Dáil Éireann debate -
Wednesday, 29 Nov 1995

Vol. 459 No. 1

Private Members' Business. - Counties Limerick and Kerry Plants.

Mrs. O'Rourke

Thank you for the opportunity to raise on the Adjournment the Neodata factories — two in County Limerick and one in County Kerry. In the autumn of 1993 while in Government I responded to the then Opposition Deputy, Dick Spring, when the entire firm was threatened with closure.

Neodata has had a chequered history, providing mainly female employment, for 25 years. It has provided a valuable and viable service, otherwise the firm would not have restructured and continued after the earlier scare in 1993. That is a thumb nail sketch of the background history of Neodata.

To judge from what Deputy Finucane said, the announcement of the closure came as a shock to him and to other people in the vicinity of Newcastle West and Kilmallock. A month prior to Christmas the workers were told that the firm is to close. This is very sad. It is the same old story: Neodata has been here for many years employing a strong female workforce who for many years have been the bread-winners in their families due to vicissitudes and economic hardship in various families. They have to provide for children, mortgages and all the weekly needs of a household. To be told in a peremptory fashion that their services are no longer required smacks of a feudal way of doing business and, in this case, it is a great affront to employees.

The Minister set up a task force for industry adjustment, to which he gave a budget of £22 million, to identify manufacturing industries which could be in danger but which had potential and to plan renewal strategies for those firms.

I cannot get to the bottom of this task force for industrial strategy renewal. Every time I ask a question about it I am told it is something else. What is the task force doing? What is it studying? On what is it spending its money? What is its strategy? What is its renewal process? What firms and people have been helped by the task force with its £22 million which was set up with a great fanfare?

Neodata would be tailor made if its problems had been tackled on time. I do not know whether Neodata can regroup, if its work can be revitalised and redirected and if the considerable skills of the female workforce, developed over a number of years, can be rechannelled into alternative industries or ways of earning money. Surely the task force has the wherewithal in terms of finance and the remit from the Minister to investigate this. Will the Minister tell us whether he can, at this late stage, save Neodata and, if not, will he encourage alternative suitable employment for the skilled female workforce who have worked for so long in this firm.

Mr. Finucane

I welcome the opportunity of speaking on this issue. I am familiar with the problem because one of the plants involved is located in Newcastle West and the other in Kilmallock. I live in Newcastle West and know many of the workers there who were devastated by the recent news. Not only did it come as a surprise to them, it was a great surprise to me.

I want to refer briefly to the history of this company. Neodata was set up in Newcastle West and Kilmallock over 20 years ago. During that time the company has had a chequered history and there have been ups and downs with regard to employment. The Kilmallock operation recently reduced its workforce to 35 while the Newcastle West plant has over 70 employees, yet the companies were regarded as stable and part of the indigenous industrial workforce.

Another favourable aspect of the companies was that their workforce was predominantly female. Many of the employees came from the local secretarial schools and they were engaged in keyboard work, subscription fulfilment, etc., which suited them. Many of the employees are married and, as Deputy O'Rourke said, they are the breadwinners in the family because their husbands are on social welfare.

Those workers were as surprised as I was when news of the closures was announced. The reason I expressed my annoyance so forcefully yesterday to the media was because this company experienced certain problems in November 1993 as a result of its decision to relocate to Boulder, Colorado. The company stated at that time it would make up the deficiency by seeking alternative markets, particularly in Europe, to provide sufficient work for the residual workforce. The company had regular consultations with the local public representatives in the area and asked us to respect the confidentiality of their actions and we adhered to that because we felt we were being fully briefed.

I understand that in recent times the workforce increased to 850 as a result of securing a contract in the United States with the Philip Morris cigarette company, which runs a promotion called "The Country Store" in which coupons are given to people who buy cigarettes. The coupon processing was being carried out in Listowel and there was a spin-off business in Newcastle West also where people would reclaim gifts. Much of that work was seasonal and the company secured other contracts.

When the company expanded its workforce recently it was anticipated that when the seasonal work eased off, there would still be sufficient work for its residual workforce. There seemed to be a period of co-operation with the public representatives with regard to consultations but no warning signal was given to any of us that the company was experiencing difficulties. Some of these workers will be let go on 8 December, others on 15 December. That is a Christmas present none of them would have anticipated. While Listowel can bask in the glory of expansion — and I wish them well — there is a sense of despondency in my county over what happened. It is bad enough having one operation close down but to have two close down is a body blow.

I agree with Deputy O'Rourke about the early warning signals. I recall Members being told that if Forfás and the powers that be felt companies were experiencing certain problems, early warning signals would be sent to allow the industrial promotion agencies to take remedial action to find alternative industries. The company stated that the workers will be let go and that it will probably retain the buildings in Newcastle West and Kilmallock with a view to providing some seasonal employment to meet the American market. That is of no long-term use to these employees.

I ask the Minister at this late stage to inform the industrial promotion agencies that this workforce has the necessary skills and that they should avail of the talent and obtain suitable alternative employment for these areas to make up for the current vacuum.

Minister for Enterprise and Employment (Mr. R. Bruton)

I thank Deputies for raising this issue. This announcement and the way it was made came as a surprise. I was only yesterday morning that my Department was advised of the serious problems. The agencies were not alerted early to the impending difficulties. Neodata has now announced the closure of its Kilmallock operation with a loss of 36 jobs and the closure of its Newcastle West operation with a loss of 71 jobs with effect from 15 December 1995.

Neodata has four operations in Ireland at Kilmallock, Newcastle West, Listowel and Limerick. It will retain its Listowel operation where 93 people are employed and the Limerick operation which employes seven people. The company's main reason for the closure is that a current major contract will only be retained at a lower level of business in 1996 and, therefore, fewer employees will be required.

Regrettably, as the House is no doubt aware, this is not the first time Neodata has run into problems. In November 1993, exactly two years ago, when the company employed 400 people between their four Irish locations, it announced that it was consolidating all its operations back to Boulder, Colorado, with the loss of all 400 jobs in Ireland. In the event, collaboration between the company and the IDA prevented the loss of 260 jobs with two major contracts being secured.

While the company has been particularly successful in identifying and securing new business for its offices in the mid-west, a drop in demand for the services provided at Kilmallock resulted in the introduction of a voluntary redundancy programme at that office earlier this year. The programme, which involved 35 redundancies, was fully subscribed and was implemented between June and October of this year.

Neodata also implemented a programme of temporary lay-offs last summer involving almost 20 permanent staff. These lay-offs were necessary because of a delay in securing new contracts and to seasonal variations.

The company has now concluded that it has approximately 100 people in excess of what its current order book justifies. While it still has a major contract in the US, and has negotiated another contract for 1996, the work will be at a lower level and accordingly will require fewer people.

In addition, the company's efforts to develop a European market have not, so far, proven successful. Neodata is continuing its marketing efforts in Europe, with the support of IDA Ireland, but this will take time. In the meantime, the company considers that it cannot justify the present levels of staffing. Accordingly, it plans to restructure the Irish operations to have a more cost effective base from which to move forward in the future.

The net result is that the company proposes to close the Kilmallock and Newcastle West Offices. Following this, Neodata would have 100 permanent staff as I indicated. In addition, during 1996 Neodata expects to have up to 100 full time equivalents working as temporary and part-time employees between Listowel and Limerick.

As regards the Task Force for Industry Adjustment, which was mentioned by Deputy O'Rourke, its primary purpose is to identify areas of business at risk from competitive forces and to propose competitive strategies. The task force has approved a "Change Management Programme" which is targeted in particular at providing grant support to enable traditional industries, rather than companies such as Neodata, undertake certain initiatives.

Deputy O'Rourke also mentioned a dedicated jobs task force for the Newcastle West and Kilmallock areas. I do not see fruitful progress being made by setting up such task forces because, increasingly, there would be a demand for them in many areas of the country and this would only dissipate the efforts of the State agencies. Nevertheless, I assure the House that I have directed IDA Ireland to redouble its efforts to find replacement industries in the region. I have also asked IDA Ireland to continue to support the endeavours being made by Neodata to secure sustainable new business.

I can also say to the House that the development agencies have been very active in the region in attracting new industries and assisting in the expansion of others. Companies such as Analog Devices, Dell, Cabletron and AST continue to expand in the Limerick area. They have invested substantial capital and this, coupled with their relationship with the University of Limerick, will ensure that they remain at the forefront of their technologies. In addition, the arrival of new overseas companies such as Vistakon, which will employ 450 people by 1998, and APC, which will commence recruitment of 300 people next year, are positive developments for the area as a whole.

I assure Deputies that every effort will continue to be made to ensure that Neodata has a future in Ireland. Neodata first came to Limerick in 1969. It did so without State assistance as the internationally traded service sector did not qualify for State aid at that time. However, it has been grant assisted in the meantime. It has been a major employer in the mid-west for over 25 years and its ongoing contribution to the economy is very much appreciated.

My immediate concern and that of IDA Ireland will be to see if anything can be done to secure new business and avert job losses, and what can be done about replacement opportunities.