End of the line?

IF it really is true that hundreds of jobs could go at Nestl's York plant because of the high pound and the fact we're not in the Euro, politicians nationally are really going to have to get their thinking caps on.

While Nestl were playing down the situation today, city analysts were speculating that the development could add to pressure on the Government to make up its mind on the Euro.

The latest scare surrounds the best-selling KitKat - one of the most popular brands made in York.

Millions of the crispy snack bars - the UK's favourite sweet - are sent abroad every year from the firm's York factory.

National newspapers today were speculating that 'hundreds' of jobs at Nestl in York could be axed because foreign buyers - wholesalers in Italy, Spain and Portugal among them - were preferring to buy KitKats made in Germany, the other main European production base, rather than those made in York.

The reason? The German plant uses the European single currency which, because of the relative strength of the pound against the Euro, means it can at the moment make KitKats more cheaply.

Grace Chen, Treasury analyst at the Royal Bank of Scotland, said there was no doubt that manufacturing in the UK had been suffering because of the strength of the pound.

There were signs that the pound had been coming down in the last couple of months or so, she said. "But there is an argument that if you're in the single European currency, you might have some kind of an advantage."

The KitKat situation is a perfect example of how the debate over whether or not to enter the Euro - often perceived as little more than a slanging match between politicians with little real relevance to the ordinary man in the street - can have a real impact on our jobs and livelihoods.

Miss Chen said there would now be increasing pressure on the Government to make clear its position on the Euro. But she stressed the health of UK manufacturing wasn't simply a question of whether we were in or out of the Euro. Other factors such as the strength of the pound and tax laws all affected our ability to export successfully, she said.

Nestle was stressing today that it certainly was not the end of the road for chocolate production in York.

Reports of widescale job losses at York or threats to the factory were

'completely untrue', a spokesman stressed today.

He admitted there had been a 'transfer of some Kit Kat production from York to Hamburg in recent months'.

"However, the success of KitKat Chunky, which has brought

substantial additional production to the York factory, has offset any lost export volumes and there have been no overall job losses as a result," he said.

Nestl admits, though, that it has expressed 'concern' about the strength of the pound against the Euro, and the effect on its export business.

Its line today was that it would be wrong to speculate about any future impact on jobs. Trade unions would always be consulted first on any matter affecting employment, the spokesman said.

But - in a statement that may send a tremor of worry through many of the hundreds of workers employed making KitKats in York - the spokesman added: "If the strength of the pound is maintained then there is a risk

that our export business would suffer further and that this would lead to

job losses."

What that seems to mean is: no job losses now, but no real guarantees there won't be any in the future. The future of the factory itself, though, does not seem to be in doubt.

It is no surprise that the current problems are centred on KitKat production. Rowntree's fortunes have long been inexorably tied to this humble chocolate bar.

The company can be traced back to 1725 when Mary Tuke opened a grocer's shop in Walmgate. This business expanded and began trading in cocoa, a concern bought by Henry Isaac Rowntree in 1862.

Two factors enabled the company to take off. Henry's visionary brother Joseph joined as a partner, and the industrial revolution allowed them to export their products nationwide.

The 1930s must be considered the golden age for Rowntree innovation. It was during this decade that the York factory created all manner of famous names: Black Magic, Aero, Dairy Box, and Smarties all hit the shelves, but these favourites have always been eclipsed by the remarkable KitKat.

Such products ensured that chocolate was no longer a delicacy for the better-off alone. They were affordable to the ordinary man, woman and child in the street for the first time.

And allied to this Rowntree's pioneering marketing techniques - in 1939, the KitKat was sold under the slogan "Give yourself a break at teatime" - and soon KitKats were being consumed by the millions.

This turned the factory around. By the end of the Twenties, Rowntree's was losing out badly to Birmingham rival Cadbury. By 1939 it was the third largest confectionery firm in Britain.

And the KitKat is still crucial to the firm's fortunes. When Nestl Rowntree was losing market share in the 1990s, it consolidated its output, reducing the number of its products.

Then it concentrated on creating new versions of old favourites. Once again the runaway success proved to be the KitKat, this time in Chunky form. So popular was the new bar that sweetshops could not keep up with demand.

Nestl had expected to sell 2,500 tonnes of Chunky KitKats between its launch last spring and Christmas; in fact it sold 12,000 tonnes. This growth has helped to stabilise York production in the face of reducing exports. One thing that the Rowntree factory in all its incarnations has never done is to have a break from the KitKat. For the good of the city, we must hope it never does.

PICTURE: how the KitKat image evolved from the 1930s to July 1993