Fruit of the Loom has announced plans to consolidate operations in the Republic at its Ballymacarry plant in Buncrana with the loss of 65 jobs. But the move was welcomed by IDA Ireland as the start of a new era at the company, which has cut hundreds of jobs in recent years.
The plan emerged yesterday as Novell, a US-based software firm that employs more than 140 people in Dublin, said it would shed up to 10 per cent of its Irish staff in a group-wide restructuring.
However, the firm said it would proceed with plans to build headquarters in Dublin, despite cost-cutting. Staff at the firm's existing Dublin office were informed yesterday of the 10 per cent job losses announced by management.
Fruit of the Loom said its consolidation in Buncrana was the first step in an investment programme at its Irish operations that would allow it implement 24-hour-day, seven-day-week working across its textile operations.
Fruit of the Loom currently employs 360 people at Ballymacarry, a further 240 people at its Shore Road plant in Buncrana and 230 people across the border at its Campsie plant in Derry. The consolidation will see workers at the older Shore Road site transfer to the newer, purpose-built site at Ballymacarry.
Fruit of the Loom, in the process of being bought from its creditors, declined to reveal the size of the planned investment. It is being purchased by Berkshire Hathaway, the investment vehicle of US billionaire investor Warren Buffet, for $835 million (€946 million). The deal is set to be completed in the first quarter of next year.
An IDA spokesman said it was very pleased with the investment, which he described as "substantial". He said the shift in work patterns should yield a 20 per cent improvement in productivity, and that a strong management function was being added to Donegal manufacturing operations.
The clothing company's Irish operations have had a tough time in recent years as low-cost competition from the Far East has taken its toll. Three years ago, Fruit of the Loom closed plants at Malin, Milford and Raphoe while more than 1,000 workers lost their jobs over the course of 1999.
Novell will reduce its total global workforce of about 6,000 people by 19 per cent, or approximately 1,800 positions. It is also writing off certain assets and anticipates a pre-tax restructuring charge of about $55 million, most of which will be taken in the fourth fiscal quarter.
Mr Ian Dunlop, vice-president of product development at Novell, said the development of a new headquarters in Dublin had been unaffected by the company's restructuring. Novell has not announced how many staff it will locate at the site but a building of that size could hold 1,000 people.
Novell spent about £30 million (€38 million) on a site at Sir John Rogerson's Quay last year and was scheduled to begin construction in July 2001. But Mr Dunlop confirmed construction had been delayed due to contamination at the site from materials used for processing gas. He said decontamination was now complete, but could not confirm when construction work would begin.
