DS Smith to close Kent factory as it pushes ahead in Europe

Britain’s largest packaging company will close its factory in Kent and continue to expand production in Europe, warning that a planned bonfire of EU laws risked plunging the UK into a deeper economic crisis.

Miles Roberts, chief executive of DS Smith, said the group’s international business could not continue to subsidise operations in its home country, adding it would be “extremely helpful” for manufacturers if the government aligned regulations “wherever possible” with EU rules to ease trade.

His remarks add to warnings by UK businesses against a deeper separation from the EU post-Brexit, as the government pursues plans to “review or revoke” up to 4,000 pieces of law derived from the bloc.

“The UK economy is one of the weakest places for manufacturers now. But we have more than made up for that with strong investments elsewhere,” he added. DS Smith recently opened factories in Poland and Italy, and is expanding in Germany as it continues to invest outside the UK.

“What really is the benefit [of diverging from EU rules]? It adds cost and complexity . . . It’s more cost and inflation for the UK,” Roberts said.

The decision to wind down DS Smith’s factory in Aylesford, which produces cardboard displays for retailers, was “very regrettable”, he said, but the company had to “respond to the demand that’s there”. The closure is expected to lead to about 100 job losses.

“There are now quite severe restrictions on the movement of products between the UK and its biggest market,” he said, adding the company’s exports to the bloc have roughly halved since Brexit. 

Roberts said DS Smith did not currently have plans for further closures, but added: “A lot of what we make still abides by EU regulations. If the UK government’s going to come away from that, then we’re going to have all these separate registrations . . . We’ll have to think very hard about . . . how we deal with that.”

Unite union officer Louisa Bull said workers at the Aylesford factory were “gutted” by the decision. She said jobs will be available at another warehouse in Cambridgeshire but staff would need to relocate.

Separately, GMB Union “reluctantly accepted” an improved pay increase of 8 per cent from DS Smith after 93 per cent of the 1,000 workers it represents last month voted to strike over pay.

The group still has one paper mill and 27 packaging facilities across the country excluding the Aylesford factory.

GMB officer Eamon O’Hearn said the site closure had contributed to concerns about the future of UK manufacturing and factory workers, adding “no one can escape the impact that Brexit had on supply chains”.

“The other parts of [DS Smith] are subsidising the UK. And that can’t go on forever,” said Roberts, adding some of its UK factories are now lossmaking.

His comments came as DS Smith reported an 80 per cent surge in profits to £315mn during the six months to October, while revenue rose 28pc to £4.3bn.

The group also revealed that it provided £100mn in support to its UK pension scheme through a cash advance and liquidity facility, as recent turmoil in the gilt markets plunged many UK retirement plans into crisis. But it said the cash advance had been repaid and the scheme was yet to draw money from the liquidity facility.