I have given permission to Deputy O'Keeffe to raise the subject matter of Question No. 9 on today's Order Paper. The Deputy has 20 minutes.
Adjournment Debate. - County Cork Factory Closure.
I rise in this House tonight in a last ditch effort to obtain a reprieve for the Fastnet Co-op factory in Skibbereen in West Cork. I do so in the context of figures disclosed to me today in the House by the Taoiseach for the total amount spent on imports of foodstuffs in recent years. The reply to that question is very relevant to the subject matter before us. The figures show that the imports of foodstuffs have gone up from £269 million in 1978 to £425 million in 1980. In that broad context, very serious questions must be asked before a small, native food-processing plant is closed.
I speak about the Fastnet Co-op in a personal sense. It is a factory in my home town. I recall travelling around the countryside with many other members of the community obtaining subscriptions for it when it was first formed. In personal terms, it is not just another factory. It was a co-operative effort in my home town, based on native raw materials produced by my own neighbours and processed by the locals — 160 in all — many of whom I grew up with. So much for the personal view of the situation.
In general terms, the Fastnet co-op was a unique concept. It was a co-operative venture between a large, State-owned company — the sugar company — and the farmers, workers and community of a rural town and hinterland. In Irish terms, it is not just another factory. It is a result of a unique partnership bringing about considerable employment and prosperity in an underdeveloped area. Its closure involves a positive decision now by the Government to withdraw support, not to grant the necessary support to keep it in operation. I am quite sure that the Irish Sugar Company would be willing to continue its support and have planting instructions for the current year issued by the co-op, provided the Government guaranteed any resulting losses.
The idea to obtain a suitable alternative industry has been given the goahead. However, so far there is nothing in the pipeline. In the meantime, since the IDA commenced their efforts, we have had a significant new development, the report of the Oireachtas Joint Committee on Comhlucht Siúicre Éireann — The Irish Sugar Company. It is important to stress that the Oireachtas Joint Committee is not an Opposition body. It is a committee composed of Members of both Houses, from all parties and has a majority of Government members on it — six of the members of the committee are from the Government party and, in addition, the chairman of the committee is a respected member of the Government party, Senator Eoin Ryan. Furthermore, it is regarded as being a very serious committee indeed. In the compilation of this particular report, it had specialist advisers, including a lecturer in economics and a senior lecturer in accounting and finance at Trinity College. This report must be given considerable weight by the Government. Furthermore, the Government are called upon to seriously explain themselves if they decline to follow the recommendations of that report.
I do not wish to be political in this contribution but, as a West Cork man, I must say that, in so far as the future of the Fastnet Co-op is concerned, the non-implementation of the report by the Government puts that Government in the dock. I wish to refer to a few relevant sections in the report. At paragraph 16 the report states:
The cost of any obligation to maintain aspects of its food operation which are economically non-viable, but which the Government wishes to maintain for social or other reasons, should be explicitly recognised by the payment of a State subvention in compensation.
Here we are talking about the food operations of the sugar company and the need for the Government to specifically recognise the social factors. I must stress, and will stress time and time again, that there are important social factors, when one considers the location of this plant in an underdeveloped part of the country.
Later on the report, at paragraph 116, states:
The Committee believes it would fully meet the Company's responsibilities to its work force to ensure that alternative employment opportunities with a roughly equivalent skill level are made available in the locality, either by another State enterprise or by an IDA-assisted industry, where it wishes to close an existing plant.
Here again it is being realistic. It states that if the plant cannot continue in operation indefinitely, efforts have to be made to secure alternative employment there.
At paragraph 117, it goes on to make what I consider to be the really relevant and most important recommendation in so far as the Fastnet Co-op is concerned. It states:
The Committee recognises however, from the State's point of view, not to say the interests of the work force as well, that it makes no sense for the Company to close a plant until alternative employment opportunities have come on-stream. The cost to the State of unemployment, in terms of tax receipts foregone and unemployment benefit paid, will usually exceed the difference between the value of what the workers produce and their wage. Provided this condition is met, it is "cheaper" for the State to subvent the Company to maintain its plant in temporary operation rather than allowing its workers to go on the dole. Until alternative employment opportunities are provided, the Committee recommend that the Company should receive a temporary Government subsidy to keep its uneconomic plants in operation. Unlike the present situation, however, where the State is effectively asked to take on an open-ended commitment to meet the losses due to the operation of uneconomic plants in the proposed situation there would be a clear commitment to provide alternative, more viable jobs, within a short period of time.
This, then, is the centrepiece of the report of the joint committee. It stresses the need to seek an acceptable suitable alternative. Locally, on the ground, it is accepted that if this plant cannot continue in operation on an economic basis, this is where we must look. Having said that, I must say that in the context of the fact that we are producing the goods ourselves, native raw materials, it is sometimes difficult to understand how we cannot compete with the produce from other countries so far away — Israel, Kenya and so on. Indeed, questions have been raised from the point of view of investigating the possibilities of dumping. However, the immediate situation is that if all the experts say that this plant is not viable and cannot be made viable, the local community — workers and everybody involved — will be forced to accept that we must look to an alternative industry. The simple fact is that such is not now available and there is no guarantee of it for the immediate future.
I want to ask the Minister and his Government this question: is it not better to implement the decision of the joint committee now while, at the same time, continuing the search for an alternative industry? There are many pluses in adopting this course of action. The continuous employment for the work force would be maintained. I want to put it on record that that work force have given good service and were never involved in industrial relations problems. When talking about establishing another industry in the future, it must be an advantage to have such a good work force available. If this report is implemented, it must be remembered that we have a highly specialised group of growers who will be able to continue in operation and provide special techniques for future projects in the same area. There is also the question of the factory and machinery being maintained in good working order so that they can be used in future projects.
The State must be seen to be discharging its obligations to a remote underdeveloped area. Surely there is a social obligation here not quantifiable in simple economic terms? The report of the joint committee, even in economic terms, felt that such a plant should be kept open and various minuses are set forth in that report. I ask the Minister to look again at these pluses and minuses. They all point to what I feel must be a decision to maintain this plant in operation. I would highlight the absolute urgency of an immediate decision in this regard. We are into the planting season. From the point of view of celery, planting instructions would have to be issued this week. The other items grown in the area, such as carrots, swedes, beetroot and so on, could wait another while, but bearing in mind the problems in arranging contracts, seeds and so on, there should not be any delay.
If an alternative industry became available before such produce was processed, the Minister could bear in mind transferring that produce to another plant within the sugar company group. There is such a factory in Midleton and there would be considerable possibilities of having the capacity in that plant used to process such vegetables in the event of an alternative coming on stream before the processing was completed at Fastnet.
I feel I have put the position fairly, and in a non-political fashion make this appeal to the Minister and the Government. I am making a plea to this Government for a stay of execution, to allow a last minute reprieve. I am not looking for an open-ended commitment; I am merely looking for a commitment to allow the work force to be kept together until an alternative opportunity is on offer. I accept that the IDA are a good organisation but they cannot work miracles. Any alternative, once identified, would need a considerable amount of time before coming on stream.
I have to contrast the borrowing of £4,000 million over the last three-and-a-half years and the small amount of money that would be needed to save this plant. One hundred and sixty jobs may not seem large in the national context, but this will be a closure of Ferenka size consequences to a small underdeveloped part of West Cork. With a final, urgent, earnest appeal I ask the Minister to lift the axe and allow this plant to continue for one further year until an alternative industry is found.
Deputy O'Keeffe is, I think being a little pessimistic. I am more optimistic than anybody about this industry in particular, and the food processing industry in general. I was involved in its inception and a lot of voluntary effort was put into it. In the case of Midleton, General Costello gave us two weeks to find £20,000, and it was found. That is the kind of enthusiasm that was generated in that area. In Fastnet we have the best celery in the world — even better than Tuam. This plant is in direct competition with producers of fresh celery, but when the EEC laws are tightened — in winter we import fresh celery from North Africa and other countries — there will be a tremendous future for that industry. I am not only concerned about the factory jobs involved or the skills which took a long time to acquire, but I am more concerned about the jobs on the farms.
When I was in the Beet Growers Association I remember going to these factories and seeing tractor loads of goods being delivered. These contracts formed a substantial portion of the income of these small farmers. The cheques were very useful at a time when there were no dairy cheques from the creameries. I am asking the Minister, and not in a political sense, to look at this problem again.
There will probably be another industry brought into this area through the efforts of the IDA but I am more concerned about holding on to what we have and maintaining the skills acquired over the years as well as keeping the canning process. There will be a good future for this industry when the recession is over and people start buying again.
I ask the Minister to go down and see for himself if there is any way a small sum of money would keep a co-op going. I believe Erin Foods should have been set up as a separate entity. At present the sugar company are looking for areas in which to economise, but this move is not a solution to their problem. I hope the Minister will look closely at Fastnet with a very sympathetic eye.
It is important to realise — and it is no secret — that the sugar company are going through a very difficult period and that they have had very heavy losses in the last financial year. Since they began trading in 1964 Erin Foods have accumulated losses of £24 million and these losses have been a drain on the sugar operations. This has led to the company's present high borrowings for capital investment which could otherwise have been financed by profits. As a result the company have begun to rationalise their food sector by reducing excess capacity and overhead costs and by developing more profitable and more marketable products.
It is understood that it is in this situation that the company, not the Government, have decided to close Fastnet. They see no future for the activities carried on there — canning, bottling and air drying — because of the low margins and depressed market conditions abroad. The losses at Fastnet over the past few years have been very high.
The work force on the food processing operation is at present about 50 and it is understood that there will be employment for them on food processing until about September. There is, therefore, an amount of time available to secure alternative industry. The sugar company have given full details of the Fastnet site to the IDA, who have given these to all their offices abroad. A special brochure has been prepared and this will, in addition, be sent to all IDA offices. The securing of an alternative industry is being promoted by the IDA as a matter of the highest priority, and I have written to the Minister for Industry, Commerce and Tourism seeking his assistance with the IDA.
In the meantime the sugar company have told the workers that they are prepared to negotiate early retirement arrangements with those who might wish to retire now and special severance payments, in addition to the statutory payments, for those who might wish to leave otherwise. In the case of regular growers the company have undertaken to offer them beet contracts or to consider compensating them otherwise. It is understood that within the next day or two discussions between the company and representatives of the workers and of the growers will take place to discuss these matters.
The Joint Oireachtas Committee report stated at paragraph 117 that the company should not close a plant until alternative employment opportunities have come on stream because it will usually be cheaper to do this than allow workers to go on the dole. This statement is, of course, debatable and cannot be read apart from the totality of the committee's report. Indeed, in paragraph 119 there is reference to the difficult decisions in a number of areas which are faced by the company in their attempt to restore profitability. It is stated that Government action alone will not be sufficient to help the company through their present difficulties and that they will need the full co-operation of all concerned if they are to continue in their long-standing development role in key areas of the Irish agricultural industry.
While, of course, one has naturally no desire to see any workers lose their employment, the position is that there are no funds at the disposal of the Department out of which the continuance of the operations at Fastnet could be subvented. In any event the result of such a suggestion would be that the State could be asked to subsidise every loss-making activity in the country. I should add that the sugar company have not asked me or the Government for funds.
I regret the necessity to cease the food operations but I am confident that, given the priority which the IDA are according the matter of a replacement and given the co-operation of the Fastnet society, which is forthcoming, a suitable replacement can be found within the time available. It is important to stress once again that the co-operatives decided, although reluctantly, to accept the sugar company's decision at their meeting on 7 January last and they are co-operating with them and the IDA in efforts to secure another enterprise for the factory.
Deputy O'Keeffe mentioned the increase in food imports and this is a matter about which we have been concerned. However, the main increase to which he refers concerns cereals and not the kind of produce produced at the Fastnet co-operative. The suggestion has been made that the Minister and the Government should do this or that, but the sugar company have not made any proposals to me in regard to any additional measures which should be taken and the co-operative concerned decided reluctantly on 7 January last that they would accept the sugar company's decision and that they would work with them and the IDA to secure alternative employment.
The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 4 March 1981.