IT firm Misco are to close their warehouse and distribution centre in Greenock, making 65 staff redundant.
The company say the “difficult decision” was due to the rise of drop-shipping, where sellers act as intermediaries, getting manufacturers to send products straight to customers and so negating the need for large warehouses filled with stock.
Chief executive Alan Cantwell said the business needed to save a minimum of £1.5 million annually: “This difficult decision follows a detailed analysis of the business and is part of a wider strategy to bring Misco back to full profitability in order to achieve our long-term goals.
“It is with regret that we will be closing our UK warehouse and releasing staff. Supply chain outsourcing, and the available automation, offers greater efficiencies and lower costs and is vital to the future success of the business.”
Workers in the Greenock warehouse operation will see their jobs taken by a third-party logistics provider before Christmas, though some redundancies have already started.
The Scottish Government’s Partnership Action for Continuing Employment (Pace) framework for mass redundancy situations such as this has been activated.
The company says its sales office currently based in Greenock will be re-located locally to allow for more office space and planned expansion. All 24 staff there are to be kept on.
Local MSP Stuart McMillan learned about the news yesterday morning, and discussed possible ways forward with Scottish Enterprise. “I’m deeply concerned about this news that Misco are about to shut,” he said. “It certainly will cause a great deal of uncertainty.
“I know the company has gone through a restructuring down south.
“The company has stated that the rise of drop-shipping for large storage warehouses is to blame. Unfortunately Inverclyde is going to suffer from this.”
The firm say they opened the Greenock logistics centre with the idea that it would ship 6000 parcels a day. Ten years later and it now ships closer to 400. Cantwell became chief executive in March after leading a management buy-in of the company that last year lost £16m.
The boss told trade paper Channel Reseller the job losses had been a long time coming. “Like a lot of things in this business, this really should have been challenged and looked at a long time ago,” he said.
“We’ve taken a really hard look at it. The logistics centre there was originally set up to ship 6000 parcels a day, and at present we are shipping between 400 and 500 a day. Things have moved on. We are drop-shipping pretty much everything – the majority of parcels now go straight from logistics through to the clients, so we really don’t need that facility.
“It’s a very expensive facility for the number of units that are going through it, and our 400 parcels a day will only go one way. There are some very good third-party logistics firms out there who can do it better than we do and do it cheaper, because that’s all they do.”
Cantwell added that the firm will save approximately 10 per cent on shipping costs. “[The warehouse closure] is part of the ongoing process to return Misco to its former glory,” Cantwell added. “And the last two months have been very solid for the business. The first two months were a bit shock and horror for everyone, but things are settling in now.”
Dr Alison Smart from Glasgow University’s Adam Smith Business School said the closure looked as if it was part of a trend. “When you’ve got a supply chain of goods you want as few places where they are held as possible,” she said. “There was a warehouse shipping 6000 parcels that’s now shipping just 400. You’ve got a huge amount of overheads with that. At point you can’t really cut any further.”
Minister for Business, Innovation and Energy, Paul Wheelhouse, said: “We are already in discussions with the company to provide support for individuals affected through our multi-agency initiative for responding to redundancy situations, the Partnership Action for Continuing Employment team. “Through providing skills development and employability support, as well as other support such as financial advice, Pace partners aim to minimise the time those affected by redundancy are out of work.
“I appreciate how distressing this news will be, but I hope it is of some reassurance to those potentially affected by redundancy that Pace has an excellent track record of helping individuals to move on to new employment opportunities or other positive outcomes.”
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