LEXMARK STAFF COMES TO TERMS W/JOB LOSSES
LEXMARK STAFF COMES TO TERMS W/JOB LOSSES
2006-01-30 at 9:47:00 am #14200
Lexmark staff come to terms with job losses
The 700 workers at the
Lexmark printing equipment firm in Rosyth have spent the day assessing
the future, following the shock news that the factory will close by the
end of the year. Efforts are already underway to help them to find
Today most of the 700 employees given the bad news yesterday are at
home, many of them in the houses behind us in Rosyth, contemplating
life after Lexmark. Among them is 40-year-old Archie Prentice. He and
his wife both work at the Lexmark factory and now face an uncertain
He said: “Just like everyone else we have a mortgage to pay and bread
to put on the table. It is going to be difficult but we have to be
optimistic. Lexmark will do their bit and the Government will hopefully
do their bit.”
But during Prime Minister’s questions at Westminster today, Alex
Salmond blamed the job looses on Government complacency. He said: “What
level of industrial disaster is required to shake this Prime Minister
and his Chancellor out of their totally unjustified complacency of the
competitive position of manufacturing in Scotland?”
The Prime Minister said: “By what he is proposing, which is effectively
to say that he is able to prevent jobs ever being lost in manufacturing
in Scotland, that is simply a cruel deception of people, it would do
them no good whatever to pretend that is the case but we will give
every possible support to those people in the difficult times that lie
The team tasked with helping the Lexmark staff to find new jobs hope to
start meeting the employees in the next couple of days – at this stage
though they can offer them little more than advice. Malcolm Barron from
Careers Scotland said: “The first thing is job search support which is
very critical at this time. The second thing will be career planning
support for those who are thinking about changing careers at this time
and finally financial advice about benefits which is clearly a worry
Archie Prentice may be optimistic about his future, some of his colleagues though are expecting 2006 to be a very tough year.
Lexmark adds name to list of failed inward investors
WHEN the Scottish Office announced the arrival of Lexmark in Fife in
October 1995, the then Scottish industry minister, George Kynoch, said
it confirmed the country’s “international reputation as an excellent
location from which to serve European markets”.
Scotland’s big sell was as a north European springboard for mainly
Asian and US exporters keen to exploit the growing continental market.
Government grant money poured from St Andrew’s House, attracting
hundreds of mainly low-skill, production-line manufacturing jobs – a
flawed policy that would be highlighted a handful of years later with
the demise of telecoms giant Motorola, Chunghwa Picture Tubes and other
headline-grabbing inward investment projects that quickly lost out to
cheaper Asian markets.
The deal to bring Lexmark, the printer maker based in Lexington,
Kentucky, to Scotland was achieved in the face of stiff competition
from other parts of Europe, most notably Ireland and the Czech Republic.
An initial 500 Fife jobs were created, with the promise of more to come
within a plan to use the 90,000sq ft factory as the No.1 source of all
components for its cartridges in Europe.
The £26 million project was backed by Locate in Scotland, the Scottish
Office, Scottish Enterprise and the Invest in Fife Partnership.
Like so many projects of the time it received regional selective
assistance (RSA). After Lexmark first insisted that much of the cash
came from its own bank accounts, it was revealed later that an initial
£8.5m was given to it by the UK government, with £3.5m following since
Launched in March 1991, Lexmark makes laser and ink jet printers and
accessories. The Fife plant assembles colour and monochrome cartridges
for the company’s range of ink jet models. The company was born of a
management buy-out of IBM’s information products division. Revenues
were up 11 per cent to $1.8 billion (£1bn) in 1994, the year before it
parachuted into Scotland.
Its arrival helped maintain Scotland’s image at the time as one of Europe’s premier locations for inward investment.
There was also considerable expansion going on from existing investors,
including Motorola and ICI. In 1996 Locate In Scotland helped attract
84 projects involving planned investment of £981m with RSA grants of
£119m, after 97 projects and planned investment of £1.1bn in 1995 with
£95m of RSA.
One by one, however, the companies that came with great fanfare and
government subsidy fell: Motorola left, having once been Scotland’s
biggest manufacturing employer with 6,500 workers in Bathgate; Hyundai
in Dunfermline, failed to deliver a promised 2,000 jobs and mothballed
its proposed plant; Compaq, NEC, Hewlett Packard and ViaSystems also
Chunghwa’s fall was the toughest to take. In a total investment of
£260m, £20m was public money. It closed its doors in 2002. The Scottish
Executive is believed to have since clawed back £8m of its RSA funding,
but there was outrage over the company retaining ownership of the plant
site and it was sold 18 months ago to the developer Tritax Assets for
an undisclosed amount.
There will be scrutiny now over how much of the government’s £8.5m will
be returned by Lexmark, and whether the land on which its factory sits
will be returned to Fife Enterprise.
RSA is generally paid out on a pro-rata basis depending on jobs
created. There is an argument that Lexmark fulfilled its part of the
deal. However, a failure is still a failure.
In July 1998, Lexmark had announced plans to double its then workforce
to more than 700 in Fife with a further £24m investment in a new
printer cartridge assembly plant. Matthew Clift, its director of
worldwide operations, insisted the announcement reflected an
“increasingly strong demand” for its products in the European
Despite the slowdown in demand for PCs since 2000, which had affected
home and office printer markets, Lexmark said ink and toner sales
But in October 2001, it announced the loss of more than 1,500 jobs
globally. It ended 2004 with 13,400 employees. Yesterday it said it was
shedding 1,400 jobs globally, and effectively closing in Scotland.
Even as recently as April 2003, the market for the company’s products
appeared solid. Amid Wall Street rumours that Dell was interested in
buying Lexmark, officials claimed the firm’s strength in selling
replacement cartridges, complemented by a line of new printers, would
help it endure softness in corporate and consumer spending and
aggressive pricing competition from cheaper manufacturing, especially
in Asia and India.
It was reporting near-40 per cent rises in quarterly profits in 2003,
and officials suggested it was then No.2 in the printer market after
However, by July last year, its profits had started to fade, amid a
worldwide decline in demand for cartridges. The 14-year-old Lexmark
said it was also being hurt by “tax-related costs”, and another 275
jobs were to go to trim costs, within a third-quarter outlook that was
now short of Wall Street forecasts.
The firm, by then supplying printers to Dell, posted net profit of
£45.9m, down from £78.5m a year earlier. Revenues in Q2 rose just three
per cent to £736m