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Dáil Éireann debate -
Wednesday, 30 May 1984

Vol. 350 No. 13

Adjournment Debate. - Loughrea (Galway) Engineering Firm.

Deputy N. Treacy has been given permission to raise on the Adjournment the serious financial position of T & D Engineering Loughrea, County Galway, which is forcing the company out of business. He has 20 minutes.

A Cheann Comhairle, I want to thank you for giving me an opportunity to raise this matter. I wish to share my time with my constituency colleague, Deputy Kitt. I should also like to thank the Minister of State for coming in to hear the debate and reply to it. T & D Engineering were founded in April 1972 at Tynagh, Loughrea, County Galway. They were born out of the necessity to manufacture ancillary equipment and to service the mining industry in the country in general but in particular at Irish Base Metals Limited in Loughrea. At that time Tynagh was the biggest lead and zinc mine in Europe. It was more popularly known as Tynagh Mines. When the company were set up they employed six people on a permanent basis. They made steady progress and employed 26 skilled workers on a permanent basis at one stage until the present crisis hit them.

The fact that most of the company's revenue came from the mining industry put them into a decline with the closing down of the local Tynagh Mines and the scaling down of mining and exploration activities throughout the country over the past few years. The company are resilient. They were not prepared to close down. They sought new products and explored new markets. These products include comealong cable clamps, earthing equipment, stringing wheels, bus stop signs, cable anchors, loading ramps, locomotive caps and others. The company are the sole suppliers of comealong clamps and special earthing equipment to the ESB, one of our most efficient semi-State bodies.

In view of the declining mining operations throughout the country the company took a hard look at the situation and saw that there was an opportunity for import substitution. We are all aware that with the present state of the economy and the high rate of imports, our one hope is to diversify and try to effect import substitution. That is exactly what the company did. They also supply similar equipment to the British Electrical Board. They won these orders after assessment by the British Institute of Research and Standards who recommended this company's products to the British Electrical Board against a Finnish manufacturing competitor. This shows the quality of their product range and the skills available within the company.

In an effort to explore the market place and to see what products could be substituted from an import point of view, they spent well over £100,000 in research, development and training. They have had a cash flow difficulty over the past three years since the closing down of Tynagh Mines. We accept that they are in difficult financial circumstances and that they have financial liabilities to the State. Their debt to the State was caused by the fact that they used their own liquid cash in research, training and development. They have a tax liability and other liabilities to the State.

They got two grants from the IDA of slightly in excess of £17,000 for training and development. The company spent much more than that. They have done their best to survive. They are committed to the market place. They have their range of products. They are committed to their workforce. As yet they have not explored mainland Europe, the Middle East or the Far East. From the information available it seems that there is only one competitor in Finland supplying these markets so there would be a major potential for the company in these areas if they had the resources to explore those markets.

Recently the IDA got a report about these products from Córas Tráchtála who did an amount of investigation into them. Córas Tráchtála have projected that this company's products would make a major impact in the market place from 1984 onwards provided they could manufacture a sufficient amount of them and get them sold overseas. The company have not got the liquid resources; they have not got the personnel in the marketplace; they have not got the money to manufacture them in big numbers; and consequently they cannot make progress.

Last December they made an application to Fóir Teoranta for a working capital loan of £50,000. That application was rejected in March of this year. The company could wind down their operations and go into liquidation, but they are not prepared to do that. They are committed to their liabilities, to their products and to the country. They want to survive in business. They want a fair opportunity to do so. Their bankers are satisfied with the commitment of the company, have supported them and will support them still further if the State can come up with the necessary capital through the IDA and Fóir Teroanta by way of grants and loans to make the company viable.

The company had to lay off some of their workers recently. At present they employ seven people, a drop of 20 compared to their maximum period of employment. However, only last week the company secured a contract from Canada worth £40,000 and as a result hope to recruit a further five people next week. That is an indication of the resilience and commitment of the company. It is worth noting that the company have strong assets, two buildings, a workshop, a store and a two-acre site in the heart of south Galway at Tynagh. It is close to the Tynagh Mines which lies derelict at present. Outstanding mining and mechanical equipment lies idle in those mines. The company under discussion have a particular expertise for dealing with such equipment. Looking to the future it would be wise if we tried to attract an industry to Tynagh Mines to replace Irish Base Metals Ltd., a concern which proved very successful for 20 years. T & D Engineering could make a major contribution to the success of a new industry there.

Company stocks, in raw materials and finished products, are worth in the region of £85,000. The equipment and machines at depreciated value are worth £75,000. One can see from that that quite an amount of capital was invested by the directors in the company over the years.

Deputy Kitt and I are very perturbed about this matter because the southern part of our constituency is regarded as a black area as far as unemployment is concerned. The House will be aware, following the debate earlier this evening, of the problems that arise in the northern part of the constituency due to the decision to postpone the construction of the briquette factory at Ballyforan. Unemployment is very high throughout the constituency. I should like to put on record the number of companies in the southern part of the constituency located within five miles of T & D Engineering that closed down in the last five years. They are, Irish Base Metals Limited, Tynagh; Milihem Minerals Limited, Gurtymadden, an ancilliary company of Irish Base Metals Ltd. which manufactured a special product for the oil industry; Wrangler Limited, Loughrea; Hohner Panoramic (Ireland) Limited, the only German company that manufactured musical instruments outside Germany; Loughrea Precision Engineering Limited which closed down a few months ago and is at present in liquidation; Loughrea Cottons Limited, a traditional industry which was the biggest in the town; Westphalian Carpet Yarn Spinning Company, which replaced the former but closed down after two years in operation and, most recently, PMPA Garage (Loughrea) Limited.

In the Loughrea-Tynagh area more than 1,000 people are unemployed. The company under discussion could liquidate tomorrow morning and the State would have to settle for what would be left after the assets of the company have been disposed of. However, the company are committed to their liabilities and to the market place. There is no doubt but that the company have potential at home and on the foreign markets. They have succeeded in getting a grip on the English market and are involved with one of our most successful semi-State companies. They have a skilled workforce that no other company of their size possess.

We accept that the company have liabilities but we appeal to the Government, the Minister responsible and the Minister of State who is well aware of the problems industries face, to come to the aid of the company. It is important that the Government recognise the contribution the company made to import substitution and that the opportunities exist for it to expand and develop. In the next three years if the financial resources are made available by way of loans from Fóir Teoranta and a State grant through the IDA the company can be made viable and make a major contribution to the economy of that area. I appeal to the Minister to give us a commitment to come to the aid of this resilient company.

I should like to support the case made on behalf of T & D Engineering. The company made an application to Fóir Teoranta for working capital and I hope the Minister will be in a position to outline the response to that. The situation in that company is unusual in that while the concern are letting people go there is still a demand for their products. That company have also submitted an application to the IDA for capital and training grants. They are anxious to be told the amount of the grant to be paid and if it will be paid retrospectively. They also ask if the Revenue Commissioners, through the Minister for Finance, would be sympathetic in regard to the repayments in view of the fact that they did not get any grant in the past. Had they got a grant they might not have the large tax bill they have.

The company feel they have been victimised in that some of their competitors got grants towards the cost of premises, machinery and training at the full rate. They believe that if they were located anywhere else in the country they would not have much difficulty in obtaining State assistance and would be treated more sympathetically. It is sad that for the second time today we are speaking about another west of Ireland project that is in danger. The directors of the company have clearly indicated to me that all the profits of the company were reinvested in the concern. They are anxious to increase the number of jobs. At one time 26 people were employed in the concern and I am sure the Minister agrees that if there is potential at home and abroad for the products of the company they should be given every possible assistance to enable them to continue in operation.

We hear a good deal of talk about import substitution. Here are a company who have UK markets but I am afraid they are losing ground in the UK market because they are in financial difficulty. We should have a policy of trying to cut down on imports. This company should have a strengthening export market, and I am sure they will do that because they are dealing with some of the best companies in the UK. If they are given the help they are seeking I am sure we will not be talking about saving the company, rather we will be talking about expanding T & D Engineering Ltd.

I share the concern expressed by both Deputies concerning the present difficulties of T & D Engineering Ltd, Tynagh. This company developed their business based on servicing the needs of the mining industry in Tynagh and were for a large number of years a perfect example of the type of company that can make an effective contribution to the economy. In this case it was a small Irish engineering company who serviced a major mining operation and identified a niche in the market. Their successful past record makes their present difficulty all the more unfortunate, particularly when we have regard to the fact that when their mining customer base in Tynagh diminished T & D Engineering Ltd., with the assistance of the IDA, followed the recommended course of identifying and developing new products. I will have more to say about that aspect of the case in a few minutes.

Unfortunately, development of new products is not the only facet involved in maintaining a viable business. Of equal importance is the need to ensure that the company's finances are maintained in a sound condition commensurate with the company's development programme. In this instance I understand that the company, despite the assistance they had received from the IDA and CTT, now find themselves in serious financial difficulty the solution to which lies outside the remit of those State agencies which operate under the aegis of my Department. I understand that the company approached Fóir Teoranta for assistance earlier this year but that Fóir Teoranta who have to observe statutory criteria including a criterion that they must be satisfied as to the long-term viability of a company, found themselves unable to provide the assistance sought in the light of the information provided in T & D Engineering's application for aid. Fóir Teoranta are very conscious of the need to assist Irish industry wherever possible, particulary industry in areas such as Tynagh. In this regard I understand that Fóir Teoranta were recently in touch with T & D Engineering Ltd. and indicated to them that if there were any material changes in the company's circumstances since they made their original application Fóir Teoranta would be happy to reconsider any new application which might be submitted by the company. Consequently, while I must stress that this offer by Fóir Teoranta must not be taken as a commitment on their part to provide assistance to the company and Fóir Teoranta would still have to have regard to the statutory criteria, I recommend to the Deputy that he encourage the company to consider whether there are sufficient grounds for a reapplication to Fóir Teoranta.

On a more general note but a propos the problems which have arisen in this case I feel it necessary to say that, given the length and severity of the recession we have experienced over the past few years, there has been an unprecedented level of demand for the service of the State agencies, especially those involved in the industrial rescue scene. From my knowledge of the work of these agencies I can say that they have responded extremely well and sympathetically in very difficult circumstances and have made a very serious effort to help companies in difficulty where at all possible, given a reasonable prospect of viability. Deputies must appreciate, however, that there is a limit to what State agencies can do, and often firms face difficulties which the State agencies, despite their best efforts, are unable to resolve. For instance, if a firm's problems relate primarily to a fall off in demand for their products then State agencies can do only a limited amount to assist the company. Certainly CTT can assist a company in funding new export markets for the company's products, but the State rescue agencies cannot create demand where it does not exist. Unfortunately, the recession is associated with falling demand across the whole spectrum of industrial products, and this is a problem which assistance from the rescue agencies simply cannot resolve.

Another problem facing the rescue agencies is that the firms often leave it until too late to approach them for assistance. When a firm begin to experience difficulties there is an understandable temptation for the management to see the difficulties as being of a temporary rather than a permanent nature. Management often hope that difficulties will pass and the company will be restored to health. This, of course, does not always happen, with the result that firms continue to trade unprofitably and often have accumulated large liabilities by the time they approach the rescue agency. These liabilities are sometimes such that there is no prospect of the firm trading out of their difficulties. In fairness to the State agencies — I deal with them on a day-to-day basis—too often firms leave it until too late for a restructuring exercise. I can only advise firms in general that when they come into a difficult trading situation where they have financial problems they should go to the State agencies who are primarily responsible for assisting them, sooner rather than later. In my experience far too often things are left to drift to where the banks, whom I have found to be sympathetic to companies in difficulties, cannot help them and State agencies with the best will in the world are bound by statute not to assist them because of the criteria adopted in the Act. Therefore, there is responsibility on the companies themselves to come early to State agencies who can help them.

This case is a typical example of what I am talking about. Certain statements were made by Members for Galway which confused me somewhat. For instance, I am not aware that an application to the IDA for grant assistance is outstanding or that any grants payable are outstanding.

We did not say there were.

I understood that the Deputy's colleague said that that was the position.

I spoke of capital for training grants.

Again I am not aware that any training grants are outstanding. I do not want Deputies to impugn AnCO or the IDA in relation to grants concerning which no application has been made or grants payable have not been paid. In fairness, it would be proper for me to have the record clear and correct.

Lest there be any doubt in the Minister's mind, to put the record straight, we are more than pleased to acknowledge the contribution made by the IDA.

The Minister has only one minute left to conclude.

When the company approached the IDA regarding R & D grants they were encouraged and sent in a certain direction. They went in that direction with a certain amount of success. I am not quite sure of the value of the mining stocks and equipment which the Deputy spoke about. I would imagine that the demand for these products is, to say the least, slow.

With regard to the penetration by the company of foreign markets, I am not impressed by what the Deputies have said. I am quite satisfied that the sales of products to the British Central Electricity Generating Board are not of significance. I must say that in fairness. In fact, I would go so far as to say that the design of products being supplied there has not as yet been accepted by the UK electricity supply industry co-ordinating body.

Does the Minister accept that they supply those products to the main suppliers?

I am trying to be helpful.

The Minister should conclude now.

I hope they are not closing the door on the company.

I am trying to state the position as I understand it. The export potential may very well be there, but a fresh application, given realistic figures for potential exports, given the possibility of a long-term survival plan for the company, if it is to be made should be made to Fóir Teoranta as soon as possible.

In accordance with Order of the House the Minister should conclude. It is now after 11 p.m.

I hope that Fóir Teoranta, given the statutory criteria, will be able to help the company. However, I must state that they are a statutory body independent of me and it is up to the company to prove their own case.

The Dáil adjourned at 11 p.m. until 10.30 a.m. on Thursday, 31 May 1984.

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