Dáil Éireann debate -
Tuesday, 27 Nov 1984

Vol. 354 No. 4

Private Members' Business. - Verolme Cork Dockyard: Motion.

Mr. Lyons

I move:

That Dáil Éireann calls on the Government, which already owns 48 per cent, to acquire the full equity of Verolme Cork Dockyard and ensure its continuance as a shipbuilding and repair yard and provide also for heavy engineering business which will arise from the offshore oil exploration programme.

In proposing the motion I must express the view that it would be nothing short of a national scandal if the Government did not ensure the continuance of Verlome Cork Dockyard, a dockyard that must be unique throughout the world inasmuch as at its closure date it will be in a position to discharge all its responsibilities to its creditors in full. The Minister, the Government, and others must realise that that unique position in modern business terms would amount to one of the most unsatisfactory close-downs of all time. There is not a shipyard in the world in such a favourable financial position at present. I understand that the management of the dockyard presented to the Government last May at least five options that would allow them to continue trading. All the options were refused by the Government. Since then many efforts have been made to resume talks with the Department, and the Government, on the possibilities for the yard but to date those talks have not taken place.

It is necessary to recap some of the historical aspects of the dockyard. I should like to start with July 1980 when the Government announced a shipbuilding programme for the yard under which four ships were to be built, one bulk carrier, two fishery protection vessels and one research vessel. To date only the bulk carrier and a fishery protection vessel, a P31, have been completed. At that time trade unions, workers and management agreed that rationalisation would be inevitable but they accepted it for the purpose of ensuring a viable future for the yard and the remaining workforce. I should like to emphasise that any amount of redundancy payment is a poor substitute for jobs and employment.

On 20 April 1983 a delegation from the trade union group was informed by Minister Bruton that he hoped to have an announcement for the yard before May 6 but no such announcement was made. On May 23 of that year the Minister promised again to have a Cabinet discussion on the following day, May 24, on the question of Verolme Cork Dockyard but as far as can be ascertained no discussion took place.

Those unfilled promises, and the allowing of orders to go to Japan by a former Minister for Transport in another Coalition Government, from 1973 to 1977 resulted in the dockyard personnel being totally frustrated, almost to the point of being annoyed. That was the beginning of the end for the dockyard and it was initiated by a Coalition Government. The lid is now being put on it by another Coalition Government. The uncertainty caused by the incidents I have outlined reduced the confidence of the workforce. Their energies were sapped and they were demoralised. The Government's intention to abandon the yard was indicated clearly during that time. I could go back further and recall that in 1965 a person who is a Member of the House today indicated in a northern constituency in that general election that if the Coalition Government were returned to power the dockyard would be closed. That was a significant commitment.

The commitment of the Government to maritime affairs is indicated further by the recent liquidation of Irish Shipping. It appears that Government policy is that at the first sign of a problem the concern should be closed and the problem will disappear. In my view, that is an unacceptable answer. That view is held by many other people. It would be better if the Government negotiated with people and ensured the continuation of some of these enterprises that they seem happy to close.

Further significant evidence of the Government's understanding of the position of the dockyard is underlined in the terms and conditions of redundancy given to the workforce in the last year. With the delivery of the bulk carrier in 1983 the conditions of redundancy were announced. It was stated in those conditions that there would be an orderly delivery of the P31 and the bulk carrier and, by implication, the workforce could do what they liked after that. It is of major importance and significance, something that is adding to the frustration of the Cork people, that the senior Minister from that area is conspicuous by his absence concerning the affairs of the Cork region. His silence was deafening on the problem in Dunlop, on what happened in Fords, on the provision of a ferry service between Cork and Swansea, on the liquidation of Irish Shipping and now on Verolme Cork Dockyard. Nevertheless, even at this eleventh hour it is not too late for the Government to acquire the remaining 52 per cent of equity of the dockyard from the partner on the board, RSV, Rhein Shell Velome, the parent company already in liquidation.

It does not appear to be fully realised that at full production the number employed at the dockyard in the period 1972 to 1974 was 1,400 people. By 1983 they had been reduced to 1,100, gradually trimmed down to the recent figure of 980. Those figures do not include the many temporary staff who are taken on, often as many as 40. The current number in employment in the dockyard is 98 and it is intended after the intended closure — I again stress intended closure because I hope that even at this stage the Government will see some light and will not allow the dockyard to close — about 20 will remain in employment. What is to become of the highly skilled personnel of the dockyard? What of the present apprentices at various levels of their apprenticeship who will find themselves in limbo because of the lack of any prospective employment for them to complete their apprenticeship? This is a very serious aspect of this matter. They will be joining their colleagues from Irish Shipping whose training is also jeopardised by the recent Government decision.

This Government stand indicated for allowing Irish ships to go to Britain for repair. Of course there was a variation in the labour charge of £5 sterling in the British yards and £7 per hour in the Verolme dockyard, but what has not been emphasised or considered is the higher energy costs in Ireland, which were discussed last week when we were dealing with the motion on electricity charges, the higher taxation, both direct and indirect, and higher telecommunications and infrastructural costs. All these charges increase the rate per hour charged by Verolme. What is important is that the output per person compared with workers in other dockyards is not in question. We must recognise that fact. Despite criticism levelled at Verolme workers by many commentators, their output per hour per person compares very favourably with that of similar dockyards to which Irish boats were sent for repairs. Let me emphasise that these extra costs in Ireland were responsible for the differential, not a lack of confidence in the work of the Verolme employees.

Would it not be appropriate for the Government to subsidise the yard to maintain employment, just as every other national government subsidise their shipbuilding and repairing operations, and make up the difference in cost? In that way the Government would maintain employment in the yard and support the spin-off industries and businesses which are dependent on places like Verolme. Let me repeat, that Government policy in this matter is seriously incorrect.

I was pleased recently to read a reported statement that the Fine Gael Deputy, Deputy Coveney, supported the proposal before the House this evening. In a banner headline Deputy O'Sullivan, a member of the Labour Party, was reported as saying that the dockyard must be saved by the Government. Those two Cork Deputies have spoken in favour of keeping the dockyard open. All that is left for them to do tomorrow night is to vote with us and ensure that this motion is passed.

At least two more protection vessels of the calibre of the P.31 could be ordered in Cork dockyard. The Government could request the EC to provide the funds necessary to build those vessels and so keep the yard open. It does not need a great stretch of the imagination to realise that with the advent of two more nations, one of whom has a powerful fishing fleet, we will need another P.31 boat, if not two, in our south-west waters.

I want to emphasise the importance of the strategic location of Cork dockyard. The facilities there include the most modern sophisticated equipment and an outstanding operational machine shop. There are immense possibilities for this yard to remain in business. If the Government allow the dockyard to close, it will be a further indictment of their inability to understand the situation, to adopt policies, to establish commitments to keep an industry like this in operation, to leave behind the uncertainty and insecurity this Government have created over the yard. They should restructure the operation and provide a use for the skills which already exist there and safeguard employment which is so badly needed. If they do that, I have no doubt that the workers of that dockyard will respond in a manner befitting their loyalty and commitment to themselves, their families and the country.

In the case of Cork Verolme Dockyard the Government are being given a unique opportunity to show their willingness, if such willingness exists. They will help the people of Cork by example to turn the economic tide in Cork's favour and in favour of the nation as a whole. Cork people know that we have the ability, the tenacity, the will and the determination in the Cork area to succeed over all adversity, including the adversity of a Coalition Government, if we were given that measure of support which the Government ought to be capable of giving.

We cannot criticise the Government for all the industrial failures in the Cork area, far from it. They may not be 100 per cent to blame, but the Government have a 48 per cent stake in a company which they are allowing to cease operations, a company that will clear all their debts. It is not too much to ask the Government to re-examine the position, to listen to the people, to Government Deputies, to Fianna Fáil Deputies and to the workers of Cork dockyard and to be prepared to keep that dockyard open and thriving on behalf of the nation.

It is well to realise that in the history of the dockyard there have been times when its existence was threatened, but because of commitments by Governments at that time, particularly Fianna Fáil Governments who were always prepared to help to secure the employment of the workforce, assistance was given and the workers responded magnificently. The question of our neutrality must be in our minds during this debate because of recent happenings at Chequers. Where will the naval fleet, including the sophisticated, modern, well equipped P.31, go for maintenance and overhaul? Will they all be sent over to British docks? It is mind-boggling to think that this will happen but I leave it to the people to judge their actions.

Mr. Allen

They will be sent to the naval dockyard.

Mr. Lyons

It is terrifying to think that our naval fleet will go to British ports for upkeep and overhaul. We cannot and must not allow that to happen. The Government should seriously review the situation and they must not count the cost when it concerns our neutrality, our work-force and supporting industries and businesses. The life blood of Cobh must not be lost because of the lack of commitment to maintain the yard. The dockyard must be kept open as a strategic shipbuilding and repair enterprise.

We must take into account the development of natural resources which must in time bring further employment to the yard. We must also avail of the skills and professions associated with Cork dockyard. With so much endeavour in the search for natural resources off the south, south-west and east coasts, the strategic location of the dockyard is eminently suited to benefit and be part of any natural resource which we may attempt to bring ashore. I appeal to the Government not to shamefully preside over the demise of this important national institution. The aftermath and effects of its closure will not go away, as the Government seem to hope.

In May 1983 a motion was laid before this House in the names of Deputies Fitzgerald, Wyse, Lyons, Wallace, Ahern and O'Keeffe calling on the Government as a matter of urgency to draw up proposals for the development of shipbuilding and repair at Verolme Cork dockyard and as an interim measure, in the interests of preserving the jobs of the workforce, to place immediate orders for the building of a fishery protection vessel and a fishery research vessel. However, that has not been done.

When members of the Government were in Opposition they referred constantly to Cork harbour as a white elephant. In July 1982 a positive proposal was put forward by Fianna Fáil regarding the purchase of the Whitegate refinery. Despite desperate opposition at that time from people now in Government, one a Cabinet Minister, that decision was made and was very well received.

(Interruptions.)

Mr. Coveney

What is the Deputy talking about?

Mr. Lyons

The Minister should take his courage in his hands and pursue the acquisition of Verolme Dockyard for the nation.

Mr. O'Sullivan

On a point of order, I wish to contradict——

An Ceann Comhairle

A contradiction is not a point of order.

Mr. O'Sullivan

Deputy Lyons is trying to mislead the House regarding the purchase of Whitegate refinery.

Mr. Lyons

I refer the Deputy to Volume 337, columns 2548 and 2549 of the Official Report of 14 July 1982. He will see what I am talking about.

An Ceann Comhairle

Deputies will have an opportunity of dealing with this matter.

Mr. Lyons

I do not have time to quote from the Official Report. Why, in all the circumstances, particularly with regard to the financial position of the yard, was an administrator not appointed? Why did the Minister for Finance, at the behest of Fóir Teoranta, deem it necessary or appropriate to appoint a receiver? Will the Minister indicate if this is true? I tried to find this out earlier in the day but I failed in the attempt for various reasons. I was told it would be discussed tonight and that the matter was not urgent. Would the Minister say now if this is so?

An Ceann Comhairle

The Deputy should wait until the Minister is replying.

Mr. Lyons

Very well. Based on the answer which he might give——

(Interruptions.)

Mr. Lyons

What are the estimated costs of the appointment of a receiver? We all recall reading recently that redundancy payments of £8 million were being made by the Government to workers in Verolme. I should like the Minister to say who is paying the redundancy. Are the Government paying £8 million in redundancy to the workers at Verolme? If that is so would it not be better if that £8 million, or even part of it, was used to ensure the continuance of the dockyard? What is the final cost figure of the P31? Will the redundancy payments be paid from the extra costs of the vessel? Perhaps the Minister will let us know the facts. In adition, will he let us know if the people interested in purchasing the dockyard are Irish or foreign?

With regard to fishery protection vessels and the aid that is available from the EC if requested, why is it that request was not followed up by the Government? Why did the Government not seek from the EC funds for the building of one or two fishery protection vessels? In The Daily Telegraph of today's date there is a report that in Britain they are giving £10 million for ship building. Has our Minister made any similar request? In mid-1983 we asked the Government to make such a request for money to build a research vessel and a protection vessel at Verolme dockyard. We cannot allow the Cork dockyard to close for want of a commitment and encouragement or for want of a plan or programme. This Government have been given sufficient time but they have sat back. Their attitude has been that if they close the place the problem will go away. That is not good enough; in fact, it is totally unacceptable. The Government should give all the necessary resources to ensure that the dockyard stays open and that the skills of the employees that have been acquired over the years are not lost to the area and to the nation.

What are the Government's intentions with regard to the maritime institutions I mentioned already? This Government have liquidated Irish Shipping, a 100 per cent Irish company. Hot on the heels of that liquidation are they going to shut down the dockyard and cast to the four winds the workforce and the equipment in the dockyard? The Government own 48 per cent of the equity of Verolme dockyard. They should acquire the remaining equity and keep it for the nation. This would ensure its continuance as a shipbuilding and repair yard and it would be available for the engineering business that will come as a result of the offshore exploration programme.

I do not believe that the Government will allow the yard to close. I do not believe there will not be support from members of the Government parties to ensure that our motion succeeds and that the Government will acquire the remaining equity. I do not believe they will allow the opportunity to pass without doing that. On 25 October on a question on the Adjournment the Minister for Industry, Trade, Commerce and Tourism indicated that he and the Government would allow the yard to close on 30 November 1984. In this motion which is put down in the names of my colleagues I am appealing to the Minister at the eleventh hour to acquire the Cork dockyard wholly for the nation, to be used for the benefit of the country and to provide employment for the people who have served the area so well. I appeal to the Minister not to let this be another episode in the litany of demoralising closures and failures in the Cork area. The Government have a responsibility in this matter and they must accept it. I ask them to acquire the remainder of the equity and to acquire the dockyard. I ask them to restructure it and if there are industrial relations problems to carry out the necessary negotiations. It is up to them to show a commitment and to give incentive and leadership. If they do this the workers at Verolme will respond in a positive way in keeping with their previous commitment to keep their employment and to keep the dockyard open. As a result of the debate tonight and tomorrow night I hope the Government will ensure that before Friday, which is the deadline for closure of the dockyard, they will acquire it for all of us, for the workers and for the economic needs of the Cork area.

Minister for Industry, Trade, Commerce and Tourism (Mr. J. Bruton)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute the following:

"nothing the failure of Verolme Cork Dockyard to win orders for shipbuilding contracts on the open market despite the availability of substantial subsidies from the Exchequer, calls on the Government in the context of the impending closure of the dockyard to do its utmost to ensure that a purchaser for the yard is found who would provide significant employment."

The impending closure of Verolme is extremely regrettable for the workforce, their families and the Cork region. I know that all Deputies in the House share this view.

Before commenting on the various aspects of the Opposition motion, there is one thing that I feel I should clarify from the outset. It was suggested by Deputy Lyons in the last Dáil debate on Verolme that the company could afford not to close down. That is not the case. The company are in a position to meet their obligations solely because the State provided them with funds in order to ensure the orderly and timely completion of the patrol vessel for the Department of Defence.

Turning to the substance of the Opposition motion, I would point out, in relation to the suggestion that the Government should buy out the Dutch majority shareholding, that this option was offered to a predecessor of mine in 1979 who, naturally enough in my view, showed no great enthusiasm for such a prospect. I might add that the then Government were advised of this in May 1980, but they did not wish to avail of the option. If the offer was unattractive in what might have been regarded as a more buoyant economic period, how much more unattractive can it be considered now? This is something the Opposition may wish to ponder further before they point an accusing finger at this Government.

Mr. E. Collins

Hear, hear.

Mr. J. Bruton

If we ignore the fact that the Opposition, when last in Government, chose not to adopt the line now advocated by their present colleagues and look at the rationale behind such a proposal, we see that what is in fact proposed is that the State should pay a significant sum of money to increase its holding in a company who have been in a loss-making situation for several years, who have been unable to pay interest on their borrowings from the State, and who have no realistic prospect, according to the Shipbuilding Advisory Team, of making profits in the foreseeable future. I would like the House to be very clear on this point. The whole thrust of Building on Reality is that investment by the State is regarded as being desirable where that investment can make a return to the Exchequer. What is now proposed by the Opposition is that the Exchequer should outlay some hundreds of thousands of pounds on shares that would not offer a return to the Exchequer, but whose purchase would imply, if not necessitate, the spending of several million pounds more, again with little or no prospect of a return on investment. I think the illogicality of this proposal speaks for itself in any context other than Alice's Wonderland. That seems to be the place inhabited by those who are framing the Opposition's economic policies.

The Opposition would have us purchase the remaining equity in Verolme with a view to ensuring continuing shipbuilding work for the yard. Unfortunately, they do not state where this work could be obtained. They seem to forget that in the past 18 months the yard has been unable to win a single order on the open market notwithstanding the fact that it was quoting on the basis of quite substantial subsidies from the Exchequer. The bleak prospects facing the yard have been recognised by a number of commentators. For instance, in the House in June 1983 Deputy Gene Fitzgerald said "Like all shipyards in the Western World VCD is going through a very difficult time because of the recession". During the recent debate on Irish Shipping it was said that the "whole question of shipping was in a state of flux", and "the world of shipping is in oversupply". These remarks merely reflect what reputable international experts have been saying for years. To be blunt, I think it naive and wrong of the Opposition to pretend that Verolme has any future in the short term as a viable shipbuilding industry. Naivete is no basis on which to construct economic policy.

Whatever way the Opposition wish to describe it, the thrust of their motion is that the Government should ensure that Verolme stays open no matter what the cost to the taxpayer. I have already demonstrated conclusively that in fact the work is not available in shipbuilding terms to keep Verolme open, but I would like to remind the House of exactly what the cost of this type of policy can be. This is most graphically illustrated in the case of the bulk carrier completed in the summer of 1983. The commercial quote for this vessel was £14.2 million while the ultimate construction cost at Verolme was in excess of £30 million. Thus a subsidy of £16 million from the taxpayer was necessary to provide work for some 750 man years and implies a subsidy of more than £21,000 for each job for one year. That is almost three times what the IDA would pay for a job that would be permanent, whereas these were for one year only. Let me repeat that this policy makes no contribution whatsoever to the subsequent viability of the firm, and exceeds substantially the average once-off payments that the IDA make to create permanent jobs.

The total cost of keeping Verolme open to date cannot be stated accurately because there is no way of knowing how much the patrol vessels for the Department of Defence would have cost if built elsewhere. Nevertheless, it seems reasonable to infer from the more than 100 per cent subsidy for the bulk carrier, and the fact that a VCD quote for a fisheries research vessel was twice that of a Norwegian firm, that there was a large element of subsidy in the construction of these vessels for the Department of Defence. If this is considered in the context of direct production subsidies costing £26 million and credit subsidies amounting to £8 million, it is clear that the cost to the State of maintaining jobs at Verolme has been probably some £40 million, again without having achieved the slightest possibility of commerciality.

Deputies will recall that requests for publication of the A & P Appledore report on Verolme had to be turned down for reasons of confidentiality. Nevertheless, I did give the main thrust of the recommendations to this House on 1 June 1983. I think it is timely to elaborate on this somewhat. These recommendations were, in summary form, as follows:

Verolme could not trade successfully in the building of new ships without substantial State support. No shipbuilder was operating without State aid in some form or another. In spite of a general intent to reduce aid, the realistic options for the immediate future were to increase aid or close yards.

VCD had none of the advantages of home market, modern facility, high productivity, technical leadership or low cost enjoyed by its competitors. It was therefore highly questionable whether VCD could win orders from the international market even with subsidies in the 30 per cent to 50 per cent range.

A market for ship repairing existed in Cork but VCD's share had dwindled to practically nil. A fresh approach to ship repair was recommended.

A change of management alone was not enough to save the yard in shipbuilding. In ship repairing a change of organisation and management was recommended if the available market was to be tapped. VCD's productivity was very poor. Their projected man hours for the bulk carrier were about twice those of the best competition in Denmark and Japan. If the yard was to stay open and assuming orders could be found then a serious attempt at productivity improvement could be made. This was in common with shipyards in the UK, for example, which were acutely aware of poor productivity. A productivity improvement programme could look at all aspects of work on the shop floor from better design for production and easier communication of technical information to organisation of shop floor work into work packages of like skill and work content.

There was no meaningful strategic value of maintaining VCD in peace time. The types of vessels required by Irish shipping companies, fisheries and the Navy were readily available at lower cost and with attractive credit terms elsewhere. Nor was there a case, as was raised in the UK, for example, for the value of shipbuilding as a home market for steel, marine engines and ship equipment and materials and material supplies. VCD imported all but a fraction of the material and equipment for a ship.

It was highly unlikely that VCD could win suitable orders on the open market over the following five years and probably beyond. This conclusion assumed heavy Exchequer funding of between 30 per cent and 50 per cent of the cost of each ship, which was a prerequisite. There was, therefore, no commercial justification for continuing to support VCD.

VCD had no inherent advantage in shipbuilding, so there was no justification in industry terms for continuing support to VCD.

The one argument in favour of continued support to VCD was that of saving jobs. The weight of evidence of this study had led progressively to a recommendation to close VCD. However, the implication in terms of job losses had always been a constraint. The social impact of closing VCD would be severe and would have to be judged as a wider issue. However, the international market was so bad and VCD's position so weak that even the most generous support was unlikely to ensure orders for the yard.

With this one reservation, the recommendation of this report was to discontinue shipbuilding after the present order book was completed. Ship repairing has a future in Cork but as a separate, much smaller, more commercial enterprise.

I would like to nail down another fabrication that has been bandied about in recent times. It has been suggested that inaction or an excessively cautious political approach led the Department of Foreign Affairs to act in such a way as to lose orders for VCD. This, I am glad to say, is another instance of fantasy, in that I am satisfied that an intensive effort was made internationally to market the P.31, with the full co-operation of the Department of Foreign Affairs, but the results were dismal.

In relation to further orders for the Navy, such as the patrol vessel just completed, I would remind the House that the Department of Defence and the European Commission both accept that in the light of protection measures adopted since 1978 the present mix of ships and aircraft, including the patrol vessel just completed, will provide adequate protection in the medium term. I remind the House merely because the negotiations that led to acceptance of this position commenced after the then Minister for Foreign Affairs had written to the then Taoiseach on 6 May 1982 advocating that the Government proceed with only one of the two proposed patrol vessel orders in view of the likely additional cost to the Exchequer of having to build the two vessels. I might further add that following the letter from the then Minister, Deputy Collins, to the then Taoiseach, a Government committee was established to investigate this issue. It decided that approaches would be made to the European Commission to seek a reduction in the numbers of patrol vessels and aircraft necessary to provide adequate surveillance and control for fishery protection purposes without any subsequent reduction in aid. The cost of providing the proposed mix of ships and aircraft had risen considerably since they were first approved by the Commission in 1979. The Commission approved the modified programme without any reduction in aid on 8 December 1982. Again we have an interesting comparison between the actions of Fianna Fáil in Government and their proclamations in Opposition when they are in a position of diminished responsibility.

I apologise to the House for going into such detail at this time, but I feel it is necessary to set the record straight once again. The Government amendment to the Opposition motion in June 1983 referred to the absence of provision in the Estimates agreed on by the previous administration for new orders. In other words, no provision was made by the then Fianna Fáil Government for the ordering of a second patrol vessel.

At that time, Deputies Fitzgerald and Reynolds made great play of the fact that there was a contingency fund of £120 million for capital projects, and that this would have covered provision for the patrol vessel which was not specifically provided for only because the Estimates were introduced as early as October.

At that time I stated that reference to a contingency fund was really not credible, and that if the then Government had been serious about the placing of a further order for a patrol vessel, they would have made specific provision for it. I think it will be clear to the House from my earlier reference to the Government committee that far from just not making specific provision for the second vessel, the truth is that the then Government had specifically excluded it on the basis that there was no prospect of EC reimbursement and that the likely £30 million cost was prohibitive.

Turning to the ship repair aspect of the Opposition motion, proposals were made to me earlier this year by the company which covered a number of options for maintaining VCD throughout 1985, with its present structure, on the basis of ship repair and general engineering work. In short, these proposals assumed that employment of between 165 and 250 people could be maintained in 1985 if the Exchequer were prepared to underwrite cash losses of between £1.65 million and £2.12 million.

There were a number of significant risks attaching to the assumptions behind these figures, not least of which was the fact that there was no evidence that the yard would get the required level of work. Furthermore, the yard had achieved nothing like the assumed turnover figures since 1981. More fundamentally, there was no real prospect of this action securing viability for the yard, and continued operation beyond the end of 1985 would have required the investment of almost another £1 million in terms of maintenance and dredging. It will be seen then that what was essentially proposed was the provision of £3 million for the maintenance of possibly 200 jobs for one year only.

In the circumstances, I did not feel I could justify the prolongation of the present structure of the company by the injection of more State funds on a drip-feed basis, especially when there was no long-term prospect of viable jobs.

I would like to turn to the possibility of general engineering work arising from offshore exploration and exploitation. Prospects of general engineering work arising from a commercial find are essentially dependent on the exploration and development of an Irish oil or gas field, as is evidenced by the fact that it is several years since VCD won a contract in this very competitive offshore construction business. I am sure that until a petroleum discovery is declared commercial investors would not wish to gamble their money on a facility for which they have no immediate use.

The possibility of using the yard as an offshore supply base is a separate question and a more realistic prospect. I understand that my Department have just received an inquiry about using the yard, or at least part of it, for such purposes. I will be pursuing this matter in consultation with the receiver, the IIRS and the Department of Energy. I would like to point out that such a project would be in direct competition with similar facilities on the south and south-west coasts.

I would like to inform the House that I have been assessing, in consultation with the Departments of Finance and Energy, a proposal from a group of Cork and Norwegian interests which would involve the construction of an exploration rig at Verolme. I am informing the promoters that, for a variety of reasons, I cannot accept this project as it has been presented to my Department. The biggest problem is the level of Exchequer exposure, a figure of £35 million having been mentioned. If this level of money were given to the IDA or SFADCo, it could result in a significantly greater number of jobs than the 1,500 temporary jobs implicit in the oil rig proposal.

Because this Government do not want the skills of the workforce and the assets of the yard to disappear forever and because of our firm commitment to the Cork region, I have already taken steps to ensure that every possibility is explored of finding a replacement industry or industries for the Cork Harbour area. I have asked the IDA to circulate all their overseas offices with details of the yard with a view to seeking groups who may be interested in putting the facility at Verolme to good use. In addition, I have asked the IDA to submit to me as soon as possible a report about the feasibility of bringing new industries or activities into the yard.

The point of departure for any new project must, however, be that the yard has to close now, and thereafter any commercial and viable proposal will be considered in a most favourable manner. It is appropriate at this stage to deal in general terms with the Government's commitment to the Cork area.

In January 1984 the Government established a high level working group on employment in Cork to advise on all possibilities to create new jobs and to protect existing jobs in Cork. The group comprised senior civil servants, local authority managers and senior executives of semi-state bodies. The group was to report to the Government on: (a) the impact of the measures already being taken to provide jobs in the Cork area; (b) the action necessary to provide additional new jobs, and (c) all action possible to safeguard existing viable jobs in Cork.

At the same time the Industrial Development Authority established their own internal task force to co-ordinate industrial promotion in the Cork area. The establishment of the high level working group on employment in Cork was an important initiative by the Government for an area which undoubtedly required serious analysis if its industrial development structures were to develop.

Mr. Lyons

Keep the dockyard open.

Mr. J. Bruton

In March 1984, the working group submitted their confidential report to the Government. Having considered the working group's report in the context of overall economic development, the Government initiated a detailed action plan for Cork which was announced by me on 11 May 1984. The Government stressed at the time that the problems being faced by Cork were common to other areas of the country — areas which, like Cork, relied heavily on older, more traditional industries. It was obvious that Cork's difficulties were in many ways a very real localised example of a national employment problem.

The Government saw that, even considering the severe strain on public finances, the incentives already offered by State agencies to industry and the fact that there were no instant solutions available, some measures must be taken to help Cork overcome its problems.

The initiatives for Cork announced by the Government included the following major elements: Ringaskiddy port and industrial estate were to be declared and operated as a free port. In addition, Ringaskiddy port and adjoining industrial estate and the industrial estates at Togher, Hollyhill and Churchfield were to be designated from higher maximum levels of industrial grants. Also the Government decided that Bord Gáis Éireann would supply natural gas directly to companies on the Ringaskiddy industrial estate at oil related prices and a deepwater wharf should be constructed at Ringaskiddy.

In addition to the above, the Government pointed out that Ringaskiddy was possibly the most attractive site in Europe given the initiatives for the estate which I have just mentioned. Accordingly, it was decided that the IDA would intensify their worldwide marketing programme to bring the advantages of Ringaskiddy to the attention of potential industrialists.

Other initiatives announced by the Government at that time included the provision of an industrial waste disposal facility at or near Ringaskiddy. The IDA were asked to give special priority to food-processing in Cork and to examine the possibility of establishing a microelectronics design centre in Cork.

In addition, the IDA would take the lead role in co-ordinating the various State services aimed at industrial development in the Cork area — with particular attention being paid to small industry development. A number of other supportive plans were announced in that press release of 11 May 1984 which, together with the major initiatives already outlined, made up a Government package of incentives aimed at curbing the industrial employment problems of Cork. It is worth stressing that, prior to this, no similar action plan had been drawn up for any area of the country. This was the first time a Government had compiled such a wide-ranging development plan for industry in any particular region.

I am pleased to say that in so far as my Department are concerned the initiatives announced by the Government in May have now been implemented. I announced on 30 October 1984 that the EEC Commission had approved the Government's proposal to designate the specified industrial estates in the greater Cork area. The ministerial order was made on 5 November 1984 which gave effect to this designation. This designation order means that Ringaskiddy port and adjoining industrial estate will be in a position to offer a maximum grant level of 50 per cent of eligible fixed assets to medium and large industry. The Togher, Hollyhill and Churchfield industrial estates can offer small industry a maximum limit of 60 per cent of eligible fixed assets. This order will operate for three years. This initiative will, I am certain, increase the attractiveness of these sites as locations for industry.

In connection with marketing the Ringaskiddy industrial estate special marketing programmes headed by IDA, and also involving Cork County Council and Cork Harbour Commissioners, were undertaken in Europe and North America earlier this year. Ringaskiddy is also being promoted by IDA in the Far East. In June of this year a Ringaskiddy marketing programme was launched in Scandinavia.

A special marketing programme was held between 8 and 17 October and included meetings with chemical/ pharmaceutical companies in New York, New Jersey, Michigan, Chicago Houston and Dallas. Arising from these marketing efforts a number of projects are under discussion with IDA.

Another major development recently from Cork is the commencement of construction of the IDA's enterprise centre at the North Mall in Cork city. I had the privilege of performing the sod-cutting ceremony at the site of this centre at the end of last month. It is expected that the centre will be completed within 12 months. It will contain 37 units ranging in size from 250 sq. ft. to 950 sq. ft. and will be particularly suited to the needs of the typical small industry start-up project. It will offer to the small industrialist shared conference rooms, restaurant, secretarial offices and general services.

This is an important development for the small industry sector in Cork. As evidenced by the success of the enterprise centre in Dublin, small industry projects can more reliably develop in an environment where expert support and advice are available.

Legislation is currently being prepared by the Minister for Communications in connection with the establishment of a free port at Ringaskiddy.

As all Deputies know, Cork has been the location of a concentrated small industry promotion programme. This was undertaken in June 1983 on a pilot basis for the non-designated area of County Cork. The developments which I have outlined illustrate the Government's commitment to increasing the level of industrial development in the greater Cork area. The infrastructure has been provided and is being further developed to ensure that the changing needs of the area and the industries located there are catered for.

There has been, I am pleased to say, a significant increase in the number of first time visits by industrialists to the greater Cork area, with 76 first time site visits between January and September 1984. This compares with 64 for the whole of 1983, a very big improvement. This is an indication of increased interest among industrialists in Cork as a possible location for industry.

Mr. Lyons

We need it.

Mr. J. Bruton

Cork city has received substantial Government investment in industry over the past few years. In 1983, for example, approximately £550,000 was invested in factories in the city. In land and site development work approximately £1.3 million was invested in 1983 and approximately £12 million in grants was paid to companies in the greater Cork area. The Cork region has recently attracted a number of new projects including Statistical Softwear, Angus/Isochem, Tytex and Dennison Manufacturing which will employ approximately 300 people between them.

The above developments are an illustration of the Government's commitment to assisting industry in the Cork area. The initiatives announced by the Government in May of this year were vital to the economic wellbeing of the Cork area. The Government have done all in their power to assist the development of industry in the area both with new initiatives from State agencies and Government Departments and financial investment in the area.

Mr. Lyons

What about the liquidators?

Mr. J. Bruton

Finally, to end on a very positive note, I should like to inform Members that my Department have received a serious expression of interest from a foreign concern who are already involved in the ship repair business to purchase the yard after it closes. As negotiations are at a very early stage these talks must be treated in strictest confidence. However, the fact that there is already an active interest in the yard must be encouraging.

In the light of all the foregoing, I believe the course proposed in the Government's amendment to the motion is the right one, both in the interests of the hard-pressed taxpayer and in the interest of securing self-sustaining viable jobs at Verolme.

Mr. Lyons

What about the liquidator?

Mr. J. Bruton

The alternatives in regard to the system of winding up the company were a liquidator appointed by the creditors, or a receiver appointed by Fóir Teoranta. We made the latter choice in order to have some control over the situation through Fóir Teoranta. Clearly that is important in the light of the interest which I have just indicated has been displayed by somebody with quite a good success record in possibly acquiring the yard after its closure for a repair operation.

Mr. Lyons

The Minister has appointed an administrator.

Mr. Wyse

I have just read the Government amendment and, as I am sure all Cork Deputies will, I recall that but for minor changes it is the same amendment put forward on the closing of Irish Dunlop and Fords. It is practically the same wording. I am sorry that the Minister is leaving now.

Minister of State at the Department of Industry, Trade, Commerce and Tourism (Mr. E. Collins)

I will listen to the Deputy.

Mr. Wyse

I hope so. The Minister of State is welcome. The Minister says that the possibility of using the yard as an offshore supply base is a separate question and a more realistic prospect. He has found it very convenient to single out one aspect of the work of the yard. I would assume that any Minister would look at the overall position and the work being done in the yard, rather than singling out the offshore supply base. Of course, it would be a very viable and valuable industry in the advent of oil. I recall the Minister's words when we were discussing the closure of many of our traditional industries:

Because this Government do not want the skills of the workforce and the assets of the yard to disappear forever and because of our Verolme commitment to the Cork region, I have already taken steps to ensure every possibility is explored at finding a replacement industry or industries for the Cork harbour area.

The Government Cork Deputies are facing me. We heard that statement in connection with Irish Dunlop and with the Ford Motor Company, but they are standing as a monument to neglect by the present Government. No one will deny that. I am trying to be as constructive as possible, but I am afraid that at times one's patience becomes exhausted.

I recall at one time reading a statement by a Fine Gael Minister for Finance that it was not the Government's business to find work for the Irish workers. Apparently, that same tradition is now being followed. I want to say loud and clear tonight that any worker employed in any State-sponsored body will go home this night a really worried person. The Minister is telling us that he will not pay and the firm is to be closed, even at a time of great recession when industries are on their knees trying to survive. I must assume that the Minister is referring to a number of our State bodies who are asking for a directive from the Government at the moment — CIE, Aer Lingus and one of our traditional industries——

An Leas-Cheann Comhairle

They are not in the motion, Deputy.

Mr. Lyons

They will be the subject of a further motion. The Government will get around to them.

Mr. Wyse

I think, a Leas-Cheann Comhairle, that I am entitled to form an opinion about the Minister's speech.

An Leas-Cheann Comhairle

Just a passing reference.

Mr. Wyse

He is telling both bodies that they will not pay and the State bodies will be closed. There is no other interpretation of the Minister's statement. I am wondering if he wrote the script himself. I am now going to question the Minister of State. The board of management asked for a meeting with the Taoiseach, the Tánaiste and the Minister, Deputy Bruton.

Mr. E. Collins

No.

Mr. Wyse

The Minister of State will be speaking later. Is it not true that Deputies on that side of the House asked for this meeting?

Mr. Lyons

It is reported that they did.

Mr. Wyse

Is the Minister forming an opinion of this yard without visiting it and sitting down with the board of management to explore all possibilities for the saving of the yard? The Minister talks about one possibility. There are many other possibilities for the yard. The Minister and, I have no doubt, my colleagues opposite me know well that there are other possibilities open at the moment. Are we waiting for some foreign investor, when all is lost and the price is just peanuts, to purchase the yard and move in? Is it not true that there are inquiries from Great Britain, from a shipping company who recently placed their workers on redundancy? Are we getting all the facts? There are many questions which I would like to ask tonight but, unfortunately, this was a very lengthy brief, one page more confusing than the other, but moving in the one direction, towards closure. God help the Irish workers where this Government are concerned. This is another occasion for Cork Deputies to have to stand in this House pleading with the Minister and the Government to take urgent action to save some of our traditional industries, but unfortunately to no avail. This is what happened to Fords, Dunlop and many others.

Only last week there was another great blunder by the Government. The people employed in our shipping fleet all over the world were told by radio that they were out of a job and workers walking off their ships were being arrested. That was another panic decision by the Government.

This evening, sadly, we are again pleading on behalf of another Cork industry, Verolme Cork Dockyard, in the hope that the Minister and the Government will take the necessary steps to prevent this closure. The Minister's role in the affairs of this industry is of great importance by reason of the fact that the Government hold 48 per cent of the shares in the yard. To my mind, the most practical action for any Government to take now would be to purchase the Dutch interests. I understand that the management asked the Government to do so. I think the Minister is running away. So far no reply has been received by the management of the yard about the matter. I wrote to the Minister some months ago asking him to set up a fact-finding mission and to hold the yard for at least another 12 months. I am not accusing him, because things may become mislaid, but I had not the courtesy of a reply to that suggestion.

The time is right for a fact-finding mission but, above all, the Minister and the head of the Government must go to Verolme and see for themselves the possibilities that lie there. The Government have yet to realise the benefits derived from this industry. They have trained the most highly skilled craftsmen in Europe, if not in the world. In addition to building ships, they do all their own design, naval architecture and research work as there are no other facilities anywhere else in the country for this. Surely an industry like that must be considered an asset. The Government are sinking a ship without realising the valuable cargo it carries.

How can we be so blind as not to recognise the significant part that shipbuilding and engineering play in the building of our economy and in providing necessary employment? There are a number of questions to be answered if the air is to be cleared of the suspicion that surrounds the closing of the yard. For instance, why was the request of management and of some Deputies for a meeting with the Taoiseach, the Tánaiste and the Minister refused? We are told by senior executives of the yard that the company could pay redundancy to their workers and pay off all their creditors as well as the Government grant. If this is true the company must be unique in industrial history. Is it not extraordinary that they are in a position to pay these moneys and that at the same time they make a decision to close thereby depriving hundreds of workers and their families of a livelihood? The Minister must clarify this point.

On the other hand, we are told that the Government are paying the £8 million in redundancy to the workers. At the same time, we read in The Evening Press that the £8 million is being paid by the Government as an incentive for the delivery of the P.31 to the Department of Defence. I have been told by senior management at the yard that the announcement to close was delayed because the company had put aside the money for redundancy payments to pay back creditors and to pay the Government grant and that if the announcement were made earlier, the calls on the company would mean that redundancies could not be paid. That must be either verified or denied by the Minister.

The Minister as well as those of us who represent the area are well aware of the rumours that are circulating but yet the announcement of the closure was not forthcoming from management. There seems to be something sinister in all this. Is somebody hiding something instead of letting us have the facts? The workers are now questioning the payment of the redundancy money. It is shameful that a company who apparently are in a position to pay redundancy money, to pay their creditors and to pay back a Government grant should make a decision to close. When I was at the yard recently I found that the ship for the Department of Defence was almost completed. Is the £8 million being paid by the Government really for the purpose of paying redundancy money to the workers? These would be payments additional to the statutory redundancy payments. I understand that the cost of the P. 31 is £22 million. There was a good deal of criticism of Verolme because of this price but we have not been told about the extra facilities which were decided on later and which caused the cost to increase. Perhaps later we will be told that the ship cost £30 million. Does this account for the £8 million the Government are to pay to Verolme? The record must be put straight in this matter. Those of us who represent the area must have an explanation to offer the workers.

Another question to which I should like a reply concerns the value that is put on the yard. One evaluation in 1982 put the figure at approximately £28 million while in 1983 a Cork company who were asked to put a value on the yard for the purpose of insurance arrived at a figure of approximately £45 million. That is another matter that needs to be clarified. Are there a group or groups of people on the sideline who are willing to purchase the yard at their price? The Minister must be prepared to give us the facts in this whole matter. Deputy Lyons has told us that four options were put before the Government last year in respect of the yard but that there was no reply from the Department to any of them.

I am hoping the Minister will give us some genuine information to take back to the unfortunate workers and their families. I have put my questions on record and I await answers to them. We must have these answers if the suspicions surrounding the closure of the yard are to be eliminated.

Debate adjourned.