As the first two items relating to difficulties at a textile firm are being taken together, the Deputies will have ten minutes to put their case and the Minister will have ten minutes to reply.
Adjournment Debate. - Textile Industry.
I wish to share my time with Deputy Pattison.
Is that agreed? Agreed.
I thank the Ceann Comhairle for allowing me to raise this matter on the Adjournment. It relates to a company called Comerama in Castlecomer, County Kilkenny. This is not just a firm which provides jobs for 200 people; it is a business that has a major employment impact on a place the size of Castlecomer in north Kilkenny. Comerama is the only company to employ that number of people in north east Kilkenny. Any difficulties it might have in terms of its business or finance would have a devastating impact on Castlecomer and north east Kilkenny in general.
The company in question is involved in the manufacture of textile – mostly woollen – goods and it has come under increased pressure as a result of competition from cotton yarn producers. Stocks have built up and Comerama is finding it increasingly difficult to offload those stocks this year. I accept that there is probably an over-capacity in this industry worldwide and that there will be a general shakeout in respect of woollen mills. There is some evidence that the latter is already happening in some European countries, particularly Germany. Movement is taking place in terms of the capacity issue. However, the employees and management at the company are anxious to find a mechanism which will allow Comerama to remain in business in both Castlecomer and Bunbeg, County Donegal, until the extent of the shakeout that will result from the over-capacity to which I refer becomes evident.
An excellent relationship exists between the management of the company and its employees. They have already made sacrifices in the past to reduce costs. This year they went on a three-day week and previously they went on short time to help the company overcome its short-term difficulties. However, there is a danger that, when measures such short-time working, cutting costs and co-operation are used, a company may not re-enter full production. The management indicated recently that it wants to cut production costs to 20% of full production. This could result in a serious loss of employment and the closure of the company.
I request the establishment, if possible, of a working group comprising representation from the management, the unions, the Department and the statutory agencies – particularly Enterprise Ireland – which can consider ways to protect the future of the plant and as many jobs as possible and allow the company trade out of its difficulties until the position vis-à-vis similar companies throughout the world becomes apparent.
I also wish to highlight the difficulties being experienced by north east Kilkenny. I raised this matter on the Adjournment two months ago and I highlighted the problems being faced by this company. I understand that meetings were held with Enterprise Ireland and I know that the Department is fully aware of the problem. However, I also raised this issue 12 months ago as a result of worldwide difficulties with regard to the product Comerama manufactures and because, in light of the company's importance to north east Kilkenny, it was essential that positive action should be taken.
This company has operated in Castlecomer for the past 33 years and has employed up to 180 people and part-time and seasonal staff. Alongside the difficulties being experienced in world markets, the company has incurred major costs. Last year, for example, it paid out £1.5 million in energy costs – an increase of £250,000 on the previous year. There is no company in this tight market which could sustain that type of increase in costs at home while, at the same time, dealing with major difficulties on the world market in terms of its product.
I request that Enterprise Ireland continue its discussions with the company while also considering the position of the other major players in north east Kilkenny and discussing with them ways of perhaps expanding their workforces with a view to taking up any slack that might result from decisions taken at Comerama. The Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, visited Castlecomer and was informed about the 93 different enterprises and small businesses which operate in the area. With the co-operation of the Department, other agencies and, perhaps, the county enterprise board, I believe there is scope to expand and grow these indigenous businesses while also helping the two major companies – Comerama and Ormonde Brick – operating in the area to expand their activities and their workforces.
A report was carried out a number of years ago on the activities and status of businesses in north east Kilkenny. In my opinion, the Department would benefit if it considered the findings of this report and examined the potential the suggestions it contains might have in terms of impacting on the growth of various businesses in the north of the county.
The Minister or Minister of State should meet the various community groups – particularly the two enterprise groups – in Castlecomer. No Member is more aware of the difficulties the community in Castlecomer experienced as a result of the closure of the coalmines than the Leas-Cheann Comhairle, Deputy Pattison. He has played an extremely positive role in respect of all the development which is taking place in north Kilkenny. There is a positive attitude among people in north Kilkenny which is mirrored in the report to which I referred earlier in respect of the development of small businesses. If it was arranged, I believe a meeting with the Minister and the various agencies could prove fruitful. If everyone focused on the difficulties being experienced by Comerama at present, the foundation might be laid either for the further development of the company in a different direction or the development of other offshoots in that area.
I hope such a meeting will be arranged as soon as possible because the problems at Comerama are grave. As Deputy Hogan stated, if the level of employment should fall or the short-term working arrangements remain in place, the long-term outlook for a company with worldwide headquarters in Castlecomer would not be good.
I thank the Deputies for affording me the opportunity to comment on this important matter.
There is no doubt that there is a dark cloud hanging over Castlecomer and the surrounding area. There is an urgent necessity to take action. I was a Member of the House when the last dark cloud passed over Castlecomer, about 35 years ago. We can learn from the actions taken at the time by the Government of the day and the various Government agencies, such as the IDA, together with the local authorities and the community in Castlecomer. All came together and had a great deal of success in replacing the jobs of approximately 500 coalminers.
The area had been for many hundreds of years a traditional coalmining area. The closure of the mines was a calamity and the industry which is the subject of this debate was one of the main replacement industries located in Castlecomer following the closure. I join my constituency colleagues in appealing to the Minister to pull out all the stops in dealing with this issue. It was done before and, with the same co-operation, can be done again. Workers, employers and management have already co-operated to keep this firm going.
The Minister could do something practical in the context of the forthcoming Finance Bill by providing for exemptions for payments made to short-time workers on unemployment benefit. When workers opt for short-time work, in an effort to preserve their employment and the company, their unemployment benefit is added to their earnings for tax calculation purposes. It is a small matter but would assist in generating further management and worker co-operation in trying to get over this difficulty in the textile mills. If the company can get through this difficulty, it might be able to survive. Every effort should be made to accomplish this. I hope my suggestion is given serious consideration in the context of any planned income tax adjustments.
I thank the Deputies for raising these matters on the Adjournment. The Minister of State, Deputy Aylward, has also been in contact with me and the Department about them.
This is the second time in a matter of months that Comer International has been raised on the Adjournment. It was also discussed on 26 June last. At the time it was working a full seven day week in both plants in County Kilkenny and County Donegal but this was being reduced to a five day week. The two manufacturing plants, Comer International Limited in Castlecomer and Comer Yarns in Bunbeg, County Donegal between them manufacture 7,000 tonnes of high quality undyed worsted yarns each year. There are 180 employees in Castlecomer and nearly 200 in Bunbeg.
The industrial development agencies, particularly Enterprise Ireland in relation to the County Kilkenny plant and Údarás na Gaeltachta in relation to the County Donegal plant, have been trying to assist the company with its current difficulties for some time. High stock levels and a slow down in drawing down from customers forced the company to place staff on short time earlier in the year. Further action has now become necessary due to continued difficult retail conditions. The company has had to respond to the existing market conditions in order that it can maintain a strong position in the international marketplace.
The present position is that the plant in County Kilkenny will operate three days on, three days off, but the larger production line, employing between 110 and 120 people, will be phased out over the next few weeks. These workers will then be laid off temporarily. This will leave approximately 60 workers on the smaller production line. The plant in County Donegal will operate on a three day week for the next couple of months.
An overall strategic review of business worldwide will be undertaken over the next few weeks. The prospects for the future will only become clearer when the review has taken place. This will probably be in December. The difficulties at Comer International have been brought about by a number of different dynamics coming into play. Eight years ago there was a surplus of wool and its price was suppressed. This has now changed and wool prices have risen by 25%, but wool spinners have not been able to pass this on to clothing manufacturers. Retail sales have been poor worldwide, which has also reduced the demand for cloth. The latest situation in Castlecomer and Bunbeg only serves to re-emphasise the fact that the clothing and textiles sector continues to face considerable challenges. Castlecomer and Bunbeg are not unique in this regard.
Competitiveness is the key. We have to be able to compete in the global economy. There are a number of competitiveness issues, but, in clothing and textiles, the cost of labour is always high on the agenda. It is becoming harder to compete with imports from countries where the cost of labour is significantly lower than in Ireland or the rest of the European Union.
The industrial development agencies have the competitiveness agenda high on their list of priorities. They are working with their client companies to make them as competitive as possible. Comer International is an important exporter as well as being a large regional employer in the south east and the north west. Significant investment has been made in the companies during the years, the most recent being in April this year when assistance was given by Enterprise Ireland to support training in County Kilkenny. The company has been operating in Castlecomer for over 30 years and is both a significant and important contributor to the local economy. Enterprise Ireland will continue to work with the company while the strategic review of operations is taking place.
The industrial development agencies are active in County Kilkenny. Enterprise Ireland has approved over €900,000 for the renovation of an old mill for use as an enterprise centre. Construction work on this project is due to commence before the end of the year. Employment in Enterprise Ireland supported companies has been increasing in recent years and had reached 3,771 last year.
With regard to IDA Ireland, in 2000, Deutsche Bank announced 200 jobs for Kilkenny in its global accounting centre. Current employment is at 100. Also in 2000, Infoscore announced 100 jobs in its Kilkenny software development centre and currently employs 22 people. In 2001, Fileflow announced 25 jobs in its software development centre and employment has now reached 20 people. There have been no job losses in IDA supported companies in 2002.
Education also has an important role to play. Kilkenny has access to third level institutions which have developed outreach campus facilities in the city, particularly Carlow Institute of Technology and the National University of Ireland in Maynooth. The courses currently on offer through the outreach campuses include science, business and engineering.
There have been a number of project announcements by overseas companies, supported by IDA Ireland, in County Donegal in recent years. The most significant of these include Prumerica in 2000 and 2001 with 600 jobs, Pacificare in 1999 and 2001 with 310 jobs and Keith Prowse in 2002 with 120 jobs. Government agencies are actively supporting the needs of firms operating in the clothing and textiles sector to assist them in ensuring the long-term viability of their companies. A number of projects have been undertaken by Enterprise Ireland, such as improving communications and design, increasing public relations activities and establishing production networks and strategic partnerships. One of these initiatives included a directory of County Donegal clothing and textile companies produced with an industry profile. Enterprise Ireland is also active in promoting inward buyer missions which include clothing and textile companies nationwide.
I am satisfied that all the development agencies, including the county development boards and the county enterprise boards, will continue to promote counties Kilkenny and Donegal for suitable industrial projects. I hope to see a positive outcome from the forthcoming review of Comer International's operations.
That does not sound good.