Diageo: it’s not redundancy, just shameful profiteering

By Stephen Gummer

So Diageo’s profits are in. The drinks company who provides us with Guinness, Smirnoff and numerous other commonplace alcoholic beverages has had a tough year. Their revenue has increased by 15% and now totals around £9.5 billion. Their gross profit has fallen by an unbearably small £0.07 billion to £2.02 billion and net profits have increased to £1.62 billion from £1.52 billion. Somebody pass around the collection plate, maybe LabourList readers should help the shareholders scrape together a dividend?

Never has it looked more wholly outrageous that this company is trying to cut 900 jobs, 700 from its Kilmarnock bottling plant and 200 from Port Dundas distillery in Glasgow.

So wholly greed-based is the proposal that even local members of the Conservative Party have joined the union movement’s efforts. In fact the efforts to fight Diageo’s greed have been entirely politically united, with members of the SNP, Labour, the Liberal Democrats and the Conservatives all at least agreeing that 900 job cuts is too many. Such political unity doesn’t happen often – if every major political party has set up their stall against you there is a good chance you’re doing something wrong.

However, perhaps the most sorry aspect of this whole affair arose when Diageo’s boss, Paul Walsh, rather bizarrely claimed that the strike action could hurt sales of alcohol, leading to further job cuts. To put that into plain English Mr Walsh is worried that trade unionists publicising the fact that his company is behaving immorally will hurt his profitability and consequently his employee’s jobs. Such an argument is about as convincing as blaming Robert Peston for the credit crunch, reporting something bad has happened doesn’t exacerbate the problem, it is the action itself that leads to worse consequences. If Mr Walsh is really worried about the adverse publicity he might just want to consider keeping the hundreds of workers he intends to lay off; as by his logic it may very well save him money by avoiding lost profits.

In times of global recession there are inevitably going to be job losses and honest companies, who have done everything they can to safeguard their workforce, may very well have to cut staff. However, Diageo are using the global recession as a mask to increase their own profitability. The nerve of their using the credit crunch as a smokescreen is enough to turn anyone to drink.

Related posts:

1. Fair play on redundancy pay
2. Time to correct Brown’s most shameful act – or we’ll deserve to lose