Deputies Tom Enright, Brian Cowen and Charles Flanagan gave me notice of their intention to raise on the Adjournment the subject matter of the closure of the Midland Butter and Bacon Factory at Tullamore. I presume the Deputies wish to share time.
Adjournment Debate. - Tullamore Factory Closure.
How many minutes are there for each of us?
There are 20 minutes available — roughtly six minutes each.
With my colleagues, I thank the Chair for allowing us to raise this important matter on the Adjournment tonight. The closure of the Midland Butter and Bacon Company will have a devastating effect on the workers in the factory and on their wives and families. The repercussions of this closure will be felt for many years to come. The majority of the workers have mortgages, many have cars on hire purchase and many are trying to educate their children in third level education and so on. They cannot meet their commitments if they lose the weekly wage packet. The impact of this closure on the town of Tullamore will be great. At present 2,000 people are signing on each week at the employment exchange there. This closure will aggravate an already bad situation. There was a wage bill at this factory of £1.6 million each year. The loss of this money will be a serious loss to the Tullamore and to the county. The people cannot accept a loss of this magnitude.
The closure of this factory smells. The workers were told on Friday evening last that the factory was closing. They were not given any notice. Cheques were given to workers and today I heard that the cheques had bounced and had been dishonoured. That is absolutely scandalous. Tonight on television I heard a young man, Mr. Vincent Conlon, outline to the nation how vans returning with money from the sale of produce were intercepted and the moneys taken from the drivers. In exchange the van drivers were given worthless cheques for their week's work. The vans were hijacked and the money taken by the firm. There was an absolute rip off. I utterly condemn the way the workers and the van drivers have been treated. The Minister and the Government should ensure that every possible sanction is taken against this company and its directors so that this type of rip off does not recur.
A close examination of the figures for the Tullamore employment exchange show's the seriousness of the situation. It has been disclosed that the number of people under 25 years of age out of work in Tullamore has declined while the number over 25 years has increased. That illustrates the level of emigration from the town.
Last Friday the Minister for Industry and Commerce announced 460 new jobs across the country. Everybody is happy to see new jobs being created but not one of those new jobs will come to Offaly or to the midlands. A recent report on the midlands published in December last shows that this area has fared worse than any other region with the exception of the Gaeltacht areas in relation to job creation. Only 750 jobs were created in the midlands while about 5,000 were created in the east and 1,500 in the south east. We in Offaly have experienced a serious decline in employment. With the elimination of jobs in Bord na Móna there has been a drop of over 1,000 workers in Offaly in the last few years in that respect alone. The loss of all these jobs in the firm in question is a major disaster for the county. When both the Tuam and the Thurles sugar factories were closing major plans were made by the IDA and the Government to provide alternative employment and plans were already in train. There have been no plans and no provision to provide these jobs in County Offaly. I call on the Minister for Industry and Commerce, the IDA and SFADCo to take immediate action to provide alternative employment in County Offaly.
Every practical step must be taken to keep this factory open as a going concern. It is important for the workers, their wives and families, for the town of Tullamore and for many farmers throughout the county to provide the raw materials for the products this firm sells. It is vitally necessary that every effort be made by the Minister for Industry and Commerce to keep this factory as a going concern. This should be a priority and I urge the Minister to take action. Some efforts have been made by Offaly County Council, who set up a task force that submitted a report.
Offaly deserves to be treated as a priority, and I am afraid the IDA have failed to provide jobs there. Tullamore is spoken of as a priority town. If Tullamore is a priority area, why were we not considered when all these jobs were announced? No provision was made for any new jobs in County Offaly. Offaly has been left behind. It is important that the IDA, SFADCo and the Minister for Industry and Commerce immediately take action to provide jobs in County Offaly. The situation is getting worse and employment is falling day after day. The only people who have the power to remedy that are the IDA, SFADCo, the Minister for Industry and Commerce and the Government. It is their duty to provide these jobs.
I am a representative of the county and it is my job to highlight this issue and to urge the Government to provide these jobs. As a matter of extreme urgency I call on the Government to ensure that these jobs are provided and that efforts are made to keep that factory in operation.
I would also like to thank you for allowing us to raise this matter on the Adjournment. In relation to this matter, the receiver has been appointed, the employment of the workforce has been terminated with effect from Saturday last and 180 jobs have been lost. It appears that liabilities exceed assets by an estimated £700,000. The operations of running the business of Midland Butter and Bacon Company Limited have come to an end.
I decry the manner in which it seems management failed on Friday last to make itself available to the workforce to inform them of what was about to unfold. I fully agree with the sentiments of the workers who say they have been left high and dry by reason of the fact that cheques seem not to have been honoured. The allegation that there was a breach of good faith in relation to the failure, as promised, to honour cheques by paying from the cash coming in on the vans on Friday evening is one which would cause particular resentment among any workforce.
In short, workers who have given long and loyal service deserve to be treated better. Workers who, on Friday last, faced the prospect of the appointment of a receiver the following day could have reasonably expected that the serious position of the company would have been explained and clarified by outgoing management, despite the difficult circumstances that would entail. Bearing in mind all of that, including the suddenness and the shock which has been the consequence of the appointment of Mr. John Donnelly as receiver, what has to be grasped now is the commercial reality that faces this private company and the need to salvage as much as possible out of the desperate situation in which the workforce, their families and the local community now find themselves.
Our first priority is to ensure that the full entitlements due to the workers in this insolvency situation will be speedily dealt with by both the Department of Labour and the Department of Social Welfare. The corollary of this would be that the receiver would then be in a position to negotiate as quickly as possible with all and any prospective buyers who hopefully will have an interest in starting up operations at the site, be it in the bacon industry or in some related industry, which will give a realistic prospect of long-term employment for as many people as possible. It is clear that the operational problems the company were experiencing stem from a need to invest substantial sums in the existing plant and machinery and in the infrastructure of the premises itself so that the plant will meet all necessary standards under the relevant legislation which governs food related industries.
The point has been made that given the interests of large food concerns in the milk quota of Westmeath Co-op, of which the area of Tullamore forms a part, these concerns or others might display an interest in acquiring the premises with a view to setting up an operation which would give employment in the food related sector. Time is of the essence in all of this. The receiver has a good track record in selling off enterprises which get into financial difficulty as going concerns when and where that is possible.
In relation to remarks about the 460 jobs which did not come to Offaly, I understand that what was involved was an increase of jobs in existing industries in those locations. However, I take the point, and it is one that has been widely held within the county, that the Industrial Development Authority need to focus far greater attention to get the result we need given the fact that we are a county which depends, inordinately highly, on the semi-State sector — Bord na Móna and the ESB — which is under rationalisation at present, and we have a small manufacturing industry base compared to other midland counties in the region. There is also the case that many of our major indigenous industries are in traditional sectors which are particularly vulnerable and where competition is very high at present.
I am glad to say that as a result of discussions with the IDA today certain changes and commitments have been given in that respect. It is clear that the IDA regard the whole region, and the part of Offaly over which they have control, as being a national priority. I have received an assurance that a specific team will be set up within the IDA consisting of Mr. Tom Rochford, head of the regional development division, a member of the overseas division, the regional manager and another member within the IDA who deals with native Irish manufacturing industry. They will have at their disposal the whole network of IDA resources for the purpose of seeking to encourage and entice industry into the area. I further received a commitment that that team, to be known as the IDA North Offaly team, will liaise with the Offaly enterprise board on a monthly basis to report progress, or a lack of it, to ensure that we see some effort being made to get the type of industry we require. I received further assurances under the private participation programme, which is envisaged in relation to the building of factories, that whatever problems are arising in relation to a 25,000 square foot factory in Tullamore will be dealt with as soon as possible.
I want also to call Deputy Flanagan before the Minister replies.
I would like to record my gratitude to you for allowing this very important, albeit short debate, to take place tonight. The shock announcement of the closure of the Midland Butter and Bacon Company has devastated the town of Tullamore and its surrounding areas. Tullamore is the largest centre of population in the counties of Laois and Offaly and one which has, in recent times, been ravaged by unemployment and emigration. One had only to see the droves of returned emigrants in the town at Christmas to witness the extent of the problem. Now, with the appointment of a receiver to the Midland Butter and Bacon Company the future is looking particularly bleak for the workforce and their families. Many of these are young married men with mortgages who are facing a future of extreme hardship and suffering.
I understand that this company has suffered trading losses with the result that from Friday last the doors were shut without a scintilla of prior notice to the workforce involved. The debts, I understand, amount to something in the region of £1.5 million and with assets of over £1 million the net loss appears to be less than £750,000. I am very concerned at the future of this plant and I would hope that every effort is made to secure the premises as a going concern if at all possible.
There are 180 workers involved, inclusive of those in part-time employment, but it does not stop there. Farmers and suppliers are left in severe difficulty and I understand that a number of individual hardpressed farmers have been badly stung, and I would hope that every effort is made to ensure that their losses are kept to an absolute minimum. I urge the Ministers for Industry and Commerce and Labour to use every resource available to them to ensure that the receiver can preserve this company for sale on the open market as a going concern. If this plant is not to be preserved, then the insolvency fund should be opened without delay to ensure that cheques which were not honoured last week are met and that payment in lieu of notice and holiday payments, as well as the statutory redundancy, are paid without delay. Otherwise many families in the town of Tullamore will suffer severe hardship.
Last year the Government designated County Offaly, in line with other western counties to receive increased grant aid for industrial purposes. Unfortunately, this move has produced very little in terms of dividends. There is a clear onus on all parties concerned, in conjunction with the Industrial Development Authority, to realise that Offaly is a disaster area ravaged by unemployment. The loss of 180 jobs in Tullamore is bad enough but if that is added to the 1,200 people who have availed of the voluntary redundancy-early retirement scheme in Bord na Móna, coupled with increased uncertainty in the ESB regarding the renewal of the peat power contract, we are facing an appalling economic spectacle.
County Offaly needs to receive special and urgent attention in order to stem the growing crisis. Male unemployment in Tullamore now runs at over 25 per cent and a recent taskforce highlighted the fact that 1,000 jobs lost in County Offaly equals 20,000 jobs lost in County Dublin. A scenario such as that will not be accepted by people or society and neither will this job crisis in Tullamore. I urge that every avenue be explored to ensure the continued operation of this plant which is needed for the future survival of Tullamore and north County Offaly.
I am glad to have the opportunity to reply to this question on the closure of the Midland Butter and Bacon Factory put down by Deputies Enright, Flanagan and Cowen. I should like to put the position at Midland in the context of developments in the pigmeat industry generally.
In July 1987, the Minister for Agriculture and Food, Deputy Michael O'Kennedy, announced a major programme for the development of this very important industry. This programme involves a total capital investment by 1992 of some £140 million, including substantial State and EC aid in the slaughtering and processing sectors of the industry. The purpose of the programme is to rationalise and modernise these sectors so as to create an up-to-date and efficient industry comparable to the best in Europe and capable of matching its competitors both at home and abroad. It also has an ambitious job creation target of some 1,000 jobs.
The development strategy involves the creation of eight central slaughtering and processing plants, up to the highest EC and US veterinary standards, with a minimum slaughtering capacity of 6,000 pigs per week. The strategy also provides for the establishment of a number of specialised export-orientated processing plants, which it is envisaged, would source their raw material from the central slaughtering units. The programme is well under way with a number of plants already onstream and some others in the process of construction or at an advanced planning stage. In fact, since June 1987 my Department have approved of investment projects in pig slaughtering and processing facilities involving a total capital input of about £80 million. Of this, the IDA have committed £15 million to these investments while EC grant aid of some £40 million has been sought, of which about £15 million has been approved.
The decision to appoint a receiver at the Midland Butter and Bacon Factory is one over which the Minister for Agriculture and Food has no control. As the Deputies said in their contributions, the liabilities exceed the assets and there is no denying there have been difficulties in this plant for some time. However, having said that, one's sympathy certainly must go to the estimated 180 people who have lost their jobs. Obviously this was a very valuable industry to the town of Tullamore. It goes without saying that the loss of an industry in any town is pretty traumatic but we have to realise we are living in difficult financial times where companies who have trading difficulties find it hard to survive. We must look at the industry as a whole and the need for necessary rationalisation to get it on to a competitive footing.
We are a very small State in the context of the European Community. The process of change in the pig industry, whether at primary production level, slaughtering level or processing level, has been slow but there is no doubt that the change which has taken place at primary production level is an example to other sectors in the industry of the sort of change and greater efficiency which can be achieved. The investment programme which I outlined in my opening remarks, and the generous grants which are available both from the State and Community coffers, will provide the incentive to potential investors and people who have a commitment to the future of the pig industry to make the capital investment which is required.
There is no doubt this industry demands a lot of capital and the requirements in this regard are very substantial indeed. Obviously it is an investment which has to be undertaken on a planned basis, having regard to the availability of raw materials and cost competitiveness but I believe there are sufficient people in the industry who will plan, invest and do the right thing to ensure the future of the pig industry in this country.
There is no doubt also that the hygiene standards which are required to secure export licences to the EC are high. These demand additional capital investment in the provision of facilities to ensure that the quality of the product being exported from this country is of the highest standard.
I accept the sincerity of the contributions of the Deputies from the LaoisOffaly constituency here tonight but one must see the difficulties in this case in the context of the rapid changes which are taking place in the pig industry. One can only hope that the investment plans of those in the industry will be such as to benefit the pig industry generally in the midlands in the not too distant future.
The Dáil adjourned at 11 p.m. until 10.30 a.m. on Wednesday, 15 March 1989.