IDA Ireland has agreed to waive up to £5 million in financial penalties on Fruit of the Loom as part of a deal which will guarantee 1,300 jobs in Donegal for at least another year.
The company yesterday confirmed the transfer of its T-shirt sewing operations to Morocco from next year with the loss of 770 jobs, while undertaking there will be no further job losses in 1999.
The new business plan approved by the board of IDA Ireland includes a commitment by the company that 700 sewing jobs will be retained throughout 1999, and the remaining 600 jobs at its fabric production facilities will be secure at least until 2006.
The Tanaiste, Ms Harney, said the agreement represented a "satisfactory" outcome although the 770 job losses were regrettable. Every possible effort to find replacement jobs and industries would be made.
The Fruit of the Loom chairman and chief operations officer, Mr Bill Farley, said the company had been working to try to maximise job numbers in Ireland but that the "economics" of the situation suggested the firm should have made the job cuts some time ago.
"It has been clear for some time that if we are to continue to market our products competitively, this means moving certain jobs to regions with substantially lower wage costs."
IDA Ireland's chief executive, Mr Kieran McGowan, said the decision was the best outcome possible given the difficult environment.
Under the new deal, the grant-aid packages paid to Fruit of the Loom have been renegotiated to include revised penalty clauses to safeguard the remaining jobs for as long as possible.
Ms Harney had told the company in September it would have to repay IDA Ireland up to £10 million if more than 700 jobs were cut, but Fruit of the Loom had disputed the scale of those liabilities.
A compromise has been brokered in protracted negotiations since then. Fruit of the Loom will now repay £5 million by the end of January. It will also hand over its three disused factories at Malin Head, Milford and Raphoe, in part-payment of a further £2 million.
The value of these factories is negligible and will depend on the level of interest from other companies.
A company statement announcing the factory closures was read out to employees at the Donegal plants yesterday afternoon.
Workers at the Milford plant reacted angrily when two managers from the Buncrana headquarters read out the statement to them in the canteen. The local plant manager, Mr Danny McIlhenny, who will also lose his job from April, broke down in tears as he tried to read the statement.
Mr Anne Whoriskey, a shop steward at Milford, said the workers were "devastated" at losing their jobs, but were also outraged because management would not answer their questions. "They said they had travelled to the plant to give us the news with dignity, but they have not given us any dignity."
Many workers at the Raphoe plant broke down in tears when the news was announced in their staff canteen. Ms Olivia Doherty said it was "a devastating blow".
"What makes it worse is the fact that there is nothing else employment-wise in the area. There is nowhere else for people to go."
SIPTU representatives are to meet management today to seek clarification of the statement and to discuss a redundancy package.
The local branch secretary, Mr Sean Reilly, said he was "deeply worried" about the possibility of more jobs being lost at the end of next year, but said he did not want to speculate on this until after he had met management.
Many workers directed their anger at Ms Harney and the Government for failing to bring alternative jobs to Donegal.