Substantial job losses from among the 3,500 employees of Fruit of the Loom in Donegal and Derry are now feared over the coming months. Employees will be told today that managing director, Mr Andy McCarter, and the other Irish director, Ms Mary Cullen, are to leave the group in October.
The group's chairman, Mr Bill Farley, is to visit Ireland shortly to discuss the future of the operations here with the Tanaiste, Ms Harney.
Mr Joe Mullan, the group's head of apparel, is to take over the day-to-day running of the Irish operations, The Irish Times has learned. The company will also announce the immediate closure of the Dungloe sewing plant, which employs 48 workers.
This closure has been flagged for almost a year. But the surprise departure of the two Irish directors heightens fears for the long-term viability of Fruit of the Loom's Irish operations.
Sources close to the company are signalling the possibility of substantial job losses in 1999. In the interim, a return to short-time working could be introduced in response to a slump in sales of Fruit of the Loom leisure wear in the European market.
Mr Farley is due to visit the Irish operations in the next couple of weeks and is expected to inform Ms Harney of the company's intentions in relation to its Irish workforce.
The company has reviewed its T-shirt production operations in Ireland on a number of occasions and has considered moving it to its sister operation in Morocco. Such a move would lead to the loss of 700 jobs in the Donegal area. Sources believe this operation is now under serious threat and that further jobs could be lost if the European market deteriorates further.
A Fruit of the Loom spokesman refused to confirm or deny the management changes, saying it was company policy to inform workers first of developments.
However, an IDA Ireland spokesman described the changes as "disappointing". Mr Andy McCarter took over as the European vice-president last year succeeding his brother, Mr Willie McCarter, and two other directors, who left the company in acrimonious circumstances.
In a letter to staff, Mr McCarter and Ms Cullen said it was always their intention to leave the company, having opted to stay last year in a bid to ensure continuity for the workforce. They are understood to have reached amicable settlements with the company and will leave at the end of October.
The appointment of Mr Mullan will provide stability for the workforce in the short-term. He has worked at the company for 10 years. Mr Farley gave a commitment to the Government last October that there would be no job losses until October 1998, at the earliest. As that date draws nearer, there are growing fears that a decision is imminent to substantially reduce the scale of the Irish operations.
The spinning plant in Derry, which employs 1,000, is thought to be the most secure. It is a highly efficient and capital intensive operation which supplies the yarn for the production of T-shirts and fleece products in the six Donegal factories.
Fruit of the Loom faces major price pressures in its T-shirt business and an overall downturn in sales of both T-shirt and fleece products in the European market. In the US the group has been increasingly moving much of its manufacturing production to low-cost locations such as the Caribbean.
A similar move from Ireland to Morocco could prove cost effective, with employees working for as little as £30 a week compared with average wages of £200 a week in Donegal.
SIPTU has been working closely with the company during the past year to train more staff in the fleece manufacturing process.