Financial situation: Stena Lines, Irish Ferries' main competitor on the Irish Sea, does not, apart from one exception, use outsourced crewing staff.
Irish Ferries has said it is reacting to competition but is overstating the case when it refers to its six competitors having already done what it is doing.
The bulk of the staff on Stena's Ireland-Britain routes come from Ireland and Britain. They are members of the Siptu, Numast, TSSA or RMT trades unions. There are some outsourced staff on the Larne to Fleetwood route, a situation Stena inherited when it took over the route from P&O.
One source says Stena staff have been reassured that it is not looking at replacing them with outsourced labour. That may change depending on the outcome of the Irish Ferries dispute.
Both Stena and Irish Ferries have a strong presence on the central (Dublin-England/Wales) and southern (Ireland-France) corridors on the Irish Sea, with Stena probably ahead on passenger numbers on the central corridor.
Stena, a privately owned Swedish company, has a lower cost base than Irish Ferries, having negotiated greater flexibility from its staff. Irish Ferries says it has been unable to negotiate similar flexibility from its staff, putting the blame for this on Siptu.
Other companies operating Irish Sea routes are Norse Merchant, P&O Irish Sea, Cork Swansea and Seatruck. All are understood to use outsourced staff.
There is no doubt that Irish Ferries is under pressure. Earlier this month two analysts who monitor Irish Continental Group, owner of Irish Ferries, expressed concern. Joe Gill of Goodbody cut his profit forecast, saying the company was getting squeezed between rising costs and declining income.
Davy analyst Stephen Furlong said if the company failed to replace its Irish-based staff with a cheaper outsourcing arrangement, it would be left with an uncompetitive cost base.
Passenger numbers are falling as more and more people choose to fly, while rising oil prices are adding to costs. Demand for the ferry freight services continues to grow but it is not as profitable as the passenger end of things.
Stena is a huge group which made a €10 million profit last year, a relatively small figure given its €1 billion turnover. In the first six months of this year, ICG made a pre-tax profit of €1.7 million on a turnover of €139.6 million.
Profits were up considerably on the same period in 2004, a change that chairman John McGuckian said was "due to the absence of industrial disruption in the period" as well as cost reductions.
The company says its return on capital will be as low as 2 per cent by 2007, if costs cannot be reduced. In other words, it could do better with a deposit account in Rabobank. Chief executive EamonRothwell has said he will not have the rest of ICG subsidising Irish Ferries.
Most of Ireland's exports are transported by sea and the current disruption to Irish Ferries comes at a time when its freight services are much in demand.
ICG human resources manager Alf McGrath says 11 strike days in December 2004 cost the company €8 million in lost turnover and were a catalyst for the action since taken by the company.
