A crisis meeting on the future of up to 700 jobs in Donegal and Derry broke up without conclusion last night, as the Tanaiste, Ms Harney, and the chairman of Fruit of the Loom, Mr Bill Farley, failed to agree on a way forward.
Both IDA Ireland and company sources had believed until late yesterday that Mr Farley would announce significant redundancies after a meeting with Ms Harney this morning.
That meeting has now been postponed indefinitely, with Fruit of the Loom saying it needs more time to consider the future of its operations here.
Last night's discussions in the Berkeley Court Hotel, in Dublin, were described as "full and frank" - usually diplomatic language for a blazing row - and lasted for 1 1/2 hours.
The chief executive of the IDA, Mr Kieran McGowan, and a senior negotiator at the Department of Enterprise, Trade and Employment also attended the talks. Mr Farley and two senior company officials represented Fruit of the Loom.
"We put it very clearly to them that we wanted the maximum jobs maintained, a good deal for any workers made redundant, and we said we wanted our grant money back," one Irish source said.
It is understood Ms Harney, who went directly to the meeting on her return from a trade mission to Italy, surprised the clothing firm by her forthright approach to the issues. Seemingly taken aback, Mr Farley deferred the meeting planned for this morning.
It is understood Fruit of the Loom will now hold another series of meetings with the IDA to plan the firm's future. It may be, however, that last night's apparent rethink represents merely a stay of execution for several hundred workers.
Most analysts now believe a large number of redundancies are inevitable, and fear the loss of hundreds of jobs could have a devastating effect on an area already considered underdeveloped. Some figures suggest Donegal's unemployment rate is twice the average for the rest of the Republic.
The company, which employs 2,800 workers in six factories across Donegal and in Derry, has already closed its Dungloe factory with the loss of 53 jobs, placed 1,100 employees on a three-day week, and announced that it was considering some of its other T-shirt sewing facilities.
Business observers say global economics lies at the root of the problem for the company's Irish operations. In recent months Mr Farley has come under increasing pressure from his own shareholders to restructure Fruit of the Loom, moving low-tech operations to low-wage countries.