World-famous shortbread-maker Walker’s has warned labour shortages caused by Brexit and Covid will cost it sales as it attempts to rebound from its “toughest year in living memory.”
The Moray firm is currently short of around 200 workers and struggling to meet demand during its busiest production period, according to joint managing director, Jim Walker
Mr Walker’s warning came as the impacts of Covid, punitive US import tariffs and Brexit on the family-run business were revealed in annual results showing its profits halved and sales plunged by more than £16million last year.
‘We are unable to find sufficient staff to meet demand’
The recruitment problems are hitting the Aberlour-based firm, which also has a factory in Elgin, during what is traditionally its busiest production spell, ahead of the festive season.
Mr Walker said: “Trading conditions have continued to be challenging in 2021 with the continuing impact of the pandemic and, more significantly, the impact of Brexit.
“Both of these factors have significantly impacted on the availability of labour with the consequence that, along with many other food producers, we are unable to find sufficient production staff to meet demand.
“The labour shortage will cost us sales in what would have been an excellent rebound year in 2021, but we are working tirelessly to ensure customer service issues are kept to a minimum.”
Walker’s is one Moray’s largest employers, with a current workforce of around 1,400.
The firm’s annual results, published by Companies House, showed its pre-tax profits fell from £7.6m in 2019 to £3.6m in the 12 months to the end of last December. Its turnover dropped from £148.8m to £132.4m over the period.
At the onset of the pandemic, in March 2020, Walker’s closed its factories for three weeks, keeping workers on full pay.
The company initially claimed £1.3m under the UK Government’s furlough scheme, but repaid the sum after management concluded it could operate safely, the risk to the long-term future of the business had subsided and the employment security of its staff was guaranteed.
Sales were also hit by the closure of the UK’s tourism, travel and hospitality sectors.
Mr Walker said that, for the first eight months of the year, the firm had “suffered the financial consequences” of a World Trade Organisation (WTO) sanctioned 25% tariff imposed by the US government on imports of sweet biscuits.
The tax hike, now lifted, was part of a trade dispute between the US and the European Union over EU subsidies for aircraft maker Airbus. Imports of goods including single malt whisky and cashmere products faced similar taxes because of the row.
To pre-empt possible tariffs and trade restrictions at end of the Brexit transition period, Walker’s produced and shipped orders for European customers early, during its busy pre-Christmas spell last year.
Optimism as company looks to its 125th anniversary
Mr Walker said: “2020 was a really challenging year, the toughest in living memory, but we’re delighted that we managed to get through it, which we couldn’t have done that without the support of our loyal and committed workforce. They have been truly fantastic.
“Our primary focus throughout has been the safety of our employees and we have been delighted with the collegiate manner in which everyone has worked together to secure the long-term viability of the company and the communities in which we operate.”
He continued: “The relaunch of the Walker’s brand identity, with a more contemporary feel whilst still reflecting traditional values, is well under way with the brand available in Sainsbury’s nationwide.
“The international roll-out of the new branding will commence in 2022 and is expected to accelerate the growth of export sales.”
“2020 and 2021 have been very challenging years, but we look forward to our 125th anniversary in 2023 with a renewed sense of optimism and resilience, confident that the investment we have made in our people, brand and production assets will ensure a secure and prosperous future for the company and its loyal workforce.”