Job cuts likely at Waterford Crystal following restructuring

The internationally renowned glass manufacturer Waterford Crystal is preparing to reposition its business, due to the need for further cost reductions at its manufacturing plant in Waterford city in southeast Ireland. Although the main trade union represented at Waterford Crystal is aware of the difficulties facing the company, it believes that the company will commit to retaining its manufacturing operations in Waterford, despite the possible job cuts.

Company background

Waterford Crystal, the Irish-based arm of the Waterford Wedgwood Group, was first established in 1947 and became one of Ireland’s few indigenous exporting success stories before the country began its modern industrial development in the 1990s.

The company began outsourcing in the early 1990s, but has always retained a core manufacturing base in Kilbarry in Waterford in the southeast of Ireland. At its peak in the 1970s, Waterford Crystal employed 3,000 workers involved in the manufacture of various craft-based crystal products. Since that time, in a bid to remain competitive, it has cut almost 2,000 jobs and outsourced several product lines to companies in a number of other countries, including Germany and Slovenia.

Impact of weak dollar

The United States has always been Waterford Crystal’s main target market, and as such the success and competitiveness of Waterford Crystal is largely dependent on the euro/dollar exchange rate. The dollar being so weak against the euro in recent times has put a severe strain on the company, which today employs about 1,000 workers at its main plant in Kilbarry.

In all, the Waterford Wedgwood Group reported a pre-tax loss of €57.5 million for the six-month period prior to the end of September 2007, compared with a loss of €20.7 million reported for the same period in 2006.

Newspaper report unveils restructuring plan

The local Waterford newspaper, The Munster Express, recently reported that, during the summer of 2007, a ‘top-secret’ meeting took place at the French holiday home of Group Chair, Sir Anthony O’Reilly, in Deauville in northern France. According to the article, a restructuring plan for Waterford Crystal was reviewed by Sir O’ Reilly and a group of the company’s top executives. The newspaper article highlighted that ‘events are about to unfold that will reduce the Kilbarry workforce by 400 to 500 workers, leaving about 300 employees to operate a mainly sales and tourist orientated operation’.

The company would not comment on the article at the time, other than to insist that it remained committed to manufacturing in Waterford. However, the Chief Executive of Waterford Wedgwood, Peter Cameron, confirmed on 8 November 2007 that there were indeed going to be significant job losses at the Waterford plant. Mr Cameron indicated that employment levels at the plant could not be sustained at their current levels; at the same time, however, he reiterated that the company remained committed to manufacturing in Waterford.

Union aware of difficulties facing company

The main trade union represented at the plant, the Amalgamated Transport and General Workers’ Union (ATGWU) – now part of the Unite union – is well aware of the difficulties facing Waterford Crystal. Relationships between management and the trade union have been favourable in recent years, despite the company’s problems and a gradual slimming down of job numbers over the past two decades (IE0508201N, IE0208202N).

The trade union believes that it has a commitment from the company that it will retain manufacturing operations in Waterford, even if these operations have to be slimmed down and only focus on local craft-based manufacture, such as glassware. Such a move would link in with the previously announced plan to further upgrade the tourist facility in Kilbarry, which attracts an impressive 300,000 to 350,000 visitors annually – making it one of Ireland’s leading tourist attractions. In its ‘glory days’ of the 1960s and early 1970s, the company attracted a mere 10% of this figure and only started to realise the tourism potential when it went through major restructuring in the 1990s. Industry sources believe that the strategy which focuses on tourist attractions and a glassware museum, along with a traditional manufacturing element, could sustain business in Waterford into the future.

Commentary

With job cuts on the horizon, securing finance for a voluntary redundancy programme is proving to be difficult and is one of the reasons why management has delayed formally informing trade union representatives of its plans. Two years ago, Waterford Crystal sold over 20 valuable acres of land for €33 million. This deal helped fund about 300 redundancies resulting from the closure of its Dungarvan plant in County Waterford.

Brian Sheehan, IRN Publishing