Waterford Crystal has demanded a 10 per cent cut in prices from its worldwide network of suppliers and threatened to impose the price cuts if the suppliers did not respond within five days.

The demand came in a letter issued to suppliers on October 31st, where the group sought the 10 per cent price cut retrospective to the beginning of October and gave them until November 5th to agree.

In the letter sent to Waterford Crystal suppliers, the subsidiary's director of group procurement and outsourcing, Mr J. P. Murtagh, stated: "In the absence of a response from you by Monday November 5th, we would propose to secure the requested credit by raising a debit note against your account." In effect, Waterford has stated that if it did not get the price cut by agreement, it would be imposed.

In his letter to suppliers to the crystal operations, Mr Murtagh said: "We realise that this will be difficult for your business but we are sure that you understand that we will all have to suffer pain in the short term so that both our organisations will enjoy those good times again when they return, as we know they will.

"In many ways, it could be said that we have become close business partners. We have enjoyed the good times together but now times are far more difficult," he said.

A spokesman for Waterford said that in order to achieve lower costs: "We are inviting all of the stakeholders in the business to participate in this process. Employees throughout the group have endured short-time working and each of the businesses in the group had written to suppliers asking them for a reduction in their costs."

Waterford said it intended the cut in supplier prices as a short-term measure between now and the end of the year. But there were indications that not all suppliers, especially larger ones, have yet been asked to cut their prices.

The spokesman said that the price-cut letter had been sent to all its suppliers worldwide, including companies supplying Wedgwood, Rosenthal and All-Clad - as well as Waterford Crystal.

But one major supplier to the crystal operations, Bord Gβis, said it was not aware of any such letter. Bord Gβis supplies natural gas which fires the furnaces in the crystal plants in Waterford and Dungarvan, and is thought to be one the group's largest suppliers in Ireland.

The Waterford spokesman declined to comment on the group's relationship with individual suppliers. But he said: "Major suppliers in terms of volume have been approached and are being approached to participate in the discount scheme." This suggests that while Bord Gβis and other major suppliers may not yet have received the demand for a price cut, such a demand may be on the way.

Waterford Wedgwood's demand for its suppliers to share the pain comes in the wake of the €60 million (£47.25 million) rationalisation programme announced two weeks ago. As part of this programme, Waterford is cutting its workforce in Ireland, the UK and Germany by 1,400 jobs.

Most of these are concentrated in the UK, with just 100 jobs due to go at the Irish crystal operations. The Irish operations, however, are also shutting down for two one-week periods between now and the end of the year.

When that rationalisation was announced, chief executive Mr Redmond O'Donoghue described the business environment as the worst he had experienced in 30 years. "The situation, in my view, is unprecedented."

As well as the job cuts, the rationalisation programme also involves cutting operating costs by greater use of technology, rationalisation of the group's chain of retail shops, and a reduction in inventories.

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