Redundancies are to begin on Tuesday at the UK’s largest bioethanol plant, which is to close after the government refused to offer the owners a bailout.
Around 60 staff, just over a third of the total, are to receive redundancy letters on Tuesday and leave the site. The remaining workers will go in phases over the coming months, as part of an orderly wind-down of the business.
On Friday, owners Vivergo Fuels, a subsidiary of Associated British Foods (ABF), said the government’s decision not to offer financial support to the facility in Lincolnshire was “deeply regrettable” and blamed the UK’s trade deal with the United States.
The plant converts wheat into bioethanol, a component of petrol used to reduce carbon emissions. The facility was already losing £3m a month, partly due to high energy prices.
But now the company has also been left competing with cheaper imports after the 19% tariff on American bioethanol was scrapped following the recent UK-US trade deal.
Vivergo described the government’s decision not to offer financial support as “a flagrant act of economic self-harm that will have far-reaching consequences”, pushing the sector “to the point of collapse”.
The company added that the closure would be a “massive blow” to the local area and supply chain. More than 160 staff at the site, who were consulted about a potential wind-down process in June, will have left by the end of the year, when the plant will be ready for demolition.
The factory is also the UK’s largest single production site for animal feed, a byproduct of the production process for ethanol.
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The NFU farming union described the imminent closure as “terrible news” for workers who will lose their jobs, but also “thousands of people whose livelihoods depend on this supply chain”.
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The company, near Hull, warned earlier this year that it was in financial trouble as crisis talks continued with the government.
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In a statement, the government said it made the “difficult decision not to offer direct funding as it would not provide value for the taxpayer or solve the long-term problems the industry faces”.
But Unite general secretary Sharon Graham called the government’s decision “short-sighted” while the GMB union’s Charlotte Brumpton-Childs blamed “the impact of tariffs and trade deals” for “working people losing their livelihoods”.
