Stiff penalties if new targets not met

The new package negotiated between IDA Ireland and Fruit of the Loom is structured to allow stringent financial penalties to kick in if job levels fall below agreed levels.

Under the terms of the deal announced on Wednesday, Fruit of the Loom has guaranteed 1,300 jobs at least until the end of 1999. Some 600 of these jobs are then guaranteed until 2006.

If employment levels drop below this 600 figure over that timeframe, Fruit of the Loom would end up with significant financial liabilities to IDA Ireland.

While this will be cold comfort for the 700 sewing employees whose jobs will remain at risk after the first guarantee runs out in December 1999, the deal aims to secure as many jobs as possible given the economic difficulties faced by the US multinational.

In September, the Tanaiste, Ms Harney and IDA Ireland stated that the company's total financial liabilities in the event of more than 700 job losses would be in excess of £10 million. Some £5 million of this is to be repaid by the end of January.

The monies raised through the sale of the company's three factories in Raphoe, Milford and Malin will be paid to IDA Ireland. It has put a value of £2 million on these premises, although their actual market value may fall below or rise above this figure. In the meantime, the US multinational will retain ownership of and maintain the factories.

IDA Ireland confirmed yesterday that it did not seek to recover the remaining amount of more than £3 million which would have fallen due, agreeing to renegotiate this amount as part of a new grant agreement, in return for guarantees over the future jobs of the remaining 600 jobs. IDA sources said that this gave a financial incentive for this number of jobs to be retained in the long term.

In a statement yesterday, the Tanaiste said that the no-grant liability had been cancelled and that outstanding liabilities continued to be carried by Fruit of the Loom on the basis that it maintained a minimum of 600 jobs until December 31st 2005.

SIPTU representatives in Donegal held a three-hour meeting with Fruit of the Loom management in Buncrana yesterday. The meeting, which was described as "neither encouraging nor discouraging" was the first between the two sides since the company announced 770 job losses and the closure of three plants on Wednesday. Mr Sean Reilly, SIPTU branch secretary, said it had been a preliminary meeting and that the two sides had agreed to meet again next week.

"Some parts of the meeting were difficult but both parties are anxious to secure an agreement quickly," Mr Reilly said. He said that the company had not given any commitments on redundancy payments during the discussions.

A Labour Court ruling is expected soon on a redundancy package for 53 workers laid off at the end of November from a Fruit of the Loom plant in Dungloe. This is likely to determine the terms offered to those who will lose their jobs from the other plants in the spring.

Mr Reilly last night addressed a meeting in Buncrana of Fruit of the Loom employees to inform them of progress made yesterday and to discuss the best way forward. He said a settlement would probably not be reached until January.

There was a very low attendance at the meeting, with fewer than 100 people in the hall as it started. The company employs more than 2,000 in four plants in the county.

A number of people entering expressed dissatisfaction with SIPTU.