Adjournment Debate. - Xerox Corporation.

I thank the Ceann Comhairle for the opportunity to raise this matter which is particularly relevant to my constituency.

In recent days there have been disturbing newspaper reports concerning the financial well-being of the Xerox Corporation. It has a significant Irish operation located in Blanchardstown and Dundalk. My concern is the Dundalk plant. When the IDA announced that Xerox was coming to Dundalk, it was a welcome shot in the arm for the town. For many years previously, the area had been blighted by unemployment. It was difficult to get industrial developments to locate there and when Xerox did so it was most welcome.

Earlier today I read a press release issued by the company. It is clear there are restructuring plans afoot and one must ask what their implications will be for Dundalk. Given the huge State and company investment in the town, if there are implications they would be most serious. Employees, business and commercial interests are dependent on Xerox and they are anxious to be reassured about their position. I hope the Minister of State, Deputy Treacy, can assure my constituents, particularly the people employed at Xerox, that all is well with the company and that we can look forward to the future with considerable hope and promise.

We are advised that the technology for the product manufactured in Dundalk is more modern than that in the corporation's other plants worldwide. That appears to give Dundalk a considerable head start and I hope that is the case. If not, there would be serious implications. Industrial investment is hard won. It is a competitive market and getting industries to locate anywhere in Ireland is always a challenge. It is appropriate, therefore, to compliment the IDA on its success over recent years in attracting significant industries to Ireland. We are most appreciative of the investment that has come to the north east, particularly to County Louth.

I hope the Minister of State, in advising the House of the situation, will be able to offer reassurances to the people of Dundalk and County Louth.

I thank Deputy Kirk for raising this matter on the Adjournment. I share his concern at the recent poor financial performance of Xerox Corporation's worldwide activities.

It is worth recalling that the Xerox Corporation is the world's sixth largest information technology company and employs over 91,000 people in 130 countries. It is a public company on the New York Stock Exchange and last year it had sales of IR£17.97 billion and profits of IR£1.33 billion. Xerox Europe, the European operations of the Xerox Corporation, markets Xerox products, solutions and services throughout Europe and employs 19,000 people. It has manufacturing operations in Ireland, the UK and Holland, and advanced research and development centres in Cambridge in the UK and Grenoble in France, two well known university cities.

In 1998, the company carried out a review of its worldwide operations and decided to concentrate on the growth of digital based products, such as colour copiers and printers. It also adopted an improved business model for Europe, which included the provision of a number of business activities in Ireland. The new Irish operation is the single largest greenfield undertaking by Xerox and has been the fastest and most successful business ramp-up in the company's history. When fully implemented by the end of 2003, total employment levels are targeted to be 2,131 people in Dundalk and 1,995 people in Dublin, with a total investment in excess of IR£400 million. The current employment levels are ahead of target and now stand at 837 people in Dundalk and 1,515 people in Dublin.

The 110 acre Xerox Technology Park at Dundalk is one of Xerox's three manufacturing facilities in Europe. Its 500,000 square foot facility will encompass the manufacture of colour toner, ink jet printer cartridges, ink jet printer heads, power supplies and electronic assemblies. The facility will also undertake software development. The manufacture of the advanced Docutech and Docuprint document solutions has already begun following the completion of the first of the technology park's five facilities, its 162,500 square foot hardware building, almost a year ago.

Related activities at the technology park will include materials procurement, production management and associated accounting functions and group resources, such as quality management, human resources, environmental, health and safety functions. Xerox has already developed strong links both with the Dundalk Institute of Technology and the chamber of commerce. The investment at Dublin's Ballycoolin Business Park in Blanchardstown incorporates Xerox's multilingual shared financial services, technical support and customer support operations for the entire European market. It also includes the establishment of a centralised server farm to support the company's pan-European information technology functions. The Dublin campus will incorporate six buildings covering over 270,000 square feet of premises. Ireland will be the primary European location for centralised shared services, technical support, colour toner production, inkjet printer cartridges and high end product manufacturing.

Unfortunately, the company's worldwide financial performance has been disappointing recently. Last year its sales were down slightly on the 1998 figure. For the first six months of the current financial year sales were down on the equivalent period in 1999 and a net loss of £92 million was incurred. The developments have been reflected in the share price, which has fallen considerably. The company today announced its financial returns for the third quarter of this year. A loss of $167 million was incurred on sales, which are 4% lower than the comparable period of 1999.

The poor results are attributed to a number of factors including currency fluctuations, an unfavourable product mix in terms of margins, continuing teething difficulties with the reorgan isation of the company especially in the realign ment of the sales force which has led to reduced productivity and pressure on prices due to strong global competition. The company has, therefore, announced several measures to address these difficulties. These include cutting $1 billion in costs, including significant redundancies. A major disposal of assets to raise between $2 billion and $4 billion is proposed. The company also intends to cease its equipment finance operations.

Despite these major problems, the company has reported growth in its colour products and inkjet printers which are important elements of the Irish operation. While the full details of the cost cutting measures have not yet been clarified, the expectation is that there will be no adverse implications for the Irish operation in either the short or medium term. There are no plans to restructure the Irish activities. It will be some time before all aspects of the changes in the worldwide activities of this excellent company are resolved, particularly in relation to which elements will be outsourced or sold, but the IDA is keeping in close contact with the company. The position will become clearer in due course and we are hopeful that the Irish elements will thrive and prosper in the years immediately ahead.