Kerry Foods reviews operations at Durham plant with view to closure

Kerry Foods has set the end of July as the final decision date for the possible closure of its cooked meats and home-baked goods factory in Durham, England.

Kerry has begun a 90-day consultation period in which it will review operations at Durham, adding that it has been unable to “restore the site to a profitable level” in the face of competition in the cooked meats sector from bigger British players.

The Durham site employs around 350 staff. Kerry has indicated that, in the event of a closure, it would hope to re-employ its “loyal workforce” in its alternative roles in some of its other English plants.

The Tralee-based food group has also indicated that it has the capacity to meet the business commitments aligned to the Durham plant by shifting production to its plants in Lincolnshire and Norfolk in England, as well as to its Glenealy meat plant in Wicklow, Ireland.

Kerry Group director of corporate affairs Frank Hayes said: “We have already made significant adjustments to our cost base in Durham. If an alternative strategy cannot be secured, we will regrettably have to close the Durham site. If so, this will happen by the end of July.

“Market conditions in the cooked meat sector have been highly competitive in the UK over the past 12-18 months and Kerry is relatively small in this sector. There has been an increase in promotions in this sector that has led to a lower factor throughput in Durham.”

The union representing the Durham workers, the Union of Shop, Distributive and Allied Workers (Usdaw), has described the potential closure as “absolutely disastrous”.

The union said that the Durham production line features several generations of the same families working alongside one another. Usdaw said it will continue to talk to Kerry Foods management in a bid to keep the plant open.

The loss-making Durham operation runs against the upward fortunes of other Kerry Group companies. In February, the Group unveiled record annual trading profit for 2011 of more than €500m.

Revenues were up 6.9% to €5.3bn, delivering a pre-tax profit of almost €450m for the year. The group also says that it is likely to make further acquisitions during 2012.

Those annual results also showed that Kerry’s consumer products growth of 3.2% was weaker than the 7.7% growth in its flavour and ingredients division.

The group will continue to discuss the situation with the relevant parties in Durham over the coming months.