150 facing axe in Glaxo cost cuts

7:50am Friday 3rd October 2008

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A FURTHER 150 North-East jobs are under threat after drugs company Glaxo-SmithKline said its factory must cut costs by £6m a year.

The news was broken to shocked staff at Barnard Castle, County Durham, during three meetings yesterday.

Bosses describe job losses as a “worst case scenario” but have confirmed an immediate review of staffing at the 60-acre site – to be completed by the end of the year.

The news comes only 24 hours after The Northern Echo reported US firm Parker Hannifin will close its fridge parts factory in Crook, County Durham, after financial losses of more than £10m in two-and-a-half years.

Fellow US-owned engine manufacturer Cummins is also preparing to cut 86 fulltime staff at its Darlington factory, in addition to 111 temporary workers.

The deepening economic gloom gripping the region was tempered slightly by engineering and project management firm K Home International, based in Thornaby, near Stockton, which yesterday announced it is to create 100 jobs.

Meanwhile, economists hope the UK will receive a much-needed boost if the US Congress approves a £385bn rescue package today, aimed at restoring confidence in its troubled financial markets.

Staff at GlaxoSmithKline (GSK) – which has joint headquarters in Britain and the US – were told the cost of running its Barnard Castle operation, which employs 1,050 people, is £6m ahead of income, a gap that cannot be allowed to continue.

GSK recently announced its intention to cut 850 research and development jobs in Britain and the US.

Earlier this summer, chief executive Andrew Witty warned that the industry faced a number of challenges as an increasing number of products lost patent protection, health funders sought cheaper health care and patients demanded new and better medicines.

One worried Barnard Castle worker, who asked not to be named, said: “We were told each employee costs the company an average of £40,000 a year. That takes into account wages, national insurance, tax and pension.

“So it works out that if 150 employees go, that will mean a saving of the full £6m.

“We must all now hope that other ways of saving can be found.”

He added: “There is fear and worry right round the factory.”

Staff were also told during the meetings that some jobs could be regraded to lower salary levels – resulting in a one-off compensation payment.

Six years ago, 400 jobs were cut at Barnard Castle in the aftermath of the merger between Glaxo Wellcome and Smith-Kline Beecham.

Yesterday, GSK said it would focus its cost-cutting efforts to three main areas. These are:

● Review of organisation structures, staffing levels and working methods across the site;

● Reducing operating costs;

● Seeking new business opportunities.

Acting site director Adrian Lowes said: “While not wanting to prejudge the outcome of the organisational review, we anticipate that it may result in a proposal to reduce staffing levels. “However, until the review is complete, we are not able to determine the numbers that may be involved.” The plant in Barnard Castle – Teesdale’s largest employer – manufactures a range of medicines, including Zovirax and antibiotics. It also plays a key role in the launch of products. The staff member continued: “Several workers asked the management if there would be any voluntary redundancy, as some people would rather go with a decent redundancy payment than go on working with these doubts hanging over them. They were told it will depend on who can be spared and who will have to be retained.

“Various other ways of saving money have been suggested and, hopefully, this will lead to fewer jobs being lost.

“But every single member of staff must be worried, and this is dreadful for everyone, with Christmas coming up.”

GSK announced a few weeks ago that 20 people might have to be made redundant at Barnard Castle.

Staff claimed yesterday that this had risen to 27 – which is in addition to the latest staffing review.

Mr Lowes said: “Any proposal to reduce head count is subject to consultation with trade unions and other employee representatives.

“GSK recognises the uncertainty for staff at Barnard Castle caused by this announcement, and we are committed to keeping all staff fully informed.

“Barnard Castle is an important site in the GSK manufacturing network and will continue to focus on its role in developing, introducing and supplying to customers and patients worldwide.”