More Britain

You are in > Britain

Britain

by Noah Tucker / August 27th 2006

Trafford Park Bakery closure exposes the myth of corporate social responsibility

Northern Foods, supplier to Britain’s supermarket firms including Tesco and Asda, announced on Thursday 24th August that it is shedding 900 workers. 690 of the job losses will result from the closure of the company’s bakery in Old Trafford, Manchester – already one of the most poverty-stricken areas in England.

The closure of the site, which is due to be completed in December 2006, follows the squeezing of suppliers by the giant supermarkets as they jostle for market share and higher profits.  The Trafford Park Bakery, which is dedicated solely to supplying Tesco, has become financially unviable at the wholesale prices which Tesco was willing to pay.  Northern Foods, which produces a wide range of processed food products both under its own brands and under the supermarkets’ ‘own labels’, employs 20,000 workers in Britain and Ireland.  Since May this year it has been attempting to sell its pastry division which has become unprofitable. The company has stated that the Manchester site was running at an annual loss of £3 million.

Northern Foods is also cutting 210 jobs at its Palethorpes plant in Shropshire. 

A statement issued by Northern Foods plc claimed that it was ‘proposing’ to close its Trafford Park Bakery in Manchester and that “the employee consultation process has begun”.  However, there is little doubt that the company is determined to shut the plant.  According to the company statement: 

“The decision reflects Northern Foods’ focus on improving the overall performance of the business and is being progressed at this time in preparation for the disposal of the Pastry category…

“The closure supports the proposed sale of the Pastry Products business and is consistent with the strategy, announced on 31 May 2006, to focus on businesses where Northern Foods has a competitive advantage.”  

Devastating effect

The closure will have a devastating effect on an area which already has very serious economic and social problems.  Manchester’s unemployment rate is approximately double the UK average; 20% of the city's population is dependent on Income Support.  Average household income in Manchester is £16,500 per year, compared to the UK average of £21,300 (2004 figures).  The Greater Manchester region has the lowest life expectancy in England; the combined male and female average life expectancy in the five most deprived wards in Manchester is 72 years, compared to the UK average of 78.5 years. 

The structure of the processed food manufacturing industry in Britain and the weakness of the trade unions has left workers’ leaders feeling that they have very little power in opposing the closure.  Jude Brimble, a national officer of the GMB trade union, stated:

“GMB is surprised and shocked by this announcement. This is another example of Tesco throwing their buying power weight about by depressing prices and moving production at will to other plants. Tesco should talk to Northern Foods about finding a viable future for this plant which employs 690 local workers.

“There is such a thing was corporate social responsibility and Tesco need to start practising this. GMB will be asking the OFT [Office of Fair Trading] which is currently looking at the power of the supermarkets to examine this specific case as an abuse of power.  Tesco and Northern Foods owe to these loyal workers to pause and look for another way forward."

Tesco has denied responsibility for the job losses.  The BBC quoted a Tesco spokesperson:

"Over time we have been as supportive as we can be to improve the performance of the site… We continue to work closely with Northern Foods who still supply us with a significant number of other products across other areas of our business. We are working with our supply base to ensure availability of sausage rolls, pies and quiches for our customers."

Tesco declared a yearly profit of £2.2 billion in April 2006.

The comments by GMB trade union official Jude Brimble suggest two avenues through which the Trafford Park closure could be avoided: the current framework of government policy and regulation, and the notion of ‘corporate social responsibility’.

No action by government

However, Britain’s New Labour government is committed to the neo-liberal economic model, in which the capitalist market is allowed to determine matters of employment and industrial development.  As the Independent reported on 25^th August:

“As supermarkets' profits have grown, the fortunes of their suppliers have dwindled. The power the chains have over food makers such as Northern was exposed in the Competition Commission's last investigation of the industry in 2003 when Safeway was on the block. Evidence given by suppliers claimed that supermarkets simply ignored the industry code of practice imposed after the investigation in 2000, continuing their ‘predatory practices’. Suppliers told the commission that supermarkets gave them chapter and verse on how to run their business, controlling every last detail down to which logistics groups to use to make their deliveries.” 

Despite this evidence, the government has taken no action.  In 2005, it was the owners of Northern Foods plc who benefited when Asda, Tesco’s nearest competitor, started ordering ‘ready meals’ from Northern Foods instead of Asda’s previous supplier, Ferndale.  This switch caused Ferndale to complain to the government’s Office of Fair Trading (OFT).  In September 2005 the OFT dismissed Ferndale’s complaint on the grounds that Asda had not given Ferndale a written contract.  Neither Asda nor the management of Northern Foods issued any apologies to the 500 workers who were consequently made redundant at Ferndale’s factory in Thamesmead, South East London.

Fine words

Appeals to the ‘social responsibility’ of the corporations have even less likelihood of saving the jobs of workers in the industry.  The companies already have so-called ‘social responsibility’ policies; the Northern Foods statement includes the following:

“Competing in the fast paced, low cost environment that characterises today’s food industry places great demands on the business. Such demands appear all the more challenging given that a number of our factories are located in areas of high social deprivation, where standards of education, literacy and numeracy can vary and reliance on temporary and migrant workers is often very high, particularly through periods of high seasonal demand.

“In this context, we believe that a good place to work is a safe place to work, characterised by open, two way communication, by recognition of people’s efforts, and by offering everyone the opportunity to develop their skills…we will help our employees perform to the best of their abilities and drive a culture of continuous improvement at our sites.

“Our progress for the year and our targets for 2006/07 are detailed. We believe that they will provide a valuable focus point for people seeking to maximise their potential in the business.”

Fine words.  Tesco’s policy is more succinct: 

“One of our most important values is to treat people how we would like to be treated. We try to achieve this by being a good employer and by playing our part in local communities. People tell us that they want use to use our size and success to be a force for good. We accept this challenge with enthusiasm and commitment.” 

In the context of private ownership and the capitalist market, the only social responsibility recognised by the corporations is to maximise the profits of their owners - whatever the human cost.