I move:
That a supplementary sum not exceeding £404,000 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 Supplementary Estimate is for a sum of £404,000 and it is divided into two sums, one of £104,000 and the other of £300,000. The sum of £104,000 is required to recoup the Dundalk Engineering Works Limited for certain ex-gratia payments which they have been authorised to make to certain disemployed workers in the workshop grades, who were employed in the former Great Northern Railways; and the sum of £300,000 is for the purchase by the Minister for Finance of shares in Irish Steel Holdings, Limited.
I shall deal first with the Dundalk Engineering Works. On December 12th, 1958, the House agreed to a Supplementary Estimate—Vote 50— Industry and Commerce—of £50,000 to meet the anticipated cost of recoupment in the year ended 31st March, 1959 of ex-gratia payments to be made by Dundalk Engineering Works Ltd. to former Great Northern Railway Board Shop workers whose employment was interrupted temporarily or permanently and for whom suitable employment could not be found in the group of companies set up to work and develop the former railway works. As explained in detail during the debate on the Supplementary Estimate, these payments are made by the Company in the form of ‘stand-off’ pay in the case of workers temporarily laid off, and in the form of ‘severance’ pay in the case of any of the workers found to be permanently redundant.
Owing to the uncertainties residing in the new developments and to the time occupied in the necessary constructional work and in organising and equipping the various projects, the Company were unable, in the last financial year, to declare any workers permanently redundant and, in fact, no workers had been declared permanently redundant up to 31st March, 1959. Accordingly, the only claims received from the Company for recoupment up to that date were in respect of "stand-off" payments made to temporarily redundant workers. The total amount of these claims up to 31st March, 1959 was £8,606 11 8, which amount was duly paid; the balance of the £50,000, amounting to £41,393 8 4 being surrendered to the Exchequer on 31st March, 1959.
When the Estimates for the year 1959/60 were being prepared the Company were still not in a position to foresee with any reasonable degree of accuracy the future pattern of employment at the Works and, accordingly, only a token provision of £10 in respect of staff redundancies at Dundalk Engineering Works was made in the Vote for the year 1959/60. In the event, claims for reimbursement of "stand-off" payments were submitted by the Company in the financial year 1959/60 as follows:
£3,469 in respect of the period April to August, 1959
and
£4,660 in respect of the period September to December, 1959.
In December 1959 the Company found it necessary to declare 120 workers permanently redundant. The "severance" payments to these men amounted to £60,495. At the end of January 1960, a further thirty workers had to be declared permanently redundant and the Company could see then that a further seventeen workers would become permanently redundant before 31st March, 1960. The amount of "severance" payments which these 47 workers will receive, in accordance with the conditions of the scheme, is £35,000, approximately.
The Company will, therefore, require to be recouped the sum of £103,800 approximately which they will have disbursed in the forms of "stand-off" and "severance payments" in the current financial year, and a supplementary vote of £104,000 is sought for this purpose.
The second sum of £300,000 is for Irish Steel Holdings, Ltd. Irish Steel Holdings Ltd. was incorporated under the Companies Acts in June 1947, to acquire the assets of Irish Steel Ltd. then in liquidation and to maintain the steel works at Haulbowline as a going concern.
The Company has a nominal share capital of £100 of which three shares of £1 have been issued and are held by the Directors.
The Company acquired the assets of Irish Steel Ltd. for £125,000, of which £69,000 was eventually paid to the Exchequer by the Receiver on foot of a guaranteed trade loan to Irish Steel Ltd., and the industry has since been financed by fluctuating bank accommodation, guaranteed in part by the Minister for Finance, by guaranteed loan and by the trading profits of the Company since its inception.
The Company operates open hearth furnaces to produce, largely from native scrap, mild steel ingots and billets which are then converted by rolling into mild steel angles, rounds, flats and squares. Flat and corrugated galvanized sheets are also produced by the Company, the raw material being imported black sheet. The soundness of the industry has been confirmed by the successful progress recorded by the Company over the past ten years. In addition to supplying home market requirements of the products of the Company, a successful, if modest, incursion has been made in the export field, in the face of extremely severe competition.
In March 1958, the Government approved in principle proposals by the Company for a major expansion of its activities through the enlargement of the existing Open Hearth Furnaces, erection of a Blooming or Cogging Mill, the modernisation of the existing Merchant Bar Mill and the completion of the partly erected sheet mill; and the Company was authorised to proceed with the development of its plans on the basis that, if a satisfactory scheme emerged, Government backing would be forthcoming.
The expansion proposals were outlined in the White Paper on economic development which was laid by the Government before each House of the Oireachtas in November, 1958. The White Paper indicated, inter alia, that the primary purpose of the proposed developments was to increase the output and efficiency of the mills and thus reduce production costs and selling prices; the cost of the developments as then provisionally planned was estimated at about £2 million.
The subsequent investigations and negotiations carried through by the Company, with the assistance of consultants, have resulted in proposals which are, in general, an endorsement of the proposals of March 1958, but envisage a greater increase in output, a wider range of products and consequently an increase in capital expenditure. In outline the main proposals are:—
(a) increase in ingot output to 80,000 tons of 30 cwt. ingots per annum by the installation of a new oil-fired furnace of 60 tons capacity, and by improvement of the two existing 37-ton furnaces and by extension of scrap handling and casting facilities;
(b) installation of a new 750 mm. blooming mill and a new 650 mm. large section mill;
(c) re-arrangement and mechanisation of the existing merchant bar mill to improve its rate of working and to enable it to feed a wire rod mill;
(d) installation of a new modern wire rod mill; and
(e) completion of the sheet mill and consequent re-location of the existing galvanizing plant.
The estimated cost of the development proposals is of the order of £3½ millions.
The employment which will be afforded by the expanded steel works is expected to be over 700 persons at peak periods, that is, 200 workers more than at present. In this connection it is necessary to point out that it would be a fallacy to relate the proposed capital investment to the employment of 200 additional workers. In fact the position is that the expenditure is necessary to maintain 700 men in employment.
The Government have approved the development plans as recommended by Irish Steel Holdings Ltd. and have decided that the project should be wholly financed by share capital to be subscribed by the Minister for Finance. Legislation to give effect to this decision is in course of preparation but it will not be possible to enact the necessary legislation before 31st March, 1960. By that date the Company expect that payments estimated at £300,000 will fall to be made in respect of initial instalments to suppliers of new plant and in respect of other items. It is, therefore, necessary to place the Company in funds to meet that expenditure in 1959/60 and a Supplementary Estimate is accordingly submitted to enable payments to be made to the Company in respect of shares to the extent of £300,000 to be taken up by the Minister for Finance.