A month after they accepted a survival plan that seemed to guarantee the plant's future, the 375 workers at the Irish Glass Bottle plant in Ringsend were told yesterday that the plant was finally going to close down.

Irish Glass is owned by the publicly-quoted Ardagh group. The move will also have serious repercussions for glass-recycling in Ireland.

The decision to close the plant was taken yesterday by the Ardagh board after a number of the group's major customers in the drinks industry failed to commit themselves to sufficient volumes from Ringsend at prices which would have guaranteed the plant's future. Ardagh is the major supplier of glass bottles in Ireland, and most of the major drinks companies are on its customer list including the Diageo-owned Baileys and Irish Distillers.

Ardagh chief executive Mr Eddie Kilty said the company had looked for three-year supply agreements with its major customers at prices higher than the current level but lower than prices in 1999. That was when Ardagh began to reduce prices when Quinn Glass began production at a new low-cost plant in Ballyconnell, Co Cavan.

"We got agreement on prices but not on volumes and that meant we could only operate the equivalent of 5½ machines out of eight. We looked at cutting back staff, cutting back management, cutting back overheads, the whole gamut, but we couldn't get to a situation where the plant could be profitable," said Mr Kilty. He added that the closure would probably be complete in about 10 weeks.

Mr Kilty would not say which of its customers had refused to increase their supplies from Ardagh. He specifically refused to comment on a weekend report that cream liqueur manufacturer Baileys had refused to increase its supplies. Baileys managing director Mr Frank Fenn could not be contacted for comment. ...

Ardagh first announced plans to close Ringsend at the end of February after deciding that the plant was no longer competitive and that without major changes in work practices it had no future. At that time, negotiations with the unions had failed to produce the required changes in work practices.

But lengthy negotiations involving the Labour Relations Commission produced a survival plan which involved 50 redundancies out of the 375-strong workforce, changed shift patterns, the elimination of job demarcation and the contracting-out of some plant maintenance. In return, Ardagh had given a commitment to invest in the Ringsend plant to bring it up to world-class standards.

But ominously, Ardagh said at the time the rescue plan was announced that support from its customers in the form of guaranteed prices and volumes would also be required if manufacturing was to continue. That support has clearly not been forthcoming from some of the company's biggest customers.

The decision to close Ringsend has led Ardagh to write down the value of the Ringsend plant's plant and machinery to €7.6 million. Ardagh does not own the site in Ringsend. It is leased from the Dublin Port & Docks Board.

Ardagh yesterday explicitly acknowledged the contribution of the workforce in reducing the cost base at Ringsend, but said: "Without sufficient committed volumes at economic prices it would have been impossible to finance the plant's future profitability. Consequently, the closure decision was absolutely unavoidable."

The closure of Irish Glass will mean that Quinn Glass in Ballyconnell is the only domestic manufacturer of bottles and it is understood that Quinn does not have the capacity to fully meet the needs of the drinks manufacturers. It seems likely that most of the bottles for the Irish drinks manufacturers will now have to be imported.

The closure of Ringsend also has serious implications for the glass-recycling industry in Ireland. It will mean that the Rehab group will have to find a new outlet for the 100 million bottles it recycles each year.