Lower-skilled workers will be the ones losing out as a result of the new national living wage, the boss of Finsbury Food Group has warned.
Increased capex spend at the listed bakery would go towards more value-added jobs and the removal of less skilled work in the medium term in a bid to mitigate costs related to the new rate, set to come into force on 1 April, CEO John Duffy told The Grocer.
It comes as group revenues jumped 46% to £156.6m in the first half, with like-for-like growth of 7.4%, and operating profits up 78% to £8m (21% on a like-for-like basis). The figures reflect the full integration of morning goods specialist Fletchers, which was acquired for £56m in 2014, and Johnstone’s, bought in 2015, which helped Finsbury expand into more retail and foodservice channels, as well as coffee shops - a new market for the group.
Finsbury is significantly increasing capex in the current financial year - expected to be £11.6m vs £7.4m last year - as it invests in its bakeries for the long term, with capex in the first half of £3.7m compared with £1.7m a year ago.
Some of that spend would go towards easing rising costs associated with the NLW, Duffy said. “In the medium term, the capex will ensure we have more value-added jobs and remove some of the less skill-orientated jobs at the bottom end.”
BDO gathered similar findings in its 2016 food and drink report last month, with one in five manufacturers weighing up reducing staff and almost a third set to invest in further automation.