Deputy Rabbitte has given notice of his intention to raise the matter as to the implications for employment in the Clondalkin area of Atlantic Magnetics being put into receivership with a consequent risk to 150 jobs and if the Minister has any plans to assist in the sale of the firm as a going concern or find a replacement industry. Deputy Rabbitte knows the procedure.
Clondalkin (Dublin) Company Closure.
I am grateful to the Chair for permitting me to raise this most important issue, since this factory in my constituency in Clondalkin was unnecessarily put into receivership causing devastation in the lives of 150 people who were employed at that plant. The decision to force Atlantic Magnetics off Clover Hill Estate in Clondalkin into receivership and throw 150 workers onto the dole queue is an indictment of our commercial practices and company law and a personal tragedy for the members of the workforce concerned.
Atlantic Magnetics is a modern company producing a quality product. They are unable to meet the full extent of market demand, and they have a trained and committed workforce. Arising from a series of events triggered by the main bank involved, 150 workers have now been shabbily disemployed. A company in the electronics sector with full order books indicating a demand of three and a half times what the company can presently meet are now forced, because of a shortage of working capital, to stop production. While this House tonight engages in a macro-economic debate on the jobs crisis, the local economy in Clondalkin is being deprived of a successful wealth generating plant that in reality has potential for expansion. When the Receiver entered the plant on Monday, work was in progress on an order for an Irish software company. Work was stopped immediately on the instructions of the Receiver and that Irish software company are now obliged to source that order abroad. In fact, so shabbily have the workers been treated that they have not been paid for working last Monday.
I have formed the personal opinion that the Goodman collapse provoked the decision of the main bank concerned to effectively foreclose on this company which had expended considerable outlay on new equipment — £1.5 million was spent on new equipment in 1990. The experience of the Companies (Amendment) Act, 1990, and specifically the experience of the Examiner process was a disaster. The bank managed to obstruct the release of funds desperately needed for working capital and thus frustrated the Examiner. The drawn out resort to the courts wasted precious and valuable time and money and although the Supreme Court decision was ultimately positive, it was too little too late.
Effectively the capacity of the Examiner to secure the necessary major investor was frustrated by the deficiency in the Companies Act. There was no working capital to meet increased demand. The result is that a potentially successful modern company is on a life support machine. Workers with an excellent industrial relations record — I should say there is no trade union involved — find themselves without wages and with a likely delay of up to eight weeks before the Department of Labour will resolve their entitlements. The Government must actively intervene to ensure the retention of employment in this plant at Clondalkin and to close the loopholes in the Companies (Amendment) Act that this tragic case has exposed.
I congratulate the Minister of State on his appointment and I welcome him to the House. I mean no disrespect to him when I say that I had hoped his senior Minister would respond to this debate. It is all very well for us to discuss unemployment in the abstract. However this modern successful company had orders on the books that would keep them going for five months but because of an action triggered off by a financial institution, 150 workers in my constituency are unemployed tonight.
I plead with the Minister to appreciate the extent of the personal devastation of these workers and to take whatever steps are necessary. I do not care whether that means assisting in finding an investor through the receiver mechanism or taking equity participation in the company that will cause it to flourish. I do not believe the Government can stand idly by and allow this plant to close down. The only person I did not speak to today was the Receiver but I would like to ask him why the management told the workers that he would keep the company going on an ongoing basis. He has not done that; he shut production down immediately.
We are not talking about an clapped out uncompetitive factory. This is a modern factory with new equipment. The teething problems with machinery have been sorted out. The trained workforce have an excellent productivity rate. We have a good product and market demand. It is imperative that the Minister ensures that the receivership is not allowed to leave that plant closed.
The Minister and I have been keeping ourselves informed of the situation affecting Atlantic Magnetics Limited and we share the Deputy's concern at the company's return to receivership and the consequent threat to the jobs at the plant.
Atlantic Magnetics was established in 1989 following a management buy-out of the Memorex-Telex floppy disc facility in Clondalkin. The company manufacture and market floppy discs for the Irish and European markets. The management buy-out was supported by MADCORP and the IDA provided assistance for the company's development plans. The company performed well until recently when losses were incurred due in particular to severe price competition on their export markets.
The Deputy will appreciate that the electronics industry is global in nature, highly competitive, cyclical and characterised by short product life cycles. Overall the European floppy disc market has been subject to increasingly severe price competition from Far East countries which has tended to erode profit margins. At present the EC Commission are investigating a complaint from European floppy disc manufacturers concerning alleged dumping of floppy discs from Far East countries. Such investigations are, however, normally detailed and time consuming and as such offer no immediate remedy to Atlantic Magnetic's problems.
Due to the difficulties facing the company Atlantic Magnetics were placed in receivership on 18 October 1991. The company subsequently sought to have an Examiner appointed and succeeded.
The Examiner recommended trading and began work on a scheme of arrangement aimed at restructuring the company. It was quickly apparent that in order to survive the company needed an injection of fresh equity. A number of companies in the magnetic media market expressed interest in Atlantic but no firm commitments were forthcoming before the time limit on the period of examinership which expired on Monday last, 24 February. Consequently the Examiner reported to the court that he had been unable to restructure the company and thus the company returned to receivership.
The Minister and I wish to assure the Deputy that we are fully conscious of the adverse impact both economically and socially of the possible loss of jobs at Atlantic Magnetics Limited. We understand that the company are continuing to trade while orders on hand are being serviced. In the meantime I can assure the Deputy that the IDA are keeping in very close touch with developments and working closely with the Receiver. Every effort is being made to secure a take-over of the plant as a going concern and to save the maximum number of jobs.
In this regard I am aware that a number of parties has expressed an interest in taking over the company and these interests are being explored by the IDA in conjunction with the Receiver. It is impossible to say, at this stage, what the precise implications are for employment but I have asked the IDA to keep me informed of developments.
The House will realise, of course, that while the support agencies play an important role in helping industry develop and expand, much depends on the external trading environment and the competitive intensity of the market segment in which the company positions itself.