Deputy Kirk and Deputy Faulkner have been given permission to put a question on Private Notice to the Minister for Industry, Trade, Commerce and Tourism. Will one of the Deputies please read the question?
Private Notice Question. - Closure of Dundalk Footwear Factory.
andMr. Faulkner asked the Minister for Industry, Trade, Commerce and Tourism if he is aware of the closure of Clark's footwear manufacturing plant in Dundalk, County Louth, and, if so, the action he proposes to take on the matter.
I propose to have circulated with the Official Report a copy of a statement which I issued yesterday, Wednesday, 30 January 1985 about the impending closure of Clark's footwear factory in Dundalk.
As indicated in that statement, the Government and I greatly regret the announcement of the impending closure of the Clark's factory and the hardship which will arise for the employees and their families. The Clark's factory has been a mainstay of industrial employment in the town of Dundalk for over 50 years and its closure will mark the end of an era.
The State agencies have worked very closely with the company in efforts to restructure the Dundalk plant and put it on a more viable basis. In addition, the Minister of State, Deputy E. Collins, as part of his responsibility for sectoral industry, has also been closely involved in discussions with the parent company over the past year with a view to maintaining the Dundalk plant and safeguarding employment. However, the parent company is adamant that, because of continuing high financial losses incurred by the Dundalk plant and substantail surplus manufacturing capacity in the group, it is not possible to avoid its closure. In these circumstances, given the immediate realities facing the company in the market place and the extent of financial losses, the parent company is not prepared to alter its decision. The closure underlines, as I have repeatedly stressed, the need for cost competitiveness in our traditional industries if they are to survive in the current international trading environment.
The Government and I are fully conscious of the very serious unemployment problems which already exist in Dundalk. The IDA, in co-operation with other State agencies, are doing everything possible to attract new industry to the area and are working closely with the Clark company on proposals to provide alternative employment opportunities and minimise the effects of the impending closure.
Following is the statement referred to:
The following statement was issued today (Wednesday, 30th January, 1985) by the Minister for Industry, Trade, Commerce and Tourism, Mr. John Bruton, T.D.
Impending closure of Clarks, Dundalk
"Closure Shows Severity of Challenge Faced by Irish Traditional Industry"—Bruton
The announcement today of the impending closure by Clarks of its shoe factory in Dundalk is a matter of great regret. The company has been a mainstay of industrial employment in Dundalk for over 50 years and is the largest footwear plant in the country. Originally the Dundalk plant supplied a protected home market but the bulk of production is now exported to the U.K. market.
The company's decision, I understand, is based on a continuing high level of financial losses at the Dundalk plant, and the existence of surplus manufacturing capacity in the Group which has arisen primarily through increased import penetration in both the U.K. and Irish markets.
The State Agencies have worked very closely with Clarks in its efforts to put the Dundalk plant on a more viable footing. The Minister of State, Mr. Eddie Collins, TD., was personally involved in discussions with the parent Clark company early last year which were directed towards achieving that objective. Despite a further meeting recently with directors of the parent Clark company, during which the Minister of State sought to have the closure decision reversed, Clark's Board subsequently advised that reversal was not possible because of the continuing high financial losses of the Dundalk plant and the existence of substantial surplus manufacturing capacity in the Group.
However, the company is working very closely with the Industrial Development Authority with a view to facilitating the provision of alternative employment and minimising the effects of the closure.
This closure shows the severity of the challenge faced by Irish traditional industry. The response to this challenge must be both positive and realistic. The holdings of market share by a traditional industry, in present circumstances, is no easy task. It requires that costs be reduced every year to keep ahead of competition which is reducing its costs continuously. This requires ever increasing attention to productivity, inventory control, quality control, market trends and all factors that can contribute to value for money in the product.
The Government fully appreciates the difficulties and hardships which will arise in Dundalk, a town already seriously affected by closures and redundancies and with a very high level of unemployment. The IDA in co-operation with other State agencies will intensify its efforts to attract new industry to the area. The closure of Clark's Dundalk factory (ladies footwear) will not affect the company's other manufacturing plant in Ireland — Padmore and Barnes — which employs over 170 in Kilkenny in the manufacture of high quality men's shoes mainly for export.
Is the Minister aware that the unemployment numbers in Dundalk at present are fast approaching 4,000 and that over 50 per cent of those who are on the unemployment register are in receipt of unemployment assistance?
I am aware of the very serious unemployment in Dundalk. I have discussed it with the Industrial Development Authority in recent days. Dundalk is one of six black spot unemployment locations identified by the IDA which are receiving intensive efforts to attract new industry because of the scale of unemployment there.
Is the Minister aware that the number employed in manufacturing industry in that town has decreased from a figure of 4,510 in November 1982 to a figure of 3,836 in November 1984 and that the 370 jobs now under threat will further reduce the numbers employed in manufacturing industry in Dundalk?
Of course those figures are correct. I have no reason to dispute the figures with the Deputy. In response to his earlier question, I have already acknowledged that there is a severe unemployment problem in Dundalk and I have asked the IDA to give it special attention. They are doing so, and it is one of six locations being specially treated because of its unemployment problem. The Deputy does not need to remind me of the figures of which I am all too sadly aware.
In view of the Minister's recognition of the serious problem which exists in Dundalk, would he consider setting up immediately a special unit within his Department to tackle the unemployment problem in the town?
As I already indicated, the people who can do something about this, namely the IDA, are already treating Dundalk as an area of special priority. In response to requests from Deputy McGahon and Deputy Bell I have also indicated that I will meet a representative group from Dundalk in the near future to discuss the problem further. I hope Deputy Kirk and Deputy Faulkner will be present on that occasion also. I am certainly very concerned about this. However, it has to be said that the problems of traditional industries did not develop overnight. They have been a long time in the making. In many traditional industries, including this one, costs have been higher than the costs in competing manufacturing locations within the same company in Great Britain. Everybody has to participate in bringing down costs of production in these enterprises if we are to keep them in being and help them to expand. I am afraid no amount of Government action in one location as against another will substitute for making industry more cost competitive. That is the key objective. I am very glad to say that a major step was taken in that direction this very day with the announcement by the Minister for Energy of a new industrial electricity tariff which will be a help to industry.
In his reply the Minister stated that the Minister of State had been in touch with the company over the past year. In circumstances in which the Minister obviously knew that the Clark factory and the employment of 370 workers there were in jeopardy, I am rather amazed that the Minister for Finance could even have considered imposing a 10 per cent VAT on footwear. Is the Minister aware that the numbers on the live register in the Dundalk, Drogheda and Ardee areas have now reached the frightening figure of 7,886 and that to this figure will now be added 370 making a total of 8,256 unemployed people? Is he further aware that of the five counties in the Border area, Louth is the only county which is not classified as a designated area and, therefore, does not qualify for the maximum financial aids and incentives available from the industrial agencies? In view of the appalling unemployment rate in the county, as well as setting up the limit proposed by Deputy Kirk, will he immediately declare County Louth a designated area?
So far as VAT on footwear is concerned, I do not think that is a material contributor to the problem. Ninety per cent of the shoes sold on the Irish market are imported and 10 per cent only are domestic. Combining the rate of VAT at a higher level than it now is, with the effect that will have on VAT at the point of import and on the cash flow of importers, and given that people will buy a certain number of shoes anyway, it is likely that the VAT rate, if anything, will give a slight advantage to domestic producers who supply only 10 per cent of the market as against the 90 per cent of imports. I do not want to over-exaggerate that effect but the main detrimental effect of the VAT rate will be felt by importers of shoes rather than domestic producers. I accept what Deputy Faulkner has said about designation. As I said in response to an earlier question by Deputy Kirk, I do not think that simply moving the designation line would solve the problem. We could designate the entire country if we wanted to, because there is a very severe level of unemployment in practically every town and county in Ireland, although I accept that Dundalk is worse that most. Designating Dundalk by itself would not solve the problem because of the limited amount of money the Government have available anyway. As Deputy Faulkner knows, the solution lies in improving cost competitiveness and internal efficiency.
I doubt if any of the footwear workers would accept the points made by the Minister in regard to VAT. If the Minister were to make Louth a designated area it would mean better incentives would be available and this could be made known to companies throughout the world. In that way we would have a better prospect of securing employment in Dundalk. In view of the many skilled workers and the lack of their prospects of getting alternative employment there, does the Minister agree that a footwear factory is essential to maintain the economy of the town and in the interests of the highly skilled workers? What steps does he propose to take to ensure that a footwear company will be established in the town?
The Deputy may be aware that a proposal has been received from the management of Clarks for a new company to employ people in the shoe industry with a total employment potential of 90. I assure the Deputy that if such a project can be shown to be viable, the IDA, Fóir Teoranta and other State agencies will give all the assistance they can to enable such an industry to succeed. I accept that as far as possible we should try to maintain employment in areas where the skills exist already, as in Dundalk. I know of examples in other parts of the country of firms being rescued partly by the workers themselves. Perhaps when the delegation meet me we can discuss this further. I accept the seriousness of this problem.