asked the Minister for Enterprise and Employment, the immediate steps, if any, he will take to intervene in Sunbeam Industries Limited to save the jobs at the plant; and if he will make a statement on the matter.
Private Notice Questions. - Closure of Cork Plant.
asked the Minister for Enterprise and Employment the action, if any, the Government proposes to take to protect the jobs and secure the long term viability of the industry at Sunbeam Industries, Cork.
I want to express my extreme disappointment at the decision by Robert Andrews Textiles Limited, the knitwear company in the Sunbeam Industries Group, to proceed with voluntary liquidation which will result in the loss of 108 jobs. Unfortunately this company has had a history of sustained losses which were compounded by particular difficulties in 1994 and resulted in a loss of £300,000 on a turnover of around £2 million. This 1994 loss was on top of very heavy losses in each year since the company was formed. Deputies will appreciate that this is not the strongest platform from which to develop the company.
Notwithstanding this background, on Tuesday night last I gave the House an account of the all-out efforts being made to save this company. I have to reiterate and emphasise to the House that in recent weeks an enormous amount of time and energy have been spent by me, the Department and Forbairt on this issue.
The purpose of this exercise was to explore all avenues available to secure the company's future. Over the past few days, I ensured that the efforts of all concerned were intensified in order to support last ditch endeavours to find a commercially viable solution. It is a matter of great regret to me that such a solution could not be found despite the major efforts.
However, this must be seen in the context of the history of losses to which I have already referred. It must be appreciated that a knitwear operation requires large capital investment and significant volumes must be achieved if anything other than marginal returns are to be realised in the long term. I have directed the State agencies to give the highest priority to the question of finding a replacement industry for the area. In view of the urgency of the situation, I had a meeting late last night with the chief executive of Forbairt on his return from Cork with a view to accelerating endeavours to secure the maximum number of jobs in a replacement industry. I have also had discussions with the chief executive of IDA Ireland.
There can be little argument about the level of State support for Sunbeam over the years. Forbairt has provided every possible assistance to the company in its efforts to develop, including executive time, consultants and finance. Discussions are currently ongoing between Forbairt and outside investors and the company with a view to ensuring the future viability of its remaining operations. I am most anxious to ensure that any adverse comment arising from the problems of the knitwear company should not jeopardise these ongoing discussions. There will be no let up in the ongoing efforts to secure a viable future for the remaining Sunbeam operations. Although the closure of the knitwear company is a huge disappointment, Forbairt is now actively seeking to ensure that the remaining companies can be maintained as strong commercially sound operations with maximum employment content.
I have been open and frank with all Oireachtas Members representing the area. In addition to putting all the facts before the House, I have also briefed them on the situation at a separate meeting in my Department. I ask for their continuing support for the efforts to secure further employment for the area.
I am sure I speak for all parties when I say that the Minister has our support. However, good intentions are not enough. Clearly there are questions to be answered and we will use this opportunity to get answers and, hopefully, be able to guarantee the viability of the company.
What grants were put into this composite Sunbeam firm in recent years and for what objectives was the finance given? Did the company fulfil the criteria for getting grants when it spent the money? I base my questions on remarks reported in a reputable newspaper by both management and unions to the effect that the shortfall was £300,000 which seems very little — shared out among the number of jobs in question, it is about £3,000 a job which is way below the cost of a new job — and the company was unable to fill vacancies. I find that extremely odd and would be glad of an answer to that. It was also said that the company was not competitive because of the lack of capital moneys to put to machinery. However, I understand a capital grant was given to fund the purchase of machinery. I would be glad if the Minister would address those issues. The shortfall for a management buy-out is £300,000. The sum of £3,000 seems a small amount per job if there could be a hope of keeping them.
It is extraordinary that in a constituency with three Government Ministers from three different parties the silence is deafening, except on the part of the Minister whom I thank for coming here today. The silence of the Government as a whole on this matter is deafening, particularly the silence of Democratic Left who have been so vocal on so many issues.
To take the last issue first, that is an unfair description of the attitude of the Democratic Left Deputy for the area who has been in continuous contact with me and who has been making continuous efforts to secure the jobs. That applies to all the Deputies in the area affected.
What about Deputy Rabbitte?
Let us hear the Minister's response.
In Cork they call it an angelic silence.
Deputy O'Rourke genuinely wants answers but it is difficult to provide them if I am continually interupted. State grants to this industry were substantial. As can be seen from newspaper reports, £500,000 was provided for the knitwear section in return for preferential shares while additional sums were provided for the other sections. During the past four years well over £2.5 million has been provided by way of grants. When money was provided last year it did not take the form of capital grants for investment in machinery or equipment; it was to be used primarily to tackle the liquidity difficulties being encountered at the time and to allow the company increase sales and achieve the gross margins it hoped to achieve. It did not achieve its aims in that it did not secure those margins or the projected volume of business. It suffered greater losses than the previous year.
The argument that all that was needed to secure a viable commercial future for the company was £300,000 is without foundation. The difficulties facing the company were serious. The management buy-out team, which I met with other Deputies, presented a proposal to Forbairt and spent several hours yesterday discussing it. Both sides agreed that it did not have the basis to secure a viable commercial future for the company.
The Deputy also raised the question of the inability of the company to recruit staff. Although my Department would not be directly involved I know the company were depending on the recruitment of an additional 50 staff but was unable to recruit them. As a result it had to ship some of its product for expensive processing. This certainly contributed to their serious losses last year.
There is no need for me to remind the Minister that this industry is located in an unemployment black spot. When did it become evident to State agencies that the management buy-out proposal was not strong enough? What efforts were then made by those agencies to seek an alternative investor or to put an alternative funding package in place bearing in mind that the company has a strong customer base, orders on the order book to the value of £2.8 million and an excellent workforce? The Government has done far too little far too late. It is clear from what was said in my presence at a management-Government meeting this week that it was obvious as early as last November that the company would find itself in difficulty and was facing big trouble. What measures were taken at that time to resolve those difficulties and avert the closure of the plant?
Forbairt and the State agencies have been intimately involved with this company in an attempt to turn around a difficult situation. This business has suffered substantial losses for four successive years. Last year a substantial amount of money was invested to tackle its liquidity problems. Because of the seasonal nature of its sales it requires substantial amounts of working capital. The State provided this money but the company did not succeed in meeting its targets in terms of its margins and volume of sales.
The management buy-out proposal only surfaced in mid-February. When consultants were appointed by Forbairt to assess this proposal and other issues it became evident that it did not meet the funding requirements to secure a viable long term future for the company. Alternative buyers for the knitwear section were pursued, unfortunately without success. We are still working vigorously to find alternative buyers for the remaining sections of the business and we will continue to do so.
It is not a question of far too little far too late. The Deputy does no credit to the briefings we have had if she suggests that is the case. The record is clear: during the past four years Forbairt and the State agencies made great efforts and provided money to secure a long term future for the company and to secure employment. It is disappointing that we have not been to do this but it has not been for the want of trying.
During the course of the Adjournment Debate of 16 February the Minister gave me an assurance that he, his Department and Forbairt would work closely with the company to secure a viable future for it. Has the Minister had direct contact with the owners of the plant in Cork? When interviewed on radio today some of the workers were very critical of the Minister in terms of his lack of involvement and commitment to resolving this serious problem in view of the fact that 110 jobs will be lost tomorrow. By contrast the Minister and Minister of State were highly involved in efforts to resolve a recent dispute in Dublin for which we pay tribute to them. Such a commitment has been lacking in relation to the dispute at Sunbeam. The workers at that company and the people living in Cork city, particularly on the north side, feel that they have been let down in view of the fact that 110 people will be without employment tomorrow. In some instances they are the only members of their families in employment. Has the Minister had direct contact with the owners of the plant in keeping with the assurance he gave during the course of the Adjournment Debate on 16 February?
I gave the Deputy an assurance that I would spare no effort to secure the future of the company. I have spared none. There have been numerous meetings between the State agencies under my control and the company and State money has been invested to assist it. The State also appointed consultants to assist in putting a viability package together to secure employment. I met the management buy-out team at its request and that of Deputies. I depend on Forbairt to produce a package to secure a commercial viable future for the plant. The Deputy may want to gain short term political capital but the reality is——
I resent that remark.
The Deputy should please resume his seat.
The Minister was directly involved in resolving the Packard dispute. He should withdraw the remark.
I will bring this matter to a speedy conclusion if I do not receive the co-operation I need.
At all times I have worked with the Deputies for the constituency to deal with the problem. At their request I met the management buy-out team.
Did the Minister meet the owners of the plant?
On my initiative and at their request I have been in daily contact with the chief executive and other executives of Forbairt. I have enlisted the support of the job protection unit of my Department to work on this project. Last night I spoke to the chief executive of Forbairt to see how we could advance in seeking a replacement industry. I spoke to the chairman of Forbairt after the meeting, which Deputy Wallace attended, at which the management buy-out proposal was discussed in an endeavour to tackle the remaining issues. These include the lack of adequate funding for the management buy-out proposal and the lack of access to the machinery and equipment belonging to the former owners. As a result of those contacts, all those issues were fully explored by agencies working on my behalf. Unfortunately, at the end of the day — and it was a long day and night of work — the team representing the management buy-out and Forbairt were forced to the reluctant conclusion that there was no basis for a commercially viable future for the employees in what was being put forward. That is a matter of deep disappointment to me but I assure the Deputy that no effort has been spared on my part or on the part of those who work on my behalf to secure the future of these jobs. I assure the Deputy also that I will continue to do that and that this issue is not lost. There are remaining parts of this company the future of which we are straining to secure. I will continue to work on that and I will do everything that I am advised is appropriate to succeed in that objective.
Did the Minister meet the owners of the plant where the real problem lies?
I want a simple "yes" or "no" answer from the Minister. As Deputy Wallace has said, there is a perception in Cork that when the crisis arose in Packard in Tallaght, the Minister and his Minister of State, Deputy Rabbitte, were deeply involved in negotiations on a daily and nightly basis to resolve the problems there. Both the Minister and the Minister of State met the owners of that company in an effort to rescue it. Did the Minister meet with the owners of this plant to try to save it?
The Deputy is trying to evade the reality of this company. We have sought to find a viable future for the company.
Did the Minister meet the owners?
We have sought alternative buyers and there are buyers working with Forbairt to examine how the remaining industry can be made successful. I have not met those alternative buyers——
Did the Minister meet the owners?
——and I do not meet everyone involved in this issue. I am the Minister responsible for these agencies. I intervene as and when I have been given evidence by those agencies that such intervention would be timely and appropriate.
So the Minister did not meet the owners?
There has been no requirement upon me to make contact with the owners. Having discussed the alternative purchase of this company, I instructed the chief executive and the other executives in Forbairt to examine how the machinery and a proper funding basis could be secured. Enormous efforts were made to secure those two important elements. Unfortunately, they were not successful. Forbairt also made contact with other prospective buyers of this company to see if a commercial future could be secured for it. We are trying to secure a commercial future for the company.
The Minister was asked a straight question and he failed to answer it.
We have done everything that was appropriate in this area. As far as the Packard dispute is concerned, that was an industrial dispute in which I was glad to find the time to intervene in order to encourage the parties involved to find a resolution.
It was a resources issue.
It was not a resources issue. Not a penny of State money has been spent to support Packard to date.
To date.
If the company comes forward with proposals that will secure a viable future for employment, Forbairt and the IDA will be at its disposal. The problem in this case was that there was not a viable plan which could obtain support from Forbairt to secure the future of those jobs. There was not any commercial plan that could stand on its own and gain support. The Deputy well knows that the State would be deceiving everyone if it put taxpayers' money into a company that was not commercially viable.
The loss of these jobs at this plant is a blow that the north side of Cork city could well have done without. I am conscious of the fact that we must ensure the remaining jobs in Sunbeam are secured. I ask the Minister to continue his efforts in this regard. I appeal to the other Deputies who represent this area — and I know they are genuine in their representations, as I am — to be conscious of the fact that negotiations are ongoing in relation to the other jobs in the company. They will not be thanked by the people of the area for turning this issue into a political football.
We are fully entitled to ask questions and get answers.
The people in Sunbeam are conscious of the need for information also. We must ensure that further funding is secured which will ensure the viability of the other sections of the firm.
That should be adequate, Deputy. The Deputy must conclude. I must call the Minister.
I say to Deputy O'Rourke——
This is Question Time, Deputy. If the Deputy does not conclude, I will not be able to accommodate the other Deputies.
Deputy Lynch made her political platform last November.
I assure the Deputy and the House that every effort will be made by my Department and by the agencies to secure the future of the remaining sections of Sunbeam.
A Leas-Cheann Comhairle, I tabled a question.
Perhaps the Deputy will resume her seat while we endeavour to accommodate other Deputies. Does the Deputy object to the other Deputies being accommodated?
Provided I get a fair share of the time.
It is fair to say that the people in Cork expected great things from this Government given that we have three Ministers from the area, as well as Deputy Lynch who has the "Tallaght Dynamo" behind her. We all expected those Ministers to meet with the management and the owners of Sunbeam in an effort to ensure this labour-intensive industry in Cork was saved.
The Minister said that £500,000 worth of preference shares was taken out and that £2.5 million of State money was invested in the company. Is the Minister satisfied with the level of vigilance undertaken by the State agency? Is he happy with the management structure of the company over the past number of years which has brought us to this sad day? The Minister and the Minister of State, Deputy Rabbitte, entered into discussions in Tallaght to resolve the difficulties of the industry there. I ask them to go to Cork and discuss with the owners of Sunbeam the real dilemma facing the workers there, most of whom are the only breadwinners in their families.
I assure the Deputy that I, as Minister, and the agencies working on my behalf will spare no effort to secure alternative employment. That is the task facing us. The Deputy asked if I was satisfied with the level of vigilance on the part of Forbairt. Forbairt has spared no effort in tackling this problem. Not only has it put in its own efforts but it has hired expert consultants to assist in those efforts.
It is the Minister's own efforts in which we are interested.
A number of consultants have examined the problems of the knitwear section but none of them, unfortunately, was able to come forward with proposals for a viable commercial future. We sat down also with the management buy-out team who equally sought to secure a viable commercial future for the company. Again, those efforts were unsuccessful. Those assessments were carried out by Forbairt and by consultants brought in to assist in the matter. There has been no foot dragging on the part of Forbairt in this regard.
What about ownership of the machines?
The Deputy should let me answer his question. I am happy with the level of vigilance on the part of Forbairt but I am not happy with the outcome.
The Minister cannot go ahead with a buy-out now because ownership of the machines remains the same.
These machines are entirely owned by the parent company, Sunbeam Industries. There is no Forbairt hold over them. They were not grant aided by Forbairt.
May I ask a question?
That is the end of questions for today.
I wish to put one question.
I am moving on to other business.
This is disgraceful. All parties were allowed ask questions. I tabled a question on this matter and was allowed only one supplementary question.
I am asking the Deputy to resume her seat, or I will ask her another question which she will not like.