GlaxoSmithKline Shutting Irish Skincare Plant

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--GlaxoSmithKline (NYSE:GSK) (GSK) (Brentford, England) has announced the planned closure of a skincare plant in western Ireland with the loss 165 jobs.

The company, which has been trimming its manufacturing capacity in recent years in its home country of the U.K., said that despite the plant improving its cost efficiency over the years sales of its skincare products from the Stiefel Laboratories plant in Sligo have failed to meet projected demand. The Sligo operation produces approximately 40 different formulations of Stiefel skin healthcare products, including Physiogel, Oilatum and Driclor for more than 65 markets. The future of the plant was in doubt in 2009 when GSK first acquired dermatology specialist Stiefel Labs. In 2012, GSK committed to investing almost $13 million in upgrades.

The company told employees at the plant that the current business model was "unsustainable." It revealed that it had assessed potential future uses for the plant but that they were not feasible without "without significant further investment." GSK employs roughly 1,500 people across its four locations in Ireland.

"Demand for the products made on site has not grown in line with previous expectations, due to the highly competitive market in which we operate, making our current business model unsustainable," GSK said in statement. "We have not made this proposal lightly. We thoroughly evaluated a number of alternatives for the Sligo site, none of them were considered feasible without significant further investment. We understand the impact of this proposal on our employees, their families, and the local region."

Ireland's Minister for Business, Enterprise and Innovation Heather Humphreys commented on the decision. "This is very disappointing news for Sligo and the hard-working employees at the GlaxoSmithKline operation there. The company has indicated that there will be no job losses this year, and the majority of workers will remain in employment until 2020. The Government will also be making every State support available to these workers. The Minister for Employment Affairs and Social Protection is aware of the situation, and we will be doing our utmost to help these workers transition and find new employment opportunities when the time comes."

GSK's manufacturing operations in Cork and Dungarvan, alongside commercial operations in Dublin, will not be impacted by the Sligo decision. Last year, GSK cancelled plans for a £350 million ($451 million) bio-pharmaceutical drugs facility in Ulverston, U.K., and is also selling part of the plant. Industrial Info is tracking both projects.

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