By Sylvia Macdonald and Georgi Gyton
Production is to be cut at Finsbury Food Group’s premium cake business Memory Lane Cakes, as sales continue to fall in the recession.
The bread, cake and morning goods manufacturer said production at the Cardiff business is likely to be cut from seven to five days a week. A consultation with employees is currently taking place on changes to shift patterns, with 95 jobs out of Memory Lane’s 1,000-or-so staff at risk. This represents 4% of Finsbury’s total workforce of 2,500.
Memory Lane is the leading manufacturer of the UK retailers’ premium own-label cake ranges.Martin Lightbody, chairman and major shareholder at Finsbury, told British Baker: "There is a general decline in cake sales, including premium, and we have been at the forefront of premium, especially celebration and upper-tier cakes.
"The number of products sold on deals this year increased dramatically, so we have been looking at cost-cutting over innovation. We must show our customers that we can produce excellent products again."
He continued: "Our strategy is going to be to innovate for the future. In the industry I would like to see a general improvement in quality available to consumers, while affordable to our customers. We shall continue to look at opportunities to keep us competitive."
The job losses and changes to shift patterns are only being made at Memory Lane’s Cardiff site, "not company-wide".
A spokeswoman said: "In the current economic climate, the firm believes this is a necessary step to safeguard the long-term employment of as many staff as possible, while ensuring that the company continues to work efficiently in providing high-quality products. Finsbury is committed to full and complete consultation with the affected employees on this matter and will aim to deliver improvements to factory operations, while keeping job losses to a minimum."
In Finsbury’s November trading update it announced that "sales in its larger cake business had declined by 6% in value", slightly ahead of the overall market decline of 4%.
An analyst at stock-broking and advisory house KBC Peel Hunt said that the share price had gone down quite aggressively in the couple of days following the announcement, from around 24-25p to 20p, but had now flattened off.