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Dáil Éireann debate -
Wednesday, 18 May 1983

Vol. 342 No. 8

Adjournment Debate. - Future of Athlone Factory.

We appear to be in calmer waters but they are just as troubled in another way. I have never spoken on an Adjournment debate before but I will not take 20 minutes to say what I have to. There is a firm in Athlone called CMI which was previously called Gulf and Western. There were great hopes for the firm when it started. CMI is a subsidiary of a very large American company with its home base in Oklahoma. Hopes were further raised when they announced their plans to go ahead in Athlone and said they hoped to increase the work force.

The work force in CMI has steadily diminished since last autumn and there are now approximately 54 people employed. This company make gear cutting equipment and one of the main reasons for the proposed closure is that stock is piled up in America and has remained so due to the oil glut on the international market. The stock-piling is in Oklahoma and it will take 18 months to clear. As a result, the Athlone plant is to reduce its work force to about six employees. The fears of the work force are very real. I met them, the managing director and representatives of the staff associations and unions in the factory. They are, as the Minister will understand, in common with other workers who face unemployment bewildered and troubled.

The workers have a strong sense of purpose. I know they met the Minister recently and were very pleased with his kind reception of them. They found him very well briefed and aware of what was happening. They have the most up-to-date equipment and machinery in the world for this operation. They have the skills needed. They have put it to me and to the Minister that they are available to do subcontracting work. There are markets available for this product but they must be identified. The workers cannot go out and seek markets but they believe they have a good product. If they could get subcontracting work to tide them over the 18 months it is estimated will clear the Oklahoma pile up, CMI would then be able to use the machinery and the work force could perhaps be expanded so that what started out as a disaster could become a productive plant.

I know the Minister is as eager to help as I am and that he is fully aware of the position. I was born and bred in Athlone. It is an area which has a long tradition of factory work. My father was managing director for a number of years of General Textiles Limited. We lived over the shop so to speak. We grew up in an industrial atmosphere. In its day this cotton industry employed over 980 people. It was the mainstay of the industrial life of the town. However, with the advent of new fibres, particularly synthetics, the factory employed fewer people until now only a few remain. Athlone got replacement industries which are good employers but in the last few months there has been a decline. We had the near disaster of Athlone Apparel which at present is just about there. This shock and the shock of CMI have sent great waves of disquiet through the town. We are reminded of the bad old days when Gentex deployed its work force and practically had to close its doors. As one who grew up in the industrial scene I want to see the jobs stay in Athlone.

The work force of the factory are highly skilled. As I said, they are utterly bewildered particularly some Scottish workers who were only recruited in the last few months and told that their future was bright. It may sound naive to the Minister but the workers think CMI can be viable in the short term if they get subcontracting work. They want the Minister to liaise with other agencies who can go out and find markets for their products. They have been told by the managerial staff that the long-term prognosis for CMI when the Oklahoma pile up disappears is good. However, in the meantime the factory will close and only a skeleton staff of five or six people will be kept for a few months.

I tried to raise this matter by way of Private Notice Question yesterday but it was judged not to be so urgent. Tonight was the best occasion on which to raise it because there are still two weeks of reprieve for this factory. I ask the Minister to please do what he can. They are a highly trained and skilled work force. It is a very modern plant and kept in an immaculate state. Most of the work force are young and have families. They have settled in and around Athlone and many of them have mortgages. We have an industrial work ethic in Athlone. I ask the Minister to please try to do everything he can in the fortnight which is left. Athlone is depending not alone on the retention of what is already in CMI but ultimately on the growth promised for this factory. They have been told that £5 million of special investment was put into the plant and machinery in CMI to enable the company to have, as they have, the most advanced machinery and most highly skilled work force possible. I will be interested to hear what the Minister has to say. The staff and the unions were glad to meet him recently and I hope that his interest in this industry has been maintained.

I wish to add my voice in support of Deputy O'Rourke in asking the Minister to do all he can and to call on all the agencies at his disposal in an effort to put something together in a rescue bid for CMI. I was at the opening of that plant, which I believe is one of the finest engineering plants set up in this country, and it was said at the time that it had the most modern engineering machinery ever to be installed in any factory here. Hopes for it were high at the time and I remember banner headlines in the papers about Deputy Keating — who was Minister of State at the time — saying that this was the big one for Athlone. Gulf and Western came in originally with heavy investment and an international name. The Minister and everybody knows that when you project an employment target for a company like that within the overall plan of the IDA for a region like Athlone, the town is reckoned to be well catered for. As we all know, it did not turn out as everybody expected despite the attraction of Gulf and Western at the time. Subsequently they went and they were taken over by CMI who held out hopes.

We must be realistic and recognise the downturn in the type of activity that is part and parcel of that company's operations. Perhaps the Minister will have more information available to him than we would have as to the real problems of CMI. Is it a question of lack of orders? Is it, as in some other American corporations, excess capacity elsewhere and the international subsidiary offshoot must pay the price for it? The Minister might be able to enlighten us. Is it a question of a financial position? I am not aware that it is. Perhaps the Minister can say if any application was made to Fóir Teoranta, the rescue agency, to come to their help in the short term. Nobody would disagree with the notion that there will be a market for engineering products when the upturn in the economy comes about and that the products, of that plant will be on demand, whether they be the type of products that have been made there or a new range of products. Maybe the market for their products has taken a very serious downturn and perhaps the Minister's agencies in looking at the situation will see serious overstocking. Whether that was in anticipation of orders to be received or bad management — as happens many times in Irish industry — I do not know. Maybe it is not a major problem. Perhaps the Minister can enlighten us.

Like Deputy O'Rourke, I would like to see the situation there maintained because the plant has a contribution to make to the overall economy here, particularly to the midlands and to Athlone. The skills that have been developed there should not be scattered to the four winds or wasted. Perhaps there is an area here for a joint venture with somebody else to ensure that that fine plant is not allowed to close and that the skills in which a big investment was made are not wasted. The families involved face social and economic problems when they get notice that within a couple of weeks they will be out of a job. Unfortunately that is an everyday occurrence in Ireland at the moment. We in this House and the Minister with responsibility in this area should be seen to spare no effort whatsoever in trying to put a rescue package together, whether by a joint venture, financial aid or whatever it is, to keep that fine engineering works in operation. We will need it in future.

I thank the Deputies for raising this matter on the Adjournment and for giving me an opportunity of stating the position as I see it. Like the Deputies, I would like to express my disappointment at the recent announcement by this company of their intention to halt manufacturing operations in Athlone for the moment and to effect a moth-balling situation. My disappointment is all the more keen because of the promise which the establishment of the firm held for Athlone at the beginning of 1982 and for the creation of a substantial number of high quality and much-needed jobs in Athlone.

I know that the disappointment is shared by the promoting company, the CMI Corporation of the United States, who have been forced by unforeseen circumstances into taking this decision. Like many other firms engaged directly or indirectly in the oil exploration business, the CMI Corporation have been seriously affected by the dramatic and unforeseen decline in the number of oil rigs being used. This decline has been brought about by the reduction in oil supplies worldwide. Some indication of the size of this decline can be seen from the fact that in December 1981 when CMI were about to be established, the number of oil rigs in operation in the US was estimated at an all-time high of 4,600 and at that time projections were for even a greater number of oil rigs to be in operation. The fall in oil prices then occurred and by December 1982 the number of US oil rigs in operation had fallen dramatically to 1,900. Some analysts of the industry are forecasting that this could drop even further in 1983 if oil prices remain soft. That will give an indication of the demand for the company's product, which has also fallen dramatically.

The inevitable consequence of the fall in the number of oil rigs in operation has caused serious problems for the oil rig equipment component manufacturers such as the CMI Corporation of the United States who have experienced a loss of $19.8 million in 1982 and who in the same year have had a reduction in their US work force of some 50 per cent, from 2,200 to around 1,100. The experience in Oklahoma of the parent CMI company is fairly representative of that of similar companies in that state. As a result of this fall in the number of oil rigs stocks of components have built up until in the case of the CMI Corporation the parent company stocked at least 12 months' supply at present levels of demand, perhaps even more. It is this development which is at the nub of the present difficulties of CMI Athlone and which have resulted in the short-term working and early redundancies in the company which began in September last year. However, the substantial investment in equipment at Athlone which has been made by CMI, and their recent announcement that they intend retaining some workers to safeguard and maintain the plant so that it will be available for reopening at a later date, represents a very positive indication of the commitment of the United States company to the plant in Athlone. We all share their optimism that it will have a long-term future as soon as the world economy picks up.

One of the disappointing aspects of the latest development is that the engineering workshop facilities at CMI, Athlone, are probably second to none. It had been hoped that the establishment of a company and the project would provide a basis for a further development of our mechanical engineering industry. This is one of the developments which the Telesis report is very anxious to see here. I hope and believe that this can still be achieved and I should like to assure the House that no effort will be spared by the relevant State agencies, such as the Industrial Development Authority or my Department, in seeking a solution to the company's problems.

One such solution would be the availability of sufficient suitable subcontract work. This is a possibility which has been and will continue to be explored by the Industrial Development Authority and by Córas Tráchtála who, working with the IDA and local management, will examine the possibility of subcontract work abroad as well as seeking subcontract work at home. However, the specialised nature of much of the equipment at CMI, and the high level of orders which would be necessary to maintain a viable level of production at the plant, makes the securing of subcontract work a difficult proposition. Based on inquiries to date, there does not seem to be a great possibility of securing a high level of suitable subcontract work from Irish firms, but there is a faint possibility, which the IDA will continue to explore. I have asked them to maintain the closest liaison possible with the work force and the company.

Deputy Cooney consulted with representatives of the company last week and has also met IDA officials recently. He has asked them to set up a task force to seek and gain subcontract work for the company. He has taken a personal interest in this matter and has discussed it with me. The Deputies can be assured that we are very anxious that this company will stay open. While we have to understand the parent company's position, which is primarily a matter of finance, we must understand that the demand for the product is not there at present because of over-stocking in America.

In reply to Deputy Reynolds, the company have approached Fóir Teoranta with regard to a loan and I am sure that when finances are considered by the board of Fóir Teoranta the company will be given a sympathetic hearing.

Have the company approached Fóir Teoranta?

I understand they have. The high stock level in America and the fact that they have lost $19 million constrains the American company also to a large degree. We have a difficult situation but I feel it will be resolved as soon as oil exploration and the world economy pick up. We will use our best endeavours to win some subcontract work for the company, but it is not going to be easy because of the complex nature of the plant. However, all the resources of the IDA and Córas Tráchtála will be used in an effort to get subcontract work for the plant.

Before this dreaded June date comes, is there any guarantee that the factory doors will not close and that even one contract will have been procured?

I appreciate the sentiments of Deputy O'Rourke and I acknowledge that Athlone in recent times has diversified. It used to be deeply dependent on textiles but in recent years it has expanded its industries. I cannot give any guarantees but I will use my personal best endeavours and those of the IDA and Córas Tráchtála to seek subcontract work. With regard to the long term future of the plant, the fact that the company are mothballing, rather than closing the company or putting it into receivership, is a positive indication that they want the plant. Obviously, they have invested a lot of money in it and as soon as oil exploration picks up they will again use the plant.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Thursday, 19 May 1983.

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