Fruit of the Loom is expected to announce the loss of almost 800 jobs at its T-shirt operations in Donegal today, with redundancies to be phased in during the first three months of 1999.
The job losses are incorporated in a new business proposal which is expected to be approved by the IDA Ireland board this afternoon. The plan put forward by the company will also offer medium-term safeguards for the remaining 1,200 Donegal jobs.
Mr Bill Farley, Fruit of the Loom chief operations executive, will be immediately informed of the IDA's decision and is likely to instruct local management to outline its plans to workers this evening.
The new business plan follows months of difficult negotiations between IDA Ireland, Mr Farley and his European management team. It is understood to incorporate some compromise on both sides over the scale of the liabilities to IDA Ireland under its grant-aid agreements as a result of the job losses.
The terms under which any future penalty clauses will come into effect will also be addressed in an attempt to secure the continuation of as many jobs as possible.
The firm is expected to offer the factories where production will cease to IDA Ireland in part payment of its financial liabilities.
In a statement issued after meeting a delegation of the company's unions in Dublin yesterday, the Tanaiste, Ms Harney, said she expected the company would make an announcement to workers today.
She told the unions, according to a statement, that she looked forward to a "fair and reasonable settlement to talks on a redundancy package". The company must fully inform the workers of its plans in Donegal, she said.
The company is expected to close its T-shirt sewing operations in the first quarter of 1999, transferring this end of its production to a Moroccan affiliate. This would affect workers at Buncrana and would also close plants at Malin Head and Raphoe. It has already closed its plant at Dungloe with the loss of 50 jobs last month.
The company told workers on Monday it would be in a position to outline its plans for the Irish operations by the end of this week.
Some 2,500 workers in Derry and Donegal will be laid off on Friday until January 5th, a week earlier than the scheduled Christmas shutdown. The company has assured workers production will restart in January.
Over half of the Donegal workforce is already working short-time, with 300 in Malin Head and Raphoe working two days and a further 800 on a three-day week. The short-time working and the early closedown of production this year is part of the company's efforts to run down its stock of T-shirts and leisure wear following a sales slump.
The negotiations between the company and IDA Ireland have focused on the financial implications of the new business plan, both for IDA Ireland and the firm.
IDA Ireland has issued three grants to Fruit of the Loom since 1988, each of which relates to the company meeting specific job targets. These grants are issued for a 10-year period and once the company meets the terms of the original agreement for its duration any liability ceases.
The State agency has recalled the last grant, issued in 1993 for around £5 million, because of its failure to achieve certain job targets. This is not disputed by the company. The discrepancies related to the repayment of monies issued under the 1988 grant which, while issued 10 years ago, was not fully drawn down for some years later.