White knights spell trouble for Irish economy
Will British Telecom recognise unions at ESAT?
BY ROBBIE MacGABHANN
The smiling face of Denis O'Brien, chairperson and chief executive of
ESAT Telecom, beamed out of newspapers and television screens this
week. O'Brien had agreed to the sale of ESAT to British Telecom for
nearly £2 billion. ESAT has a presence in the 26-County mobile phone,
fixed line and internet markets.
Under O'Brien's leadership, ESAT refused to recognise trade unions
Denis O'Brien himself stands to earn over £230 million from his shares
in ESAT. He told the media that he didn't know what he would do with
the money but that he would be ``having a bit of craic''. The sale of
ESAT didn't come as a surprise; the corporate sharks have been
circling the company for some time and O'Brien's real concern was to
maximise his takings on any sale.
Therefore we are told that British Telecom was a white knight.
However, it seems the only real difference between British Telecom
(BT) owning ESAT and Telenor is that BT was prepared to pay $100 a
share compared to $85 a share from Telenor.
So what did ESAT do that makes them worth £2 billion? Did they invent
mobile phones? Did they invent GSM technology? Did they start the
mobile phone business in Ireland? The answer to all these questions is
ESAT and Denis O'Brien were in the right place at the right time. The
EU had deemed in the early 1990s that there should be competition in
the 26-County market place for phone services. In 1995, ESAT won the
first commercial tender for providing mobile phone services in the 26
They have used this very profitable foothold to get access to the
fixed line market and now want to use EU directives on deregulation of
the electricity market.
Will ESAT's power station be more environmentally friendly than any
ESB stations? Will they use alternative energy sources? No again, as
O'Brien's only rationale is the profits he believes he will get from
entering this market.
There has been little comment in the media coverage of the ESAT sale
that under O'Brien's leadership ESAT refused to recognise trade
unions. Will this change now that British Telecom are owners of the
There are no guarantees that the anti-union policy will change at the
company. Part of the reason for this is that the Dublin government,
which gave ESAT the right to operate in Irish phone markets, did so
with few conditions. The failure of ESAT to recognise unions has been
ignored at an official level.
The same attitudes and mentally were at work when ESAT were let into
the Irish phone market. Surely a windfall clause should have been
inserted into the ESAT licences that if the company was sold off the
Dublin government would get a share of the profits. A big slice of the
£2 billion payout would build a lot of hospitals and new houses. It
could pay for school books and extra teachers. It could be invested in
helping the unemployed get education and training qualifications that
would really matter.
However, this didn't happen. Instead, we have to comfort ourselves
with the sort of sentiments expressed by the Irish Times, who told us
this week that the BT buyout of ESAT will ``usher in a new era of
competition''. They are not alone in supporting the belief that more
competition means lower prices for consumers and this is the best
thing any market can offer us.
The real question of the BT takeover of ESAT that needs to be asked is
whether this is the future we want, where companies are bigger than
countries? An example of this is the $335 billion merger this week
between Time Warner and America Online (AOL), resulting in the world's
largest media company.
Do we want a situation where ever greater amounts of resources and
wealth are controlled by a smaller and smaller group of people? For
example, this year's UN Human Development Report found that the top
three billionaires in the world have assets greater than the combined
GNP of all least developed states and their 600 million citizens.
Meanwhile, profits grow and the wealth of transnational companies is
continually amassed, as is the amount of economic power wielded by
These transnationals exercise this power in their own interests,
influencing policy makers, changing legislation and getting
governments to subsidise their operations. There are around the world
today over 250 agencies like the IDA that subsidise the activities of
transnational companies on the promise of new jobs in their economies.
WORKER AGAINST WORKER
The transnational companies pit their workers against each other,
telling them they have to be competitive and flexible while their
profits grow. The larger the business, the more unaccountable they
Friday 14 January is the start of open season on Eircom, as it now
goes on the open market. Up until now, international takeover of the
company has been prohibited.
It is highly likely that before the end of the year Eircom will, like
ESAT, be part of a larger transnational concern. It will probably be
followed by the ESB and Aer Lingus into international hands.
There will then be no guarantees that these companies will be run with
the needs of the Irish economy as a whole in mind, even though they
control resources vital to the wellbeing of the whole economy. As
usual, the Dublin government seems oblivious to these important issues
as the huge cash windfalls for more Denis O'Briens continue.
Does Ireland need General Motors back?
BY ROBBIE MacGABHANN
Just a few years after the closure of Packard Electric and General
Motors is back in the 26 Counties. In the early 1990s, General Motors
put their workforce at Packard Electric through the mill, continually
asking them to be more productive, more flexible and ultimately to
work for less money.
The workers agreed concession after concession to General Motors
management. The end result was that they lost their jobs and Packard
In order to keep their jobs and meet the demands of being in a
so-called internationally competitive business, the workers made
concession after concession to General Motors management. The end
result was that they lost their jobs and Packard Electric closed.
Now, another subsidiary of General Motors is coming to Mullingar, with
the promise of 200 jobs. Mary Harney has welcomed the project, even
though many of her constituents lost their jobs after the last GM
sojourn in the 26 Counties.
Commercial Mortgage Corporation is a financial services company with
offices in the USA Canada, Tokyo, Paris and now Mullingar. An
Phoblacht contacted the IDA and asked them what would be different
about GM this time around.
Spokesperson Colm Donlon said that the IDA was ``absolutely delighted''
about the GM announcement and that the new jobs were a ``very different
operation'' from Packard. These were ``high value, high quality'' jobs
that the IDA expected to last.
There are no guarantees with any transnational company and the people
of Mullingar are probably looking forward to the jobs, but so once did
the people of Tallaght. Time will tell if GM has changed its spots.