Halls of Broxburn factory lease back plan fails
- 14 September 2012
- From the section Edinburgh, Fife & East Scotland
The owners of Halls of Broxburn have turned down an offer from the Scottish government to buy and lease back the threatened food factory.
It emerged late on Thursday that the latest plan to save the plant, and its 1,700 jobs, had been rejected.
Parent company Vion said accepting public money would only delay any potential decision regarding closure.
Finance Secretary John Swinney said he was interested in hearing from anyone else who might buy the business.
West Lothian Council described the rejection as "disappointing".
The taskforce dealing with the threat to the Broxburn factory will meet again in October.
Mr Swinney explained the proposal was put together to allow further investment at the plant.
He said: "Along with the leader of West Lothian Council, John McGinty, I put these proposals last week to Peter Bekkers the chief operating officer at Vion International.
"Vion - whilst welcoming the innovative nature of the proposals - has advised the taskforce today that the proposal is not sufficient to be acceptable to the company.
"The taskforce is now concentrating on identifying profitability improvements, engaging with retailers to sustain contracts at Halls, providing advice to employees and working with two potential bidders to secure investment and we would invite any other interested parties to come forward."
Potential savings of £4m had also been identified, Mr Swinney said.
Mr Swinney said buying the food factory would have cost about £2m and the proposed rescue plan was "essentially a commercial transaction".
The Finance Secretary added: "What we were trying to do in this proposal was to recognise the fact that should Vion chose to close the plant, that's not a cost-free option for Vion.
"It will cost them in the order, I estimate, of between about £17m and £25m to close the plant.
"That's essentially a negative cost which I would rather see invested in the long-term future of the plant at Broxburn, creating a continuity of employment for members of staff."
With less than three weeks to go until the 90-day consultation closes on 3 October, Mr Swinney said two other parties have expressed an interest in the plant.
A spokesman for VION, said: "We greatly appreciate the serious offer of support the Scottish government has made and thank them for the significant assistance they have provided since the start of the consultation process.
"However, given the scale of the losses at Hall's of £79,000 per day, and the complexity and inefficient layout of the factory, we regret that we are unable to accept this support.
"It would be wrong to accept the offer of public money knowing it is significantly below the amount required to resolve the core legacy problems at the site and would only serve to delay any potential decision regarding closure."
He added: "The Broxburn plant is competing against much larger, modern plants across Europe and to establish such a facility on the site would cost in excess of £100m and take up to two years of mounting losses to complete.
"Unfortunately the structural issues within the market and the problematic nature of the outdated facility, which we have been consistent about throughout this process, mean we have still not identified a viable solution for the Hall's site."