GSK's UK plant to lose out to outsourcing
GlaxoSmithKline's (GSK's) pledge to make the business leaner with
the help of outsourcing and offshoring.
The drug giant has announced that it will downsize the current workforce at its Ulverston, Cumbria site from 540 to only 210 employees over the next two years. The firm said that a business review has concluded that the site can only become "sustainably competitive" if the operations are downsized and restructured to focus on the final stages of the manufacturing of the products made at the facility. The manufacture of certain intermediate stages of the products that are currently carried out at the site would instead be carried out by third party manufacturers "at globally competitive prices," a company spokesperson told Outsourcing-pharma.com. GSK makes a number of antibiotics at the plant that have now come off patent and are subject to generic competition. The spokesperson said that last year the company launched a review "to examine all available options to address increasingly fierce competition" from generic pharmaceutical companies in the manufacture of cephalosporin antibiotics. "The review team looked not just at the cost challenges facing the Ulverston site, but also at how the high standards in product quality and supply performance could continue to offer competitive advantages to GSK's cephalosporins business," they said. "The current position of rising site costs and decreasing competitiveness is no longer sustainable and there is a need to take action now to protect GSK's cephalosporins business and transform the Ulverston site into a sustainably competitive operation." GSK said that the proposal is now the subject of consultation with employee representatives, but despite the company's reasoning for the scale back, local unions are already fiercely opposing the decision and have initiated "urgent" talks with the drug firm. Union Unite national officer Phil McNuty said: "Unite will fight any attempt at enforced redundancy for our members in Ulverston. We are determined to keep as many of these jobs in Ulverston as we can, and are appalled by the company's plans to outsource elements of chemical production". "The UK pharmaceutical industry must be protected from this devastating blow, and we expect Government to plan its part in securing jobs in the UK for an essential UK industry". The unions have also indicated that they fear the move is a slippery slope that will eventually result in the plant being closed altogether, but GSK has denied the possibility and said that "taking lesser measures would simply mean continuing with an operation which is not structured to be sustainably competitive and this would eventually lead to site closure." Meanwhile, the Ulverston situation is by no means an isolated one, but part of a company-wide resolve announced last October designed to achieve savings of up to £700m (€1bn) by 2010 - 40 per cent. The pharma heavyweight announced a sweeping restructuring plan in the form of an 'Operational Excellence' programme, which largely centres around cutting down on manufacturing sites and simplifying production processes and activities to reduce over capacity. The cornerstones of this new programme are "persistent focus across all functions; a reduction in complexity, to be achieved by standardisation, consolidation, outsourcing and offshoring; and the exploitation of global opportunities, in regard to procurement, skills, labour cost and arbitrage," indicated GSK's CEO Dr J.P. Garnier at the time of the announcement.
