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 –for which Twinings applied for a multi-million euro EU funding earlier this year – and expand a Chinese site.
As of May 28 the firm’s funding application had been accepted but remained unsigned, with the EC seeking “formal guarantees” from Polish authorities that it was not being used to sponsor ‘relocation’, a practice forbidden under union law.
It raises the spectre of UK workers effectively subsidising their own unemployment as EU taxpayers, and ERDF (European Regional Development Fund) grants, which must concern new investments, are forbidden in such circumstances.
Contract signed on October 4
But in an October 27 letter shown to FoodManufacture.co.uk by Keith Taylor MEP, EC commissioner Johannes Hahn said that Twinings signed to receive the grant on October 4, although he said the Commission was still “analysing” the situation, given its previous undertaking to check that funds were not being misused.
Hahn wrote:“The Commission was informed by the Polish managing authority that the contract for support was signed on 4 October 2010.
“The total value of the project amounts to 174.5m Polish zlotys (circa. €43 million) of which 48.4m zlotys (circa. €12m [£10.42m]) is of European Regional Development Fund (ERDF) support.
“The Commission is currently analysing the situation and the Honourable Member [Keith Taylor MEP] will be informed of the results of this enquiry.”
A lawful grant?
Taylor originally wrote to the EC on September 21 pressing the commission for a further, promised response to a question put by his predecessor Caroline Lucas on March 25 about her concerns over job losses at Twinings’ Hampshire site.
Lucas 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” .
Union and staff outrage
Reacting to the news that the contract had been signed, Andover TUC (Trades Union Congress) secretary Derek Kotz said: “Whichever way you look at it Twinings is relocating production abroad at the cost of 400 UK jobs.
“For UK taxpayers to pay for that process is astonishing and an absolute disgrace. If this grant is given it makes a complete mockery of rules supposedly designed to stop EU grants being used by firms to uproot from one place to another.
“That said, there is a small nugget of hope, given the Commission’s continued examination of [the legality of] this case.”
Peter Millward, Twinings shop steward at USDAW Andover added: “As a Twinings worker I am genuinely dismayed that the firm have been able to do this – I’m paying to make myself redundant via the EU.
“Contrary to what Twinings have been telling us it is not an insignificant amount of money – it’s almost 25% of the overall site cost, so their claim it’s a small proportion is poppycock.
“I just don’t know how they can get away with this, or what this country’s coming to, when a profitable workforce – working for an immensely profitable company in Associated British Foods – is simply scrapped and jobs transferred abroad. There should be laws to stop this.”
Investment in technology
Presented with union concerns, a Twinings spokeswoman said the firm applied for EU financial support to invest in technology and research and development at the Polish site.
“The Polish authorities are satisfied we meet the eligibility criteria and have approved the grant for £10m. This is subject to fulfilling the terms of the agreement," she said.
“The grant will be used for investment in innovative technologies for blending and packing premium quality tea. The streamlining solutions we will introduce to the manufacturing process will enable us to offer Twinings teas with improved quality and aesthetic features to our mainland European customers.
“Twinings remains committed to the UK. More than 90% of the tea British customers drink will continue to be produced here in the UK, and Twinings is investing £6 million in its Andover factory.”