Dáil Éireann debate -
Thursday, 5 Nov 1959

Vol. 177 No. 6

Committee on Finance. - Vote 50—Industry and Commerce.

Minister for Industry and Commerce (Mr. J. Lynch)

I move:—

That a supplementary sum not exceeding £275,000 be granted to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1960, for the Salaries and Expenses of the Office of the Minister for Industry and Commerce, including certain Services administered by that Office, and for payment of certain Subsidies and sundry Grants-in-Aid.

The necessity for the introduction of this Supplementary Estimate is threefold. Córas Tráchtála, as the House is aware, was changed into a statutory body and the moneys which were unexpended by the old board will have to be authorised for expending by the new statutory body. These amount to £59,000. Similarly in the case of An Foras Tionscal, the grant-giving functions of the Industrial Development Authority were taken over by An Foras Tionscal as a result of the amendment of the Industrial Grants (Amendment) Act and the unexpended portion of the moneys available to the I.D.A. during the current financial year will now have to be expended by An Foras Tionscal. The purpose of the Estimate in this instance is to authorise An Foras Tionscal to spend the unexpended portion.

I shall give it in more detail in case I have not explained it sufficiently. As far as the major sum is concerned— the granting of £275,000 to An Foras Tionscal—the object is to meet extra commitments that were not envisaged by An Foras Tionscal as a result of the increased expenditure in grants or as a result of projects which have come to a further stage of development than was originally anticipated.

In accordance with the provisions of the Export Promotion Act, 1959, Córas Tráchtála was established as a statutory board on 1st September, 1959, and took over the export promotion functions hitherto carried on by Córas Tráchtála Teóranta as a limited company. On the same date the company was wound up. The activities of the board are at the level permitted by the financial provision made under Subheads P.1 and P.2 of the main Industry and Commerce Estimate. Issues made are sufficient only to finance the organisation up to the present date, and the provision under Subhead P.3 and P.4 of the Supplementary Estimate is necessary to enable the board to function for the remainder of the financial year. As Deputies will see from the notes at the foot of the Supplementary Estimate the sums required under these two subheads are the same as the unissued balances under the corresponding subheads of the main Estimate and no additional moneys are being sought for Córas Tráchtála.

Likewise, in the case of Subhead Q.4 of the Supplementary Estimate the sum required corresponds exactly with the unissued balance of the corresponding subhead in the main Estimate and no extra money is sought. The need for the provision arises from the fact that under the Industrial Grants Act, 1959, which came into operation on the 26th August, 1959, responsibility for grants for projects outside the undeveloped areas was transferred to An Foras Tionscal, which body also assumed liability for commitments entered into by the Industrial Development Authority in respect of projects approved for grants under the Industrial Grants Act, 1956. The object of the provision at Subhead Q.4 is to make available to An Foras Tionscal the balance remaining of the provision in the original Estimate for grants to the I.D.A. for industrial development outside the undeveloped areas.

Now I come to the main item in the Supplementary Estimate—the provision of £275,000 for grants by An Foras Tionscal for projects located in the undeveloped areas. As I said already, the need arises from the necessity to provide more money than was originally expected for grant payments likely to mature in the current year. An Foras Tionscal originally estimated their requirements for the undeveloped areas during the current year at £500,000 but they now expect that actual payments will amount to £775,000, and it is accordingly necessary to provide a further £275,000.

The framing of an estimate such as this naturally presents certain difficulties to An Foras Tionscal. When they have sanctioned grants, the rate of expenditure depends entirely on the expedition with which the promoters of a particular industry move. In this year, happily, that expedition was very evident but I think it was contributed to by the very dry summer which enabled building operations to proceed at an abnormally high rate. Whatever the cause, it is a matter of satisfaction that the grants for the undeveloped areas in the current year have exceeded the anticipated amount by over 50 per cent.

I shall now deal with the total commitments to date by An Foras Tionscal in respect of projects in the undeveloped areas. These amount to £2,527,890, of which £1,433,173 have been discharged, leaving outstanding commitments of £1,094,717. Grants paid to date in the current year amount to £322,489 and it is expected that payments to the end of the year will amount to £453,000, making a total of £775,000 in grant payments for the year. There are at present 47 projects in the undeveloped areas in production which have been assisted by An Foras Tionscal, and there are a further 18 projects in various stages of development. If all the latter projects come to fruition, the 65 projects approved by An Foras Tionscal to date will represent a total capital investment of about £6¼ million and will give employment to about 4,300 workers.

A very encouraging feature of the operation of the Undeveloped Areas Scheme has been the extent to which projects related to the export trade are being developed. Of the total of 65 projects approved, exports are envisaged in about one-third of the cases and, in the case of certain projects, the bulk of the production is intended for export. I feel sure that the House will have very little difficulty in voting the extra provision sought.

Mr. Dillon

£6¼ million is a lot of money. I understand it is hoped to provide employment for a little over 4,000 people.

Mr. J. Lynch

4,300.

Mr. Dillon

Workers?

Mr. J. Lynch

Eventually.

Mr. Dillon

I wonder how many of these are men and how many women?

Mr. J. Lynch

I have not got the break-down, I am afraid.

Mr. Dillon

It works out at a very substantial capital investment per individual employed and at this stage one can only express the hope that all these enterprises will thrive and prosper.

I am concerned to afford the Minister an opportunity of correcting a rumour which reached me. That was that a grant had been given by An Foras Tionscal for the erection of a mineral water factory in the West of Ireland. That could not be possible, could it?

Mr. J. Lynch

I do not know. I shall inquire about it.

Mr. Dillon

Because I understood that under An Foras Tionscal it was not proposed to give new entrants to an existing local industry large Government grants to knock their competitors out of business. It would astonish me if in an area, where there were already four or five mineral water factories erected at the cost of the citizens themselves, that they should discover some morning that the income tax they were paying was being handed over by way of grant to a neighbour to establish another mineral water factory in an area which was already more than adequately supplied by the existing installation. I think I should hasten to add that the establishment in question which was present to my mind is nowhere in the vicinty of Ballaghaderreen but is in another area altogether. Nevertheless, I feel that the matter ought to be brought to the Minister's attention so that he can confirm, as I hope he will, my belief that it is no part of the duty of An Foras Tionscal to give grants from public money to establish industrial units to compete with existing industries in any given area.

I should like to know from the Minister whether any progress has been made or whether it is intended to attempt any progress along lines to which I have referred on another occasion. One of our perennial difficulties in exporting industrial goods is to find our way into foreign markets because we are confronted with the vicious circle that you cannot get into the markets if you have not the goods and you cannot very well produce the goods if you have not a market in which to sell them. All too often the result is that an enterprising person rushes out to canvass orders for the commodity he proposes to produce. secures the orders and then fails to deliver the goods because he has not got the supply. He subsequently produces the supply and goes out on a second selling campaign to be told that he will not get any orders at all now because he failed to deliver on the first orders he got.

The infallible way to avoid that dilemma is to seek to associate with a manufacturing enterprise here an established business which has marketing channels into which the output of a new industrial unit in Ireland can be poured right from the commencement of production. With that in mind I have suggested to the Minister for Industry and Commerce and, indeed, to the Taoiseach, that part of the duty of An Foras Tionscal ought to be to seek to secure that certain large exporting industries who consider establishing branch factories in Western Europe would consider the advantages of establishing them here.

In that connection, I want to suggest to the Minister a form of assistance which I am not sure an Foras Tionscal has at present statutory power to offer. One of the great arguments that a cold-blooded, international businessman will advance against locating his plant in Ireland is this: "If I want to sell goods in Western Europe, why on earth should I put my plant in Ireland? Why should I not put it on the Continent of Europe, because if I manufacture in Ireland, I have, possibly, a very considerable burden of expense in transferring my finished product to a point of universal distribution on the Continent of Europe?" Is it in the power of An Foras Tionscal to say to such a manufacturer that it would be prepared to meet the cost of placing any industrial goods manufactured here at a port, c.i.f. or f.o.q. in Great Britain, or even at Hamburg or Antwerp?

I conceive that it might be quite possible to induce a very large manufacturer of goods to locate his plant here, if we were in a position to say to him so far as freights are concerned: "We are prepared to put you on a basis of absolute equality with the factory located in the most advantageous situation for distribution either in Great Britain or the Continent of Europe." There may be snags in that conception, but it occurs to me that it is an idea worth considering and it might be the means of bringing really valuable industries to this country which would provide permanent employment for men.

To tell the honest truth, it is only industries of that character, which are ultimately designed to provide permanent employment for men at decent rates of wages, that I think it is worth spending large sums of public money in promoting. Industries which hold out no prospect of ever giving large employment except to girls are, I think, of doubtful value. If they develop themselves as a result of unaided private industry, they are useful and good in their own way; but the investment of public money should be primarily directed to providing permanent employment at a satisfactory rate of wages for potential fathers of families in this country.

I hope the outlay on the promotion of whiskey exports is producing an adequate return. I expect at the end of this year the Minister will be able to give us a more exhaustive report upon it. At least, I think we know that we have stocks in existence to meet any orders that may be engendered by this campaign. But there is one last note of caution it might be appropriate to sound on this occasion, particularly with reference to Córas Tráchtála. There is no greater disaster than that an export promotion body should send out emissaries to promote exports which we have not got.

There is also the danger of people taking too optimistic a view or a misinformed view about the quality of goods we have to offer, whether they be agricultural goods, livestock or manufactured goods. We may have a particular line of goods eminently suited to a market, but if you offer that line of goods in another market, although their description may be virtually identical, it may transpire that the quality required by the second market bears no relation to the quality required in the first market. You can easily be misled into drawing customers at considerable expense to this country looking for something which in fact is not to be found here.

I would urge the Minister to keep a vigilant eye on activities of that kind so as to ensure that where trade missions are sent abroad and authorised to offer particular categories of goods, we are absolutely certain that the goods are here not only in quantity but in quality to meet the type of demand that we are ourselves engendering by the missions we dispatch. It may well be that that is being looked to with full diligence, but it is a problem which, I think, should engage the Minister's very special attention. An excess of zeal without discretion could do a great deal of harm in transactions of that kind.

General Mulcahy

Would the Minister say if there is anywhere a register kept of the industries and their locations for which grants of this kind have been made?

Mr. J. Lynch

The board of An Foras Tionscal are required to submit for presentation to the Oireachtas an annual report which indicates the type of industry to be established, the location and the amount of the grant.

General Mulcahy

Is there a register kept where one can see the actual location and the address of the industry? Sometimes an annual report comes out six months after the date.

Mr. J. Lynch

To an extent, the annual report is a register. I admit there is some delay in publishing it. As a general rule, the current activities of An Foras Tionscal in dealing with prospective industrialists are not published until such time as the matter is concluded by An Foras Tionscal. Then it is included in the annual reports, as they are issued.

First of all, I want to tell Deputy Dillon that the approximate figures I have for employment are that about two-thirds of the total are men and one-third women. I think that is fairly good, bearing in mind that it represents somewhat less than 3,000 men, while the remainder of the 4,300 we hope will be eventually employed in the undertakings for which grants have been sanctioned and or paid will be women.

I agree entirely with Deputy Dillon's suggestion that our export markets should be watched carefully, particularly bearing in mind our capacity to export a particular commodity, and our capacity to ensure that the commodity we have undertaken to export will conform to the standards we have undertaken to supply.

I am sure the Deputy will be pleased to learn that one of my first activities as Minister for Industry and Commerce was to attend a conference of sales managers at Shannon during the summer. The main theme of the conference was, first of all, to establish wherein lies the best export potential for the commodity produced; secondly, to ensure that the commodity produced will measure up to the standards and quality required; and, thirdly, to ensure that a continuous supply will be available in order not to jeopardise the prospects of advancement or the prospects of encouraging new forms of export. Córas Tráchtála has representatives abroad. One of their main functions is not only to establish what commodities may be exported to different parts of the world but to ensure that the commodities exported are such as can be produced here competitively, both in relation to price and quality, and with a reasonable assurance of continuity of supply.

The suggestion that we should assist firms by way of subsidising exports is not new. Down through the years, it has been suggested from time to time that some form of export subsidy should be provided. In the first instance, Foras Tionscal have not got such a power. It is accepted that the best form of assistance that can be given is the initial grant which ensures that the firm which enjoys the benefit of the grant will from that point onwards depend on its own efficiency to keep its plant going and to procure sufficient markets at home and abroad for its commodity. The suggestion of giving a subsidy by way of transport within the country or from the country has been referred to from time to time. That has been answered always by the argument that, after the initial grant, the company must depend on its own resources and its own efficiency; that is the best type of assistance and the surest form of assistance from the point of view of making the company live up to a reasonable standard of efficiency in order to survive.

If there were grants of the kind suggested by Deputy Dillon—grants by way of subsidy for the export of goods which would eliminate the cost of export in placing goods at a point on the Continent or in Britain, which would have the effect of making the price comparable with that at which the company could produce for the home market, such a step might be open to grave objection under existing trade agreements. I am almost sure it would be. Such a step would certainly bring forth opposition from competitors and that would inevitably mean intervention by trade organisations. Any advantages we may enjoy under existing trade agreements might be very seriously jeopardised. The system in force, the only system that Foras Tionscal can operate, of giving grants initially for building, for the installation of plant, or for the training of personnel, is the best system that can be operated in all the circumstances.

Vote put and agreed to.

Supplementary Estimate reported and agreed to.