Proposals - Manuf Operations
GlaxoSmithKline PLC
14 June 2001
Issued 14th June 2001, London
GlaxoSmithKline Announces Proposals for UK Pharmaceutical Manufacturing
Operations and Consumer Manufacturing Operations
Following the merger to form GlaxoSmithKline plc (GSK), the company today
announces proposals for its UK pharmaceutical manufacturing operations and for
the consumer manufacturing sites acquired with the purchase of Block Drug Inc.
These proposals are the first recommendations resulting from a global review
of the company's manufacturing network.
The proposals follow a detailed analysis of the company's manufacturing
operations which has considered a wide variety of factors including current
and forecast demand for its pharmaceutical and consumer products, and capacity
and cost data across the GSK manufacturing network.
GlaxoSmithKline needs to establish a manufacturing capability that is flexible
enough to adapt to the constantly changing environment in which the company
operates, efficient and focussed enough to keep ahead of the competition, and
productive enough to improve customer service and deliver products of value to
patients.
The proposals are designed to significantly enhance the competitiveness and
productivity of GSK's operations through a series of initiatives and changes.
Included in them are plans for process design improvement, new global systems
and standards for logistics, and procurement benefits resulting from the
enlarged company's buying power. In addition, the company's manufacturing
capacity will be consolidated into a smaller, globally integrated network of
manufacturing sites. These proposals will be the subject of full, thorough and
proper consultation, in line with the company's policy and its legal
obligations.
Proposals for UK pharmaceutical manufacturing operations
The company proposes to close its site at Speke, Liverpool over the next 3
years. The site predominantly manufactures CFC-containing asthma inhalers and
demand for this type of inhaler is in decline following progressive
implementation of the 1995 Montreal Protocol to ban the use of all
ozone-depleting substances. This proposal would result in the potential loss
of up to 500 jobs.
The company also proposes to transfer certain operations at its Barnard Castle
site in County Durham, which are duplicated elsewhere, to other sites in the
global manufacturing network. The site currently employs 1500 people and will
continue to be one of GSK's largest manufacturing sites in the world. A
reduction of up to 400 jobs at Barnard Castle over the next three years would
occur as a result of these proposed changes.
In addition, GSK proposes to sell its site at Montrose, Angus as many of the
operations at this site are duplicated elsewhere in the global manufacturing
network. As a result of the review, a combination of positive factors
regarding the site has indicated that a proposal should be made to sell it,
with a number of GSK products continuing to be manufactured under long-term
contract with the site's prospective new owner. Other Montrose products would
transfer to alternative manufacturing facilities within the GSK network over
the next three years. Montrose, which manufactures bulk 'active' ingredients
for around 20 pharmaceutical products, currently employs 720 people.
Proposals for consumer manufacturing operations
With the purchase of Block Drug Inc. earlier this year, GSK acquired several
consumer healthcare manufacturing sites. Operations at some of these sites are
duplicated elsewhere in the existing GSK manufacturing network and, as a
result of the review, the company believes it can achieve greater efficiency
by incorporating these operations into existing GSK consumer healthcare
manufacturing sites.
Consequently, GSK proposes to close over two years two former Block consumer
healthcare manufacturing sites at Plymouth, Devon, and Puerto Rico resulting
in the eventual loss of 170 and 275 jobs respectively. Production at these
sites would be transferred to GSK's facilities in Maidenhead, UK and Clifton,
USA. It is also proposed that over two years there would be a reduction of 110
in the number of staff employed at the former Block/Stafford Miller
manufacturing site in Dungarvan, Ireland.
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GlaxoSmithKline recognises the impact these proposals would have on employees
and local communities and would work with local representatives of affected
areas to develop ways of minimising those effects. The company is planning to
reduce the effect of job losses through a variety of measures, including
re-training, provision of outplacement services, voluntary redundancy and
early retirement.
Tim Tyson, President of Global Manufacturing & Supply, GlaxoSmithKline said,
'These proposals follow a detailed review that examined every aspect of our
site network, and implementing them would significantly reshape and improve
our manufacturing business. GlaxoSmithKline remains strongly committed to the
UK. The company employs over 25,000 people here - around a quarter of its
global workforce - and conducts over 40% of its research & development in the
U.K. With almost 20% of its global manufacturing workforce based in the UK, it
remains a core location for the GlaxoSmithKline manufacturing network.
We fully recognise the impact these proposals would have on some of our staff
and we regret the need for the loss of jobs. We are committed to providing
extensive support to affected employees and their communities.'
GlaxoSmithKline - one of the world's leading research-based pharmaceutical and
healthcare companies - is committed to improving the quality of human life by
enabling people to do more, feel better and live longer.
Enquiries:
UK Media enquiries: Martin Sutton (020) 8966 8372
Philip Thomson (020) 8966 8372
Alan Chandler (020) 8966 8372
US Media enquiries: Nancy Pekarek (215) 751 7709
Mary Anne Rhyne (919) 483 2839
European Analyst/Investor enquiries: Jennie Younger (020) 8966 8378
Duncan Learmouth (020) 8966 5961
Anita Kidgell (020) 8966 8369
US Analyst/ Investor enquiries: Frank Murdolo (215) 751 7002
Tom Curry (215) 751 5419
Notes to Editors
* GlaxoSmithKline's manufacturing network comprises 115 sites in over 40
countries.
* These proposals would have no material effect on any of
GlaxoSmithKline's R&D, corporate or commercial sites in the UK, or on its
other 10 UK manufacturing sites at: Beckenham, Kent; Crawley, Sussex;
Coleford, Gloucestershire; Dartford, Kent; Irvine, Ayrshire; Maidenhead
and Slough, Berkshire; Ulverston, Cumbria; Ware, Hertfordshire and
Worthing, Sussex.
* Savings expected from the merger of Glaxo Wellcome and SmithKline
Beecham are expected to amount to £1.6 billion by 2003. This figure
includes an estimated £570 million of savings from the manufacturing
restructurings previously announced by the two separate companies, as well
as some additional savings resulting from further manufacturing
rationalisation.
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