Son rises as group faces fierce heat of restructuring

At the tender age of 31, Gavin O'Reilly has come a long way in a short time at Independent Newspapers having just taken over its domestic arm - an operation that accounts for around one-third of Independent's sales and operating profits.

Mr O'Reilly's rise within the companies controlled by his father, Dr Tony O'Reilly, has been matched by that of his brothers. Cameron O'Reilly heads Independent's operations in Australia while Tony O'Reilly jnr runs Arcon, the mining group that developed the Galmoy lead-zinc orebody in Kilkenny.

There are those who believe that the triplets' climb up the corporate ladder has as much to do with their father's control of Independent and Arcon as to their own business talents. It is fair to say that there are few 31-year-olds who have climbed so high at such a relatively young age and all three will need to work to get the results to show that they deserve the elevated positions they enjoy.

Gavin O'Reilly's promotion to the post of managing director of Independent Newspapers (Ireland) cemented the family control at Independent. Gavin O'Reilly joined his brother Cameron on Independent's seven-strong executive committee, and there are many (not least within the walls of Middle Abbey Street) who believe that one of the brothers may become the number one at the group when sexagenarian chief executive, Mr Liam Healy, eventually relinquishes the reins - next year at the earliest.

Even if Mr Healy is succeeded by somebody else in the short term, there is a belief in many quarters that an O'Reilly will ultimately take over as chief executive of Independent Newspapers. The only question is, which one?

Independent's executive committee will oversee the £90 million (#114.28 million) restructuring that will see the group's workforce worldwide cut by 10 per cent, or around 1,300 people. The two O'Reilly brothers will play a major part in executing this restructuring programme. Cameron O'Reilly's remit includes New Zealand where swingeing cuts are planned while Gavin's responsibilities as managing director of the Irish operations will include enforcing the job cuts and changes in working practices that the group believes are essential to bring it into line with best international practice.

While Gavin O'Reilly and recently appointed managing editor, Mr Michael Roche, will be in charge of trimming the fat from the Irish newspaper operations, Mr O'Reilly's predecessor, Mr David Palmer, has been appointed chairman of Independent Newspapers (Ireland) and has specific responsibility for bringing the group's proposed new £40 million printing plant on the M50 into operation.

Management sources insist that the decision not to go ahead with a new plant until now was the correct one, despite a feeling among Middle Abbey Street staff that Independent's dependence on a near-obsolete printing press and on outsourced colour printing had allowed competitors like The Irish Times to gain a dominant position in lucrative sectors of the advertising market such as recruitment advertising.

But union sources emphasise that as recently as last October, Gavin O'Reilly had emphatically ruled out bringing a new modern printing press online. He told a management/staff meeting: "At this point let me make mention of a much anticipated subject. New presses, which have been wrongly touted as the panacea to our competitive challenges. First let me say that we have no current plans to re-equip at this time . . . Our current four-day week, demarcation and existing working practices will ensure that this decision is some years away unless change is afoot."

Before moving into the managing director's office in Middle Abbey Street, Gavin O'Reilly had spent three years running Independent Directories, Independent's challenge to the dominance of the Golden Pages. This was followed by two years as director of production operations at the Independent, where he got to understand the intricacies of the newspaper process. Sources have indicated that it was during this period that he became convinced of the need to challenge the issue of working practices, especially the four-day week, introduced 15 years ago in lieu of a pay increase.

He subsequently became deputy managing director in 1997 before finally becoming managing director at the end of last year.

Gavin O'Reilly's remit takes in all of Independent's Irish operations, including its cable television and regional newspaper activities, but union sources are convinced that the primary target for cost-cutting in Ireland will be the elimination of the four-day week as well as some of the demarcations in the production process in Middle Abbey Street.

Staff sources say he has been quick to make his presence felt. "He's very visible, far more so than David Palmer ever was and he has always maintained a hands-on approach," said one source. This has included dealing directly with some editorial department heads, an approach that sources say has sometimes led to friction with the Irish Independent's long-standing editor, Mr Vinnie Doyle.

Already, new editorial staff are employed on the basis of a five-day week or nine-day fortnight working patterns. Independent management believes that the continuation of a four-day working week can no longer be justified if the group's operations are to be brought into line with best international practice. It is understood that Mr O'Reilly would be happy to see a nine-day fortnight as a reasonable first step.

But Independent management has been emphatic that the elimination of the four-day week is just one aspect and is not the cornerstone of a restructuring that one source said "is something we should have done years ago".

The same source insists that Independent has no intention of ending up in a Wapping-type situation and that everything will be done with the agreement of the main unions, the NUJ, the Irish Print Group arm of SIPTU, and SIPTU itself. There is a clear indication here that Independent accepts that any radical changes in working practices - and redundancies - will have to be paid for.

While the unions see best international practice in terms of the radical cost-cutting within the British newspaper industry (including the Independent Newspapers-owned Independent and Independent on Sunday), the management is understood to have accepted that there is little likelihood of generating that scale of cost savings.

But in tandem with the move to a state-of-the-art print plant is a determination that some of what management sees as the more extreme restrictive practices will be eliminated. The four-day week alone is equivalent to 16 per cent more payroll than Independent needs, management sources have indicated.

While "work-sharing" is another element in the restructuring of the Middle Abbey Street operations, it is understood that management does not intend to merge the Irish Independent with the Sunday Independent to create a seven-day newspaper.

But management believes that the success of the Saturday Irish Independent - boosted by its colour magazine - will put more pressure on the Sunday Independent to respond. In effect, two weekend newspapers within the same stable are increasingly likely to compete with rather than complement each other.

When Independent announced the worldwide £90 million restructuring just before the new year, Gavin O'Reilly said: "The competition is bigger and better now than it ever has been and a little bit of reality at some stage has to enter the fray." That competition he identified as the strong recent growth of The Irish Times, the arrival of new titles such as Ireland on Sunday and the Sunday Business Post and also the increased penetration of British titles such as the Sunday Times.

The next few months will see how quickly Gavin O'Reilly gets to grips with the cost base which he has identified as one of the problems restricting Independent's ability to respond to that competition. His success in doing so will probably be a major influence on whether he eventually becomes chief executive of the group.

Outside Independent Newspapers, Gavin O'Reilly's main interests are charities, particularly those like the Ireland Fund and the O'Reilly Foundation which are closely linked to his father.