I wish to share my time with Deputy Mulvihill.
Adjournment Debate. - Irish Steel.
Is that ageeed? Agreed.
I welcome the opportunity to raise on the Adjournment the crisis in Irish Steel. Sadly, this company seems to be moving closer to a dark abyss as each day passes. During the week the problems in the company were described by management as "frighteningly serious". We are being blamed by the public for standing by and allowing the company to drift towards oblivion. There is, therefore, an urgent need for a strong political response to this crisis.
Last Tuesday the craft unions unanimously rejected the proposed survival plan. While this plan is a serious attempt to deal with the problems of Irish Steel, it must be accepted from a human and social point of view that the financial demands imposed by it on the workers would be extremely severe. It is, therefore, understandable why they are unwilling to accept the plan.
The Government is the major shareholder in this company. While the survival plan is an economic response to the crisis in the company, there is an urgent need for a clear political response by the major shareholder, the Government. From a political, social and economic point of view, everything possible must be done to prevent the closure of this plant. All our efforts must stem from that premise. I welcome the proposed intervention by the Labour Relations Commission which can only be helpful. I am worried why it has taken so long for the commission to intervene, but better late than never. I hope the commission can help resolve the problem in the company.
I thank Deputy Bradford for sharing his time with me. Cork, and in particular Cobh, have suffered major job losses in the past from the closure of the Verolme Dockyard. When the yard was sold to Damon Shipping some years ago we were promised 300-400 jobs, yet no jobs have been provided in the yard to date.
The 500 full-time jobs in Irish Steel and a further 500 spin-off jobs are now threatened by the crisis in the company. In the past the workers in Irish Steel accepted wage freezes and redundancies — I worked in the company but was made redundant some years ago. The workers have once again been asked to take a cut in their basic wage to save the plant. Management should look at other areas where reductions can be achieved before asking the workers to take a cut in their basic wage. In April one tonne of scrap cost £114, it now costs £87 per tonne. Irish Steel uses between 360,000-400,000 tonnes of scrap per year and the lower price should lead to savings of approximately £3 million. This saving should be used to avoid any cut in basic pay and save the plant. Workers have told me they will not be able to pay their mortgages if they have to take another cut in wages. They have accepted wage freezes in the past and now they are expected to take a wage cut. It is unfair to ask them to do this as their wages are already very low.
The Minister must do everything to save the jobs in Irish Steel and prevent the closure of the company. Major savings can be made from the lower cost of scrap, and the Minister should give consideration to this point.
I thank Deputies Bradford and Mulvihill for raising this matter on the Adjournment.
Last April the Government considered the survival plan for Irish Steel Limited and approved the opening of negotiations between management and unions to achieve the levels of cost reductions and efficiencies needed to enable the company to continue in business as a viable commercial entity.
Minimum net savings of £8.4 million per annum were identified in the plan. The Minister for Enterprise and Employment has emphasised that the negotiations between the unions and the executive chairman may identify some other areas where costs are under the control of the company and where reductions can be achieved. Nonetheless the cost reductions that have been identified in the plan are in those areas identified in the Simpson Xavier report, and it is likely that they will have to be included in the adjustments.
However, it has also been emphasised that the savings, whatever their source, must reach at least £8.4 million net per annum because, unless savings of that order are achieved, there can be no question of asking the Government to continue to invest State resources in Irish Steel. Unfortunately, without those cost savings and further State investment, there can be no future for the company. Nobody should be in any doubt about that. It gives me no joy, just as it did not give me or the Minister for Transport, Energy and Communications, Deputy Cowen, any joy earlier to talk in this way about such matters. However, the facts must be faced.
Of course, it is difficult and very sad for people working in companies who arrive at the position in which the workers in Irish Steel or TEAM Aer Lingus find themselves. We are in a huge process of change in semi-State companies, with very difficult times ahead, even with the achievement of cost savings that must be effected. I repeat, that there is no joy in having to say that.
I fully recognise the concerns of both Deputies who have spoken and others in this area and there should be no doubt about what that prospect means. It means the immediate closure of the plant if the £8.4 million savings and the loss of all 560 jobs are not accepted. In addition, job losses would be inevitable in other local industries which supply goods and services to the company. Admittedly, there are job losses envisaged under the cost savings plan but there is a very big difference between the redundancies envisaged in the plan and the 560 job losses which closure of the plant would entail.
As both Deputies will be fully aware, the steel market continues to be extremely difficult and a successful outcome of the European Commission's restructuring plan for the industry remains far from certain. There will be a meeting of Industry Council Ministers on Tuesday or Wednesday of next week in Luxembourg who will be discussing the steel plan to ascertain whether further progress can be made. An improvement in steel prices might be expected to follow from its successful implementation which, of course, would be of benefit to Irish Steel which continues to make losses at the rate of £1 million per month on average. Sadly, that was the same statistic referred to in the House earlier today in the case of TEAM Aer Lingus. I need hardly say that, given this scale of losses, an improvement in steel prices in itself would not be sufficient to stop the outflow of funds from the company. That is why it is imperative that agreement be reached on the cost savings plan by 30 June, which deadline must be rigidly adhered to. The scale of the company's losses does not allow that deadline to be extended. Time is fast running out and it appears that very little progress has been made to date.
The Labour Relations Commission should be used to progress discussions in a structured manner, involving all unions. In recent discussions, the Minister for Enterprise and Employment, Deputy Quinn, confirmed to the new chief executive officer, Mr. Dineen, that unless agreement is reached on the full implementation of the plan by the end of this month, there can be no question of the Government considering further investment in Irish Steel Limited.
Because of the regime on State aid operated by the European Commission for the steel industry it would be necessary to secure the unanimous approval of the other member states to any further State investment in Irish Steel. An important aspect of obtaining this approval would be to show that Irish Steel can function as a viable commercial entity, that it has a commercial future ahead in the marketplace. As it now stands, Irish Steel is not viable and cannot hope to be unless the £8.4 million cost savings plan is agreed and implemented in full as soon as possible.
While not wanting to appear to repeat the point for the sake of repetition, there can be no doubt about the consequences of not reaching agreement within the next two weeks on the company's cost savings plan, which would be the total and immediate closure of Irish Steel. It is a frightening prospect for all concerned, particularly for the workers and management of the company, but is a very real possibility unless reason prevails and serious negotiations are embarked on immediately by all the unions. I repeat, the Labour Relations Commission is ready, available and should be resorted to to progress discussions in a structured manner involving all the unions.
I thank the two Deputies who raised the matter. This company has been the subject of many parliamentary questions, Adjournment Debates and other debates in this House, which is as it should be. It is only right that Deputies should express the concerns of their constituents, one of the best ways of ensuring that the workings of this House are seen to be relevant. Equally it is necessary that there be honesty all round in openly stating the position in the House.