The Government met with company representatives on Monday night, both sides knowing there was little or no prospect of ‘nationalising’ the Crystal business given the state of the public finances. Last summer the group was refused a €39m loan guarantee request to the Government specifically to save jobs at the Waterford factory.
Finance Minister Brian Lenihan said this week that the Government “will seek to intervene in any court proceedings if we can and if we can do anything to help.” A spokesman at his Department said there “could be some possible involvement” to ensure the company’s pension obligations are fulfilled in respect of 8,000 past and present workers.
The group’s pension scheme is in debt to the tune of between €100m and €111m and may have to be wound up if the company cannot be sold as a going concern.
Wedgwood workers in the UK, where operations are under administration by Deloitte, are covered by Britain’s Pension Protection Fund, but their Irish counterparts have no such safeguard. Essentially their status is merely that of unsecured creditors.
But a source close to the trustees for the Crystal fund at Mercer suggested to the ‘Munster Express’ that the difficulties in the pension scheme are not as bad as some media reports make out. Given that 8,000 employees are concerned, a deficit of the amount quoted “is not the worst possible scenario,” the source said, stating that stock market declines will have led to part of the pension shortfall.
It could be envisaged that a partial reduction in some benefits to pensioners and a medium-term plan to reduce the deficit over 5-10 years could see a solution being found.
One informed source reckoned that pensioners may have to take a reduction in benefit to save the scheme from being wound up. Indications are that there may be partial Government support for this measure.
The Irish Congress of Trade Unions is expected to raise the Waterford Wedgwood pensions situation at a meeting with Taoiseach Brian Cowen on the economic crisis later today.
A deal with KPS or another suitor would not necessarily cover existing pension liabilities. Local Sinn Féin Councillor David Cullinane yesterday called on the Receiver to ensure that Irish jobs are preserved and that the group’s pension scheme is protected in any negotiations with potential investors.
“If reports of interested US investors in Waterford Wedgwood are correct that is very good news for the company and its workforce,” Cllr Cullinane said, but it’s “imperative”, he added, that any acquisition deal should not be struck “at the cost of abandoning the company pension fund.
“The relevant government departments must immediately seek a meeting with receivers Deloitte Ireland to ensure that Irish based jobs and the company’s pension scheme are part of any sale of the Irish operations… The government’s current ‘hands off’ approach cannot continue,” he said.
If negotiations are not successful, Cllr Cullinane wants Deloitte to set up a task force comprising of union representatives, local enterprise board officials and the company’s management board to formulate an action plan within three weeks “with the objective of delivering an attractive alterative for potential buyers of the Irish based operations using the Waterford brand.”