UK’s Next Manufacturing, a subsidiary of the UK-based Next Group, announced the shutdown of its loss-making Katunayake plant due to high operating expenses. Two other local facilities will remain operational but with a reduced workforce.
David Reay, Director of Next Manufacturing, elucidated that after grueling every alternative, they came to the conclusion that the Katunayake plant, which was unprofitable for years on account of rising operating expenses, merely could not be restored to economic viability.
Next will provide up to LKR 2.5 million (US $ 8336) in compensation to each laid-off worker, as per their terms of service under Sri Lanka’s labour law. Next’s other Sri Lankan operations, located in the Katunayake Free Trade Zone, are to remain open with a reduced workforce. In addition, manufacturing units in Andigama and Nawgaththegama will also remain completely operational. The closure will lead to 1,416 redundancies overall.
Katunayake Manufacturing is facing 1,341 redundancies and will have 93 staff remaining. Katunayake Embellishment will be reduced from 160 employees to 110. Katunayake Product Development is reducing 25 employees with 57 remaining. NMA Operations with 1,149 employees will remain with no colleague redundancy.
While the company did not detail definite cost drivers, industry experts cite rising labour expenses as the major concern. They caution that inflated wage costs undermine competitiveness and discourage potential investors, making closure the only practical solution.
Overall, the restructuring will bring Next’s total workforce down in Sri Lanka from 2,825 to 1,409 – illustrating how far the company needed to go to achieve the level of cost cutting it did.
