90 Lanarkshire jobs face chop at sausage skin firm
● Bosses say Scotland is ‘strategically important’ to group’s global operations
Devro, the Scottish sausageskin and food casings producer, plans to shut its Bellshill site with the loss of some 90 jobs.
The group said it had undertaken a review of its global manufacturing footprint in an effort to obtain “further efficiency improvements”.
While the firm proposes to close its Bellshill operation, it is looking to increase the range of products manufactured at its nearby Moodiesburn site, also in North Lanarkshire, and relocate some of the manufacturing assets from Bellshill within the wider group. It will take a £15 million hit as a result of the actions.
In a trading update, Devro told investors: “In line with our strategic priorities, the group has undertaken a review of its global manufacturing footprint with the aim to pursue further efficiency improvements, as well as to align available capacity to the group’s growth ambitions. Following consultation, we expect Bellshill to close during 2020 with the loss of circa 90 employees.
“Additionally, as part of the global manufacturing footprint review and the intended closure of Bellshill, the group is analysing its ongoing supply strategy.
“This is expected to result in non-cash exceptional impairment charges in [financial year] 2019, primarily relating to partial write-downs of the China and US plants.
“These plants continue to be an integral part of our global footprint and the revised supply strategy will enhance the agility and flexibility of the group’s supply chain whilst staying focused on our longterm growth ambitions.”
The Moodiesburn operation, where the group is headquartered, recently received a £2m investment.
Chief executive Rutger Helbing added: “Scotland will remain strategically important to Devro’s global operations. However, the collagen market is evolving and we must look at how we manage our business and stay competitive.
“Decisions like this are never easy. I know this will be an uncertain time for many colleagues, their families and the wider community.”
Devro noted that sales momentum had improved during the third quarter of 2019 with 1 per cent volume growth in collagen casings.
It added: “During the period we saw good trading in North America, where we benefited from continued growth in snacking categories, and also in China.
“These positive performances were offset by a further deterioration in market conditions in continental Europe and weaker-than-expected sales in Japan.”
Shore Capital analyst Darren Shirley said: “Looking into Q4, management is guiding to a further ‘modest’ acceleration in volume growth. Management has also announced it is proposing to close its Bellshill site in Scotland and relocate some of the manufacturing assets within the wider group (we expect primarily into the Czech Republic).”