Another savage blow to the Scottish economy

Friday 6 July 2012

THE likely loss of more than 1700 jobs at Dutch-owned Hall's of Broxburn is a bitter blow not just to West Lothian and the Scottish pig industry but the whole of the Scottish economy.

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For a nation that boasts too few large sustainable companies, each one that disappears is keenly felt.

Hall's is the victim of a cruel confluence of circumstances: namely, historically steep rises in animal feed, combined with big increases in fuel prices. It has also suffered the classic squeeze between high borrowing costs and big supermarkets capable of screwing down the margins of their suppliers, especially in the high-volume market. It is they, not the retailers, who pay for all those tempting "bogof" (buy one get one free) offers. More needs to be done to create a level playing field between suppliers and retailers.

Admittedly, there is an acknowledged over-capacity in the pig meat market as some consumers turn to white meats, which are perceived to be healthier, and others find bacon and pork joints beyond their means. This is a terrible blow for the loyal and hard-working staff who have endured years of restructuring in a bid to make the plant pay. But a business that is said to be losing nearly £80,000 a day is clearly unsustainable.This is the latest in a long line of major employers in West Lothian to throw in the towel. The lesson of Motorola, which halted production of its mobile phones in Bathgate a decade ago, and before that British Leyland and NEC, is that these closures leave holes in the local economy that are hard to fill. The task force announced by the Scottish Government yesterday to save the company is to be welcomed, but it remains to be seen how successful it will be. Politicians and Scottish Enterprise can offer sympathy and encouragement to start new businesses but such efforts following the Motorola closure were largely unsuccessful, despite the skills of the workforce. It will be even harder to turn abattoir workers and meat-packers into entrepreneurs. As for the Scottish pig meat industry, its margins remain under pressure as the cost of feed increases far more steeply than farmgate prices. Wholesale prices are lower than at the same time last year, yet still the third highest in Europe. There is some scope for smaller, perhaps nimbler, Scottish producers to take advantage of the disappearance of Hall's from the bacon and pork market. In general, it is top of the range, added-value food products that have proved more resilient to the downturn. Fortunately, that is an area in which Scotland performs particularly well. Hall's has failed despite heavy investment in the plant since it was bought from Grampian Country Food Group in 2008. How many other once-healthy and profitable businesses are teetering on the brink of disaster?

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Another savage blow to the Scottish economy

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