KYRAN FITZGERALD
The trade union, Mandate, has written to management at Arnotts, and to its bankers, Anglo Irish Bank and Ulster Bank, to express “extreme concern” at reports that the two banks are taking over day-to-day control of the Department store.
According to one Mandate official, “the store has been trading quite well and staff are cooperating with restructured hours. Staff reductions have been very modest”. Michael Mehigan said that there have been no huge reductions in working hours – and some of the reductions put in place “have been clawed back.”
Some staff have been working under protest following changes in their working hours – they have been expected to come in later, and stay until later.
However, there have been no pay reductions, though staff have been on a pay freeze. This was agreed a year ago and was originally intended to last until the end of 2009.
A group of management consultants, with retail experience, called Palladin, have been put in by the banks to work in the store on their behalf. They may play a much greater role in the months ahead. Palladin is a US-based group.
A MAJOR STRUGGLE
Arnotts has been struggling to repay a debt of €260m, built up as a result of a shake up in the store’s ownership and major expenditure on property acquisitions as part of the ambitious Northern Quarter re-development project. Figures show an operating loss of just under €27m in 2009, though there are indications that trading has picked up in the current year.
Earlier this year, the banks injected more capital into the Group as part of a refinancing exercise. Management consultants have also been brought in to examine the operation.
There are now real fears about the future for jobs, despite assurances to the contrary from the company.
CALL FOR OPENNESS
According to John Douglas, Mandate’s general secretary, “on behalf of our 900 Mandate members, we write to express extreme concern about the future of Arnotts retail and the impact of pending decisions on the jobs of Arnotts employees. We also express our disappointment at the manner in which the news of Anglo Irish Bank and Ulster Bank control of the company was announced in the media. Arnotts employees, many of whom have given a lifetime to the Company deserve to be treated with more dignity and respect. As a basic entitlement we would have expected that staff, union shop stewards and unions to have been briefed fully before the banks’ plans for control were announced.”
Mr Douglas said that the difficulties facing Arnotts “are absolutely not of the employees’ making and we in Mandate trade union are demanding that the future of Arnotts is secured through an open and honest partnership with employees and their union”. What he called the recent company “modus operandi of secrecy and closed doors is unhealthy and has led to an atmosphere of fear and suspicion”.
“In this regard, we are aware that consultants from America have recently completed an in depth examination of the Company and its options. If the Company wishes to implement long term viability plans please note that it can only do so successfully with the support of staff and their trade unions”, he said. “Therefore we are seeking an immediate meeting with bank representatives to begin a process of constructive dialogue on the future of Arnotts.”
“IN GOOD SHAPE”
A spokesperson for Anglo Irish Bank declined to comment on grounds of client confidentiality.
An Arnotts spokesperson confirmed that the company “is working with its banks (Anglo Irish Bank and Ulster Bank) as part of the ongoing process agreed last February to restructure the Group’s financing”.
The company added: “Arnotts strongly emphasises that trading continues as normal. Arnotts is performing very strongly with trading for the first half of the year ahead of the Irish retail market. Jobs within Arnotts remain secure and Arnotts continues to invest in the future of the store. We would like to reassure our customers that it is business as usual at Arnotts.”
According to some industry sources, the Group is currently trading profitably and is “in pretty good shape.”
There is some surprise that the banks have moved to take direct control of the operation, as the chief executive, David Riddiford, is an experienced international retailer, who is credited, in some quarters with having “refreshed the store.”
However, the Arnotts management strategy has been criticised by a former Director, the retailing consultant, Eddie Shanahan.
