Britain’s largest packaging company will close its factory in Kent and continue to expand production in Europe, warning that a planned bonfire of EU laws could plunge the UK into a deeper economic crisis.
Miles Roberts, CEO of DS Smith, said the group’s international operations could not continue to subsidize operations in its home country, adding that it would be “extremely helpful” for manufacturers if the government were to enforce regulations “where possible”. align with EU rules to facilitate trade. .
His comments add to British companies’ warnings against deeper secession from the EU after Brexit as the government pursues plans to “revise or repeal” up to 4,000 laws derived from the bloc.
“The UK economy is currently one of the weakest areas for manufacturers. But we more than made up for that with strong investments elsewhere,” he added. DS Smith recently opened factories in Poland and Italy, and is expanding in Germany as it continues to invest outside the UK.
“What is the real advantage [of diverging from EU rules]? It adds cost and complexity. . . It’s more cost and inflation for the UK,” Roberts said.
The decision to close DS Smith’s plant in Aylesford, which produces cardboard displays for retailers, was “deeply regrettable”, he said, but the company had to “respond to demand”. The closure is expected to result in the loss of approximately 100 jobs.
“There are now pretty tight restrictions on the movement of products between the UK and its largest market,” he said, adding that the company’s exports to the bloc have roughly halved since Brexit.
Roberts said DS Smith currently has no plans for further closures, but added: “A lot of what we make still complies with EU regulations. If the British government wants to get rid of that, we’ll get all these separate registrations. . . We’ll have to think about it very carefully. . . how we deal with it.”
Louisa Bull, Unite’s union official, said workers at the Aylesford plant were “devastated” by the decision. She said jobs will be available at another warehouse in Cambridgeshire, but staff will have to move.
Separately, GMB Union reluctantly accepted an improved 8 percent pay rise from DS Smith after 93 percent of the 1,000 workers it represents voted to strike over pay last month.
The group still has one paper mill and 27 packaging facilities across the country, with the exception of the Aylesford mill.
GMB official Eamon O’Hearn said the site closure had contributed to concerns about the future of Britain’s manufacturing and factory workers, adding: “No one can escape the impact Brexit has had on supply chains”.
“The other parts of [DS Smith] subsidize the UK. And that can’t go on forever,” Roberts said, adding that some of his UK factories are now loss-making.
His comments came as DS Smith reported an 80 per cent increase in profits to £315m over the six months to October, while sales jumped 28 per cent to £4.3bn.
The group also revealed it has provided £100m to support its UK pension scheme through a cash advance and a liquidity facility as the recent turmoil in gilded markets has plunged many UK pension schemes into crisis. But it said the advance had been repaid in cash and the scheme had yet to raise money from the liquidity facility.