With the agreement of the House, I should like to share my time with Deputy Hughes.
Adjournment Debate. - Job Losses at Westport (Mayo) Plant.
Is that agreed? Agreed.
I thank you for allowing me raise this important matter on the Adjournment this evening, a Cheann Comhairle.
The matter in question is the placing in receivership of the Larbaun plant in Westport, County Mayo, which manufactures a range of underwear products principally for the home market. Larbaun and its predecessor have been in operation in Westport for over 30 years, during which time they played an important part in providing much needed employment and building up the local economy. In the past 12 months a revision of work practices and a restructuring of the plant have taken place, resulting in a lowering of absenteeism to a level of less than 3 per cent, a doubling of productivity from 1,100 dozen to 2,400 dozen per week, a lowering of the production price and an ability to fulfil contractual obligations on time on each occasion. No blame for the present work stoppage can be attributed to the Larbaun workforce who are efficient, competitive, diligent and at all times professional in their work.
The textile industry in the broader market has been experiencing difficulty for some time past. The free trade concept allows importation from outside sources to EC countries subject to certain quota restrictions. Obviously difficulties arise when the consumer, often in difficult financial circumstances, can purchase cheaper goods produced in the sweat shops of various countries abroad.
Dunnes Stores has been the main purchaser of Larbaun products for over 20 years. It has to be said that this major facility provided stability for Larbaun over many years. However, the non-purchase of goods contracted for over a period of time caused cash flow problems for Larbaun resulting in the present receivership. I understand that the non-purchase of goods by Dunnes Stores was because of the importation of a huge quantity of a particular type of underwear from an outside source. The consequence was that, at one stage, in excess of £500,000 of finished products was held in the Larbaun stores. When one considers that the turnover of the plant is in excess of £1 million per annum, one can readily appreciate the scale of this effect. All goods held in the Larbaun stores were produced to meet specific contracts.
In order to revive Larbaun as a going concern, with potential for growth, the following requirements should be met. There should be a clear, unequivocal statement by the receiver on the up-to-date position regarding ongoing talks, in particular in regard to the position about contractual obligations entered into by Dunnes Stores. I understand from reliable sources in Dunnes Stores that any difficulties here, if not already sorted out, can be sorted out immediately. Obviously, Dunnes Stores, as a major Irish purchaser and consumer outlet, would not wish to destroy their good relations with Irish consumers arising from this happening. I have been informed by sources in Larbaun that, despite stringent efforts by the receiver to contact Dunnes Stores with a view to sorting out the problems of their contract with Larbaun, he failed to secure a favourable decision and had no option but to release the 65 workers there. If the arrangements which are now being put in train between the receiver and Dunnes Stores had been in place three weeks ago the workforce would not now be out on the streets. Larbaun have put their house in order. This company can be sold as a going concern with potential for future growth. The purchase of all the products in stock, of itself, will not sort out this problem as a new purchaser for this plant must be found.
I call on the Minister to instruct the Industrial Development Authority to assist Larbaun in whatever arrangements may be decided to get it up and running again. The increase in VAT from 16 per cent to 21 per cent has had a crippling effect on this trade. I might remind Members that Fianna Fáil and Labour Members voted against a Fine Gael motion on this matter in the House some months ago.
Larbaun has acquired new market outlets in Britain and should be rewarded for that initiative. I trust the Minister will ensure that every facility necessary will be given to Larbaun by his Department to ensure that the contractual obligations are completed and that this company and its diligent and efficient workforce are put back to work in the shortest possible time. I trust the Minister will ensure that is done forthwith.
I thank Deputy Enda Kenny for sharing his time with me. This closure came as a great shock to the local community two weeks ago when Larbaun, which had been in existence for over 35 years, was put into receivership. While accepting that the textile industry has been the subject of enormous pressure in the past ten years, despite a change of ownership this company succeeded in increasing its efficiency rates by nearly 100 per cent in the past 12 months, during which time the workforce was never more effective.
One must ask what was the cause of the closure. There would appear to have been various reasons. I shall not lay the blame totally on the role the large multiples play in this country, nor shall I use my precious time to appeal to Irish consumers to target their considerable purchasing power on quality Irish goods rather than on cheap imported ones dumped on our small economy.
I call on the Minister to ensure that all State agencies, particularly the Industrial Development Authority, FÁS and the Irish Trade Board, play their part in assisting the receiver to save the 65 jobs in Larbaun, which to a town like Westport with a population of 3,500 is almost the equivalent of the loss of the Digital plant in Galway. I would ask him to ensure that full support and advice under the whole range of State programmes is made available to the receiver and, more importantly, to any potential purchaser of the plant. I understand a few potential purchasers are looking at this factory.
We must recognise that our textile industry is under threat from low-cost producer countries. This becomes obvious when one notes the job losses experienced in this trade over the past ten years. The number of jobs is down from 24,000 to 15,000.
I welcome the package of measures the Minister announced on 2 August last, particularly the research and development programmes to address competitiveness, the FÁS scheme to give grant assistance for training schemes and the new competitiveness and employment protection unit established.
I call again for the immediate finalisation of the interdepartmental review of PRSI and the possible reduction of PRSI contributions by low paid manufacturing firms. We must remember that there is a differential of 6 per cent in that rate between Britain and Ireland. This was adequately spelled out in a television programme last week. I fully support the call of IBEC, the representative body in the textile trade, for the establishment of a clothing industry task force to protect existing jobs. There is much talk about new job creation. We should look first to the protection of existing jobs and their maintenance.
I assure the House that my colleague, the Minister for Enterprise and Employment Deputy Quinn, his departmental colleagues, the Ministers of State, Deputies O'Rourke and Brennan, and indeed myself and my Government colleagues, are very concerned that Larbaun has been placed in receivership. We have great sympathy for the workers and the families of those who have just been laid off and we are acutely aware of the effect of this latest closure on the Westport area generally. I understand that the appointment of a receiver was due to ongoing cash flow difficulties which inhibited the company from meeting its financial commitments. It is indeed most regrettable both for the owners and the workforce that Larbaun was not in a position to trade out of its difficulties without having to go into receivership. I can well appreciate the disappointment and frustration of Larbaun management at the special circumstances which have led to the company's cash flow problems, particularly when the company had been performing so satisfactorily following its establishment some five years ago when it purchased the assets of Lastra Foundations.
Larbaun Limited manufactured most of its output, under contract, for the principal Irish chain stores. However, competition from lower priced imports from abroad and the general slowdown in demand on the Irish market, combined to reduce demand for its products. I understand that Larbaun, over the past few years, has placed a large proportion of its production with one chain store. This arrangement had been working very satisfactorily and had the advantage of ensuring a secure market. However, by concentrating mainly on one particular market outlet, the company ran the risk of becoming exposed in the event of unforeseen changes. Larbaun, unfortunately encountered such a traumatic experience. The company, for reasons outside its own control, was faced with the prospect of holding major stocks with a consequent loss of revenue. This, in turn, meant that Larbaun was not in a position to meet its financial commitments and this ultimately led to the appointment of the receiver.
I am aware that the receiver is most anxious to do everything possible to sell the company as a going concern. To this end my colleague, the Minister for Enterprise and Employment, has on behalf of the Government asked the IDA to co-operate fully with the receiver, and to leave no stone unturned to ensure that a suitable takeover company is found. Our main objective, must be to safeguard the employment of the highly skilled and motivated Larbaun workforce.
We accept that the receiver's task in endeavouring to sell the company as a going concern will not be an easy one. The current difficulties facing the clothing industry and the general international recession do not provide the most conducive climate for such a sale. We fully recognise the problems facing the clothing industry and the need to secure the future of this vital sector of the economy.
Indeed earlier this week the Minister for Enterprise and Employment had a very fruitful meeting with the Irish Clothing Manufacturers' Federation during which they examined in detail the problems, facing their industry and the best way of devising measures to resolve them. The Department of Enterprise and Employment is continuing to liaise closely with the relevant State agencies in an effort to get clothing companies to adjust, reposition and upgrade their own competitive strategies and strengths.
The House is also no doubt aware that the Minister, Deputy Quinn, recently announced two special initiatives aimed at improving the competitiveness of the clothing industry. The advent of the Single Market and the gradual movement towards easing the quota restrictions under the multi-fibres arrangement has inevitably meant that increased volumes of imports would flow into the community from low-cost countries. To compete in this environment the clothing industry must restructure in a significant way and take a new direction.
The key to the successful future of the clothing industry is in the production of high quality, well designed products. Manufacturers must move away from the traditional production line facilities to modular production techniques such as world class manufacturing. These fundamental changes would be a major step towards improving competitiveness as the need to hold large volumes of stock with the associated high costs would be virtually wiped out overnight.
In addition clothing manufacturers would be able to respond quickly to changing trends which would give them a distinct edge over third country low-cost producers. In addition to the need for installing new production facilities, it is also important for the industry to produce better quality and better designed garments. This will of course require new technology and new design techniques. The introduction of new technology will naturally require the appropriate retraining of staff so that they can operate the new technical systems.
When announcing the two special initiatives referred to earlier for improving competitiveness in the clothing and footwear industry, the Minister, Deputy Quinn, took account of the special needs of the industry, including the necessary training requirements. These initiatives provide for a special research and development scheme, which will operate under the research and development scheme run by the State development agencies and a special training support scheme operated by FÁS. In tandem with the special initiatives for the clothing and footwear sectors, representatives of the Department of Employment and Enterprise, in conjunction with representatives of the Departments of Finance and Social Welfare, are at present reviewing the impact of employers' PRSI on low paid manufacturing industries. We appreciate that the anticipated improvements in the industry as a result of these special initiatives will not bear fruit overnight. The schemes are scheduled to run for a 12 month period which we think is necessary to give companies time to identify their special requirements and embark on the appropriate restructuring programme. These various initiatives and the suggested way forward will, I hope, be the first step in an effort to stem the number of job losses in the industry. It may also create a new vibrant sector which will not only be able to compete in the changing environment for the sector but which can take advantage of any new opportunities that may arise.
Finally, I thank Deputies Kenny and Huges for raising this matter. I share the concern they expressed on behalf of their constituents pertaining to the difficulties of Larbaun in Westport. I know that Deputies Hughes and Kenny have made trojan efforts to have this matter resolved in consultation with the Department of Enterprise and Employment, the IDA and other State agencies. I hope the consumer chains involved will ensure that the maximum co-operation is given so that this company can be brought back to a trading environment as rapidly as possible.
The Dáil adjourned at 7.50 p.m. until 10.30 a.m. on Thursday, 7 October 1993.