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Dáil Éireann debate -
Wednesday, 27 Oct 1982

Vol. 338 No. 1

Adjournment Debate. - Leather Industry Redundancies.

I should like to thank the Chair for giving me permission to raise this matter. I do not know if it is my eyesight or the lighting in the Chamber but something is fading. It is not my imagination. Perhaps, it is a combination of all three.

The lighting is bad.

I am concerned not just about the factory at Portlaw but the factories at Dungarvan and Carrick-on-Suir. Those factories constitute the Irish Leathers Group, the only leather processing industries in the country. Those factories at present employ about 750 people but two years ago they employed 1,400. There was a fourth factory in the group located at Gorey, County Wexford, but, due to problems in the leather industry, it closed. I should like to add that while an advance factory was erected in that town since, no industry has been located there although there is a considerable unemployment problem in Gorey. Last week there was an announcement to the effect that there will be 200 further redundancies in those leather factories. We were told that if a rationalisation programme is implemented only 550 people will be employed in the leather industry. That represents a considerable drop in employment in three provincial towns. The effects will be devastating, as happened in Gorey.

When the Quigley Magnesite Division closed in Dungarvan three month ago there was a loss of 140 jobs and now 97 other jobs are threatened in the leather group factory there. One can well appreciate the magnitude of the problem in that town. At present 164 people are employed in the Dungarvan factory but it is intended to reduce that workforce to 67. In Portlaw 253 people are employed in the leather industry but it is intended to make 30 of those redundant. It should be remembered that this is the only major manufacturing industry of any substance in Portlaw. Two years ago more than 400 people were employed in that factory and one can visualise the devastating effect a further reduction in the workforce will have. In Carrick-on-Suir 236 people are employed in the leather factory but it is intended to reduce that workforce by 69. This is a sad commentary on the employment prospects for the towns I mentioned.

The leather factory in Dungarvan was originally founded in 1936 and for many years it was the only industry in the town. Fortunately, a number of other industries were established since but some have closed. Small towns cannot absorb that type of situation. I am asking the Minister to make every effort to rectify the present unsatisfactory situation in the tanning industry, an indigenous industry based on agriculture. It should be supported and made viable. There is little prospect of improving the unemployment situation unless we retain indigenous industries such as the leather manufacturing industry.

We are exporting a considerable amount of the raw material for that industry, hides, and it would be a sorry day if we increased such exports, thereby reducing the number of people engaged in the tanning industry.

The Workers Party have made great play of the need to process our raw materials here but it is regrettable that the Members of that party have not got involved in this debate, as yet. Their plan lays great stress on the need to process our raw materials. We all agree that that should be done and I would hate to see any further erosion of the tanning industry. In this connection I should like to quote from the National Economic Plan 1983-87, The Way Forward, which we were debating earlier today. In the section dealing with agriculture the plan states:

In addition to the beneficial effects of output growth on the incomes and living standards of the agricultural community, benefits will accrue also to those industries involved in the processing and marketing of agricultural raw materials. The increased flow of raw materials to the agriculture-based industries will contribute to improved capacity utilisation in many industries currently experiencing supply shortfalls. Further, these developments will be instrumental in ensuring greater stability of employment for the many thousands of industrial workers employed in these industries. Moreover, the recently published IDA strategy for the development of the agriculture-based industries places particular emphasis on higher added-value products.

The reduction of the number of employees in agriculture-based industries is a direct contradiction of what is outlined in The Way Forward. Many of the problems experienced by our leather industry are due to imports from other countries, not entirely from third countries but also countries within the EEC. We get a tremendous influx in the EEC of finished leather goods such as shoes and handbags from Italy and Spain, still considered to be a third country. It is obvious that those countries can compete on better terms because they have reached a more advanced stage of technology. Tanning is a highly technical industry and it is obvious that the technology of the industries in Italy and Spain is far superior to ours. Surely the IDA should address themselves to that problem with haste. It is not good enough that the competition is superior simply that our technology is inferior. I understood that we had reached a stage in our development when we could compete within reason but, unfortunately, that is not the case. Our difficulties arise because our methods are outdated and outmoded. They need to be improved in the tanning industry and other indigenous industries. We need a greater technical know-how.

I understand Fóir Teoranta are endeavouring to assist the industry. To date they have pumped £0.6 million into the group and I understand it is their intention to inject a further £1.4 million. Those involved in the industry have told me that £2 million is not sufficient to put the leather manufacturing industry back on a sound competitive footing. To use a cliché, it is too little too late. More money is needed if the industry is to be brought up to a level where it can compete with Italy and Spain. Of course, the original problem goes back further, to the importation of cheap leather goods and unfinished leather from South America but immediately our problem is to be able to compete with finished goods from countries such as Italy and Spain. If we are to take a long-term view more money must be given to the industry. Some people may say that a considerable amount of money is being made available bearing in mind the number of jobs involved. A workforce of 1,400 is considerable but 550 is not. If it is allowed to slide from 750 to 550 we may experience a further reduction unless the industry is put on a sound footing.

The Dungarvan factory will now have only 67 employees if those redundancies take place. A few years ago the factory employed 250. Over 400 were employed at Portlaw. A factory employing 67 people can hardly be a viable unit for a lengthy period. People in Dungarvan believe this factory is being run down and that eventually it will close. I oppose that most vehemently. The Minister must bear in mind that the factories must be kept open if the level of employment is to be retained and improved. We fear that the reduction in the number employed is the first step towards closure.

There has been an announcement that three members of Fóir Teoranta will be put on the board of Irish Leathers with a view to overseeing the work of the group. Have those people got the expertise which is so badly needed? We would not have any complaint if we were sure that the people going on to the board were experts in the leather industry. We feel that those people may be there only to monitor the operation and not rectify the problem at the root.

Would the Minister see that while the investment of £2 million is worthwhile, that greater investment is made and that everything possible is done to re-structure the industry? There is not much point in putting people on to the board of Irish Leathers if they have not anything positive to contribute in a technical sense. I hope the Fóir Teoranta directors can contribute in regard to technology and expert advice. There is a limited amount of that expertise in the country and it is possible we may have to import it. We should do this if it is necessary in order to increase employment.

I am worried if there are to be redundancies that the people working in this industry for 30 and 40 years will get very little redundancy money. It appears they will barely get the statutory limit which, as the Minister knows, is very little. A man with 40 years service will only get £5,000. If the redundancies take place people in their forties and fifties will be very badly hit. If redundancies have to take place I would ask the Minister to ensure that the redundancy payments are increased.

Crucial talks have to take place in relation to this matter. I have been very mild in my comments as we all want to be helpful, but we can see an industry based on native raw materials in great trouble. I ask the Minister to take an interest in this matter and to see that employment is retained and that the Fóir Teoranta investment will be sufficient to give the industry a sound, long-term future.

I wish to express my horror at the proposal by Irish Leathers to make 200 people redundant. It affects Dungarvan, which has already great unemployment with the closure of Quigley Magnesite. This also affects Portlaw and Carrick-on-Suir in County Tipperary. The employment in the Irish Leathers group is going down from 750 to 500. That is another blow to the industry in the area, particularly Waterford. The number unemployed in the city and county is now approaching 4,000.

With regard to the Irish Leathers group, these redundancies must be regarded as short-term because a growth in output and a revival of markets are expected according to various papers produced by the Government and other authorities. I believe the excellent products produced by Irish Leathers will be in demand again. The problems should be regarded as short term ones. I am not fully informed about the rescue package whether it is by the rescue section of the IDA and Fóir Teoranta or if there is any IDA input. There should be an IDA input. The fact that the Minister for Industry and Energy is in the House tonight is an indication of the fact that he is responsible. I expect an input from the IDA rescue section. I hope the company will not be in danger.

The question of imports from third countries especially should be taken into account and where there is evidence of dumping of finished or semi-finished goods the Minister should make application to the EEC Commission in relation to anti-dumping to have those products excluded from the European market.

I want to add my voice to what has been said by my colleagues from the Waterford constituency. While I appreciate that the Irish Leathers group have their main business in Waterford they have a plant in Carrick-on-Suir in South Tipperary. There are indications that 69 of the workforce of 236 are about to be made redundant. I have been approached by many of the people who have given very long service to this industry and who are very concerned at the prospects of unemployment. I urge the Minister to have an in-depth investigation made into this industry.

When an industry based on agricultural raw materials is in jeopardy there is something radically wrong with that industry. I can appreciate an industry dependent on imported raw materials being in difficulties. If we are to have industries based on agriculture this is an instance where the Minister can show us that such industries can thrive. I urge the Minister to heed the advice given by Deputy Deasy and Deputy Collins to save the jobs of the people in this industry which are now threatened. I urge him, if possible, to increase the aid from Fóir Teoranta and, in the short term, to ensure that these imports which are naturally affecting these industries are curtailed and, in fact, stopped. I thank the Ceann Comhairle for this opportunity and I urge the Minister to do his very best to save these jobs.

First, may I thank the Deputies opposite for their very constructive approach to the problem of one of our native long-standing industries based on indigenous raw material. It is a matter that I can assure Deputies will have my personal attention as regards trying to put things right there. It is a classic example of a traditional industry that prospered under protective barriers. It came under pressure naturally but did not respond to calls from various Governments over the years to prepare for free trade. There was a lowering of tariff barriers in the 1960s and on into the '70s when we joined EEC. I think the tariff barriers totally disappeared in late 1977 or early in 1978. If we are to prosper in the future we will have to see more strengthening of industries based on indigenous raw materials. I share Deputy Deasy's view regarding technical knowledge, which is certainly scarce in this country. We have, however, a technical expert advising Fóir Teoranta on the situation at present and his services, I believe will be needed even after restructuring. Certainly, expertise in relation to the modern technology in this industry is not freely available in this country but I agree that if it has to be imported, that should be done since this is an industry that should be maintained.

Unfortunately, the company have not moved with the times. This is one of the many weaknesses apparent in Irish industries and it is very apparent in Irish Leathers in their lack of marketing and development of new products such as has taken place in many other industries that have survived these difficult times.

I very much regret the 200 redundancies approximately recently announced by Irish Leathers Ltd. I am very conscious of the adverse impact which these redundancies will have on the workers affected and on the areas, Dungarvan, Portlaw and Carrick-on-Suir, where the redundancies will take place. The decision to implement the redundancies has been taken by Irish Leathers mainly because of a serious downturn in the UK market for its products and the need to rationalise its production activities with a view to ensuring its survival.

The problems faced by Irish Leathers are not new, as I am sure all Deputies opposite are well aware. The main market for the group's output, the UK, has been declining since 1978. This market is principally in the area of footwear manufacture and the decline and closures in this industry in the UK are reflected in the very depressed demand for leather. I should stress that closures, redundancies, short term working and a build up of stocks are features of the footwear industry in most if not all members of the European Community including the UK whose market has, as I have said, been accounting for a significant portion of Irish Leathers' output. In fact the EEC Commission reported some time ago that the total Community production of footwear for 1980 was almost 8 per cent below the level of production in 1979. This fall, which as far as can be ascertained is continuing, is attributed to the recession which has depressed demand for footwear and also to increased EEC imports from third countries, as mentioned by Deputies opposite.

Tomorrow I meet the Commissioner who will be in Dublin to discuss many problems arising in this and other industries and to see what action we can take and what remedies there are for the very serious inroads made into the European, UK and Irish markets by other foreign products as well as the one we are discussing tonight.

The implications and consequences of these difficulties are not confined to the Irish tanning industry. In the UK a number of tanning companies have closed down completely and there have been closures among the remainder of some individual tanneries.

Deputies will be aware that the Irish Leathers Group was formed through the merger of a group of ten operators over the years. The group controls all tanning operations in Ireland. It may be recalled that following the first serious indication of a downturn in the market in 1978 the tannery in Gorey was closed, as Deputy Deasy mentioned, as part of a rationalisation programme. In my visits to Dungarvan and Gorey various views were expressed as to whether that was a good management decision. The workers have a different view from some of those expressed by management in relation to that closure.

The group has been making losses for some years and is now faced with very serious financial problems. In its published results for 1980 and 1981 the group made losses, before extraordinary items, of £190,000 and £114,000 respectively. In the first half of this year turnover fell by over £1 million as compared with the same period in 1981 and losses of almost £1.8 million were recorded. The emergence of this serious financial situation has led the group to review its position and it has sought the assistance of Fóir Teoranta. While discussions between the group and Fóir Teoranta are not finalised there is board agreement that substantial assistance will be made available to the group by the State agency.

The group's rationalisation programme will affect its three tanneries at Carrick-on-Suir. Dungarvan and Portlaw. The group's present estimate of the level of redundancies required to secure the continued survival of the three tanneries is in the region of 200. The rationalisation programme is not simply a question of redundancies, although that understandably is the element with most public impact, but it also involves reorganisation. It is understood that in connection with this rationalisation programme the group will be applying to the IDA for grant assistance and I can assure Deputies their application will be given full and sympathetic consideration. I have already expressed my regret that such job losses will occur but I hope that the total package of State aid and rationalisation will enable the group to fulfill its intention of keeping all these tanneries in operation in the future.

The question of Fóir Teoranta is a matter for another Minister but it is co-ordinated by my Department in relation to the rescue of many of these companies at present. Deputies may be assured that the pending reorganisation and getting the company back on a proper footing and providing whatever expertise can be found to remedy the situation is the way it should go and there is a full commitment to it so far as I am concerned. Deputies will probably be aware that when I was in Dungarvan I had a meeting with them to try to solve their problems because I regard this as one industry that should be kept going in Ireland, but we also need an input and commitment from the company. The State cannot do everything for everybody. The problems have been there a long time and personally I think an effort should have been made earlier to put matters right in this company.

We appreciate the Minister's assistance but £2 million may not be enough.

They will not be left short for the sake of putting the company right.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Thursday, 28 October 1982.

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