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Starry Plough Flies Again In Ireland

by irishhead Sat Jan 31st, 2009 at 08:47:32 PM EST


A meeting is due to take place later at a city centre location in Dublin to try to resolve the situation at Waterford Crystal.

Trade union officials from Waterford are travelling up this afternoon and will be meeting with David Begg, General Secretary of ICTU, Dermot McCarthy, secretary to the Taoiseach and other Government representatives.

The receiver, David Carson, has told the trade union officials he will attend that meeting.

Sleeping bags and blankets were brought in, as were food parcels, most of which were donated locally.

An estimated 2,000 people have attended a rally in support of the Waterford Crystal workers.

The occupation of the factory is continuing and a flag depicting the starry plough has been raised on the main flag pole at the Visitor Centre. Source

The Starry Plough - for those of you not familiar with it - is associated with the Irish Citizens Army who took part in the 1916 Rising in Ireland. They were led by celebrated trade union leader James Connolly.

Coincidentally this year in Ireland marks the centenary of the Irish Transport and General Workers Union founded by Connolly and Jim Larkin, a trade union leader forever associated with the Dublin Lockout of 1913.

Meanwhile we await a savage round of cutbacks owing to a massive housing bust!


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Sounds like the Spirit in Ireland remains alive.  And i believe they have a German subsidiary affected as well?

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
by Crazy Horse on Sat Jan 31st, 2009 at 09:05:57 PM EST
What's the story on the occupied factory?

Oh, and my browser complains that the site hosting the flag picture is inadequately certified. I dunno whether that's a problem or just my browser being paranoid, though...

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 1st, 2009 at 04:25:43 AM EST
Image should be fixed now. The workers resisted a lockout and are attempting to ensure their previous employer/owner lives up to financial and other commitments that were made to them when the company was put into recievership a few weeks ago.

They also want to keep the factory operating while negotiations with potential new owners continue.
I will update this more fully soon.

by irishhead on Sun Feb 1st, 2009 at 07:08:20 AM EST
Good for them. I hope they succeed.

Can they use their pension obligations to buy out the company? As in, the equity holders get wiped out, the pensions take a hit, but the remaining pension plan becomes the new equity?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Feb 1st, 2009 at 07:43:40 AM EST
[ Parent ]
The government may face significant damages claims for its failure to protect the pension benefits of Waterford Crystal employees, in the event of insolvency of the glass plant, according to a leading EU law specialist.

Last Friday, the receiver appointed by its banks to the Waterford Wedgwood group, told workers that manufacturing would stop at the plant with loss of 480 jobs in the 700-strong workforce.

Deloitte's David Carson said he was ``continuing negotiations with interested parties'' about a takeover of the plant, and two of those include US-based investors KPS and Clarion Capital - a consortium fronted by John Foley, the company's former chief executive. Around 200 workers have been staging a sit-in since Friday.

Trade union officials met with Carson, David Begg - general secretary of Ictu - Dermot McCarthy, secretary to the Taoiseach and other government representatives in Dublin yesterday to try to resolve the situation. The group's pension scheme is more than €111 million in the red, and may have to be wound up if the company cannot be sold as a going concern. Pensions would be significantly reduced in that case.

Government May Face Damages Over Waterford Pensions

by irishhead on Sun Feb 1st, 2009 at 07:14:15 AM EST
"The luxury crystal and china group's banks sent Mr Carson in to take over the group at the beginning of the month after it failed several times to make loan repayments when they were due.

At that point, Mr Carson, a Dublin-based partner with accountants and consultants firm Deloitte, committed himself to, as far as possible, maintaining and selling the group as a going concern.

His efforts to keep manufacturing going at the plant failed yesterday, as he wrote to workers saying that production would cease there immediately, with the loss of 480 out of its 708 jobs.

There have been signs over the last two weeks that he is running out of the cash needed to keep it going. Waterford workers have been on a three-day week for the last fortnight, he ended phased redundancy payments to over 200 former staff this week, and laid off over 300 employees from its Wedgwood subsidiary in Britain. . . . . .

His statement yesterday said that he is "continuing negotiations with interested parties with a view to a sale of the company's assets and those discussions are focused on agreeing the terms upon which a transaction could be completed".

He also said that yesterday's closure and the lay-off of 480 workers does not necessarily mean the end of manufacturing at Waterford Crystal.

Mr Carson is keeping on staff whose job it is to maintain Waterford Crystal's furnace. Shutting down and restarting this is complex and expensive.

The fact that he is keeping it going indicates that he is erring on the side of being able to sell the factory to someone who is going to restart manufacturing there.

Within days of his appointment, Deloitte confirmed that over 10 parties had approached it expressing interest in buying Waterford Wedgwood.

At this stage, it looks like just two are in the running. The first is KPS Capital, which formally announced its interest in the week the receiver moved in and subsequently met representatives of trade unions.

The second is Clarion Capital, which has not said anything formally, but which is understood to be on the verge of making a formal bid. The pair are "private equity funds", which means that they are likely to be backed by mixture of financial institutions and other investors, for whom they must ultimately deliver a return.

Both have met representatives of Waterford Crystal's main union, Unite, which was broadly positive after the two encounters. They gave the union grounds for believing that manufacturing can continue in Waterford. However, the business is likely to be considerably slimmed down, and employ about 300 people.

It is not clear it that is 300 out of the 708 total, or 300 out of the 400-plus manufacturing and craft workers. Either way, it seems that a sale will not see the entire crystal staff returning to work.

Mr Carson is not just selling Waterford Crystal. The group includes the British Wedgwood and Royal Doulton china manufacturers, as well as Rosenthal Porcelain in Germany."

Waterford Receiver still seeking Investors

The Bank that is forcing this situation is the Bank of America. I will dig up a reference for this in a few minutes, along with information on the owner of the Factory who is a newspaper baron,  because this is a convoluted tale with many echoes (faint as they may be) of the 1913 lockout.

by irishhead on Sun Feb 1st, 2009 at 07:27:25 AM EST
The Bank that is forcing this situation is the Bank of America.

And would that be by any chance the same Bank of America that spent an estimated $10 million of US taxpayer TARP money on a party at yesterday's Super Bowl?

The same one, you say? How remarkable.

I'm beginning to think tumbrels and guillotines might yet come back into general use.

by Mnemosyne on Mon Feb 2nd, 2009 at 09:52:13 PM EST
[ Parent ]
Might that be the same bank that bought Merrill Lynch last September at the behest of Paulson, for more than its market value, only to then complain that it had underestimated Merrill Lynch's 4th quarter loses in 2008 and obtain a government guarantee for Merrill's toxic assets after threatening to pull out of the takeover deal?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith
by Migeru (migeru at eurotrib dot com) on Tue Feb 3rd, 2009 at 03:26:53 AM EST
[ Parent ]
Why, I do believe it is the very same one.

Although, I'm not entirely sure it was a case of "underestimating." I've seen stories that say there was a lot hidden in the numbers and that the speed of the deal meant those things weren't found in time.

Of course, those stories could have originated in a PR firm . . .

Tumbrels and guillotines are looking more and more interesting.

by Mnemosyne on Tue Feb 3rd, 2009 at 11:31:48 PM EST
[ Parent ]
Can't the workers simply take on ownership of the company, like John Lewis Partnership or Tower Colliery, as a worker cooperative.

They can raise finance by finding "capital partners" interested in a share of their gross revenues within a partnership framework.  

Their pension fund would of course be one of these, and would be given a proportional share of gross revenues in exchange for extinguishing the current pension obligation.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Feb 1st, 2009 at 07:32:43 AM EST
The leeches debtors need to be removed in order to get the factory back into a fiscally sound position so it can, once again, become a going concern.

To get out from under the debt the entirety of the debt needs to be retired.  The best way, of course, is for the Irish government to assess the factories "value" at current market price (Mark-to-Market,) "buy" it at that value, and return to the debtors their pro-rata share of the "cost."

And then give the factory to the workers.

No guarantee this will make the factory profitable but until the steady drain of money from wealth production to the parasites debtors is halted any action to save the factory is almost certainly doomed.

IMNOHPCO.

(In My Not So Humble Pinko-Commie Opinion.)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Feb 1st, 2009 at 12:51:58 PM EST
[ Parent ]
Thanks Chris and Jake for the feedback. I can put your thoughts somewhere where their union reps will find them in Ireland.

Meanwhile here is some info on the Newspaper tycoon who washed his hands of them and these financial commitments a few weeks ago. He is probably the richest man in Ireland, and is the Chief Executive of Independent News And Media - Ireland's biggest newspaper group. William Martin Murphy who was Larkin's and the ATGWU's main adversary in the 1913 lockout in Dublin was also the chief executive of the Irish Independent and other associated newspapers. Here is an informative Wikipedia article on that episode.

The company has called in the administrators to Waterford after O'Reilly, its chairman and controlling shareholder, failed to rescue the firm from becoming a victim of the global economic slump.

The 72-year-old former rugby international - he played for Ireland and the British Lions - lost about £140m, but it is doubtful that the affair will shatter his reputation as one of the world's most successful and charismatic businessmen.

In Ireland, his country of birth, he is regarded as something of a legend, leaping to fame in the 1960s as the man who successfully marketed Irish butter Kerrygold as a leading export brand and who went on to become head of foods multinational Heinz.

Not content to stop there, he also built up his Independent News & Media empire, which spans operations from India to South Africa, and which is the parent company of British national newspapers the Independent and Independent on Sunday.

However, Ivan Fallon, a former Sunday Times journalist and the current chief executive of IN&M in the UK, concedes that the failure of Waterford Wedgwood is a "knock for him [O'Reilly] personally".

Cracks in O'Reilly's crystal

Going to research the Bank of America bit of the puzzle next.

by irishhead on Sun Feb 1st, 2009 at 07:58:49 AM EST
"Takeover talks with an unidentified private equity firm failed to come to fruition Friday and a group of lenders led by Bank of America declined to suspend a so-called covenant that is part of Waterford's loan agreement. Talks with the lenders started four months ago, and the banks agreed three times to suspend the covenant, which requires Waterford to have a certain amount of cash on hand, to give the company more time to find a potential buyer."

Waterford Wedgwood falls prey to economics

Bank of America Pulled The Trigger. There are people on the radio describing how they, after Christmas, took voluntary redundancy only to find agreed redundancy payments were not paid. There is disgust about Banks being bailed out here while this is allowed happen. There are even hushed calls for nationalisation from workers and their representatives in the media.

It is suppose is worth noting that this will lay complete waste to an Irish town due to the amount of jobs that indirectly depend on the factory.

by irishhead on Sun Feb 1st, 2009 at 08:14:53 AM EST
These workers in Chicago, in a similar industry, who Obama supported, managed to put pressure on THE SAME BANK in the same way in the early part of the year - using similar tactics.


The workers at Republic Windows and Doors staged their occupation of the plant in early December after it closed on only three days' notice, leaving workers with unpaid severance and vacation wages. After receiving national media coverage and political support from as high as President-elect Barack Obama, the union negotiated a settlement with Republic ownership and primary creditor Bank of America to receive an average of $6,000 for each union worker.

The story also attracted the attention of Kevin Surace, chief executive officer of Serious Materials of Sunnyvale, Calif., which produces energy-efficient windows and drywall at four U.S. plants.

Surace said he sympathized with the unemployed workers and saw a chance for his company to expand into a new region where there was already a plant, equipment and a trained workforce available for purchase.

"It was very sad to see what looks like it could be a world-class operation just fall on terrible hard times and then all of the workers quite abruptly laid off," Surace said. "We saw a great opportunity with a great facility and great workers."

As the plant ramps up production, the company plans to offer new jobs to the more than 300 workers in place when it was closed, he said.

Another factor that helped draw an offer from Serious Materials was that 90 percent of the equipment remained in the factory, which workers attributed to the success of the occupation in preventing removal of machinery. The union alleged in charges filed last week with the National Labor Relations Board that Republic's majority owner, Richard Gillman, moved manufacturing equipment before the plant's closing to an Iowa plant operated by Echo Windows, which Gillman's family established last year.

Former workers at Republic Windows and Doors heartened by possible sale of Goose Island factory

by irishhead on Sun Feb 1st, 2009 at 08:24:11 AM EST
[ Parent ]
The plot thickens. Fallout from Global financial Crisis leads to Bailouts. Banks getting bailouts work deliberately against interests of workers. Bank of America again! The World is scarily small.

Three days after receiving $25 billion in federal bailout funds, Bank of America Corp. hosted a conference call with conservative activists and business officials to organize opposition to the U.S. labor community's top legislative priority.

The Bank Of America has a huge operation in Ireland under the name MBNA. A few miles from where I'm writing this. Possible point of leverage? They got a 20 Billion bailout. They are 'absorbing losses from the takeover of Merril Lynch'! That is what is causing them to pull the trigger on Waterford.

A Tiny UGLY World

by irishhead on Sun Feb 1st, 2009 at 08:56:48 AM EST
Does BofA own MBNA thse days? That is one of the nastiest, most rapacious credit-card operations. They deal in "specialty" cards, the ones that carry a store or business name and sometimes "give" users back "bonuses."

When they were MBNA, they had a rep of going into a small town, making grand promises and then leaving as soon as things got tough, usually sticking the town with the bill.

Do not do business with them. Read the fine print on your cards.

by Mnemosyne on Mon Feb 2nd, 2009 at 09:56:44 PM EST
[ Parent ]
Buyouts not Bailouts.

Bail-outs bail out the banks' management, shareholders and creditors, in that order.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Feb 3rd, 2009 at 03:28:45 AM EST
[ Parent ]
Waterford Wedgewood has been losing shed loads of money for years despite numerous "efficiency plans" and the outsourcing of some work to lower coast destinations.  The financial crisis will hit its traditional luxury goods niche much harder than other sectors.  O'Reilly was good at marketing, if nothing else, but even he couldn't revitalise the brands.

I would be very wary, if I were a worker there, of putting my (already under-funded) pension fund on the line as part of some rescue deal - particularly at the behest of some private venture deal - because there is a good chance that the WW business model will never be profitable again, and workers will then lose their pensions as well as their jobs.

Sometimes you have to take a cold hard look at a business model and determine whether it can be viable in the future.  If it wasn't successful at the height of the Celtic Tiger, how could it possibly be successful now?

Perhaps an alternative business model - based on smaller cooperative groups of glassmakers sharing expensive capital equipment and with a marketing effort coordinated by state marketing agencies might have a better chance of success - as it would cut out a huge amount of overheads.  

However I don't think the business model can sustain the traditional shareholder/management model particularly with aggressive private venture funds at the helm.  That is a fast track to destroying what remains of the brand equity and worker equity (in the form of their skill base and pension entitlements).

No outside venture fund is going to "rescue" WW.  The workers are going to have to do that for themselves - with marketing and other back-up from the state.

notes from no w here

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Feb 1st, 2009 at 10:32:11 AM EST
Frank Schnittger:
No outside venture fund is going to "rescue" WW.  The workers are going to have to do that for themselves - with marketing and other back-up from the state.

This requires a suitable partnership framework, which could work quite nicely even though there is no suitable legal vehicle in Ireland, since WW is a multinational.

Step One: transfer the assets to Custodians (one in each country).

Step Two: transfer all shares in the existing Plc in trust to the staff, John Lewis Partnership - style.

Step Three: allocate an agreed part of the proportional "Equity Shares" in gross revenues to existing shareholders and debt holders.

Also allocate sufficient "Equity Shares" to the staff to cover the pension shortfall (leaving existing contributions ring-fenced).

Step Four: the Employee Coop then rationalises itself, and maybe shares some of the gains from doing so with the Investors. If necessary they could agree with Investors to bring in a new "Marketing Partner" on a revenue sharing basis.

Not difficult.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Feb 1st, 2009 at 03:18:31 PM EST
[ Parent ]
(Warning: I'm feeling bolshie today)

Re: Step Three.  Fuck 'em.  They've had their innings and ran the business into the ground and plowed (or ploughed - this being a Brit Friendly Blog) the sucker under.  The shareholders deserve nothing and the debt holders should only get what they deserve.  (See my comment elsewhere.)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Feb 1st, 2009 at 03:29:15 PM EST
[ Parent ]
The shareholders are more or less wiped out anyway - its the Bank calling the shots now and looking for its money back.  I don't know the actual figures, but presumably a liquidation fire sale would only give it a certain % of its money back anyway.

Perhaps the Govt. should guarantee that % of the debt - effectively buy the company off the liquidator at a knock down price - and offer the Company as a going concern to the workers in return for a reasonably small % annual return in the form of a preference dividend with the workers getting to share the rest.

However ANY financial restructure has to address why the business was failing in the first place.  Cutting out management overheads - keeping Dracula venture firms at bay - and improving cost/quality/efficiency/innovation is the only way of doing that.  However the workers have a great incentive to do that if they are effectively working for themselves and can share all their profits over and above the Government dividend.

The Government fear will be that the workers will run the company on a cash flow basis - taking the profits while they can- and then look for another bailout if major equipment/marketing investment is required.  So the deal would have to include minimal provision for re-investment - at least to cover depreciation - and to fund future costs as they arise.

As long as the Government can be assured that this is a once off investment - with a reasonable risk reward profile - and not just another in a long list of failed "re-investment" programmes - then I don't see them having an ideological objection to it.

The amount of money the Government would save in welfare payments and tax revenues forgone would probably even justify the investment on a Zero interest return - provided the Government were never asked to put in more capital - and could withdraw their capital gradually before the workers could realise the major part of their profit share.

The state isn't ideologically opposed to investment in business - see nationalisation of anglo-Irish - it just doesn't want to have to run those businesses and have some prospect of ethical dealing and getting their money back.

Not a lot to ask if it is a win win for everyone...

notes from no w here

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sun Feb 1st, 2009 at 04:48:43 PM EST
[ Parent ]
Thanks for these thoughts folks. I'm using this thread as a kind of research space to do a short article for an Irish website. I'm not any of a whizz when it comes to understanding business but I'll try to include the possibilities you've sketched.
by irishhead on Sun Feb 1st, 2009 at 03:37:42 PM EST
translations of ideas presented by commenteers into childishly simple terms most welcome - my mail is ecrudden 9at) gmail (dot) com
by irishhead on Sun Feb 1st, 2009 at 04:03:55 PM EST
[ Parent ]
Update

Former chief executive of Waterford Crystal John Foley has started talks with the receiver of the company, David Carson, at the Waterford Crystal offices in Kilbarry.

Mr Foley arrived just after 11am this morning.

He is also expected to meet union officials later this afternoon.
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Mr Foley is part of the Clarion Capital investment group, which has put together a bid for the Waterford-Wedgwood company. Waterford Crystal has been in receivership since early January.

Meanwhile the sit-in at Waterford Crystal has entered its fourth day.

Around 60 workers remained overnight in the visitor centre at the company's facility in Kilbarry in Waterford city, and more are expected to take part in the continuing occupation today.

At a general meeting of workers in Waterford Crystal yesterday, they voted to continue the occupation.

Their action began on Friday, when about 480 workers were told that they were being made redundant.

Up to 200 workers who were not served with termination of employment letters were asked to turn up for work this morning, even though it was not expected to be business as usual in the visitor centre and other areas of the factory today.

Source

by irishhead on Mon Feb 2nd, 2009 at 08:30:55 PM EST


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