A Dublin distributor of chilled and frozen foods is to close at the end of the month with the loss of 350 jobs. Whelan Frozen Foods has been storing and distributing food for the Dunnes Stores group for the past 26 years but is to finish working for the multiple on February 28th.
Dunnes Stores was always the only client of the family-owned warehouse and distribution firm but the business has now been moved by Dunnes to a number of other suppliers.
The employees at the Park West business park operation in Dublin 12 have been informed of the pending closure. There is no sign of the company securing any replacement customers.
A significant number of those set to lose their jobs are understood to be non-English-speaking foreign nationals who work as drivers and general operatives.
The closure will make for a third bleak job losses story in just three weeks. At the end of January it was announced that Motorola was entering into an "employee consultation process" that could lead to 350 jobs being lost at its Cork-based electronics and mobile phone plant.
A week later, US drugs company Pfizer said it was going to scale back its operation in Cork where it employs some 500 people. Pfizer said it was trying to find a buyer to purchase as a going concern two units in Cork employing 480 people. Some 65 people at a third plant were to be made redundant.
Whelans' multimillion euro business with Dunnes was the focus of a bitter High Court clash last year. The case was eventually settled.
The origin of the dispute was an effort by Dunnes to squeeze greater efficiencies from Whelans by reducing its profit margin. The company was set up to supply Dunnes and terms and margins were agreed verbally between the two sides.
"I say and believe that it has always been the policy of Dunnes never to enter into written agreements," Paddy Whelan snr said during the legal battle.
When Dunnes sought to impose a lower profit margin, Whelans went to court complaining that it had been given insufficient notice.
The higher margins were reimposed after an injunction was sought pending the hearing of the case. The case was settled last July.
At the injunction hearing, Dunnes claimed the directors of Whelans were getting excessive fees and that the company balance sheet indicated the company was making "excessive profits".
Whelans countered that it made a pre-tax profit of €1.4 million on a turnover of €168 million in 2003 and a pre-tax profit of €1.5 million on turnover of €189 million in 2005.
In November 2005, Whelans received an e-mail from a Dunnes executive outlining the new reduced margins the board had decided on. "We believe these rates are sustainable in the longer term," the e-mail stated.
However, Patrick Whelan jnr replied, saying he and his father found it difficult, after 25 years of business, "to believe that the directors and shareholders of Dunnes Stores could seek to impose such impossible conditions on us".
In further contacts Frank Dunne told Mr Whelan snr that he did not want to put Whelans out of business and was "interested in fairness". However, the two sides failed to come to an agreement.
Dunnes signs deal to deliver produce: page 16
