I move:
That Dáil Éireann calls on the Government to instruct the IDA to participate in a joint venture with interested parties including existing management and workers, on a majority equity basis if necessary, to reopen the Fieldcrest factory, Kilkenny, now in receivership and secure the maximum level of employment consistent with long-term viability.
On a motion such as this there is a danger that some Members might get the impression that I am talking about just another closure like the many recent factory closures throughout the country. Therefore I will show complete justification for putting down a motion like this to give the House an opportunity to hear exactly what is involved and to take a decision on it.
The Fieldcrest factory is not a white elephant or a lame duck. It is the most modern and best equipped factory of its kind in the world, the biggest ever built in Ireland. It stands on a 30-acre site, 12 acres of which are under buildings. The perimeter wall is one mile in length and the factory has the potential to employ 1,200 people. It uses one million gallons of water daily.
I have given these figures to illustrate the magnitude of the undertaking and therefore the importance of the motion, and in doing that I stress again what Fieldcrest is not: it is not an industry which often has been described as a lame duck or a white elephant. Fieldcrest is neither.
The Minister for Industry, Commerce and Tourism at the time, Deputy O'Malley, at the official opening in September 1980, less than two years ago, is reported in the Kilkenny People as having said that Fieldcrest was the biggest factory ever built in Ireland, 5,000 square feet larger than the Limerick factory which the Minister said should remain nameless. Of course he was talking about Ferenka. The circumstances of the two factories are not in any way similar. I will quote from the same paper a comment made on that occasion by Mr. William Battle, President of that company at that time:
My technicians in the United States tell me that this mill is consistently producing the highest quality yarn we have ever seen and that already Terry Towels of quite excellent quality are being produced.
That comment was made by a man of vast experience in that kind of work. Fieldcrest is the most modern towel plant in Europe. The product was of the highest quality, with potential annual sales of £30 million. Though the sales figures did not reach the hoped for level, they showed a consistent increase in the sales graph in the two-and-a-half years up to the time the receiver was called in. The factory employed a highly skilled workforce and AnCO had spent approximately £1 million training them. It had an extremely highly skilled management team, and productivity was equal to the best plant in Europe, as acknowledged by plant owners throughout Europe who came to examine Fieldcrest in recent months.
The factory had an excellent industrial relations record from the beginning. The most striking feature was the number of young people employed, the average age of the 640 employees being 24 years. The factory indirectly supported a number of service industries not only in Kilkenny but in the neighbouring counties. It is not possible to give an accurate figure of the number of people in the service industries in the region who will lose their jobs as a result of this closure but it has been estimated at 300 or 400. The factory contributed enormously to the economy of the region. All this indicates that I am fully justified in seeking the time of the House to get a decision on this motion. The effect of the closure is the human tragedy that 640 people have lost their employment.
In carrying out some research in preparation for this debate I came across a statement made by Deputy Gene Fitzgerald in 1977 when in Opposition. At that time the European Investment Bank had refused a loan for this venture and Deputy Fitzgerald, Fianna Fáil spokesman on Labour, said the European Investment Bank had completely overlooked the social implications of their decision. Of course, the same can be said today of the Government. In allowing Fieldcrest to close the Government have overlooked the social implications of their decision. We are discussing the loss of 640 jobs at a time when the number on the live register is rapidly approaching 150,000, at a time when even prior to the closure County Kilkenny had an unemployment figure of 2,393. That was the situation in February 1982 compared to the situation that existed in December 1979 when 1,111 were unemployed in the county. Between December 1979 and February 1982 the unemployment figure in the county rose by more than 100 per cent. In June 1982 we could ill afford to add another 600 to that figure. It should be pointed out that in the same period the unemployment figure in Kilkenny city went up by 130 per cent.
We must bear in mind the many hardships created by this closure, particularly those in relation to youth unemployment. Hardships also exist for those who have expensive mortgages on houses. One of the many redundant workers who called to me last week told me that as a married man with one child he qualified for £59 per week unemployment benefit but his mortgage was £65 per week. He asked me what he would do but I could not offer him any help on the matter. He is one of the many who face problems in relation to a mortgage. Other workers received State grants to pull out of jobs in England and return to Kilkenny. The State paid them to return to Ireland and the question is, has the State a responsibility for those people?
It is difficult to describe the type of human devastation that has taken place as a result of the closure. In some cases workers gave up secure employment to return to Kilkenny. They were attracted by the lavish advertising campaign carried out by the company, aided and abetted by the State through the National Manpower Service. Those workers were also offered incentives in the form of grants to move residence. They now find that their world has been torn apart and nothing is being done about it.
The question being asked is, what can be done about this matter? Our motion seeks to direct the Government to do something. They have the power under the Industrial Development Act, 1977. For the enlightenment of the House I should like to quote what the then Minister for Industry, Commerce and Tourism, Deputy O'Malley, said, on 2 November 1977 as reported in volume 301, column 156, of the Official Report:
The present Bill includes a provision which will extend the shareholding powers of the IDA. Under the Industrial Development Act, 1969, the IDA are empowered to take shares in certain industrial undertakings. Equity participation by the IDA can be an important and valuable part of the overall financial package put together to assist an industrial undertaking, and it can provide the State with a share in profitable new enterprises and thus secure a return on capital invested in industrial development.
Later in that debate the Minister said:
In order to remove the doubt regarding the authority's power to take majority shareholdings and to ensure that it has adequate flexibility to operate successfully in the increasingly sophisticated financial and industrial environment, I propose to extend the authority's shareholding powers to enable it to take shareholdings of up to 100 per cent in suitable industrial undertakings, or in companies participating in the ownership, control or management of suitable industrial undertakings, and to enable it to form or participate with others in the formation of new industrial companies.
I suggest that that is what should be done now. Some time ago the receiver indicated that more than 70 per cent of the output of Fieldcrest went to customers carrying their own labels. Those companies have indicated a willingness — at least they did before the Government allowed the plant to close — to continue business with a new company provided delivery, price and quality continued as they were. We are aware that the IDA approached many major textile concerns presumably on the basis of a complete takeover by those interests. That had little hope of success for many reasons, one being that most of those approached were directly in competition with the Kilkenny plant. It was in their commercial and business interest that Kilkenny would not continue to operate. It was all the more difficult to get a complete takeover of the plant when the Irish interests who had 49 per cent of the share capital and had carried the risk burden of the operation were no longer interested. The minimum package the IDA should have been instructed to offer was that they would take 49 per cent of the equity in a new company. Alternatively, the IDA could initially take a major shareholding with an agreement progressively to reduce this to 49 per cent once breakeven point had been reached in production. This would ensure that an international company would not be put off by the State having an initial major shareholding through the IDA.
No one is suggesting that the State should take over white elephants or lame ducks. Neither do I suggest this. We are all convinced, as are management and workers, that given the right marketing approach which of necessity would have to be under the control of Irish management, the plant could be viable in the long run. The company if re-constituted may not provide 630 jobs or it may well exceed that number. The point is that a £30 million investment should not be written off. Neither should the livelihood of 640 workers and their families be written off. Those jobs should not be snatched away without any attempt such as what I am suggesting being made. The unemployment situation could not be worse. When there is an investment of over £30 million involved surely what I am proposing should be attempted.
I appeal to the Minister to instruct the IDA to do this. It would cost about £12 million. Where will the money come from? The IDA allocation for 1982 should be able to cover it because we all know that new projects are very thin on the ground. Taking the ongoing commitments into account there should be extra resources available and, if necessary, I am sure the House would support a Supplementary Estimate to cover whatever amount was required and provide whatever working capital was necessary to get a new company going.
On behalf of the Labour Party, I would fully support any Supplementary Estimate to provide money for this company. However, I feel it could be done from the existing IDA allocation. We must remember the cost to the State: extra social welfare payments, loss of taxation and social welfare contributions. That would amount to £3 million per year or thereabouts. If a successful partnership can operate the plant for less than the amount we might provide, the Exchequer would be better off.
I acknowledge the efforts of the IDA who have tried everything to get a buyer for the plant as a going concern. It was almost an impossible task given that their brief was to sell it as a going concern. That is why I feel what I propose in the motion would be more practical and might meet with more success than has met the case to date. I ask the Minister to give the IDA the go-ahead with the necessary financial backing to put an attractive package together which will involve the State, management and workers. The State should take a majority share in the initial risk because there is no doubt about the ability of the plant to prove itself if given a reasonable chance. No one is convinced that it has been given a reasonable opportunity. This could be described as a desperate situation and, as such, every possible measure should be taken to maintain employment. With the right partnership and a majority holding by the State, I am convinced that the plant could be viable and give steady, good employment and contribute enormously to the economy.
The provision in the 1977 legislation made it necessary for the Minister to give his approval to IDA involvement by way of major equity holding. The Minister might say it was not the intention to use this provision for restructuring companies such as in the case of Fieldcrest but it makes sense to maintain employment as well as create new employment. The provision was clearly to create new employment but what is the point if, as is happening, job losses are exceeding the number of new jobs created? It is about time these provisions were used to maintain employment as well as creating new employment.
My party propose that a national development corporation be established to promote joint ventures with the private sector. It was never envisaged that this would be a home for lame ducks or white elephants. Neither do I suggest the IDA or the Government should artifically keep Fieldcrest open only to close it again in a few years' time. That would be an insult to the workers and a waste of public money. I am asking the Minister to give the IDA the necessary direction to go into partnership with a suitable company and, if necessary, with the existing management and workers make an arrangement which could effectively utilise the excellent plant and modern machinery in this factory. There is a highly qualified and skilled management and work force. They should be given an opportunity to create a new life for themselves. The workers and management are willing to make sacrifices to achieve this. The Minister must know that in the difficult months since the receiver went into the factory, the workers and management suffered much by way of making sacrifices, short time working and so on but they continued the operation in a way that impressed everyone who visited the factory. Unfortunately, though, the workers placed enough trust in the Minister and in the Government to have expected more from them. Perhaps I must share some responsibility in this regard also because I, too, shared that confidence. But we did have some justification for believing that the Minister would have his contingency plan ready for the time when the banks would pull out, and that the Government would be in a position to ensure the continuance of employment there until an alternative package was put together. On a number of occasions of deputations to the Minister, he seemed confident or hopeful——