There will be a reeling of total devastation in the Ballyfermot area of Dublin this morning following yesterday's announcement that the owners of the Semperit tyre plant are to pull out. The chances of saving the 650 jobs must be regarded as slim and the workforce consists mostly of well paid male employees, sole bread winners for very many families. Yesterday also brought even more bleak news for the people of Tipperary town with the announcement that the Tambrands factory, which employs 200 people, is to close. A closure of this dimension will be a hard blow for a town with a population of 5,000 and little else in the way of an industrial base.
The Semperit announcement was not expected and yet it did not come as a huge surprise. The owner, the Continental Group, with acquisitions like Pirelli and Semperit under its belt, has more plants then it needs. The Ballyfermot factory has performed well in recent years, profits last year reached almost £5 million up from £4.6 million in 1994. And yet of the 42 million car tyres made by Continental each year in Europe, Ballyfermot only accounted for three million. Because it was one of the smallest plants in the group it was always under pressure, particularly when the trend in the industry is towards huge capacity factories in low cost countries. Continental is investing heavily in Slovenia and Poland and it is seeking partners in India, Indonesia and China.
Continental has Ballyfermot sized plants in Scotland, Germany and, in particular, at Traiskirchen in Austria. The latter might have been closed instead of Ballyfermot but it had the advantage of being close to car manufacturing customers and connected by road. The Ballyfermot output is shipped to Ellsmere Port, Luton and Antwerp in a hugely competitive industry high transport costs can play havoc with profit margins.
The lifeline given to Semperit by Continental is unlikely to extend into the New Year. The pressure on the IDA to find a buyer will be immense it will be helped by the fact that the plant has greatly improved efficiency and the workforce is amenable to measures which would secure further improvement. The irony and it may turn into a tragedy for the people of Ballyfermot is that the IDA could quickly find a willing buyer but that buyer might not be acceptable to Continental. The company would like to sell Semperit as a going concern not least because it would bring in money, but also because it would be good for Continental's image and sales in Ireland.
However, bigger forces are at play.
Continental will not allow a sale to a rival which will thereby attain a European base with which to attack Continental. The giant Korean company, Hangook, would be greatly interested in Ballyfermot, but for Continental, the longer Hangook stays out of the EU market the better. There are European and American tyre manufacturers which Continental fears less, but the choice is limited. Most of them already have sufficient European capacity. There can be no doubt that the IDA will spare no effort in seeking a buyer and no fault attaches to the Government for yesterday's announcement. But the Government must do all in its power including as much arm twisting of Continental as possible to facilitate a sale and save the jobs.