Dáil Éireann debate -
Tuesday, 9 Dec 1980

Vol. 325 No. 4

Irish Shipping Limited (Amendment) Bill, 1980, Second Stage.

Minister for Transport (Mr. Reynolds)

I move: "That the Bill be now read a Second Time."

The purpose of the Bill is to provide authority for the Minister for Finance to increase the authorised share capital of Irish Shipping Limited by 10 million additional ordinary shares of £1 each. In addition the Bill provides for an increase of £10 million in the amount of borrowings by the Company which may be guaranteed by the Minister for Finance and for the guarantee of the Company's borrowings by the Minister for Finance in currencies other than the currency of the State.

The Bill will raise the ceiling on the Company's total authorised capital to £22 million and will raise the limit on guaranteed borrowing to £15 million.

The enactment of the present Bill is necessitated by the need to make provision for the capital and borrowing requirements of Irish Shipping Limited in respect of a new bulk carrier and for the financial needs of the Company over the next few years. This vessel is one of the proposed contracts for Verolme Cork Dockyard which the Government announced on 30 July 1980.

Irish Shipping Limited will place the order for the vessel without delay and it is expected that the vessel will be completed about December 1982. It is estimated that the final cost of the bulk carrier will be in the region of £25 million.

The Company has been in a position to fund the acquisition of vessels in the past without recourse to the Exchequer. Indeed 1959 was the last occasion on which the authorised share capital of the Company was increased.

Irish Shipping's principal activity is the operation of deep-sea ships on the international tramp shipping market and this vessel will be used in that trade. This market has been depressed over a number of years because of an oversupply of tonnage and the reduced demand for it. Indications are that this position has corrected itself to a considerable extent and freight rates have improved. In spite of this improvement shipowners still have to contend with the problems arising from worldwide inflation and, in particular, the ever-increasing burden of fuel costs.

Irish Shipping, in consideration of its objective to operate within the framework of a commercial company, would have deferred the acquisition of this ship for some further period. In deference to the Government's concern to provide contracts from the public sector for Verolme Cork Dockyard it advanced its plans in this regard. The Company is not, however, in a position to finance the building of the ship without Exchequer assistance at this stage. It is therefore proposed that the cost of the vessel will be funded by a combination of equity to the Company, borrowing by the Company and the payment of subvention to the yard.

When the company was incorporated in 1941 the mandate given to it was to maintain a fleet to meet national requirements in time of need and to operate commercially thereafter. The measure of its success is that for the past thirteen consecutive years the company has made a profit and has financed its operations and capital programme entirely from its own resources.

The company is involved in a number of ancillary activities which provide alternative sources of revenue to compensate for the inevitable slumps which are endemic in the shipping industry. These activities have made a major contribution towards the achievement of the company's profit record over the past thirteen years and has helped to overcome the adverse effects of a prolonged and severe recession in the world shipping industry.

Irish Shipping Limited are confident that they can operate the new vessel successfully and profitably when it comes into service.

The recession which has been affecting the shipping industry has also in turn caused problems for the shipbuilding industry. Verolme Cork Dockyard has been facing serious financial problems and a lack of orders. The Government took steps to alleviate the situation by arranging for contracts to be placed for the building of two new naval vessels for the Department of Defence, a fisheries research vessel and the bulk carrier for Irish Shipping Limited, in order to protect the jobs of a highly skilled work force.

The continued development of Irish Shipping Limited is important in the furtherance of national development and its activities are of very considerable direct benefit to the economy. It provides well-paid employment for 950 people and its total annual payroll is over £5 million. The present bulk carrier order will provide employment at Verolme Cork Dockyard for the next two years which is a very valuable contribution at the present time to the Government's campaign to maintain existing employment and create new jobs.

The provisions of the present Bill will enable Irish Shipping to expand its deep-sea fleet. I accordingly recommend the Bill to the House.

Mr. O'Toole

I welcome the Bill. It is an enabling measure to provide extra capital for Irish Shipping Limited. I note that the annual report expressed cautious optimism. From the 1980 report, this optimism has been fulfilled and there is at least a partial improvement in the position of Irish Shipping, despite the major imbalance which has dogged the shipping business for the past five or six years, an imbalance of supply over demand. As is stated in the annual report, it is ironical that the increased cost of transport and, in particular, the increased cost of energy — in this case oil — had a favourable effect on Irish Shipping in that it sorted out the men from the boys. Many old ships were sent to the scrapyards, which left room for other ships to operate on a more viable basis.

The Minister stated that, since 1959, Irish Shipping had no reason to call on the House to provide it with any increased facility for share capital. It is now seeking this facility on the advice of the Government. The concern expressed by the Government in relation to jobs in Verolme Dockyard, resulted in bringing forward the order for this bulk carrier. This is something about which we, on this side of the House, do not quibble. In a time of depression we should seek to at least maintain our work force and, in the case of the dockyard and ship building facility, such as Verolme where there is skilled labour, it would be unfortunate if we were to allow these people to join the dole queue. Irish Shipping is to be commended for bringing forward this order.

As the Minister said, the cost of the vessel will be funded by a combination of equity to the company, borrowing by the company and payment of a subvention to the yard. The combined funding from these three sources will ensure that the work in the dockyard and the labour force will be maintained at its present level over the next two years. Irish Shipping will benefit from having a new vessel, which will be up to date, will take its place in their present fleet and be an incentive to new business on the many lines they operate around the world. The fact that Irish Shipping has, since its inception, provided this country with a guaranteed facility in times where this might be necessary is imperative if we are to have insurance against the danger that exists in the case of international conflicts and so on. They have done that admirably by going abroad and seeking to pay their way through contracts in foreign countries. The depressed state of the economy is placing a heavier burden on transport. Even the increased fees charged by shipping companies seem to be insufficient to allow such companies to break even, because of the massive increases in fuel in recent years, and because of the reduction in supply of older vessels.

We hope that the more progressive companies, such as Irish Shipping, will be able to stand up to the recession and find themselves in a position to take on new work when the international economic situation improves. This is a worthwhile Bill which serves the dual purpose of ensuring continuance of our skilled labour force in Verolme Dockyard and providing Irish Shipping with a new vessel for its fleet.

Mr. Corish

For quite a long time we have seen semi-State bodies in some difficulties and there has been criticism of them from many sectors of the community. It is very pleasing, therefore, to note, as far as Irish Shipping is concerned that, while they did have quite a number of difficulties in recent times, it is still one of the most successful semi-State Bodies. At this stage we should remember those who had the courage and the foresight to establish Irish Shipping back in 1941. The credit must go to the then Minister for Industry and Commerce, Mr. Seán Lemass, the Secretary of his Department, those who were recruited to the board of Irish Shipping and those who worked in it also. In the middle of World War II if it had not been for Irish Shipping and the acquisition of a fleet we would have been in serious difficulties in regard to supplies and exports.

In recent years, apart from that kind of work, Irish Shipping have been engaged in trade throughout the world and we should be proud of the fleet. For that reason, as well as others, we give our wholehearted support to the proposals in this Bill that the share capital and the authorised borrowings of the company be increased.

I must confess that although I come from a maritime constituency I do not know what a bulk carrier is, and perhaps the Minister will enlighten us, even if it has not much bearing on the provisions of the Bill. The most favourable outcome is that jobs will be protected in Verolme. That is very important at present when we see so much unemployment, so many factories being closed down weekly. I understand that the Government have decided to exercise their powers to direct Irish Shipping to have the bulk carrier built at Verolme. Irish Shipping have a licence to acquire ships from other areas but the Government have power to direct them in respect of the building of new boats in Irish shipyards, in this case Verolme.

On the subject of employment, the Minister mentioned a figure of 950 jobs. I should be obliged if he would give us some information as to the employment trend in the Cork shipyard in the past three or four years, whether this figure of 950 represents an increase or a decrease. In recent years we have learned from the media of the depressed state of shipping worldwide, aggravated by increased fuel costs. In many countries governments and government agencies have been getting rid of boats, and therefore we should be pleased at the prospect of the bulk carrier being built in Verolme.

The Minister has told us that in the past few years Irish Shipping have made a profit. Many of our semi-State bodies were not expected to make profits: if they broke even we were pleased. In many cases they have to be subsidised heavily by the Exchequer. Considering these things, Irish Shipping have been a success and I again welcome the Bill and repeat my tribute to Irish Shipping who have been the success story of Irish companies.

Mr. Hegarty

As a representative of the constituency in which Verolme are situated I welcome the Bill. I have given the Minister a bit of a shake up recently by putting down a few questions to him on this subject and I am sure that the shop stewards there have also been on to him in the last few weeks. In that area we have been concerned seriously because for the first time in a long period the docks have been empty, and without this new work there would have been many lay-offs in the new year.

For that reason I hope the Minister will ensure that the work will be started soon. Such companies get tied up in paperwork and in bargaining but now that there is direct Government interest in having this carrier built I hope the Minister will ensure that time will not be lost. We had been told there would be lay-offs and the 1,200 or 1,300 families depending on Verolme have become frightened.

The knowledge has emerged that our yard in Cobh is one of the best in the world. We are told that orders lost to more competitive undertakings in the past were a loss to the shipping companies concerned because ships like the Amoco Cadiz built by other companies fell to bits on the high seas. Verolme are now rightly regarded as first class and that is appreciated by Irish Shipping who have an excellent sea-going record.

As I have said, it is important that this work be got under way without delay. As well as ships such as this carrier we need smaller boats but there is not much work involved in such ships. I hope the Minister will get this work going quickly so that there will be a full complement employed, and perhaps increased employment. This is most welcome news coming on to Christmas. The people in the area were depressed because they did not think that with the best will in the world anything could be done about it. The work on the carrier will have to be got under way quickly if it is to be completed by December 1982.

Irish Shipping have done Trojan work for the Irish flag worldwide. They have a great record in regard to the transport of goods throughout the world. A bulk carrier of this type is just a massive container for grain and so on. It is the shell of a ship with accommodation for crew. There is a lot of welding and other work in it. This is a very substantial order at a time when other dockyards around the world are having problems.

It is because of the dedication of the workers in Verolme over the years that this order has been given to them. Irish people often regard themselves as not being equal to the Germans and other nations but in this particular case we have the highest skills in shipbuilding in Verolme. They are turning out the best product in the world. There has never been a serious accident with any ship built in Verolme. People are starting to look at the cheap ships and have come to the conclusion that quality ships that will last are the best value. We very often do not think about electrical work on a ship. I believe that a ship can be grounded because of electrical problems. I was shown once how electrical work was done by another company and I could almost do better myself. The wiring was very bad. We have seen top quality work in our naval vessels as well as in other ships which were built by Verolme and which are sailing all over the world.

The order for this boat will give great confidence to the people in Verolme. I hope the Minister and his Department will look around for further orders for this dockyard. We are in the era of gas and possibly in the era of oil. I hope the Minister will ensure that the massive tankers that are required will be built at Verolme. We should not go abroad for them because we have the skill to build them in Verolme. As soon as the Minister hears that we are likely to find oil off our shores I hope he will ensure that the large tankers are built in this dockyard.

Mr. Begley

I welcome this Bill. It is a step in the right direction but I believe the Minister has failed to grasp the golden opportunity presented in this Bill when he did not decentralise Irish Shipping. He should have sent Irish Shipping to Rosslare harbour, where the major activities take place. It is ridiculous having the head office in Dublin when the main harbour is Rosslare. Now that the Government have embarked on a decentralisation programme it is regrettable that the Minister did not use this opportunity to decentralise Irish Shipping to Rosslare.

I have a few criticisms to make about Irish Shipping. When passengers are waiting to go abroad one of the vessels that are late, Irish Shipping never make an effort to provide temporary accommodation or notify the intending passengers that the ship will be late arriving in port. I have heard this criticism from many tourists who come here. I hope the Minister will ensure that those tourists will not be inconvenienced to the extent they have been during the past few years. If we have dissatisfied tourists waiting at a port for a ship that is late and they do not know when it is likely to arrive they will not come here again. I hope the Minister will do something about this because I have got this criticism from many people visiting Kerry during the past few years.

I am reliably informed that Irish Shipping spend at least £250,000 a year training personnel in nautical colleges outside the country. Surely there should be some liaison between the Department of Education and the regional colleges to provide this facility in the Cork Regional College where I believe there are some facilities available for nautical training. I hope the Minister will tell Irish Shipping that this training outside the country has gone on for long enough and that he sees no reason why our boys and girls cannot be trained in Dublin, Cork, Galway, Wexford or wherever the regional colleges can provide the facility. He should inquire what efforts have been made by the Department of Education in co-operation with Irish Shipping to provide this service.

Irish Shipping have done a wonderful job. The criticisms I have made about them are ones I have picked up during my travels. I believe there are a number of slot machines in the Irish Shipping boats. Who has the concession for them? I do not believe in slot machines. I might have an odd flutter on the dogs or horses but the slot machines are out. The Minister should ensure that the concession in relation to slot machines is regularised.

Minister for Transport (Mr. Reynolds)

I thank the Deputies for their contributions and for their concurrence with the Government decision to place this order for the bulk carrier with Verolme. Deputy Corish paid tribute to where it all began, with the late Sean Lemass for his foresight in setting up Irish Shipping in the forties. We see the fruits of the foresight of people like that. He complimented the chairman, the board of directors and the management and staff of Irish Shipping on their magnificent record of success during the past 13 years. I join with the Deputy in that tribute and I am sure that in doing so I speak for every other Deputy here having regard to the fine performance of this company. They are a shining example to all other semi-State bodies.

Deputy Corish raised the question of employment in Irish Shipping and asked whether the trend in this regard has been upwards or downwards. The situation is that employment in the company has increased by almost 15 per cent — from 825 to 947, according to the annual report for the year ended 31 March 1979, and from 947 to 950 according to the annual report for the year ended 31 March 1980.

Deputy Begley raised a few points by way of criticism of the company vis-à-vis inconvenience to tourists. Naturally, tourists can become very annoyed if they have to wait for ferries. Though this is a matter for the day-to-day management of Irish Shipping I shall convey the Deputy's remarks to the company as well as taking a personal interest in the matter.

I am not aware of the existence of the slot machines to which reference has been made.

Mr. Begley

Has the penny dropped?

Mr. Reynolds

I do not know who was interested in the concession but if such a concession exists I would expect it to be advertised in the normal way. However, should this not be the case, I shall have the situation investigated for the purpose of ensuring that the concession is advertised.

The question of training is one that I have been considering for some time not only in relation to Irish Shipping but in other respects also. The situation is that there is a suitable course in Cork and I have been in touch with the Department of Education concerning the provision of suitable accommodation for the people who undertake that course. The responsibility in respect of accommodation rests with that Department but in the event of their not being able to provide the necessary accommodation. I have made other suggestions to them as to how the problem might be overcome.

Mr. Hegarty

There is some accommodation at the regional.

Mr. Reynolds

Deputy Begley is correct in saying that some of our people are trained abroad. It only came to my notice about four or five weeks ago that some Irish people are trained in British schools. I am endeavouring to have this situation rectified because I agree fully that we should make full use of our training facilities at home. I shall communicate with the Deputy when a resolution of the problem has been found.

Deputy Hegarty complimented the fine skilled work force at Verolme Cork Dockyard. The fruits of their work is proof of the fine job they have been doing down through the years. It was precisely to protect those skills, to ensure that they did not become scattered, that the Government took the decision in July to place with the yard not only the order for the big vessel but also an order for two naval vessels and for one fishery research vessel. Orders have been placed for the two defence vessels and for the fishery research vessel.

Mr. Hegarty

Has the Minister any idea when the work is likely to start?

Mr. Reynolds

The orders were placed within the past few days and work is ready to begin. In relation to the order from Irish Shipping, no time has been lost in bringing the negotiations to a conclusion. We are talking of a 70,000-ton bulk carrier which will be able to transport commodities such as steel, timber and coal. Irish Shipping considered commissioning a vessel of the order of 60,000 tons but they opted for the bigger carrier because Verolme had built a 70,000-ton vessel and had done a certain amount of planning in that area. This will help speed up the whole operation because there will not be any delay in starting the work. We are in the final negotiating stage so far as the price is concerned and it will be only a matter of weeks before the order is placed.

I am aware of the amount of activity in progress around our coasts in relation to oil and gas exploration. In this context I take this opportunity of saying to the management of Verolme that they too should have regard to the opportunities that exist in the area of servicing the offshore exploration vessels.

Mr. Hegarty

They are doing that.

Mr. Reynolds

I put this suggestion to them some months ago because I was aware of the difficulties which arose between last summer and last Christmas in the dockyard. I will not lose any opportunity in trying to identify any potential order in this regard. We have a fine skilled work force and our primary objective is to ensure that, wherever possible, the work that can be done at home is done by Irish workers. This is one way out of our present recession. The Deputies have my assurance that anything under my jurisdiction is being viewed in that context.

In welcoming the Bill Deputy O'Toole paid tribute to the many years of success of Irish Shipping and emphasised the contribution they are making to the national economy. That contribution is vital. A good deal of the earnings are in hard foreign currencies.

In passing I might mention that the provision of this 70,000-ton carrier will put Irish Shipping into the position of being able to quote for the transport of coal to Money Point power station when it comes on stream eventually.

The main reason for people going to England to be trained in nautical services is the lack of accommodation here. I understand that no accommodation is being provided in Cork by the Department of Education for this purpose but as I have said I shall be taking the matter up with them.

Mr. Hegarty

On a point of information, the problem is that in order to get into the college one must be taken on by a shipping company.

An Ceann Comhairle

The Minister, please.

Mr. Reynolds

I take the point. Regarding delays to passengers on the Rosslare to Le Havre service, Deputy Begley will appreciate that the service is on a very tight schedule and is subject to upset because of weather conditions. However, I agree that there should be some form of communication to ensure that travellers are notified of changes.

Mr. Begley

There should be advance warnings.

Mr. Reynolds

I agree. Again, I thank the Deputies who have contributed to the debate and who have welcomed the Government's decision, a decision which will ensure that Irish Shipping will have this new addition to their fleet and that the work will be carried out at the Cork Dockyard. In the future when we shall find it necessary to import large quantities of coal, Irish Shipping, under an Irish flag, will be in a position to undertake the transport of that coal.

Question put and agreed to.

Agreed to take remaining Stages today.