British tea maker to move plant to Poland

Twinings, the British tea manufacturer, is using €12m in European Union grants to relocate part of its operation to Poland within the next year, making nearly 400 UK workers redundant.

The company, which is owned by Associated British Food, plans to invest €43m ($60m) in a production plant in Swarzedz, Poland, while in the UK Twinings will close its ­factory in North Shields, shedding more than 260 jobs, and halve the workforce at its tea production facilities in Andover, Hampshire.

The move has drawn sharp criticism from both workers and members of the European parliament. The EU Commission is reviewing the situation to ascertain that the company did not breach EU rules.

R.Twinings and Company, the company’s Polish subsidiary, in October signed a contract with the Polish authorities to obtain funding worth 41m zlotys, ($15m), nearly 30 per cent of the total project investment for a tea blending and packing plant, through the European Regional Development Fund, a subsidy designed to promote economic and social cohesion in the EU.

Johannes Hahn, EU commissioner, has sought assurances from the Polish authorities that the funds are not being used to finance the relocation of the company’s operations to Poland. Under EU rules, Polish authorities must obtain confirmation from companies that subsidies will be used for fresh investments rather than to shift factories from other member states.

Twinings says the grant will be used for investment in innovative technologies for blending and packing premium quality tea.

Poland’s regional development ministry, the body in charge of distributing most of the €67bn that the country is receiving in EU structural funds during the current 2007-2013 budget cycle, said EU rules on relocation did not apply to small and medium-sized enterprises.

Because the subsidy was applied for by the small subsidiary R. Twinings, the ministry said it therefore had no basis on which to turn down the funding request.

R. Twinings is already advertising jobs for workers at the Swarzedz factory, near the western city of Poznan, with jobs ranging from accountants to machine operators.

Twinings intends to close its factory in North Shields by September 2011. Workers there are incensed at having to train Polish workers on how to operate machinery that is being transferred to Poland.

“It’s immoral that workers have to pay tax to have their job taken from under their feet – it’s a scandal,” said Derek Kotz, secretary of the Andover Trades Union Congress.

“The rules are quite clear that grants are available for new investments, but not for relocation, and Twinings is quite clearly relocating,” he added.

Twinings rejects the criticism. “The application was made because Twinings considered that its business plans satisfied the relevant criteria and the [EU] grant would provide financial support for our investment in the latest technology and research and development”, it said.

A quintessentially British company, Twining was founded in 1706 when Thomas Twining first set up shop on London’s Strand. However, according to the company’s plans laid out during the consultation period, tea for export – which makes up the majority of sales – will predominantly be produced at the new Polish factory and production facilities in China, to where part of the production is also being transferred.

Most of the tea destined for the British market will still be processed at its premises in Andover, Hampshire.