As Waterford Crystal confirmed it will shed over 200 jobs yesterday, brokers suggested parent group Waterford Wedgwood may need to hold a rights issue as part of a refinancing of some €329 million in debt that falls due over the next two years..
While workers were expressing outrage at plans to lay off 234 permanent and contract staff, Goodbody Stockbrokers raised the possibility of a rights issue, saying recapitalisation would be a positive move provided it was linked to a "radical restructuring".
Deriding as a "disgrace" an €18 million rationalisation strategy that will see 129 temporary employees let go, 105 voluntary redundancies among permanent workers and a general pay freeze, union leaders warned that job cuts cannot be pushed through without worker consent.
"Nothing will be implemented until such time as there is an agreement," said Mr Seán Kelly, regional industrial organiser of ATGWU, representing the bulk of the approximate 1,500 employees working at Waterford Crystal's flagship factory in Kilbarry on the outskirts of Waterford city.
Management said lay-offs were essential as the company sought to reduce costs and drive up revenues. Profits of €28 million in the year to March 2003 are unsatisfactory, representing only a 10 per cent return on sales, said chief executive Mr John Foley.
He added: "Currently we can source nearly 50 per cent of product at up to 30 per cent less than we have been able to produce it here in our Irish plants."
Goodbody stockbrokers said yesterday that Waterford Wedgwood may now be considering a rights a rights issue to raise fresh capital .
"Given Waterford's recent difficulties in managing its debt, there is likely to be a lot of financing risk association with this debt. . . One has to wonder is there another rights issue on the way," said Mr Peter Horgan in a broker's note.
"A recapitalisation of this nature could be a positive move for the group, provided it was accompanied by major restructuring."
Such a move would require consolidating the number of product lines within the group to reduce working capital, he said.
The Tánaiste and Minister for Enterprise, Trade and Employment, Ms Harney, responded to the lay-offs announcement by saying the Republic's dependence on exports makes it particularly vulnerable to the global economic slowdown.
Opposition leaders claim the Government is incapable of stemming the flow of redundancies.
Jobs are being shed at the rate of one every 15 minutes, said Mr Brendan Howlin, Labour spokesman on Enterprise, Trade and Employment.
He said: "In the last 28 days, 2,493 people have been made redundant, with predictions now that many thousand more jobs in manufacturing may be lost by the end of the year.
"The sum total of the Tánaiste's response is to offer us woolly analysis of the situation rather than doing anything about it," according to Mr Howlin.
His opposite number in Fine Gael, Mr Phil Hogan, said the Government's failure to bring inflation under control and modernise essential infrastructure was fuelling job losses.
