I move: "That the Bill be now read a Second Time."
I should like to apologise for the absence of the Minister who is out of the country on official business. At the outset I will, if I may, take the opportunity to congratulate you, Sir, on your recent elevation to the position which I am sure you will fill very well.
The purpose of the Bill is to give Kilkenny Design Workshops Ltd. (KDW) statutory backing to provide for an increase in their ordinary share capital from £100 to £1 million and for the taking up by the Minister for Finance of shares in the company.
KDW, who were established in 1963, as a company limited by shares with a memorandum and articles of association, have primary responsibility for the promotion, assistance and development of Irish industrial design and the improvement of design standards. Prior to the establishment of KDW responsibility for industrial design resided first with the Arts Council and then with Córas Tráchtála. CTT still retain responsibility for the marketing and design needs of exporters. At present 130 people are employed, 82 in the workshops and 48 in the Dublin and Kilkenny shops. The company are financed by an annual grant-in-aid from my Department and by income from design fees and royalties.
KDW were set up in a very practical way with workshops, technicians and craftsmen and they have done excellent work for Irish industry, the consumer and the image of Ireland overseas. Their original charter was to help improve standards of design in the craft and craft-based industries and to stimulate public interest in good design. KDW have proved themselves so flexible and so responsive to industry's needs that what was a craft centre originally is now a well-known and respected multi-disciplinary design agency.
Kilkenny Design can now respond quickly and effectively to new demands from more advanced manufacturing concerns by supplying expertise in the design of high-value products, whether in metals or plastics or in more traditional materials. They also supply expertise in new processes or in adaptations of older ones. Most recently they have become very largely concerned, devoting now as much as 60 per cent of their resources, with work for the high-technology industries: in electronics, optics, telephone equipment and engineering products.
The designers work very closely with engineers and technologists in a way that shows that industrial design is a vital and integral discipline in product development by relating technology to the available means of production and, no less importantly, the product to its ultimate user. Good design is critical to the competitiveness of Irish goods both on the home and export markets and we must be able, now more so than ever, to produce and sell goods and services which are competitive in price and quality with those of other nations.
KDW's responsibilities fall into three areas. The first is the promotion of design consciousness at industry level and the provision of advice and practical design consultancy services to which I have already referred. These design services are dependent on and bound up with the technical services provided — model and prototype workshops, technical and research facilities and the design management and field services team which is the company's main activity, helping manufacturers to adjust to new markets and new demand, matching existing production capacities and capabilities to new ideas.
The second function is to foster and improve the special skills in industrial design which until very recently we have found difficult to provide for in our educational system. It is Kilkenny's job to articulate the needs of industry in matters of design to the responsible educational authorities. In the long term this could be the most important function of all.
Kilkenny Design have played a significant part in the recent introduction of degree courses in design. The company's active role in training begins in fact with young graduates after or near qualification, because Kilkenny is not itself an educational institution. It enables gifted young designers to enlarge their horizons and gain experience not available in Ireland by financing and administering their designer development awards.
Side by side with this scheme is the designer training programme which is partly financed by the European Social Fund. This brings young qualified designers to the workshops for periods of up to six months to work on real commissions alongside experienced designers. In combination these schemes provide precisely that goal-oriented and highly selective training which makes the difference between a gifted graduate and a professional designer who understands his responsibilities to the industrial client, the production engineer, the worker and the consumer.
The third party of the Kilkenny charter is to make the public more aware of the value of good design. During its early years KDW was very conscious that while Irish products were being vigorously promoted abroad there was nowhere in Ireland where the consumer, visitor or store buyer might see a representative range of the best of Irish design and workmanship in terms of every day products. It was this need that led in 1976 to the opening in Nassau Street, Dublin, of a retail exhibition centre — The Kilkenny Shop. This centre, together with the smaller retail operation in Kilkenny, provides a show place for the best consumer products designed and made in Ireland.
Many small industries depend on the KDW "shelf space" for initial launch of products. With its exhibitions, promotions and day to day trading the shop has made an impact upon public taste and at the same time has served the manufacturers well, both directly by opening up new markets and encouraging enterprise in supplying them, and indirectly by the marketing and commercial experience that has been added to the skills of Kilkenny Design itself.
The development has had another effect, The Kilkenny Shop has become the first stopping place for many visitors to Ireland. It has become a place where commercial buyers and consumers, many of them tourists, can be brought in the certainty that what they see will impress them. It has been called a national shop-window, and I do not think that is overstating the case. The Dublin shop has grown to such an extent that in 1981 turnover reached £1.3 million with over half a million people visiting the premises.
There is no doubt that the operation of the Dublin shop merits support. The retail operation was financed entirely by borrowings. The rise in interest rates on capital used for start-up and fittings together with a substantial increase in sales necessitating increased working capital and stock levels, have combined to produce a situation whereby a cumulative operating surplus after depreciation of £105,000 has been turned into a cumulative deficit of £187,000. It is estimated that an equity injection of £400,000 at the end of 1982 would produce a trading surplus after depreciation and interest of £70,000 in 1983 and thereby would reduce the cumulative deficit to £117,000.
Butler House comprising two Georgian buildings adjoining the workshops in Kilkenny is KDW's headquarters. It was purchased by KDW in 1971 and £370,000 was spent on renovation prior to the official opening in 1977. The main objective of Butler House is to bridge the gap between the academic training of designers at Kilkenny. While Butler House is self-financing on a day-to-day basis, an outstanding debt of £100,000 remains from the cost of renovations during the seventies.
At the request of my Department KDW's proposal that equity be injected into the company was examined by management consultants. They advised that a financial restructuring of KDW was justified from an economic viewpoint and recommended the injection of £400,000 equity into the retail operation and £100,000 equity into the design operation to repay the Butler House debt. The previous Government accepted the consultants' recommendations and made provision for a capital sum of £500,000 in this year's estimates. As a general principle I should say that there is an urgent need to avoid injecting share capital into State companies which do not remunerate such capital at levels generally applicable in the commercial sectors.
The share capital now proposed is £1 million, half of which would be taken up immediately by the Minister for Finance. This would permit the issue of shares to reduce existing borrowings by the Dublin shop — £400,000 — and the repayment of loans outstanding on the conversion of Butler House — £100,000. This would leave a balance of £500,000 which could be taken up at some future date to finance further capital development. The Dublin shop would, were it not burdened by the loan and interest payments associated with its financing, have been making within two or three years of its opening a contribution to the design and product development work that goes on in Kilkenny, helping to give the company the greater scope that it needs to meet the ever-changing demands of industry.
I commend this Bill to the House.
