Dáil Éireann debate -
Tuesday, 2 Nov 1993

Vol. 435 No. 3

Adjournment Debate. - Future of Irish Steel.

Mr. Allen

I am raising this matter to give the Minister an opportunity to clear the air about the future of the Irish Steel plant at Haulbowline, Cork. It is unacceptable for the workers and the public to read comments emanating from the Minister's Department about the future of Irish Steel last weekend in The Sunday Tribune. The paper quoted senior sources at the Department of Enterprise and Employment who said that the Irish Steel plant at Haulbowline will close down next April with the loss of 550 jobs unless the company secures £1 million worth of cuts in payroll costs, lays off at least 60 workers and finds a partner to invest in it. On 2 November, The Cork Examiner quoted a consultant who recommended that the plant should be closed down if new work practices in Irish Steel cannot be agreed on.

In a city and county still shell-shocked by widespread industrial job losses, the most recent being Youghal Carpets and Beamish and Crawford, this leaked report creates a further air of depression in the area.

I am asking the Minister this evening to inform the House — which is the proper place — of his plans for Irish Steel both short term and long term and if he has carried out an investigation into how the highly sensitive and confidential document in his Department was leaked to a Sunday newspaper.

Was it a planned leak by his Department to test public opinion and to shock the workers into taking a certain line of action or is it his Department's way of making public potential job losses in Irish Steel?

We have heard for a number of years about potential foreign interests in both Irish Steel and the Irish Refining Company. At Question Time today another Government Minister said that a foreign party may be interested in the Irish Refining Company.

We are tired of waiting for foreign investors to come forward and it is now becoming obvious that we can overcome our difficulties in Irish Steel and Irish Refining only by taking hard decisions ourselves on the level of investment required. Let me remind the House of the last occasion a foreign investor invested in Verolme in Cork — we were promised 400 jobs by the Taoiseach — and we now have four people working there.

The type of misinformation being circulated in recent days on the level of payment to the committed workforce in Irish Steel is unhelpful and is being used to pressure the workforce into making further concessions. I am appealing to the Minister in a responsible way to come clean on this whole affair, to outline his plans for Irish Steel, and give guarantees about its survival rather than having reports leaked from his Department in a selective way in order to misrepresent the situation. Irish Steel is reported to be losing £1 million per month — if the reports in the newspapers are to be believed — but the consequences of its closure cannot be contemplated at this stage. It would be an employment and economic disaster for the greater Cork area and an industrial disaster for the country.

Finally, I am appealing to the Minister to act responsibly in this matter. I am also asking management and unions to step up their efforts to reach agreement on the measures necessary to secure the future of the plant. The workforce must not be asked to carry total responsibility for the problems at the plant because over the years workers have performed in a most unsocial working environment. They are committed to the plant if it gets sufficient Government support.

Minister for Enterprise and Employment (Mr. Quinn)

I am glad to have the opportunity to respond to the points raised by Deputy Allen and which were raised on a previous occasion by my Labour Party colleague, Deputy Mulvihill from Cork.

We are discussing a State owned company that is in difficulties because of a depressed market with poor prices and a costly and less than satisfactory production arrangement. Hopefully, the market will pick up in time. We cannot do anything about it. However, the company and its workers must address the things it can do to improve the situation. If this mill cannot address its problems — in the way, I suggest, that the Aer Lingus workforce has addressed its problems — then there could be risks of a business failure. Failure would not arise because of any official decisions by my Department. It would happen, if it happens, because the operation cannot go on producing steel at costs which cannot be covered by the proceeds of selling steel. Deputies will be familiar with the figures for last year. It is our business in this House to encourage management and workers to avoid such a situation by making such adaptation as can be made to improve the situation.

I do not intend to speculate about the company's cash flow or if it might run out of cash. It would not assist the company's affairs if I or any other Deputy were to do so. I can say, however, that the situation is very serious. I must, therefore, emphasise very strongly the urgent and immediate need for management and unions to agree on savings and on work arrangements to put this mill on a level of performance that compares with any mill in Europe for efficiency and production costs. That is absolutely essential. Quite frankly, this has not been adequately addressed in the present climate.

The mill must be more available to management to produce steel and to do so at a lower cost. That requires some adaptation by workers but also by management. I regret that progress on achieving savings and more efficient and profitable arrangements is too slow. I strongly urge both sides to discuss the speedy introduction of improvements.

Deputies should be very careful about going into the details of the company's finances. Let me make it clear that Irish Steel is a company with promise and potential.

Mr. Allen

The details are in the newspapers.

Mr. Quinn

I know, but I am still making the point because Deputies have to be careful how they respond to items in the newspapers and I am reiterating that in relation to this issue. Irish Steel is a company with promise and potential, provided the economics of steel production are right. However, it is not open to any Government in the European Community to invest in or to aid its own steel companies. In the Community, loss-making companies are having to close. That is the situation. The rules are quite clear, we would need the unanimous agreement of the European Commission and the governments of each member state to permit us to fund or to invest further in Irish Steel. The only way in which we could get that agreement would be if we could offer capacity reductions at the plant to counterbalance the aid. As has been made clear in this House previously, we cannot offer such capacity reduction because we have only the one mill.

There is a very serious problem with getting the unanimous consent of the Commission and member states for giving funds to Irish Steel. Member states are adamant on the need for respect for EC rules that prohibit aid to steel, as was clearly stated in this House by the Minister of State, Deputy Brennan, in the spring of this year to my colleague, Deputy Mulvihill.

There is, however, some hope that following agreement on setting reduced costs and new arrangements to increase the availability of the mill's capacity to management, this company could then attract the interest of a strong outside steel maker — a partner who could participate in some appropriate way to bring the mill forward on a more secure basis which would help it to continue and to succeed in business. In any event, with or without such a partner this mill, being a highly capital intensive plant, would require ongoing capital investment. Even to contemplate justifying such normal but needed investment requires agreement on cost savings and greater availability of the existing plant. On current costs and performance such an investment simply could not be justified. Cost savings may involve some reduction in job numbers, though not necessarily immediately. That may be related more to investment plans. However, that too should be a matter for discussion between the management and workers. The detail of it is certainly not an appropriate matter for the national Parliament.

Perhaps the explanation as to why we are discussing such things at all is that the union-management talks seem effectively to have stalled or, at any rate, seem to be moving at far too slow a pace. I must stress the need for both sides to get back to the negotiating table and to agree solutions — we have seen how flexible and courageous Irish unions, in particular SIPTU, are and they have demonstrated their capabilities in relation to Aer Lingus. This, after all, is a business like any other business in that it needs strategies that will ease and improve its cash situation. Businesses that cannot adapt and improve to cover costs can and do fail. If this business cannot make the necessary adjustments, it certainly will not be helped to stay in business indefinitely. I urge the unions to give the problems much more urgent consideration and I urge management to negotiate for the maintenance of the greatest number of jobs. If there is hardship as a result of adjustments, it should, in my view, be spread equitably throughout the entire workforce, including top management.

Finally, this plant is not a unique situation. All steel makers in Europe are in difficulty and all are making adaptations. The European Commission has identified a need to reduce capacity in Europe. This would result in some 70,000 job losses. We are not included in those reductions. We want to realise the full capacity of the existing mill as a result of negotiating new work arrangements.

Irish Steel has been very successful in its marketing, sales and distribution and if it could improve its production it could become a competitive mini-mill and accordingly would become a much more desirable partner for inward investment from another steel manufacturer or producer. As a consequence, it could become a very successful player in the European steel industry. It has the potential and it is Government policy to encourage that potential. The issue that confronts management and the workforce is the present difficulties over achieving more efficient and lower cost production. This House should send out a message to all Irish Steel on the need to move quickly to negotiate improvements, which we believe can be achieved. Without them, the economics of steel making in Cobh will not be very auspicious.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 3 November 1993.