Dáil Éireann debate -
Wednesday, 9 Jun 1982

Vol. 335 No. 6

Adjournment Debate. - Kilkenny Factory Closure.

Mr. Crotty

I should like to thank the Ceann Comhairle for giving me permission to raise this matter on the Adjournment. It is sad that I must avail of this opportunity to deal with the closure of Fieldcrest Limited of Kilkenny which, as announced today, will take place on Monday next. That will be a sad day for Kilkenny and the country. The announcement by the receiver today that it was the intention to close this factory on Monday marks the worst disaster to hit Kilkenny since the famine, In fact, the closure is a greater disaster for Kilkenny than the closure of Ferenka was for Limerick. When the factory closes on Monday the dreams of 650 employees will be shattered. Only two years ago many of those people left secure employment in foreign countries to return to Kilkenny. Others left other parts of Ireland and put their faith in Fieldcrest. They put their trust in that concern by taking out mortgages to purchase new houses in the city, replacement loans and by moving their children to new schools. Now they have been pushed aside and dumped on the unemployment scrap-heap. They are not entitled to any redundancy payments and realising that the number of unemployed in Kilkenny has more than doubled in the last two years, the prospect of alternative employment for those people is grim, bordering on hopeless.

I should like the Minister in the course of his reply to the debate to give an explanation of the IDA involvement in Fieldcrest. Two years ago the company commenced trading having received £12 million from the IDA and now the IDA state it is not a viable industry. It has been stated by the IDA, the Minister, Fieldcrest staff and management that the company was not managed and that sales promotion was a disaster. The sales office was located in London and reported to America trying to sell Kilkenny towels. Why was this situation allowed to develop and continue? I should like to know why Fieldcrest (America) were given a 51 per cent stake in the company for £2 million against an investment of £12 million by the IDA. Why was Irish taxpayers' money used in this fashion? The Minister should institute an inquiry into IDA development and investment in the company.

At many meetings held in recent months I stated that the company had not received an opportunity to prove itself. There is a highly skilled staff available and they can guarantee efficient production. The product is of the highest quality and the world is its oyster with regard to sales. The Minister should give the company the opportunity the people of Kilkenny wish it to be given. The Minister should step in and take over the commitment to the banks so that the company can remain in production. That would justify the confidence placed in it by the IDA two years ago. I do not know what has changed in two years and taxpayers are entitled to be told why £12 million was invested in the company during a recession. Nothing has changed since. The country is still in recession. There is an obligation on the Minister to carry out an inquiry as to why the investment has been wasted. The Minister should give an explanation why taxpayers' money was spent in this fashion.

Mr. Pattison

I sought permission to raise this matter on the Adjournment because I am not satisfied that the Government have done everything possible to save these jobs. I am not satisfied that the Government have investigated all aspects of the matter. The decision to close the factory is wrong and will cause severe hardship. Earlier today the Minister told the House that already he had managed to delay the closure for three months. During that time the plant was examined by prospective buyers and it was only last week that it became clear that there was only a remote chance of such industrialists taking over the plant. If the Government lived in the hope up to last week that they would succeed in attracting a foreign interest to the factory it is an indication of the scant consideration the matter was given by them. The Government should play their part in regard to the factory and fulfil some of their obligations to the workers who have invested heavily in moving to the area. Many of them moved their families from foreign countries and remote areas of Ireland to join the staff. We may hear a lot about what this firm or that bank put into this industry but the fact is that 640 people invested their future in the plant. They made heavy commitments by way of housing and so on to take up jobs there. It is the human factor in this debacle that I am concerned about. It amounts to a human or social earthquake in the Kilkenny region and neighbouring counties of Carlow, Tipperary and Laois.

Why should the most innocent party in this whole affair, the workers who invested most, bear a greater loss than any other investor in the plant? The views of the workers have not been taken into consideration. We must remember that the plant attracted the most experienced and efficient workers in the textile field. Most of those are still in that plant and they feel that their suggestions as to how the present difficulty can be overcome have not been listened to. In fact, only yesterday the representatives of each of the sections of the workforce came to meet the Minister and put their views to him. Up to about a week ago we were all led to believe that there was a good prospect that some outside buyer would take over this mill. The Government and all the other parties should then have entered into very serious discussions with the people who run the mill and have run it from the word go and who know better than anyone else the problems and the solutions to them. We are asking the Government to help out in order to keep the mill going and to give that most important group, the workers concerned, the opportunity to prove themselves. We have had many similar examples in this country. One is the Tuam sugar factory which the all-party Oireachtas committee said was not viable. The Minister of the day——

An Ceann Comhairle

Deputy Pattison, I think you will agree that to give each of the Deputies——

Mr. Pattison

I want to make a point in conclusion. What is wrong with Kilkenny? We saw one example in Tuam, which the all-party committee here said was not viable. The sugar company themselves said it was not viable, yet the Government, rightly so, for social reasons decided to keep Tuam going. We are asking the Minister for the same reason to keep Kilkenny going and give it a chance.

Mr. Gibbons

I would like to thank Deputy Crotty and Deputy Pattison for allowing my colleagues and me to contribute to this debate which concerns us all as Deputies from Carlow and Kilkenny. This is the most serious catastrophe that has befallen Kilkenny city and county and the area generally that we can recall, as Deputy Pattison said, since the famine. The people that it affects most are the workforce and it is worth remembering that the average age of that workforce is 24 years. It is worth remembering too that a great many of them left secure jobs in England and elsewhere to come home to Kilkenny and, in the belief of security in their own city, they invested heavily in housing, schools and other things. Now the world they had envisioned has ceased to exist.

What can one say of the judgment of the authority who told us two short years ago that this was the most modern factory in Ireland? The buliding itself and the machines in that building appeared to the untutored eye to be the last word in modernity. They were the last word in heavy expenditure too on the part of the IDA acting on behalf of the Irish taxpayer, the person who contributed the money. Messrs. Carroll contributed also, as did the Bank of Ireland. What has happened in the meantime is that now we hear the story that this factory is obsolete. Was it wrong in the beginning or has it become wrong since then? There may be an answer but whatever the answer is, the people working there have lost out because their investments in the future have gone. The Government have a very serious obligation to the workforce in Fieldcrest Kilkenny which cannot be shirked. The Government were ready to meet similar obligations sometimes with unorthodox methods, in other areas where there were closures. If ever there was a case for unorthodoxy in a rescue this is the time for it and I hope that such will be attempted by the Government. I could recite a number of cases where special measures were taken to rescue workers who were affected by closures, but I do not wish to recite them. We cannot contemplate the sudden discharge of all these people in a city the size of Kilkenny which has a population of approximately 15,000, a goodly proportion of whom would certainly become disemployed. The secondary employment which comes to the town from other areas has gone, too. I appeal to the Government to get their priorities right, to remember what is important and what will wait. Earlier, before the debate changed, there was reference to another project which could well wait a while. This one cannot wait.

An Ceann Comhairle

Deputy Governey has two and a half minutes and Deputy Aylward will have two and a half minutes.

Mr. Governey

I would like to add my voice to what has been said by my colleagues in the House because I bear with them concern for the workers who have worked in this mill in Kilkenny. Over the years I have had the highest regard for the IDA, but it is now time for the Minister to take a look at this sudden change.

Who was wrong at the time this mill was started in Kilkenny? Why have things changed so drastically in the short time of a year and a half or two years since it was officially opened? With all the efforts that have been made and the people who have shown interest in coming to look at that plant, now we are told that it will close next Monday at the cost of something like 630 jobs in the area not alone of Kilkenny but also of Carlow and the adjoining counties.

In the limited time I have I make this last-minute appeal to the Minister to bring pressure on the Government to ensure that this plant is kept in operation in order that futher efforts may be made to get somebody to rescue the jobs for these workers in the plant, to keep the plant going so that at least it can be sold as a going concern, and to safeguard the livelihood of these people and their families.

Mr. Aylward

I was a member of Kilkenny County Council in 1977 when the application was made by Fieldcrest to start the building of a new plant at Kilkenny. At that time it gave new hope to the people of Kilkenny and many people moved back into the area because they were influenced and encouraged by the fact that the major partner in the company, that is Fieldcrest America, were experts in the towelling world. They were joined by the cream of Irish industry and Irish business, namely, the Bank of Ireland and Carrolls Limited whose reputation is among the best in this country. The IDA were prepared to put forward grants of £12 million. People moved in from various parts of the country. They left secure employment and came to Kilkenny in the hope that their future would be secure. They purchased new houses, taking out mortgages, and they felt that certain of their future.

However, we are now told suddenly that the Fieldcrest factory is no longer viable and that we must lose 650 jobs. I do not doubt for a moment the Minister's sincerity in saying that the present setup is not viable, but, as Deputy Crotty has said, this factory has been operating in a time of depression, it has never had a proper chance and it was in the first instance expected to lose money for a number of years, I think until 1983. Reports have been made on the future of the plant which said that the plant was viable. I fail to understand now why this factory is allowed to close down.

I make a last appeal to the Minister that he recommend to the Government than an emergency plan be put into operation whereby the Government would take the place of the banks to ensure that the plant is kept in operation at least long enough to ensure that a suitable partner is found who will come into that firm to ensure the future of the 650 people involved and of Kilkenny city and county as a whole. It is not alone 650 people but also the trade of Kilkenny city and the spin-off industries which are dependent upon Fieldcrest in Kilkenny. I hope the Minister will put forward some form of emergency plan to ensure that Fieldcrest can be kept in operation.

Minister for Industry and Energy (Mr. Reynolds)

As I said today at Question Time. I very much regret today's announcement by the receiver that the Fieldcrest plant is to cease production. I regret it because of the human problems that are created for the workers, and in that regard I share fully the concern expressed by the Deputies who have spoken. I also regret it because of the setback it represents to the community in Kilkenny and to all who worked hard at local level in the local authorities and elsewhere to create the right environment in which it was hoped that Fieldcrest would have thrived. I regret it too because of the setback it represents to our industrial development and to what we had hoped would be a successful partnership between an outside company and two of our major enterprises, Carroll Industries and the Bank of Ireland.

In my reply today to the Private Notice Question by Deputy Crotty and the subsequent supplementary questions, I made it clear that despite intensive efforts by the IDA it has not been possible in the three months since the receiver was appointed — incidentally, the same day on which I took office — to find a buyer for the assets on a going-concern basis. More than 100 companies were contacted by the IDA, including 12 who had the marketing expertise which is so essential to the success of this venture. Representatives of many of these companies visited the Kilkenny factory but they all concluded that there is not a market for the quantity of goods being produced in Kilkenny. The essence of viability in any industry is to produce a product with the right quality for the market and at the right price. These are the elements which are basic to viability but they are the elements which are totally missing in this operation.

Intensive efforts were made by the IDA at international level to save this plant. We fully realise the tragedy involved in the loss of these jobs but I do not accept that it is a total failure. It is a setback. It is not reasonable to suggest that we should put people to work on a product which is being sold at a substantial loss. Losses to September 1981 amounted to £10 million and have now reached £14 million. That is the size of the problem. The capacity of the plant was geared to 85 per cent and it was producing 60 per cent of top quality products. There was never any question about the production capability of the plant or the workforce. The market could not take the product and nobody was prepared to pay the price for it. That is the essential problem of this plant. This project was put together by Fieldcrest, who had a very well-known name in the US, in partnership with Carroll Industries and the Bank of Ireland. Many people were attracted to set up home in the Kilkenny area and undertake financial obligations when they gained employment in this plant.

I have asked the IDA to consider introducing new product ranges to supplement the towel operation and make the plant viable. It is unreal to suggest that we should pay people to work at producing a product which is not marketable. The plant is very fine but we must secure sustainable employment there.

Everybody had hoped that this partnership would be successful but the necessary market penetration was not realised on the scale needed to sell the vast quantity of goods produced at Kilkenny. This is the fundamental problem and we must now look for a different proposition.

I have been asked to give the background to the setting up of this industry. On 22 July 1975 the proposal was approved by the then Government and on 30 January 1976 a revised grant package was approved. In the spring of 1976 there was continuing uncertainty that the project would go ahead but on 30 April 1976 Fieldcrest advised the Minister and the IDA that they intended to go ahead. On 16 August 1976 Fieldcrest reported that the project was likely to be postponed indefinitely but in that month they sought a joint venture partner. A partnership with Carroll Industries and the Bank of Ireland was put together early in 1977 and the revised grant package was approved by the Government on 24 May 1977.

The projected market penetration was not achieved. To what degree this can be attributed to the recession is an open question. I share the concern of Deputies but they are asking the Government to enter the field of international marketing in order to sell a high-quality product. That is not realistic. It is not physically possible for a Government to become involved in selling towel products in a concentrated European market.

The realistic approach is to look at the project as it is and to try to attract people who will enlarge the product line and establish sustainable employment. This is precisely what the IDA are doing. I am fully aware of the problems and solutions must be found but the Government should not be asked to do what companies who are very experienced in the marketing field cannot do. We must find sustainable employment in the area and I regard this development as no more than a setback.

Reservations have been expressed about the research carried out when the project was proposed. All the information was placed before the Government on the dates I have indicated and they made their decisions. There is always a risk in business and this venture did not succeed. We must come to terms with this failure and replace it with an industry which will provide sustainable employment.