain time for employees and will work hard to ensure all are supported through this difficult period.”
Meanwhile, Nestlé’s planned move to Poland sparked a Twitter backlash from consumers. Some people said they would boycott Nestlé products (see below).
What the unions said about Nestlé UK’s planned job cuts
- “This is yet another kick in the teeth for the north east economy. Pillaging our jobs and shipping them overseas looks like the worst kind of Brexit imaginable. Under this government, it’s more the Northern Poorhouse than Northern Powerhouse.”
Valerie Scott, GMB
- “To shift the production of an iconic British brand like Blue Riband to Poland is completely unacceptable. Nestlé are throwing people’s lives, and those of their families, into turmoil for the sake of increasing profit margins.”
Tim Roache, GMB
- “We will be campaigning to save as many jobs as possible and pressing Nestlé to think again about these plans which will see the loss of hundreds jobs and the production of an iconic biscuit shipped to Poland.”
Julia Long, Unite