Tuesday, April 7, 2009

Persuading Fruit of the Loom to Come to Ireland!

I have often wondered when a substantial foreign direct investment comes to Ireland what are the tentative steps, the catalysts, that causes an embryonic concept to become a compelling reality. I remember a former IDA Ireland executive in the late 1970’s being rather curt about the investment prospects of County Donegal at the time and suggesting that its best prospects might be to spread grass seed across the county!

But as I listened to Blessed Be Fruit of the Loom on RTE Radio 1 last night, Monday April 6th, one of the Documentary on One series produced by Peter Woods, I reflected on my own role in persuading Fruit of the Loom to locate in Ireland. This episode described the impact of Fruit of the Loom in Co. Donegal and how the work undertaken there migrated to Morocco for labour cost reasons in the mid 1990’s

My story began at daybreak on a June Sunday morning in 1986 at Shannon Airport. My colleague who was in charge of the IDA Ireland office in New York and the New York based representative of Shannon Development met the Chairman of Fruit of the Loom at a lunch in New York a few weeks earlier, hosted by one of the Irish-American organizations in the city. The customised printing of t-shirts had become popular in the States and prompted the company to expand into Europe. The visiting delegation arrived shortly afterwards and comprised the Vice Chairman and the President of Fruit of the Loom and their wives. The fifth member of the delegation was the Vice President with responsibility for engineering. It was a first-ever visit to Ireland for all of them. This visit took place before fax came into vogue and a decade before the Internet and e mail was even dreamt of! I recall reading details of the proposed visit on a telex page and was convinced that there was a real chance of winning an investment, if every effort was made to do so. The visit programme was to include Limerick, Cork, Westport and Buncrana and it was to last a week.

1986 was a time when about 16,000 people were employed in the Irish clothing manufacturing sector. Some of these businesses operated on a cut-make-and-trim (CMT) basis subsisting on wafer thin margins. The only added value was the labour input and the customers were typically the large supermarkets or chain store outlets in Ireland and the UK. Others businesses, such as Magee of Donegal and Clubman of Buncrana made and marketed branded garments. Several icons of the clothing industry, such as Sunbeam Ltd and Glen Abbey, were closing down as a consequence of cost and competitive pressures.

Life was more informal in the mid 1980’s than it is today, especially in the vicinity of airports! I arranged with a colleague from Shannon Development to meet the delegation directly off the arriving aircraft from the United States. My instincts told me that if I won the spouses over they might persuade the businessmen that Ireland was the perfect destination for their expansion plans! I recall being as busy as Basil in the 1970's classic sitcom Fawlty Towers pulling their luggage off the conveyor belt in the customs hall at Shannon!

Before long we were on a small bus heading to Dromoland Castle. The adage that there is only one opportunity to make a good impression is certainly the case in the foreign direct investment world. But our driver, instead of taking the main road between Shannon and Dromoland was soon driving down what seemed to very narrow pot-holed lane with grass visible between the wheel tracks! I vividly recall his first comments, in a broad County Clare accent, “the price of gas in this country would crucify you”! Thankfully, it wasn’t too long before the outline of Dromoland Castle was visible as the morning sun caressed its parapet and I was glad to draw their attention to the Stars and Stripes flying on the roof with a noble sense of purpose and welcome.

Following a full-Irish breakfast and a morning rest the plan was to bring the party to the majestic Cliffs of Moher. But, unfortunately the icnonic Cliffs were shrouded in dense fog when we reached them, which was a great pity! Shannon Development hosted dinner that evening at Dromoland and I had a sense that the group were beginning to bond with us I recall receiving a phone call from Willie McCarter, then the owner of the McCarter family business, before retiring to bed that Sunday night to exhort me to make sure we went to Buncrana. He was extremely anxious to meet the delegation there.

I rented an Islander aircraft from Aer Arran the following day and, following an overview of Limerick and Shannon Town area, we departed Shannon for Cork. The wives were taken care of that day by another colleague, the late Joan Aylward who was attached for many years to the IDA Ireland office in Galway.

The highlight in Cork was to visit Sunbeam Ltd in Blackpool which was then on the market. We had lunch beforehand at Arbutus Lodge with the then Minister for Foreign Affairs and local TD, Peter Barry and Frank Boland, a high profile local businessman. Despite all the forensic planning the visit to Sunbeam was a crushing disappointment. The factory has ceased to operate by then and I have a recollection of an emaciated Alsatian dog belonging to a security company, roaming the site. The culture at Sunbeam was very ‘old school’ ~ directors’ dining room, staff restaurant and works canteen combined with an on-site garage to service the managing director’s Jaguar and other company vehicles. The American visitors were quite deflated as we flew from Cork to Galway Airport and a night at Ashford Castle. They questioned whether it was basically possible to make their type of garments efficiently in Ireland. I have only stayed in Ashford Castle on two occasions and on each occasion the people I brought subsequently made a substantial investment in Ireland. The second investor, some years afterwards, was Masonite, now located at Carrick-on-Shannon.

Joan had driven the American wives to Ashford and following a delicious meal we had a bit of a sing-song. I recall the Manager of Mayo County Council and local Dáil Deputy, Enda Kenny, joined us. After dinner all of us gathered around the piano for an old fashioned sing-song.

We were up early on Tuesday morning and flew in the Islander to Castlebar Airport. Travenol had been a major employer in the town for many years but had closed down. It had owned a large factory and one of my goals was to promote the idea of Fruit of the Loom as a successor project. Before visiting the Travenol site we visited a small clothing manufacturer called Portwest, owned by the Hughes family. Portwest specialised in workwear and following a brief tour the Vice Chairman approached me and advised “I can tell by the buzz in that plant that it really is possible to operate a productive clothing business in Ireland” The labour content of a t-shirt was quite low in terms of minutes per garment produced and that was the core argument in favour of locating in Ireland in the context of the cost structure that prevailed in the mid 1980’s.

We departed late that Tuesday and flew to Derry and onwards to Buncrana where we met members of the McCarter family. The very positive perception of the Portwest operation was crucial in nurturing a positive disposition towards Buncrana. The social aspect of these fact-finding visits is as important as the business aspect and I recall several really pleasant meals in Buncrana with the McCarters who were very gracious. The discussions in Buncrana were very positive. I think that the McCarter plant employed in the region of 400 people at the time and by the time we departed Buncrana the basis of a proposition was in our mutual minds.

The President of Fruit of the Loom had injured his foot towards the end of the visit and he required crutches which slowed the pace somewhat. They stayed at The Berkeley Court hotel in Ballsbridge, Dublin and took the opportunity to have a look at the city. They kindly invited my wife, Patricia and I to Jury’s Irish Cabaret on the Friday evening. That show was a staple of the Dublin entertainment scene at the time and starred personalities, such as Hal Roach.

The delegation was to depart for the United States the following Saturday morning. There was an very warm rapport established in the course of the week. I brought my two children into The Berkeley Court to meet the Americans and we had one more full Irish breakfast. Hilary was 12 years old and Stephen was 9 then.
Today, Hilary, recently newly married in Australia to Howard Sharp is expecting her first child. Stephen is working in Galway having toured Australia and acted as a marine n a soap opera produced by Steven Spielberg - The Pacific, a television mini series about US invovlement in the Pacific rim during World War II.
I had arranged for access to the VIP Lounge when we arrived at Dublin Airport, a gesture greatly appreciated by the visitors. I recall one the wives showing the kids the VIP Lounge visitors book and pointing out the signature of former British Prime Minister, Ted Heath, himself a recent visitor to Dublin and insisting that the kids also sign the book, which they were delighted to do!

I travelled to the headquarters of Fruit of the Loom at Bowling Green, Kentucky with a colleague, John Colgan and we met Andrew McCarter there. The upshot of that visit was that the investment the people of Donegal and Derry became familiar with was agreed. The job numbers advanced from the 400 then employed at McCarter’s in Buncrana to about 600 and the McCarter family were to manage the new venture.

I recall a member of the IDA board remarking when the matter of grants was being discussed “I thought that we were only interested in up-the-market clothing projects”. That was the case but when we decided on this approach we never anticipated the arrival of Fruit of the Loom and the possibility of it being such a good fit with the tradition of the clothing and, particularly the shirt-making industry, in the county. We also felt at the time that if the investment has a 10-year life it would represent good value. The troubles in the North were flaring at that time and Buncrana, in common, with many Border locations were struggling from an economic perspective. The grant approval process extended through three stages culminating with Government approval. All of this was accomplished within a six-month time frame, excellent evidence of the agility and efficiency of the Irish public sector!

Fruit of the Loom grew greatly beyond our expectations and job numbers in the county reached 2,800 across several site and a spinning facility was set up in Derry at the prompting, I believe of John Hume, who took a great interest in what was unfolding.

It is nice to look back, recall that first telex message and then consider what a wonderful contribution that investment made to the welfare of the Inishowen Peninsula. I remember the shop fronts in Buncrana getting a much needed face lift and the entire town taking on the ambience of a town with a mission in the course of many subsequent visits there. Fruit of the Loom is now owned by Berkshire Hathaway, which is controlled by the legendary American investor, Warren Buffet. It includes the Russell athletic and apparel business and is listed as employing a total of 34,896 persons in the 2008 Annual Report of Berkshire Hathaway.

1 comment:

  1. I remember the immense sense of national pride we felt when Fruit of the Loom set-up operations here in 1986 (my leaving cert year). It gave the nation a badly needed and well deserved vote of confidence. Thank you for providing insight behind what happened on the ground in securing this investment and for sharing your personal involvement in the events leading up to it. I hope Ireland will continue to attract investment like this in similarly difficult and challenging times in the years ahead.