Despite “extensive” negotiations with the government, the UK’s largest bioethanol plant is to close due to the UK-US trade agreement, according to the firm that owns it.
Consultations have begun with the more than 160 employees at Vivergo’s Hull site, with all manufacturing to cease before 13 September if no funding is agreed with government, the business said.
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The wind-down of the factory is attributed to the recent agreement between the US and UK, which allowed for tariff-free US ethanol to enter the UK.
The agreement “undermined” the commercial viability of Vivergo, Primark’s parent company Associated British Foods (ABF) said regarding its bioethanol business.
“The situation has been made significantly worse by the UK’s trade deal with the US”, it said.
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Unless the UK funds the company’s short-term losses and comes up with a longer-term solution, Vivergo will shut after the staff consultation and its contractual obligations are met.
‘Uncertain’ talks
The government committed to formal negotiations on a sustainable solution, ABF said in a regulatory update, but the outcome is uncertain.
As a result of that uncertainty, consulting staff on “an orderly wind down” is taking place at the same time.
“Extensive” discussions had already been under way with government in an effort to find a “financial and regulatory solution” so Vivergo can operate on a “profitable and sustainable basis”.
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It had set a deadline of Wednesday for that solution to be delivered, the update said.
Bioethanol is a renewable fuel made from plants. Vivergo manufactures the fuel from wheat.
In return for the UK agreeing to allow American ethanol to enter tariff-free, the US said it would reduce tariffs on imports of UK cars and steel.
In response to the news, a government spokesperson said: “We recognise this is a concerning time for workers and their families and it is disappointing to see this announcement after we entered into negotiations with the company on financial support yesterday.
“We will continue to take proactive steps to address the long-standing challenges the company faces and remain committed to working closely with them throughout this period to present a plan for a way forward that protects supply chains, jobs and livelihoods.”
