In the wilderness of post-Brexit Britain, ruthlessness and cunning, backed by financial muscle, will prevail. Many good days to bury bad news will dawn and corporate Britain will gather for the feast. In this jungle, there are few beasts more ruthless and cunning than Diageo, one of the biggest drinks manufacturers in the world.
In 2012, Diageo ended 192 years of whisky production at its Johnnie Walker bottling facility in Kilmarnock. Until that day, Johnnie strode cheerfully through this town, becoming one of the largest employers in North Ayrshire. He was sustained in turn by generations of skilled and resourceful workers who helped secure Diageo’s position as the most successful drinks company on the planet. No matter. Diageo decided that 700 local jobs and two centuries of dedicated service to its profits margins counted for nothing.
Diageo’s wasn’t the first below-the-belt blow that North Ayrshire had sustained in what remained of its industrial heartlands – Margaret Thatcher’s destruction of the mining industry still carries an icy chill in these parts – but it was the unkindest.
A few years later, Diageo had the opportunity to repair some of the damage it inflicted on the economy of this area when it announced plans for a £150m tourist facility to commemorate the 200th birthday of the Johnnie Walker label next year. Instead, it opted for the boutique charms of affluent Edinburgh.
On Tuesday, a 10-day strike by 1,000 Diageo workers across Scotland will begin affecting its whisky and spirits production. The management knows that in the current fog of Brexit there will be scant scrutiny of its conduct. Yet few other industrial disputes of modern times seem to capture just how gluttonous is the lust for profit in the bellies of the biggest multinationals.
Diageo is the corporate embodiment of all that ails our economy. A decade after UK tax-payers were required to bail out our banks, often with their jobs and businesses, income inequality is at its highest level for half a century, with the OECD saying we have reached a “tipping point” and that “inequality can no longer be treated as an afterthought”. In this, “inequality” is no mere socialist trope rendered barren by over-use. If such a thing as responsible capitalism exists, it balances profits with a requirement to invest in the loyalty of its workforce by securing the slender economic aspirations of their families. This in turn flows back into a local community, nourishing other industries and businesses.
Anyone who cares about Scotland’s economic prosperity should care about this dispute. This summer, Diageo posted a staggering set of financial results. Net sales increased to £12.9bn, driving pre-tax profits of £4.2bn. This fuelled a £4.5bn buy-back bonanza for shareholders and a 30% pay increase for its CEO, Ivan Menezes, whose annual remuneration package now sits at £11.7m.
This bounty comes from a honeyed image of Scotland that is carefully and expertly transmitted across the world. In this fairytale, islands shimmering under golden sunsets produce the lucrative single malts on Diageo’s portfolio. Scotland’s gantry, which also includes some much-loved gins and vodkas, has become a licence to print money for Diageo, and all of them churned out by its bottling plants in Fife and Renfrewshire.
Yet even as these record profits were being accumulated, Diageo’s contempt for its workers – previously seen to grievous effect in Kilmarnock – began to materialise once more. The company’s current offer is a 2.8% increase on the basic rate of pay, up 0.3% from an initial offer of 2.5%. Although this is in line with many other pay awards, it remains less than increases in the cost of living and comes from a company that makes millionaires of its senior executives.
Diageo also spends millions each year schmoozing Scotland’s politicians and media to look the other way. Few of us have not attended a black-tie event supported by this colossus and perhaps now is the time for some of us to be a bit more reticent about accepting its sponsorship.
The sheer disdain Diageo has for its workforce in places such as Leven in Fife, where its bottling operation is one of the few stable employers left in a region hammered economically and socially over the past decade, is scandalous.
Diageo responded to the formal notice of strike action by saying: “We are a very good employer and remain committed to seeking a resolution and ensuring our employees receive an increase on their pay, alongside maintaining the competitiveness of our operations.” The facts suggest otherwise. Diageo can easily afford a settlement for its workers that beats the cost of living. Increasing its current offensive offer would cost less than Menezes’s 30% pay increase, a mere wrinkle on its balance sheet when set alongside its sales and profits, its executive pay and share buy-backs.
The lifestyle of Menezes and his senior executives, secured by the toil of Scotland’s forgotten communities, insulates them from the requirement ever to walk among them. He could, of course, hop on his private jet and see the reality of life for those who maintain the profit-churn: the hollowed-out high streets and the empty fabrication yards in communities where his company is the last big employer in town.
Or he could take a detour to Prestwick airport, followed by the short drive to Kilmarnock and a tour of the now-derelict Johnnie Walker plant. But when your company is so big and so powerful that it can pitch one side of a country against the other in a fight to the economic death – while the rest of us sit by and watch – the concerns of another blighted community are easily discarded. The shame isn’t just Diageo’s – it’s ours too, for allowing the company to get away with it.
• Kevin McKenna is an Observer columnist