This item is to conclude at 6 p.m. if not previously concluded.
Arramara Teoranta (Acquisition of Shares) Bill, 2001: Second and Subsequent Stages.
I move: "That the Bill be now read a Second Time."
I apologise for being a little late. I thought, based on the way business was going on here, that it would last until 4 p.m. This is a very short but important Bill and I hope it can be dealt with expeditiously by the House. As set out in section 3, it is proposed to increase the maximum State shareholding in Arramara Teoranta to €1.2 million to enable a major rescue and refinancing programme for the company in line with Government decisions and agreement between the shareholders.
Arramara Teoranta was established as a joint venture in 1947 to produce seaweed meal for use in the alginate industry. The company is 51% owned by the Minister for the Marine and Natural Resources on behalf of the Government, with the balance of shares held by ISP Alginates, UK, which is based in Scotland. The company has experienced trading difficulties in the past few years due to a downturn in the global alginate market. The company had, until recently, operated two facilities, one at Cill Chiaráin, County Galway, and another at Meenmore, County Donegal, and directly employed 34 staff, with up to 400 people involved in seasonal seaweed harvesting along the western seaboard. Consequent on major changes in the international marketplace, Arramara Teoranta ran into trading difficulties starting in 1999, which accelerated in 2000 and 2001, with mounting financial losses which are reflected in its accounts.
Following a detailed examination and a thoroughgoing evaluation of the company's position carried out by a team of business advisers appointed by the Department, the Government agreed to a restructuring of the company's operations, which involved closure of the company's plant in Donegal and the loss of 15 jobs. The restructuring was carried out with the full backing of the shareholders and was undertaken with a view to restoring the company's financial health and ensuring its long-term viability. I hope the measures taken to date and those planned will help to develop the company and secure its position.
As part of the restructuring measures, the Government, in association with ISP Alginates, the minority shareholder, has approved a significant financing package for the company based on a detailed business plan covering the period up to 2006, drawn up by the company with the help of its business advisers. Over €500,000 has been applied in meeting redundancy costs, incurred as a result of the plant closure, together with other awards by the Labour Relations Commission, LRC. This amount has been funded in the interim by bank facilities negotiated by the company. A further €800,000 is required to upgrade the factory premises at Cill Chiaráin and to install new equipment there to meet future development needs to allow the company develop and diversify into added-value products. The necessary arrangements are currently being put in train and will be fully activated subject to the Bill being approved by the House.
The current economic contribution of the Irish seaweed industry is estimated to be as much as €11 million in value annually. Some 87% of this turnover can be accounted for in export sales. The intention is that Arramara Teoranta, as the largest indigenous seaweed producer in the country will be well placed to take advantage of emerging trends in the value-added and high-tech sector.
I am confident, moreover, that with this much needed investment, Arramara Teoranta will have a bright and financially secure future and that the jobs in its plant and those of its suppliers, who are mainly located in Gaeltacht areas, can be secured. It is clear that Arramara Teoranta has suffered over time from chronic underfunding and lack of strategic business focus which has militated against levels of investment, re-equipment and planning to meet the changing requirements of the global seaweed market. What is being proposed now should set the company on a firm course for the immediate future and into the longer term.
Meanwhile, efforts are continuing to secure an alternative enterprise for the Meenmore plant involving the Minister for the Marine and Natural Resources and the Minister of State, Deputy Coughlan, who has devoted much time to this project. In discussions with her today, she assured me that she intends to continue to find a replacement industry. Helped by Údarás na Gaeltachta, Arramara Teoranta is continuing to source supplies of seaweed in Donegal. In recent months, the company has experienced difficulties in getting hauliers to undertake transport of the seaweed at realistic and commercially competitive rates. The company is currently working to develop alternative, satisfactory arrangements. These proposals are critical to the future of Arramara Teoranta and the Irish seaweed sector. I strongly recommend the Bill to the House.
I am discussing this Bill on behalf of Deputy Dukes, who has asked me to apologise for his absence. Unfortunately, he could not be here and very much regrets it.
He has a bit of canvassing to do.
If he is canvassing and I am here, I will be very annoyed, but I do not think so. The Bill is significant because it enables the Minister to invest up to €1.2 million. Any venture of that scale is of significance both to the taxpayer and ourselves. It deserves fairly close attention and scrutiny.
Will the Minister of State clarify a number of issues for me because I had not heard of the existence of this company until yesterday? It came as a surprise to me, not least that we were considering a fairly significant investment in it. It surprised me that there was such a State company and that the State was such a major shareholder in this company. The overwhelming question that occurred to me concerns why, in 2002, the State is involving itself in the processing of seaweed. Furthermore, why is it considering further involvement in the processing of seaweed?
This company is older than me, and there are not many such companies in the country. I can understand why, in the 1940s, when there were precious few other investors available, the State became involved in a project such as this and why it took the initiative, particularly because it could capitalise on any potential for employment offered by a natural resource that was freely available. That was understandable at a time when there was little employment in the area and considerable emigration. We have moved on and the State is now divesting itself of State and semi-State companies with varying degrees of success. It is now generally recognised that competitiveness, efficiency and employment are all better served and that the customer gets a better product and service from private competitive companies than through direct State provision or State financing.
Could this 50 year old company not look elsewhere for investment rather than to the nanny State? I would ask this question whether the company were successful or in need of help. Would it not be better for future employment prospects, for the better use of a natural resource and for the general success of the company to allow it the market freedom and drive to competitiveness and efficiency which the private sector can bring? I ask these questions with no preconceived ideas about the company, about which I confess I know nothing other than what the Minister of State has told us.
This measure appears to be contrary to the views on the efficiency of the private sector being expressed by the Government, particularly by the Progressive Democrat element. I cannot believe that after 50 years the State has developed any particular expertise in the use of seaweed. The State's contribution to this enterprise is merely a financial one. There is no shortage of investors for an enterprise with any prospect of profitability and a private partner would probably be more successful than the State.
This is enabling legislation but I assume from what the Minister of State has said that the State intends to make the full €1.2 million investment and to take the full shareholding. This is not quite clear from the legislation. I understand that the State is currently a 51% shareholder. If it is now to increase its shareholding, is it not reasonable to expect a concomitant investment from the other principals involved in proportion to their current share in the company? Are the other shareholders making no investment at all? Perhaps the Minister of State will clarify this point.
What are the main features of the business plan on which the restructuring and the capital development plan is based? Until last year, another plant was operating in Donegal employing 20 people, all of whom lost their jobs at that time. They received redundancy payments when the company decided to concentrate its activities in the Galway plant. The harvesters of seaweed, who had been supplying for more than 30 years, are aggrieved that promises made to them have not been fulfilled and they regard the citing of transport difficulties as an excuse not to take their product. Does the planned restructuring involve an expansion of output? This would mean there would be a greater demand for seaweed and it would then be commercially viable to transport seaweed from Donegal to Galway. That would be welcome news to the harvesters of Donegal who have lost their livelihoods, and an expression of the seriousness of the commitment given to them when the Donegal plant was closed.
I am also interested in the general direction in which the company's new plans will take it. Does it intend to diversify and engage in new product development? The Minister of State has told us that €800,000 is to be spent on upgrading the plant. Is the plant to be revamped for the purpose of diversification? All companies must look to the future and be alert to changing markets for their products. Seaweed is a versatile product widely used in the pharmaceutical industry. Health care is a growth industry and there could be a great future therein for seaweed.
The company also manufactures fertiliser and I am concerned about the market for seaweed as a fertiliser. As a result of the EU water quality directives the dumping of sewage into the sea is now prohibited. The Dublin Bay area plan, for example, does not allow for the emission of untreated waste water. More significantly, waste solids can no longer be dumped at sea. They are now heat dried, formed into granules and sold as fertiliser, primarily in the south-east of the country. This process will become extremely widespread. It is the only option for the disposal of waste solids, which all local authorities must dispose of. There will be little demand for fertiliser from any other source, in Ireland or elsewhere in Europe.
I do not oppose the Bill. The company has outstanding debts of €500,000 and needs to be restructured. I regret that the other shareholders appear to be depending entirely on the State to provide both for the company's debts and for its future viability. However, I return to my contention that the State should not be involved in such a venture. It has no expertise in this area and no strategic justification for its involvement. The investment is necessary but only as a step towards putting the company on a sound financial footing so that it can be sold to the private sector where it might prosper and thrive.
I thank Deputy Mitchell for staying around. There are not too many people in the House this afternoon. I compliment her on that and on being so frank and honest about her knowledge of the subject. If one does not live in a coastal area it is difficult to know what is going on. I live on the Hook Peninsula in County Wexford. When I was growing up I saw farmers take seaweed off the shoreline. It was called wore and was used for fertiliser. It is a natural resource and we should use it.
When the Taoiseach appointed me to my current position, he said I should create as many jobs as possible in remote rural areas and I set about doing that in the areas of aquaculture and fisheries generally. Seaweed is a resource that should be tapped into and I am pleased the Government did so as far back as 1947. It has used a natural resource to create a number of jobs in remote rural areas and allowed parishes in such areas to remain alive. It is bringing in reasonable wealth to such parishes. The seaweed industry is worth €11 million annually.
Deputy Olivia Mitchell asked some very pertinent questions. Because €11 million is not a small sum and because it goes into remote rural areas, that in itself is important. It is very difficult to find private investors. As a consequence of building up the industry and giving it new prospects, I hope we will be able to secure private funding, and that is the Government's intention. However, we cannot force anyone to do so and in the meantime the Government must keep the seaweed industry alive because of its contribution to the remote rural areas.
ISP, which stands for International Specialty Products, is based in Scotland. We are lucky to have a partner and I hope it will remain with us. It has invested about €300,000 in this new scheme. Its product is used for food. After extraction and purification alginates are used to produce thickeners, stabilisers and gelling agents. It is also used in animal feed and organic fertiliser. In these days people like to hear of organic materials and this is an ideal way to go back to the future. It is also used in the mushroom industry and for prescription medicines, and iodine can be extracted from it. Algin can be used as cattle food and for soil conditioning, and because it is organic it should be more widely used.
I thank Deputy Mitchell for coming in and for her contribution. The Bill is necessary to keep the industry alive.
Question put and agreed to.
Bill reported without amendment, received for final consideration and passed.
This Bill, which is certified to be a money Bill in accordance with Article 22.2.1º of the Constitution, will be sent to the Seanad.
The Dáil adjourned at 4.15 p.m. until 2.30 p.m. on Tuesday, 26 March 2002.