IDA Ireland is striving to attract an international project to Donegal to cushion the blow of any future job losses at Fruit of the Loom.
The US T-shirt and leisure wear manufacturer, which employs up to 2,500 in Donegal, has given assurances to the Government and its staff that there will be no job losses at its Irish operations this year. But the Government and IDA Ireland still consider that 750 jobs in the T-shirt manufacturing operations are at risk and could eventually be moved offshore to a cheaper manufacturing location. It had been feared that the jobs could have been relocated this summer but these concerns have abated.
Last May, the Government had drawn up an action plan to deal with the job losses. These plans have since been stood down, although IDA Ireland is continuing to closely monitor developments at the company.
The Tanaiste had requested IDA Ireland to outline its plans for "dealing with the expected demands for job creation when Fruit of the Loom stared to relocate and scale down its T-shirt production in Donegal".
In a memorandum sent to IDA managing director Mr Kieran McGowan in May, Ms Harney said the main facility in Buncrana "is considered secure in the long term." It employs 1,500 people in knitting, dyeing, cutting and fleece line production. However 750 sewing jobs throughout the Inishowen peninsula are "at risk", she stated.
Mr McGowan assured the Tanaiste that it was going forward with a number of measures to cope with the demands for job creation in the area if the jobs were axed. The Government had also considered the establishment of a task force for the Ballybofey/Stranorlar area. The concerns for the 750 jobs have since abated somewhat, following meetings between the Tanaiste and Fruit of the Loom chief operations officer Mr Bill Farley in the US in June.
Sales of its T-shirts in Europe are understood to be very strong at the moment and the Donegal plants are working at full production. But given the fickle nature of the fashion industry, any downturn in demand for its T-shirts is expected to prompt a review of the viability of the 750 jobs. Fruit of the Loom operates a sister operation to the Irish facility in Morocco. Sewing costs there are much lower, with employees working for as little as £30 a week. The pressure to find a replacement industry has been building at the State's industrial development agency since last January. Since then IDA Ireland has been canvassing multinationals, mainly in the US, about setting up operations in the area. Those targeted include software development companies or manufacturing type operations. Donegal is one of the most difficult regions to promote to international companies, with its proximity to Northern Ireland and the lack of infrastructure cited as the main stumbling factors. Local development associations have also highlighted the difficulties for companies in Donegal to remain competitive given the higher level of funding from agencies in Northern Ireland.
SIPTU has been working closely with Fruit of the Loom's Irish management in an attempt to train more staff to work in the higher-value fleece manufacturing process which is continually expanding. The company has invested substantially in this part of its operations over the years.
Earlier this year, Mr Farley said the group had exceeded its plans for reducing costs in the first quarter but would remain focused on achieving additional cost reductions to ensure further improvement in profitability. In the first three months of 1998, Fruit of the Loom reported a 9 per cent drop in sales, but an 18.6 per cent growth in pretax profits, to $37.6 million (£27 million).
Meanwhile, IDA Ireland has recently lost a major project which was to be located in Sligo.
