When the board of any global company, in this case the largest multinational beer, wine and spirits company in the world, agrees a move that is either going to shore up, or increase, its profits there is little any government can do to change its mind.
Diageo is a £24bn company and made a profit of more than £2bn last year. Compare that to the Scottish Government’s annual budget of around £32bn. Diageo could always mount a takeover bid for Holyrood and close that down instead.
Comments by Diageo’s senior managers made it clear from the start that they could envisage no circumstances in which their decision would be reversed and said they did not want public money to keep Kilmarnock or Port Dundas going.
If millions of pounds of taxpayers’ cash is offered to a company as profitable as Diageo, where do the handouts stop?
Though they can’t admit it publicly, the cross-party efforts by the government and opposition politicians were always doomed to failure.
Having announced their decision, Diageo’s managers would have appeared flaky in the eyes of their shareholders if they had changed their minds.
Predictably, the veneer of unity among politicians has now shattered and the blame game has started.
It is curious, however, that the Labour Party has accused the SNP Government of “letting down the workforce at all of Diageo’s Scottish plants”.
Do the company’s employees in Fife, where 400 jobs are to be created, feel that way? Their job security is ensured and while they may sympathise with their colleagues in the west, they would be fools not to
welcome the expansion at their own plants.
There are questions to be asked about the efforts of the taskforce and the consultant’s report commissioned by Scottish Enterprise.
Almost £80,000 was spent by Scottish Enterprise commissioning the report only for David Gosnell, Diageo’s managing director of global supply, to say: “The taskforce proposal does not address the basic economics of our business, current developments in the marketplace or funding for the suggestions it does advance.”
That is damning criticism and searching questions must be asked by an independent examiner of all those involved in preparing and reviewing the report before it was presented to Diageo to establish whether it is justified.
It sounds like Scotland’s negotiators went into the final meetings ill-equipped and not knowing what they were talking about when faced with very hard-headed and successful businessmen.
Part of the problem for Finance Secretary John Swinney and First Minister Alex Salmond is the balancing act they must perform between supporting workers about to lose their livelihoods while presenting
Scotland as a business-friendly country.
Mr Swinney was complimented for his leadership by Diageo Scotland’s managing director Bryan Donaghey so, at least, he retains some credibility among the business community and First Minister Alex Salmond took a high-profile part in supporting the workers at a rally in Kilmarnock.
Neither of them, however, will emerge unscathed and they now face the challenge of trying to help 500 workers at the Bausch and Lomb contact lens factory in Livingston. Just as Diageo didn’t need the capacity at Kilmarnock, Bausch and Lomb, an American company, doesn’t need the space in Livingston.
It’s Groundhog Day for Scotland’s political leadership. But no matter who is in power in a country as small as Scotland, they will always be at the mercy of multi-national companies.
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