Dáil Éireann debate -
Wednesday, 23 Jun 1993

Vol. 432 No. 7

Adjournment Debate. - Dublin Clothing Manufacturing Company Employment.

Miss Flaherty

The Minister and many of us will have seen the programme on television last night which featured the problems at Baize Textiles, a small clothing manufacturing company in the Finglas area. The experience of that company would indicate that it has lost many of its existing contracts because it has become totally uncompetitive. When asked to identify the major factor in that loss of competitiveness it points to the PRSI costs associated with employing people in this country.

A short distance from Baize Textiles there is another clothing firm in my constituency, Glenross Hosiery Limited, which until recently manufactured designer socks for the British market. While it still has some contracts many of those have been reduced as a result of (a) the exchange rate problems and (b) the interest rate problems which put their costs completely out of line. Up to the end of April these companies were cushioned by the market development fund which was established to help companies during that period. However, while the interest rates have now stabilised, people are still carrying enormous burdens from the period when the rates were extremely high. The exchange rate has improved but it still has not returned to the position in which these companies had been competing in the market in Britain.

Glenross Hosiery Limited are not at risk at the moment but at one stage they were employing 170, and are now employing 130 people, many of whom are on part-time work. This company, like Baize Textiles, must now go to Europe and attempt to sell their products there where the cost factors compare more favourably than they do with Great Britain. These companies, through IBEC, have identified the need for some ameliorative programme. They have identified also that rather than a continuation of the market development fund, which was related to direct losses during the currency crisis, special action in relation to PRSI must be taken.

All parties in this House accept that the PRSI burden is a taxation on work. We should use the clothing industry as a pilot scheme to test the impact on employment of a reduction in PRSI. Earlier this session Fine Gael put down a motion to remove the proposed VAT on clothing. It was defeated but when the Government defeated that motion they indicated that the Minister would bring in proposals to deal, in particular, with the clothing industry. It must be remembered that this is a labour-intensive industry and the employment tends to be working-class employment. Throughout working-class areas traditional skilled activities have disappeared. This is one area where the industry is holding on and employing significant numbers of people.

Baize Textiles, Glenross Hosiery Limited and other such companies around the country are at risk of closure and need Government action. IBEC have been campaigning for such a programme for this industry and I would like the Minister to indicate what plans the Department of Enterprise and Employment have, in conjunction with the Minister for Finance, for giving such a concession regarding PRSI. This would enable Baize Textiles to win back some of their contracts, to become more competitive and for other companies like Glenross Hosiery Limited to offer full employment again which they will have the potential to do if they get the required assistance.

Mr. Aylward

I wish to apologise for the Minister's absence here tonight. I want to assure the House that the Minister is most concerned that the future of Baize Textiles Limited may be in jeopardy. The Deputy's concerns regarding the employment of the company are fully shared by the Minister.

The loss of up to 90 jobs in Finglas would naturally have major effects on the economic life of the surrounding areas and, of course, present major difficulties, for the employees concerned and their families.

I am aware that Baize Textiles have issued protective notice to their 90 strong workforce and this is due to expire in August. I understand from the IDA that the company has been forced to take this action as its uncompetitive position has meant that it has been unable to win sufficient orders for its products. Baize Textiles produce outer garments such as coats and anoraks for the home and export markets including the United Kingdom and Russia.

The company, along with a number of other clothing manufacturing companies, have been finding it increasingly difficult, over the past year or so, to compete with low priced imports from third countries into both the home market and the EC. The problem has been further exacerbated by the fact that clothing manufacturing costs in the UK, which is by far our major export market, are significantly below Irish production costs.

The clothing and textiles sectors are essential to the Irish economy, providing employment for about 23,000 people. It is important, therefore, that these sectors overcome their present difficulties and become strong and vibrant elements of the economy, providing secure employment for their skilled workforce, and regaining market share in the home market and also increasing exports.

I accept that these objectives will not be easy to achieve and will take some time to come to fruition. It is important, however, for the industry to start addressing the issues necessary to make it competitive once more.

The Minister in the past referred to the best way forward for the industry, which is that it should become market led, perceived weaknesses should be eliminated, and its strengths maximised. The successful future of the clothing industry is based on proper strategic planning, competitive advantage in service, shorter lead times, aggressive marketing, and quality and design. While most of these initiatives rest with the industry, my Department has had, and is continuing to have, regular contact with State agencies in the context of addressing the problems facing the industry.

The restructuring of the clothing sector will take time and it is important having regard to the immediate problems facing the industry that some short term assistance be given to the industry to allow it a breathing space.

In this regard the Deputy is no doubt aware of the special scheme for the clothing and footwear sectors which was recently announced by the Minister for Finance. My Department has over the past few weeks, had a series of discussions with the IDA who also consulted IBEC in order to examine the best way to formulate the scheme. I can tell the House that I am now in the final stages of discussions with the Minister for Finance on the matter and I am confident that we can reach agreement very shortly on the level of funding and the criteria to be applied. The Deputy will appreciate that careful consideration must be given to this process because we must have due regard to the overall EC requirements in relation to State aid. When this process is completed I hope it will enable the clothing and footwear companies, like Baize Textiles, to become more competitive and, therefore, remain in business.

In addition, the Minister for Finance has already announced that a review is to be carried out, in consultation with the Department of Social Welfare, of the impact on low paid manufacturing firms of the operation of the employers' PRSI system.

Hopefully, the benefit of these initiatives, together with the falling interest rates, will meet the pressing needs of the industry and allow it the time necessary to restructure itself to meet the changing needs of the current market and to secure employment for the future.

The IDA has been asked to make every possible effort to avert job losses and in this regard a meeting between the IDA and the company took place this afternoon. I understand in the course of these discussions, the company has indicated that the introduction of the proposed scheme mav enable Baize Textiles to continue in operation. The Department and the IDA will keep the company advised of developments in this regard.