Yahoo Finance Falling Demand For Paper Banknotes Hits Jobs
The company which produces UK passports and banknotes for the Bank of England has announced plans to cut its note printing operations, placing 300 jobs at risk.
De La Rue (Other OTC: DELRF - news) said a review of its manufacturing operations, ordered amid growing competition in the bank note sector, was recommending a reduction in banknote print capacity from eight billion a year to six billion.
The FTSE 250 company proposed doing this by cutting the number of production lines from eight to four - leading to the closure of production in Malta.
De La Rue said that the move would save the company an estimated £13m annually from 2018/19 and affect 400 jobs, with 300 staff at risk of redundancy - the bulk of them in Malta.
Its statement said: "Bank note production will be consolidated into three centres for excellence: Gateshead in the UK., Kenya and Sri Lanka.
However, it was not all good news for the company's operations in Gateshead as the company confirmed it would relocate its security print operations to Malta as part of plans to invest heavily in its passport business.
Martin Sutherland, De La Rue's chief executive, said: "As the leading commercial designer and printer of banknotes and passports, our manufacturing footprint review has identified significant opportunities for improvements in capability and efficiency.
"Today we are announcing plans to achieve a more streamlined De La Rue, in line with the future needs of our global customers, focused on centres for excellence with investment that underpins our future."
The company issued a profit warning in May on the back of "volatile market conditions".
It (Other OTC: ITGL - news) blamed tough trading for damaging half-year earnings - forcing Mr Sutherland to slash dividends.
De La Rue has a 10-year contract with the Bank of England to produce banknotes - including the new polymer notes - due to start entering circulation next year.
The notes should prove more durable than their paper counterparts and contain additional security features to combat counterfeiters.
