GSK reveals job plan to swap India for Scotland Glaxo chief explains move to Scotland

Friday 8 April 2011

DRUGS giant GlaxoSmithKline is transferring manufacturing processes from India to Scotland and also planning to invest "tens of millions" at its operation in Ayrshire.

progress: Glaxo chief executive Andrew Witty revealed plans for the company's site in Montrose.

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mark smith deputy business editor

Chief executive Andrew Witty, the plain-speaking Yorkshireman who leads the world’s third largest drugs company, said the apparently counter-intuitive move would see 1.5 tonnes of biomanufacturing to move from India to Montrose in Angus.

GSK last year announced it would build its first new factory in the UK 30 years -- a biopharmaceuticals plant that will either be located at one of its two sites in Scotland or one of its two sites in the north of England.The announcement was part of a £500 million investment programme creating 1000 jobs.The chief executive was in Scotland yesterday to inspect the company’s plants at Irvine and Montrose for “site readiness”.Mr Witty, who yesterday also awarded Glasgow Science Centre a £600,000 grant for its BodyWorks exhibition, said “due diligence” was currently being conducted on the four sites.Asked if the “readiness” of any particular site had impressed him, he said: “I was in Montrose yesterday and I was extremely impressed, but I’m sure I will be equally impressed at Irvine today.”He continued: “I’m equally impressed by all the sites. A decision is expected in the first half of 2012.”GSK, which is also one of the UK’s most widely-held stocks, already has significant manufacturing operation Scotland.Between Irvine and Montrose the annual cost of manufacture is £160m, which produces 12 active pharmaceutical ingredients for 20 products supporting global sales in excess of £9 billion.The contribution from these sites to the Scottish economy is thought to be approximately £80m a year between salary and local supplier costs.GSK’s manufacturing in Scotland currently employs around 600 people.In February drug maker Pfizer announced it was closing its research and development plant at Sandwich in Kent with the loss of 2400 jobs.But the latest developments at GSK’s operations in Scotland are part of a strategy that will see significantly more of the com-pany’s overseas manufacturing processes brought “back home to the UK” over the next few years.He also said these developments were part of the company’s recent shift to increase its focus on drugs and consumer healthcare products for emerging markets.“It’s extraordinary to think that just a few years ago, the Montrose plant was close to shutting down,” Mr Witty said.“But the workforce applied great brain power to cost and process efficiency, and now we are actually bringing work back from India and Montrose is where it is going.”The manufacturing shift will see Montrose manufacture the chemical compound betamethasone, a potent steroid used in creams to relieve skin irritation, such as itching and flaking from eczema.Asked about the logic of this move, Mr Witty said: “It’s an absolute reversal of what has become standard practice.“A few years ago, if you had said you were moving manufacturing processes from India to Scotland, no one would have believed it.“Payroll is not the issue. Actually, our payroll in Montrose is double the payroll in India.“What has made the difference is the workforce and its extraordinary emphasis on efficiency. The Patent Box also helped.”Chancellor of the Exchequer George Osborne last year confirmed that a Patent Box -- a policy to reduce the rate of corporation tax on income derived from patents to 10% -- will be introduced in the UK in 2013.Staff numbers at the Angus plant over the course 2011 will increase from 250 to 280.“To put it simply, we are looking for the highest quality with the most cost-effective process and in this case the Montrose plant fits the bill,” Mr Witty said.“This is also a workforce that has rolled with the punches. They outmanoeuvred the threat of closure, and the headcount has gone up in the good times and it has gone down in tougher times.“That’s also true of the Irvine plant -- and now we’re looking at an expansion there worth tens of millions of pounds.”The chief executive, who is three years into a restructuring of the manufacturer of a number of its treatments, acknowledged that the Irvine plant had laid off 200 workers in December, taking its headcount to 350.Of its 96,500 employees globally, GSK employs 16,000 in the UK, a number that has fallen because of plant closures and cuts as the company has struggles with the decline of several key drugs.Nonetheless, Mr Witty said: “I know you’re thinking I’m investing tens of millions in an expansion on the one hand, while laying off 200 people with the other.“But what we have done is put the operation in a much stronger position where we can win the business and we can be confident enough to expand and grow.“There is a logical flow to it.”

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GSK reveals job plan to swap India for Scotland Glaxo chief explains move to Scotland

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