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Dáil Éireann debate -
Tuesday, 4 Mar 1986

Vol. 364 No. 4

Adjournment Debate. - Shannon Bus Assembly Factory.

I thank you for giving me the opportunity to bring this matter before the House, because we regard it as very important. With your indulgence, I intend to give some of my time to Deputy Daly.

As the House knows, in the late seventies the Bombardier company was set up at Shannon to build buses. Those buses were to serve the schools, city bus services, provincial bus services and the building of coaches was on the stocks at the time. The arrangement at that time, and as far as I know it still obtains was that the actual building operation was owned by SFADCo and the tooling and equipment was, and still is, owned by CIE; and there was an arrangement with the Bombardier company to have the factory used to build buses to suit the transport developments envisaged for the entire country.

A considerable number of such buses were built. The Government, and I at that time, heard certain complaints about the quality of the buses. I did a survey of drivers who, for the most part, indicated that the buses were good, sound, reliable and that the percentage availability was very high. Later the Bombardier company passed the operations on to GAC and they shared directors.

The important thing to reflect on is that there were as many as 450 people employed, 200 in the assembly of the buses and 250 involved in various types of manufacture to service the bus assembly company. At present, with the disastrous unemployment position and particularly with the availability of large numbers of young people who have been trained in certain manual skills, this House and the Government are not thinking sufficiently seriously, because we are not merely dealing with 450 people, that number can be multiplied by two or three in order to get the true figure of the numbers relying on this business.

The product was a reliable one. The factory was set up properly and the numbers engaged were substantial. In the light of all this and of the serious unemployment problem, the Government should make a serious effort to give this industry a chance. What is the value of the total tooling and machinery of that factory? What does one do with it now? How can its value be realised? Will the IDA be able to put something in place of the GAC operation and take up that company's capital investment? What about the much vaunted National Development Corporation? What will they develop? Why will they not invest in one of the easiest forms of investment available? The factory is there for leasing, the equipment is there for use. Would it cost a great deal?

I am trying to stimulate people to think deeply on this serious matter, to think along the lines of the possibility for development. There are various agencies, many development organisations such as the NDC, who should be interested. There are also the IDA and SFADCo. All of these should be dealing with this problem and trying to get a viable industry going at Shannon. As I said, there are many young people highly trained in manual skills. The GAC company had inputs from sheet metal workers employed in supplying the main factory. There were people making the metal parts for buses, there was a metal workshop and there were people engaged doing a highly skilled job in the making of upholstery. Those people were spread over the area and getting first class employment through their association with the main company.

Those involved in employment in that area will regard many of the activities of this House as a charade if nothing is done to salvage something form this situation. There is no problem about providing a building, which would be a big obstacle if a new business were being established. There would be no problem about providing grants for machinery and tooling because they are already in place. As I have said, there is no problem about the provision of skilled work people. They are already there, their skills having been developed by training.

I should like to know if the Minister for Industry and Commerce has applied his mind to and engaged the minds of his officials with this problem. I look forward to hearing him on what the possibilities are, on what possibilities have been explored. Have the IDA been consulted and if so what was their exact answer? Has whoever has responsibility for the infant National Development Corporation given an opinion on this? If so, the House would be interested to know what that opinion is.

With regard to one major area to which my collegues may refer, what is the Government decision with regard to the provision of school buses? Is there a Government decision on that matter? Has a decision been taken to discontinue the provision by the Department of Education of buses for school transport? I do not know but the House is entitled to know in this context as well as in the broader educational context.

I urge the Minister to make contact with all those areas I mentioned, as well as CIE, of course, and the Department of Transport — we will have the Committee Stage of the Dublin Transport Authority Bill tomorrow — who must be interested in the fate of this factory at Shannon. Again I urge on the Minister and this House the seriousness of the situation, the importance for us, as public representatives to be seen to be concerned when so many people are being put out of work in an area which is manufacturing a product which can be very useful for the further development of our economy.

I thank Deputy Wilson for giving me this opportunity to support the case he has so ably made in support of the retention of this company and the maintenance of employment and productivity in this excellent plant at Shannon. I had an opportunity on Second Stage of the Industrial Development Bill to put my views before the Minister, but I ask him once again to keep in mind the very serious situation facing these employees. As Deputy Wilson said, we have a highly skilled workforce and if this company closes, these people will have no prospect of alternative employment in the area.

In that region over the last few years we have had an over-dependence on the high technology computerised electronic field, and there is a need to balance the base of industrial production in the area between the electronics and highly skilled areas and the manufacturing of heavy industry. As I said, we have a highly skilled workforce producing an excellent product, which I am reliably informed is very much in demand. The information available tells us there is an urgent need for replacing at least half of the school bus fleet. In other words, 400 school buses are urgently needed to supplement the fleet, to provide replacements and to streamline the fleet, most of which has been working for more than 16 years. Some of these buses are in a very dilapidated condition and badly in need of replacement. This company can provide these 400 replacements at very competitive prices. There was some criticism of this plant in the past. It was said that it could not compete with imported products. It was said that a similar product could be imported much more cheaply but that is not the case. The Department, in consultation with CIE and the company have established that the bus manufactured at Shannon can be produced at a very competitive price and compares more than favourably with similar products on sale any where in Europe.

At present a prototype bus produced by this company is in Darlington for tests and it is hoped that substantial orders will result. Up to now these tests have been very satisfactory and I am told that the company are devastated that, just when they were about to make a decision on whether to place an order with the company at Shannon, they heard a petition is before the courts to have the Irish company wound up and that the hearing is likely to be sometime in the middle of this month.

The situation is critical and the Minister should be able to find a formula to enable this plant to continue in operation. I understood from Deputy Prendergast's speech this afternoon that the Minister had proposed a formula which at least would enable discussions to take place. Perhaps the Minister could tell us this evening what that formula is. Even at this late stage it might be possible to start negotiations to ensure that the company remain in production. I believe the company, with some State assistance, could put before the Government a very viable proposition. If the Minister tells us what his proposals are, an early decision could be reached and this could stabilise the position in Darlington because unless the position is clarified soon, the propects of getting this very substantial order will be lost and this could have very serious effects for the company.

There seems to be an impression that special Government assistance is required in this case but that is not so. With many other threatened closures the Government reluctantily gave financial backing, although there was no guarantee that the companies would reach profitability, but if the Government gave this company financial support they would be getting in return a very valuable product, and this should be taken into account. Giving assistance to this company would not be the same as grant-aiding some of the companies about which we have had discussions in this House in the past. The Government can support this company by giving a commitment to purchase buses. These are some of the best buses that can be bought in Europe and they are produced in Ireland by a very highly skilled workforce. This company buys component parts from small businesses which have been set up in the Shannon area for this purpose. I appeal to the Minister to take some action and see that something positive is done for this company.

May I lend my support to my colleagues and appeal to the Minister, even at this late stage, to take immediate action to save this company? It is a young company and has proved to be a competitive company. Its accounts and performance are ethical, but its fate lies in the hands of the State. We need to improve the school transport buses. We now have an opportunity to provide 400 much needed buses. I want the Minister to clarify this situation.

I support my colleagues because some of my constituents work in that company and in my county there are several small manufacturing companies totally dependent on supplying some of the base structures to GAC. If GAC goes, those other companies will go.

I appeal to the Minister to adopt a positive attitude, to provide the capital investment needed to create the jobs, to provide the public service vehicles needed in the school transport area, ensuring this company continues in operation, making its contribution to the development of the western economy.

I entirely understand the Deputies' concerns about employment at Shannon, particularly in GAC. The GAC factory at Shannon were obliged recently to lay off their workforce in excess of 200 because they had no further orders on hand. The company's problems stemmed from the fact that they have been totally reliant on domestic market demand for buses to maintain production levels. They became almost entirely dependent on Exchequer-related bus purchases which, in recent years, have been rolled forward to assist the company. However they recognised that their long term viability — here we should understand that the "viability" is important, that every company must be viable, must survive in the commercial world and that companies cannot rely continuously on Government financing for their future survival — was based on export orders. While the State gave every possible assistance to their efforts to identify and develop export markets, no sustainable markets were secured. The board of directors have their responsibilities in relation to the company. It is not up to me to comment on their responsibilities or to give any direction in relation thereto; they must act as a board of directors in a commercial company.

GAC (Ireland) Limited — formerly Bombardier (Ireland) Limited — have manufactured buses in Shannon since 1979, virtually wholly for the home market. When the company were established it was recognised that there was a requirement by CIE for urban and rural bus replacement. Over the past six years GAC produced to meet this requirement. I should point out — and it is relevant to the involvement of the State and State support for the company — that to date CIE have purchased approximately 800 buses at a cost of close on £100 million, that is, of taxpayer's money. I consider that to be substantial State support for the company. I put this forward as an indication of the support given by the State sector to the company. The company produced a good product — I do not deny that and fully accept what the Deputies opposite have said — but it was recognised at the outset that the demand in Ireland for buses would never be adequate in the long term to maintain the factory at full production.

Would the Minister give me the figure for the costings again please?

Eight hundred buses at an approximate cost of £100 million, nearly £100 million.

That cannot be right; it is more like £64 million or £70 million.

It would not be costing £1 million.

The company produced a good product. But it was recognised quite clearly that the demand in Ireland for buses would never be adequate in the long term to maintain the factory at full production.

In the State sector side of the economy obviously there is a limit to the number of new buses CIE can afford to purchase and operate. In the recent past, market demand had been created artificially by the rolling forward of future years' requirements for buses. However, this rolling forward could never be more than a short term expedient. The domestic private sector bus fleet is made up to a large extent of second-hand vehicles, limiting the ability of GAC to sell into this market. This domestic market alone, therefore, could not sustain GAC's production capacity in the long term. The long term viability of the Shannon operation was dependent on the gaining of export orders, which the company have failed to do to date to any extent.

I took a similar Adjournment Debate on this subject on 18 December last. In that debate I pointed out and I must repeat, because there is need for clarity in this matter, there has been a downturn in demand and increased competition for exports in the bus building market. Europe has seen many plant closures and a major rationalisation in the industry. Japan has recently become a great penetrator of the export markets, thus increasing the difficulties for the longer established exporting companies. The international market is highly competitive and is fraught with import restrictions and stipulations about local content of production.

All countries are looking after their own except us.

It is against such a background that GAC have been attempting to reduce their reliance on the domestic market by winning export orders. Deputy Daly's interjection is not sustainable because CIE have purchased 800 buses, good buses.

What about the school transport fleet?

I must repeat this, because people may not want to accept it but nonetheless it is a fact, that it is the State sector which has been the supporter of GAC in recent years. I do not want to go into this in any party political manner. I merely want to put the facts on record.

What about the school buses?

It is against the background of an extremely competitive international market that GAC have been attempting to reduce the reliance on the domestic market by winning export orders. The world bus market itself has been depressed for a number of years with a number of manufacturers going out of production. The downturn in the demand for buses has been caused by two factors, first, the overall reduction in the demand for public passenger transport facilities and, second, the tight control over capital expenditure in a recessionary situation which leads to an extension of the average age of bus fleets because of the deferral of replacement buses. The efforts of GAC to break into the international market have not been as successful as hoped. Perhaps this is because GAC, being a fairly young company, operated under certain disadvantages in comparison with their more established competitors such as Volvo, MAN and British Leyland.

GAC produced a high quality bus with a lot to offer. With the assistance of Córas Tráchtála they sent demonstration buses on trial both to the British market and to the Middle East.

Unfortunately no sustained export outlets were secured from these efforts.

They recently built and shipped a prototype bus to a Darlington bus company for testing. Testing is expected to take up to six months, when contracts will then be signed by the successful company in, say, September on October this year. The possibilities of such a scenario would not become clear until late 1986 at the earliest. Consequently with no immediate prospects for orders the company laid off most of their staff on 24 January 1986.

Over a number of months exhaustive efforts have been made to provide orders in the interest of maintaining employment at the factory. The school bus situation was examined in detail, as were CIE's future bus needs. However, CIE do not have the resources or the need to acquire any further buses in 1986 apart from their existing order with GAC for 39 buses for the replacement of their rural bus fleet which will be completed when the present order is finalised.

What about the replacement of the school bus fleet?

The present closure of GAC must be viewed in the context of a global recession in the bus building industry and that of other major manufacturers in the United Kingdom and on the European mainland faced with similar layoffs. The company were not alone in their search for export orders. Everything possible was done by the appropriate State agencies to assist GAC in identifying and developing export outlets, thereby improving their future prospects. In addition, over £200,000 was allocated to the company by Shannon Development by way of grants towards research and development on their product. Unfortunately, the hoped for export markets failed to materialise. In all these circumstances the company's position has become uncertain.

I would hope that whatever the board of directors decide will be in the best interests of the future of the company. Refrence was made to IDA grants. CIE own the equipment. Deputy Wilson referred to the National Development Corporation. It is rather interesting that he should have written to the NDC now to support the company when his party even opposed the establishment of the NDC itself.

That is a cheap little remark. Would the Minister tell us about the buses?

Deputies will be aware that the National Development Corporation are confined, in their criteria for investment, to companies that are viable. The State has fully supported this company in every way possible, in a commercial and social sense, particularly through the auspices of CIE.

I want to ask one question, a Cheann Comhairle, which is traditional.

The Deputy may ask one short question. It is not traditional; it is exceptional.

Would the Minister of State say whether a decision has been taken on the school transport system? Will there be any more buses provided for that purpose?

As the Deputy is aware, CIE act as agent for the Department of Education. I am not aware that funds have been made available for further school bus transport purposes.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 5 March 1986.

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