If anyone doubts the perilous position of the 1,100 Irish staff of Bausch & Lomb, they should listen again to the words of IDA Ireland chief executive Barry O'Leary.
Speaking yesterday, he made quite clear the stark choice facing the workforce in Waterford. Dating back to its $8.7 billion takeover of Bausch & Lomb last August, Canadian firm Valeant made clear it was going to take out 15 per cent of the overall workforce – a total of 1,700 jobs worldwide – and secure $800 million in annual savings, he said.
For workers in Waterford, that, it appears, translates into 200 job losses and a 20 per cent cut in wages for those who stay to bring costs at the contact lens plant in line with those at a sister plant in Rochester in upstate New York. The alternative, the company has baldly stated, is total closure of the plant.
Mr O’Leary said a support package being put together by it and other State agencies to ensure the viability of the plant will only go so far. “The fundamental cost base needs to be addressed.”
Workers and their unions, notably Siptu, have spoken of reducing job cuts in a two week window of talks from next Tuesday. And workers have made clear their view that a cut of 20 per cent in wages that Siptu says average €35,000 are unsustainable.
O’Leary, who is hardly unversed in the realities of dealing with multinational investors, offered little succour. Valeant cares only that the bottom line says it is costing it 30 per cent more to employ someone in Waterford than in Rochester. The fact that local taxes are higher, that water charges are looming, is irrelevant to them.
“The stark reality of this is that if the cost savings are not achieved, the operation will not be there,” said O’Leary. “I think that’s the stark reality that people have to make the judgement call (on), however bitter it is to swallow.
“The global savings are going to be achieved no matter what, so the question is which facilities and where the job losses [occur],” he said.
It was a remarkably downbeat assessment from a man well used to handling good and bad news on the FDI front. Valeant’s brand of hardball appears to have taken even the IDA somewhat by surprise.
It shouldn’t. A company that has made dozens of deals annually in recent past, Valeant has a finely honed model for securing savings from its acquisitions.
And while it assimilates Bausch & Lomb, it is simultaneously pursuing a much larger target, Allergan. To fund its improved $49.4 billion hostile bid for that company, it has already sold one of its businesses to raise money.
The savings at Bausch & Lomb are already earmarked. It is hardly likely to be persuaded that this is a time to re-evaluate and soften its position.
