Burberry offers factory to local community after protests over closure

Leading UK fashion brand Burberry planned to close its factory at Treorchy in Wales at the end of March 2007. Following a high profile campaign against the plant’s closure, organised by the GMB general trade union, the company has significantly increased the redundancy package on offer to the workers affected and steps are being taken to set up a workers’ cooperative business at the factory.

The leading fashion company Burberry had planned to move its production abroad and close its plant in Treorchy, south Wales, at the end of March 2007. Employees are angry at the move and argue that Burberry could afford to keep the factory open. Derek Walker, head of policy and campaigns at the Wales Trades Union Congress (Wales TUC), claims that Burberry is making healthy profits – GBP 165 million (€243 million as at 23 March 2007) last year – and accuses the company of putting corporate greed above their stated commitment to social responsibility.

Burberry, which has ‘by appointment’ royal warrants with the Queen and the Prince of Wales, has also been criticised for promoting itself as a UK brand while at the same time planning to close one of its UK manufacturing sites. While the UK market is not central to the company’s growth strategy, as it sells less than 10% of its products in the UK market, Burberry has traded heavily on its reputation of being British as part of its revival.

However, Burberry Chair John Pearce told members of parliament (MPs) on the UK parliament’s Welsh Affairs Committee, which is undertaking an inquiry into globalisation and its impact on Wales, that the Treorchy factory was closing because products, such as polo shirts, could be made at a higher quality and at a significantly lower cost abroad.

Union campaign against closure

The GMB general trade union conducted a high-profile campaign against the factory’s closure, which involved celebrities such as actors Emma Thompson and Ioan Gruffudd and singers Sir Tom Jones and Bryn Terfel making an appeal for the Treorchy factory to be saved.

GMB has developed a reputation for using unorthodox methods to publicise its campaigns. In the mid 1990s, GMB paraded a pig outside a shareholders’ meeting to highlight excessive executive pay. In its recent campaign against Permira, a private equity firm (UK0703029I), GMB paraded a camel outside a church attended by Damon Buffini, the managing partner of the equity company – a reference to the biblical observation that ‘it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God’ (Financial Times, 15 February, 2007).

However, not everyone has been impressed with the Treorchy campaign. Andy Richards, Regional Secretary of the Transport and General Workers’ Union Wales (T&G Wales) told a fringe meeting at the Welsh Labour Party conference that there was no place for ‘thespians or rock stars’ when taking on global companies. David Rosser, Director of the Confederation of British Industry Wales (CBI Wales), has suggested that the campaign could deter companies that are considering investing in Wales.

Possible workers’ cooperative

GMB’s campaign has gained a lot of publicity. Arguably, it has also brought some benefits, notably the company’s offer to give the factory to the community. The workers argued that an empty factory was of little use and that it needed an investment of GBP 250,000 (€368,750) to bring it up to modern standards. In this respect, Burberry has since increased the redundancy package on offer to employees from GBP 2 million (€2.95 million) to GBP 4.5 million (€6.6 million) and offered to donate up to GBP 1.5 million (€2.2 million) to establish a trust to start a new factory or set up a new community centre. The workers have the support of the Welsh Assembly, the Welsh Executive and the local council to set up a cooperative to save 60 to 80 of the 300 jobs lost in the closure. Mohamed Al Fayed, owner of Harrods, has also confirmed that he is in discussion with workers from the Burberry factory and that he might be able to award contracts to help launch the business.

Commentary

This battle reflects the bigger tensions emerging as textile manufacturing moves to the fast-growing economies of China, India, Vietnam and Turkey. Over the past decades, UK brands have been shifting their manufacturing operations overseas. Marks and Spencer (M&S), the high street chain which promotes its British heritage in its overseas franchises, moved its production out of the UK in the 1990s and now sources its products from a range of developing economies. If anything, Burberry remains distinctive in that it still has some textile manufacturing operations in the UK. What role customer power will play in future decisions on relocation of production remains to be seen.

Helen Newell, IRRU, University of Warwick