Fears of rising job cuts are running high

Substantial fears of rising job cuts in the food industry have been voiced by the GMB union and confirmed in an exclusive Food Manufacture​ online poll.

A total of 83% of respondents reported concerns that the rate of consolidation and job losses would increase in the food industry in the next year. Only 17% said they were not worried about this.The findings echo the words of Paul Kenny, general secretary of the GMB union, who was commenting on the latest unemployment figures from the Office of National Statistics.

Kenny was quoted in the Guardian​ saying: “I fear there are more job losses to come, particularly in food manufacturing, where thousands of workers are being made redundant.”

Asked whether there was a rise in the number of food and drink processors laying workers off, a spokesman for the GMB told Food Manufacture​: “There seems to be. Retailers are refusing to accept inflation and pass it on to their customers and manufacturers are refusing to keep their factories open [as a consequence].

Northern Foods’ Grantham-based Fenland Foods plant, which supplied mainly Italian ready meals to Marks & Spencer (M&S), is scheduled to close on August 24. The decision was made to mothball the plant, which employs more than 700 people, following Northern Foods’ declaration that its contract with M&S was financially untenable.

“There’s also trading down going on,” said the GMB spokesman. “People seem to be moving more to buying at Aldi and Lidl and there’s less demand for pre-prepared foods.”

Duncan Swift, joint head of Grant Thornton’s food & agribusiness recovery group said: “The trend in formal appointments [for insolvencies] is not necessarily upwards. We usually find there’s a spike in formal insolvencies 6-12 months after a downturn.”

But he said financial institutions that had extended credit to the food and drink sector were becoming increasingly jittery. “There’s a lot more viability reviews by banks seeking to assess how much elbow-room they [food and drink manufacturers] have before things go critical.”

However, Swift predicted that there would be a notable rise in the number of insolvencies within six months.

His comments came as the Lloyds TSB Business Barometer found that companies' confidence in their trading prospects fell in July to its lowest since the survey began in 2002. A survey by the Institute of Chartered Accountants showed business confidence fell to -25.7% for the three months to June 30, from +19.7% in the previous quarter.

Meanwhile, the British Chambers of Commerce has forecast that the jobless total across all industries would leap up by as much as 300,000 to more than 2M people in the next two to three years.

Grant Thornton’s Food Consolidation Index 2008 predicted “an unprecedented level of consolidation” for the food and drink sector in the next two to three years​.