Shadow over Boots factories

DIRECTORS of Boots are backing plans to hive off most of the retailer's huge manufacturing operations, according to insiders. The factories supply own-brand products to the group's stores.

The idea was put forward in a report by management consultant McKinsey at the end of last year. Within months, Boots said it would close its manufacturing plant in Airdrie, Lanarkshire.

Now Boots has decided in principle to shed most of the remainder of its manufacturing, which supplies almost one-fifth of everything sold through Boots' High Street shops.

The company is playing down the suggestion. Boots said: 'It is not on our agenda at the moment. It is pure speculation.' But company sources predict that sales and closures of manufacturing will start next year.

The decision was made before the arrival of new chief executive Richard Baker, who joined from Asda two weeks ago.

More than a third of products sold through Boots are own-label. Of these, about half are made in the company's own factories. There is a large manufacturing operation in Boots' home city of Nottingham with further plants around the world, including France, Germany and Thailand.

The operation employs 3,900 people, among them those still working at Airdrie. At this time of year in the run-up to Christmas, it has a further 500 temporary staff.

Hiving off own-brand manufacturing does not affect Boots Healthcare International, which makes brands such as Strepsils, Clearasil and Nurofen. Boots said at the start of the year that it aimed to cut its annual costs by about £100m.