Don't cry just yet for Ferenka
A report on the background to the closure and on the secret dealings between a company and the government. By Vincent Browne, John Feeney and Howard Kinlay.
THE POKER GAME between the Government, the unions and the giant Dutch multi-national, AKZO, is conntinuing with the expectations in at least some ministers' mind, that the Limerick plant will be saved.
On Thursday November 24 Desmond O'Malley, the Minister for Industry, Commerce and Energy, met Board members of Ferenka's immediate parent
company, ENKA, and refused to accept proposals they put to him which innvolved the Government taking over majority control of Ferenka.
O'Malley's response was that the Government was willing to consider speedily and sympathetically requests by Ferenka for further capital grants, but only after the plant had recommmenced production.
Ferenka had been involved in negootiation with the IDA for several months for additional capital to finance in enntirety or in part the £ II m modernisaation which the Limerick plant required. The steel cord business is a technoloogically innovative industry requiring frequent periodic updating.
In the negotiations with the Minister ENKA was obviously manoeuvring for further financial commitment by the Government to the tune of a total of £ 17m approximately. The additional £6m was to cover anticipated losses before the company could be expected to reach profitability.
In addition the deal proposed by ENKA involved it continuing to marrket the Ferenka steel cord product on terms highly favourable to itself and in circumstances in which the Irish company would have difficulty controlling.
The economic ministers, Des 0 'Malley, George Colley, Martin O'Donoghue and Gene FitzGerald had been meeting periodically throughout the crisis to determine the Government line and the broad strategy was laid down by the cabinet. O'Malley was clear from these meetings that, however attractive any immediate deal might be to get Ferenka off the hook, any arrangement which placed the Government in such a vullnerable situation vis-a-vis a multiinational would be unacceptable.
Since the closure of the factory on Monday December 2, the IDA and Government officials have been involved in a hectic behind-the-scenes attempt to broaden the range of options available to them and thereby strengthen their position in dealing with ENKA. Other manufacturers of steel cord throughout the world have been contacted, includding Bakaert in Belgium and Tokyo Wire in Japan in addition to a North Ameriican company, and the indications are that it may be possible to persuade one of these to substitute for ENKA.
The possibility of 'going it alone' have been considered and the idea was mooted in the Dail by Garret FitzzGerald, but there remain formidable difficulties. In the first place there would be marketing problems with the big tyre companies who would, esspecially in present circumstances, be sceptical of an Irish firm's abilities to meet its schedules. But more imporrtantly there is the problem of techhnology which it would be almost impossible for an Irish company to develop on its own sufficiently quickly to compete on the international market.
As mentioned above, the steel cord industry is technically highly innoovative and only the giant multi-nationals currently have the technological backkup sufficient to meet its demands.
The closure of the factory was as much a ploy in the continuing power play with the Government as a response to the continuing losses at Ferenka and the seemingly never-ending labour disputes.
Ferenka is part of the Dutch commpany ENKA, which in turn is part of the huge multi-national, AKZO, which has its headquarters at Arnhem in Hollland and operates in 45 countries throughout the world. AKZO is the 37th largest company in Europe and it produces a wide range of products. In. terms of turnover, it is third largest in the European paper and paper products industry, it is fifth largest in food manuufacturing industry, tenth in engineering and electrical goods and eleventh in chemicals and plastics. Before the deepression in 1974 its total assets stood at almost £2,000m and equity capital totalled £700m.
However even in its last good year, which was 1974, the AKZO group was performing poorly. The profit earned, about £60m, represented only 3% of sales and 3.1 % of net assets. In the European profit league, AKZO came only' 53rd. The slump in world trade in 1975 led to a drop of almost £200 million in AKZO's turnover. It was unable to pay. a dividend and its losses in the first half alone came to £ 19 million. Most of that loss came in the ENKA Glanzstoff division of which Ferenka is a part.
By October 1975 a major rationaliisation plant was being implemented throughout the group. Dr. Patrick Hillery as BEC Commissioner for Social Policy told the European Parliament that month that the company planned to reduce its European workforce from 43,000 to 37,000 by the end of 1977. In the company as a whole employment fell from 103,000 in 1974 to 87,000 this year. The major rationalisation occurred in the textile fibres and yarns division, which in 1970 represented 62% of the group's total turnover, only 46% in 1976 and further reductions to 40% by 1980 are planned.
But profits have continued to fall and the latest figures show that in the third quarter of this year alone, AKZO lost £ 14.5 million. It was against this background that the decision was taken to close Ferenka.
Ferenka has been a problem commpany for its parents since its inception. Negotiations with the IDA on the location of a steel cord plant in Ireland began in 1969 and a decision was taken to go ahead at the end of that year. ENKA was attracted by the high innvestment grants, the availability of relatively cheap labour, the Governnment training grants, the closed shop agreement with the ITGWU and the proximity of Limerick port.
The latter attraction quickly evapoorated as dockers there refused to handle container traffic and Ferenka had to switch to Waterford.
Almost from the day that the Ferrenka plant began construction, there were union problems. There were several unofficial stoppages during connstruction and in March 1972 the 1,400 building workers on the job went on strike. Separate entrances were built to the factory so that the builders' pickets, would not stop production.
However once construction was completed the number and duration of stoppages declined dramatically. In 1972 25,000 man hours were lost in strikes, in 1973 40,000 man hours were lost due to unofficial stopages at the plant and these amounted to 2% of total man hours. This figure was halved in 1974 when there were only 20,000 man hours lost and these were caused by the dismissals of three men who were re-appointed after Labour Court hearings. In 1975 there were only 4000 man hours lost.
There was £26 million invested in Ferenka, of which £6.5 was in capital grants by the IDA which provided a further £1 million in training grants.
In all the company lost £16 million since it began production in March 1972, plus a company estimated loss of £3 million during the recent strike. The plant capacity was 16,000 tons of steel cord per year but in no year was over 10,000 tons produced. Howwever, the 'failure to reach optimum capacity was not entirely due to labour relations, or even primarily.
When Ferenka started production steel cord technology was in its infancy and the Limerick plant was used to develop the new technology by AKZO. Inevitably there were teething problems and there were quality control diffiiculties throughout the factory's first two years of production.
Then the recession in the motorcar industry led to a steep drop in demand for steel cord during 1974 when Ferennka cancelled a planned £5 million exxtension, and again in 1975. But prooduction picked up again in 1976 and by September of this year the magical 1000 tons per month was about to be achieved when the strike closed down the factory.
The work force reached 1500 by the end of 1973, it was all put on short time during the 1975 crisis and was reduced to 1,100 by the end of that year when the firm invoked the 'inability to pay' clause in the national wage agreement. The work force went back up to 1,400 in 1976 but even in that year the company lost £2 million due to inadequate demand.
Steel cord is used to re-enforce radial ply tyers and in Limerick Feerenka was producing 25 different versions from small car tyers to caterpillar tyres for earth movers. ENKA has eight major customers for steel cord, the chief one being Goodyear and including Pirelli, Dunlop and Fireestone. Michelin is the only major tyre company not supplied by ENKA. It produces its own steel cord.
The projections for the steel cord industry are excellent and the estimates for Ferenka's future were optimistic, as early quality control problems were solved, and new technology partly paid for by the IDA was installed. But disastrous Labour relations policy was certain to frustrate any optimistic scenario and Ferenka seemingly failed to appreciate that the imposition of rigid Industrial codes on a largely rural workforce would lead to friction, as inevitably it did.
It was not until September of this year that MP&GWU decided to enroll Ferenka workers - after no less than seven requests over the intervening years from frustrated workers.
For five years Ferenka had followed primitive working practices, as outlined in two agreements with the IT&GWU, the last one, in 1976, signed for the union by its local branch official, Vincent Moran, and for the company by Tiede Herrema of Monasterevin seige fame.
Life in Ferenka was such that perioodic unofficial walk-outs were inevitable. John Hilliard, a member of the MPGWU occupation committee in Ferenka reemembers' a life that was no life, a life that left no time for any family rouutine.'
A typical semi-skilled worker, Hillliard earned a gross £69.99 when the factory closed. This included four hours overtime a week which Ferenka required of its workers.
To earn this, in common with all Ferenka workers below Class 40 level (top management), Hilliard worked the four cycle shift. On the first week of the cycle he worked from 8 a.m. until 4 p.m , on Mondays and Tuesdays, on Wednesdays and Thursdays he worked from 4 p.m. until midnight, then he had Friday off. But on Satturday he was working from midnight until 8 a.m. and likewise on Sunday and Monday. Tuesday was off and cycle two was to begin.
(Ferenka workers got their two days a week off consecutively only ten times in a year. Their lives destroyed any routine to living in as cruel a manner as possible.)
Cycle two for John Hilliard began on Wednesday when he worked from' 8 a.m. to 4 p.m. and the same again on Thursday. Then on Friday, Saturrday and Sunday he worked from 4 p.m. until midnight. Monday was off and then on Tuesday and Wednessday he worked from midnight to 8 a.m.
And then a similar cycle three and cycle four lay ahead. Says Hilliard: 'the factory lost workers all the time who just couldn't stand the morning, afternoon, night shift cycle which went on every week.'
But apart. from a shift regime used almost exclusively for migrant workers in Europe by the corporate giants, Ferenka also had rigidly authoritarian work regime. Workers were forbidden to pin photos, pictures, even medallions to their work places. They were commpelled to work on fast-moving machines, wearing ear mufflers for the noise, in narrow corridors of twenty machines at a time which barely conformed with the safety regulations.
Management, which even on the factory floor was 50% Dutch, pinned posters to pillars which many considerrer insulting. They warned off workers who took days off with a picture of a man drinking. 'Miss a Day, Your Mates Will Pay' they proclaimed.
Other posters extolled the qualities of the ideal worker whom they dubbed 'Mr. McQuality'.
Time and again despite 30 hospittalisations, according to the MPGWU. in the last year from industrial acciidents, the IT&GWU stood over the standard work regime until tempers were boiling on the factory floor.
If a worker missed a day he was not paid. But if he missed three days in six months he was dismissed for 'persistent absenteeism'.
Then if a worker was out sick for more than a fortnight, he lost his right to work until the Ferenka medical department examined him and deemed him a good long term health prospect. As the ITGWU agreement put it: 'In the everit of an employee being certified ill for more than two weeks he cannot return to work without first getting allowance to do so by the Company Doctor'.
Trainee workers (which meant anyyone employed for less than six months) could be dismissed without any notice and without any stated reason.
Then there were the notorious rules which were the cause of much of the difficulty. Says Section 18.10 of the lTGWU agreement negotiated by Dr. Herrema and Vincent Moran of the
ITGWU: 'The following warrant immediate suspension or dismissal: (a) defacing notices or removing nootices from boards (b) smoking in proohibited places (c) violating a safety rule (d) defacing company property (e) instigating or participating in an unofficial work stoppage (k ) deliberateely restricting out-put (I) sleeping on the job (0) taking photographs of the plant.
Among the matters, commonplace in most factories, forbidden by Ferrenka's management were running rafffles; selling lottery tickets, advertising football matches and the like on the company boards, lending money to another worker, distributing any pollitical or relgious literature.
A sign of the petty attitudes of management was another rule brought in by Tiede Herrema and agreed to by the ITGWU. It stipulated that a workker who was five minutes late lost 15 minutes pay; one who was 15 minutes late lost half an hour's pay; one who was half an hour late an hour's pay.
Another legacy of Herrema for the Ferenka worker was that even if a worker was only a minute late he would be marked down for an infracttion. And if the same worker was late five times in a month (even if it was only a total of 5 minutes) he could be suspended or dismissed for what management called 'persistent latecoming'.
This pettiness should be seen against a background of constantly changing shifts in a factory five miles outside Limerick, drawing workers from as far as Thurles. The worker arriving had to pass through strict security and change his clothes before clockking in. So the worker who clocked in five minutes late would have arrived at the factory according to the MPGWU shop stewards a quarter of an hour early!
It hardly surprised management then when there was a walk-out last September over the cleaning of the toilets. In a factory ridden with petty rules and penalties, where unpleasant and dirty jobs such as toilet cleaning were done on a roster basis, such a walkkout was a part of Ferenka life.
What was different this time was that an unofficial group of shop stewwards had been formed, without manageement knowledge, during the summer. Furthermore several of the ITGWU factory-committee members had defectted and were now loyal to the unofficial shop stewards. They included several men who had co-signed the penal agreement with Ferenka the year before - Paul Punch, Anthony Barry, Charles Holland, John Lynch and Charles Honan.
On September 28th the unofficial shop steward committee, led by Phil Byrnes and John Devine, who had had some shop steward experience in Britain before, called a meeting in the Savoy cinema in Limerick. At that meeting nearly 600 workers applied to join the MPGWU. Many of them had. driven from as far as Nenagh and Roscrea to join up.
By this stage it must have been clear to AKZO headquarters in Holland that there was a completely new situaation. It was probably after the Savoy vote that closure first became a major option for the directors of Ferenka.
The era of low wages and strict factory discipline was coming to an end as the workers joined a traditionnally Catholic union once led by the conservative Jimmy Dunne but one which rejected the no-strike clause of successive national wage agreements.
On September 29th the workers called off their toilets strike and reeturned to work as a pre-condition of joining the MPGWU laid down by Mr. Redmond. They were assured of no victimisation. Next day seven shop steward leaders, including Byrnes and
DEvine, were suspended indefinitely by Ferenka's Personnel Manager Sean Coffey. Clearly Ferenka's management, logically enough, did not regard the last walk-out over toilets as one of the usual petty disputes they had become accustomed to.
An official MPGWU strike followed.
And at this stage there seems to have been a clear conflict between Ferenka headquarters and local mangement. On October 7th Kevin Heffernan acted as secret intermediary for Dirrector Wijngaarden, Herrema's successor, and Coffey, to the MPGWU's area official John Brown. He agreed, on behalf of management, to a factory floor ballot "In union membership and the re-instatement of the suspended seven. But this compromise was frustratted by the ITGWU which said it would call a strike if the agreement giving it exclusive negotiating rights was broken.
By November 8th with the dispute still going, Ferenka management at a private meeting with the MPGWU agreed on twelve points on future union membership and agreed to approach Con Murphy, the Labour Court Conciliation officer, to negotiiate with the ITGWU. It seemed then that the ITGWU would be forced to agree to a bi-partisan return to work. By then the MPGWU had a total of 869 semi-skilled Ferenka workers signed up out of a total of just under 1,200.
Finally, under pressure from Des O'Malley who warned of closure, agreement was reached on Saturday November 26th on a return to work, leaving the determination of the allegiiance of the work force and MPGWU recognition in temporary abeyance.
But then came the closure - less, it would seem, because of any interrunion conflict, and more because the emergence, and near victory, of the MPGWU heralded immediate demands for higher pay and less onorous facttory regulations. MPGWU shop stewwards planned to ask for an increase sufficient at least to bring Ferenka up to the national average unskilled industrial wage - a demand that would have cost Ferenka £500,000 per annum for starters.
But at a meeting of the ENKA Board on the previous day a decision was made to close the Limerick plant, allegedly because of the substantial losses suffered by Ferenka since its foundation, which were aggravated by the recent strike and prior work stopppages, plus the loss of confidence in the possibility of achieving a 'workkable' situation.