Thousands of jobs could be lost in the north of England after the government chose not to offer a direct rescue package to Vivergo Fuels, a major ethanol producer badly hit by the details of the recent trade deal between the US and the UK.
Vivergo says the trade deal, which removed a 19% tariff on ethanol imports from the US, has destroyed the UK market for the products.
The think tank Oxford Economics has estimated that 4,000 jobs in the wider supply chain are at risk with Vivergo’s closure, including farmers, truck drivers and engineers.
The trade deal with the US has helped save thousands of jobs in the UK’s steel and car industries by reducing or eliminating tariffs imposed by Donald Trump. Under its terms, 1.4bn litres of bioethanol can enter the UK from the US tariff-free, the equivalent to the size of the UK market.
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About 270 jobs will be directly threatened, with thousands more in the wider supply chain. The UK’s capacity to produce low-carbon fuels will also be badly hit.
Formal negotiations with government began on 26 June, but no progress was made.
A spokesperson for ABF, which runs the Vivergo site near Hull, which produces high-quality animal feed for UK farms and bioethanol, said: “It is deeply regrettable that the government has chosen not to support a key national asset. We have been left with no choice but to announce the closure of Vivergo and we have informed our people.
“We have been fighting for months to keep this plant open. We initiated and led talks with government in good faith. We presented a clear plan to restore Vivergo to profitability within two years under policy levers already aligned with the government’s own green industrial strategy.”
ABF accused ministers of throwing away “billions in potential growth in the Humber and a sovereign capability in clean fuels that had the chance to lead the world”.
It claimed major investment had been on track to go into Hull, but now jobs in clean energy will now move overseas – principally to the US.
It added: “The loss of Vivergo will be felt most acutely by our dedicated workforce and their families and by the thousands whose livelihoods depend on our supply chain – from farmers to hauliers and engineers. We are hugely disappointed on their behalf, that the press was informed of this decision before we were told – and before we had a chance to communicate to our staff. Our focus is now on supporting the working people at our plant in Hull.”
A government spokesperson said it had concluded direct funding “would not provide value for the taxpayer or solve the long-term problems the industry faces”.
They added: “We recognise this is a difficult time for the workers and their families and will work with trade unions, local partners and the companies to support those affected.”
Industry sources say delays in the rollout of higher bioethanol blends, such as E10 petrol, have also undermined UK producers. The government has committed to ensuring 10% of aviation fuel comes from sustainable sources, including bioethanol, by 2030.
Another producer, Ensus, which operates the UK’s only other bioethanol-producing site, had announced in May that it may have to shut its plant because its business position had been “fundamentally undermined”.
However, the German-owned Teesside-based firm’s production of CO2 may have staved off the threat from the US trade deal for the time being.
Ensus chairman Grant Pearson said: “I met with Sarah Jones, the minister for business, today to receive the government’s response to our request for financial support and the policy changes required to ensure that the Ensus facilities can continue to operate. The minister confirmed that they value both our contribution to the UK economy, the jobs we provide and support in the north-east of England and in particular our production of biogenic CO2, which is a product of critical national importance.
“They are therefore looking at options to secure an ongoing supply of CO2 from the Ensus facility. This is positive news, however, it is likely to take time to agree upon and finalise and therefore urgent discussions will be taking place to provide a level of assurance to the Sudzucker and CropEnergies Boards that there is a very high level of confidence that an acceptable long-term arrangement can be reached.”
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