Business newsline by Tony Seymour

Euro development is adding a whole new dimension to the way multi-national giant Nestl is conducting business in the UK, which will have far-reaching effects on its factory in York and elsewhere in Britain.

York and North Yorkshire Chamber of Commerce president Maureen Loffill with guest speaker Peter Blackburn, chairman of Nestl UK, left, and Roland Harris, chief executive of the Chamber at the annual dinner.

Peter Blackburn, chairman of Nestl UK, warned if the UK does not soon join the 11 European countries - which form an economic and monetary union - investment and jobs could be at stake.

Speaking at York and North Yorkshire Chamber of Commerce Annual Dinner, held at York Racecourse, he said: "We're in the EU and that's a fact with 60 per cent of trade conducted within Europe. The Euro exists and is not going to go away.

"For example, we recently bought a Kit-Kat factory in Malaysia for long-term investment, putting down local roots, creating local employment and helping the developing world.

"But the new Malaysian factory and others like it may mean York will, who knows, eventually lose out on exports and jobs. This shows again the local effects of global trends, which might seem very distant from our day-to-day lives, but in reality are not."

York's biggest employer with 4,000 staff is now adopting pan-European manufacturing. Mr Blackburn continued: "Nestl no longer looks at its UK or Spanish factories separately. We look across Europe and plan manufacturing to make use of our assets right across the economic regions."

"Putting it into context how global economic trends have a local impact, I am deliberately using Kit-Kat as an example to illustrate many of my points because it's so important to the York economy.

"Kit-Kat it is not just manufactured here in York, but in Hamburg and several other factories around the world. Nestl managers worldwide are now in a position to buy Kit-Kats to sell in their own countries from whichever factory offers the best deal.

"When you add in to this the effect of the exchange rate variations, particularly when the pound is strong, you begin to see that right here in York we are part of a complex global picture, and a very, very competitive one.

"Our own company here in York has been battling with the effects of economic troubles as far away as Russia, Japan, and Brazil. It's said with some exaggeration, but with some element of truth that avoidance of a fierce worldwide recession hangs now on the strength of the US economy, which hangs on the strength of Wall Street, which is also hanging by a thread."

"Nestl, a Swiss-based multi-cultural and multi-national company, operates in almost every country worldwide. The world's largest food group has sales of 72 billion Swiss francs (£30 billion), with 250,000 employees worldwide. Nestl UK's turnover is £1.8 billion, with 14,000 employees at 28 factories in Britain.

"Increasingly, customers with a pan-European operation want to talk to Nestl about the cheapest price of Kit-Kat, wherever it is manufactured in Europe - and that's the price they want.

"UK consumers and retailers will continue to use pounds and pence, but most of the European Union have begun the three-year countdown to a fully-operative euro.

"Currency risk is not the only factor in investment decisions, but is a major additional UK hurdle, because it's going to become more difficult to justify UK investment.

"From my two years in France I know in many respects Britain is increasingly seen as insular, uncommitted and is being left out.

"If the York factory loses business, the Hamburg factory gains it or maybe another factory."

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.