I will call on the Deputies who tabled questions to the Minister for Enterprise, Trade and Employment in the order in which they submitted their questions to my office.
Private Notice Questions. - Job Losses.
asked the Tánaiste and Minister for Enterprise, Trade and Employment her response to the request to her as the holder of 51% of shares in IFI from the board to liquidate the company; if, in view of the serious consequences of the loss of more than 600 jobs, she will reject the request for liquidation and enter into discussions with the board on the measures necessary to keep the company in operation; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps she made to avoid the liquidation of IFI; the discussions she had with the principals of the company to avoid this disaster; her plans to provide alternative employment for the workforce; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment the factors and the sequence of events that led to the decision of the board of IFI to recommend to the shareholders to close the company; her role in the decision; her plans for the future of the 620 workers and others who will be affected; the situation regarding the plants and lands at the three locations; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement on the proposed closure of IFI.
asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will report on the closure of IFI; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment if consideration was given to keeping the Arklow section of IFI operational; the instructions which have been given to the liquidator; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment the reasons for the decision to liquidate IFI with a loss of 600 jobs; the details of the negotiation process which has taken place with representatives of the workforce; and the potential rescue packages which have been considered before the decision to liquidate.
asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement on the closure of IFI and the discussions she had with Bord Gáis regarding the supply of gas to IFI.
I propose to take all the Private Notice Questions together.
IFI is jointly owned by ICI, which has 49% of the company, and the State through NET, with 51%. As the House will be aware, the board of IFI has decided that it cannot continue trading and has recommended the appointment of a liquidator. It is obviously a matter of extreme disappointment that, despite the efforts of so many involved, it has not been possible to find a solution to the severe financial difficulties at Irish Fertiliser Industries. This will be a devastating blow for the workforce, families and local communities. I have taken steps to ensure that everything possible will be done to assist those concerned to find alternative employment as quickly as possible. FÁS will immediately look at what needs to be done in Cork and Arklow, with the priority being to provide whatever retraining is necessary.
IFI operates in a volatile market which is going through a rough trading period. The market is plagued by considerable levels of over-supply, resulting in poor prices, and costs remain high. The company made significant losses in the past year and despite the identification of a number of significant cost savings as part of recent efforts to save the company, it was not possible to establish a basis for a viable future. The joint shareholders have supported the company, for example by providing €34 million two years ago. Indeed, the value of Exchequer support for NET and IFI has amounted to €750 million in present day terms.
Unfortunately, the company has struggled to deliver a return on investment and, as a result, requires large borrowings to fund day-to-day operations. IFI had projected that its working capital needs would have to rise to about €100 million over the coming months, on top of a debt of €200 million, retained by NET when IFI was established in 1987. The debt retained by NET had risen to over €250 million by 2001 when most of it was taken over by the Minister for Finance. The company made a loss for the five years to 2001 and a further significant loss of over €30 million, or €1,000 per employee, was made in the year just ended. In the light of the emerging loss and resultant financial crisis, the company approached its shareholders in July seeking an injection of €25 million. Neither shareholder thought that the basis for this request was acceptable and asked the company to explore further options. The shareholders, in consultation with the company, engaged international financial advisers to see if a buyer could be found to take over the company. Unfortunately, these efforts did not produce a buyer.
Against this background, the company revisited its business plan to see if it could establish a basis for achieving viability. However, the plan that was finally submitted projected further losses and did not claim to establish a viable basis for going forward. Instead, the objective was to enable the company to continue trading for a number of months. As part of this short-term survival plan, the board sought €10 million from the shareholders to enable it to proceed. Even with such support, the board acknowledged that the company would continue to make losses. This clearly demonstrates how fragile the survival plan was and even modest shocks would have left the company in an impossible position again. In this regard, Deputies may be aware that a major supplier, Bord Gáis Éireann, last week withdrew credit facilities from the company.
In these circumstances, the shareholders did not consider that they could provide the support requested. At this stage, the focus will be on ensuring that operations are shut down in an orderly manner. Both shareholders will, of course, co-operate fully with the company and the liquidator in an effort to ensure that the process can be as smooth and as efficient as possible.
I will call Deputies to ask their supplementary questions in the order in which they submitted their Private Notice Questions to the Ceann Comhairle. I remind the House that this is Question Time and debate is not allowed. Deputies' remarks should be confined to asking supplementary questions.
Does the Minister agree that the workforce in east Cork and Arklow has been treated disgracefully? Workers in both plants had produced proposals for viability plans. The workforce in Cork had asked for an extra two weeks and the workforce in Arklow was not expecting the full closure of the plant there. As the holder of 51% of IFI's shares, the Minister for Enterprise, Trade and Employment has treated the employees scandalously. It is particularly shocking that workers found out about their redundancies from an English newspaper, The Guardian. The Arklow workforce discovered at 2.30 p.m. yesterday that the plant there was to close. Is it true that the workers in Cork, Arklow and Belfast have been treated disgracefully by the Tánaiste?
It is certainly not true that I have treated the workforce in question disgracefully. Every effort was made to find a buyer for the company on two occasions in the last five years.
What was the price?
Order, please.
There was no offer, unfortunately, even though international bankers were appointed to advise the Government. They made every effort and spoke to a number of companies. Nobody was interested in buying IFI because of the lack of viability of fertiliser production in Ireland, which involves importing gas from the North Sea, piping it to Cork, converting it to urea and ammonia and taking it by train to Dublin. It is an expensive process. The cost of importing fertiliser is $40 or $50 per tonne cheaper than the cost of producing it here. Notwithstanding that the company came forward with a survival plan that required more money from the shareholders, it was still predicting losses of about €7 million this year. In that context, neither the Government nor the other shareholder was interested in investing more money in the company.
I regret that over 600 jobs will be lost on this island, and that over 400 of them will be lost to this economy. It is a major blow to the workers and the economy, and particularly to the communities that are affected. I do not think anybody could criticise the Government for not being prepared to put more money into the company, given the level of investment of taxpayers' money in the company to date and the fact the company could not have been made viable. The fact is that producing fertiliser in Ireland is not viable at present.
I agree with Deputy Broughan's assertion that the IFI workers have been treated scandalously. I have nothing against English newspapers, but it is not right that workers read of their fate in such a newspaper rather than hearing it from the Minister or the management of IFI. I would like the Tánaiste to outline, in specific terms, her plan B for the staff of IFI. Many of the Arklow workforce have been employed at the plant since it opened. Some of them are over 50 years of age. We saw on the news last night that they are worried that they may be unable to find alternative employment. Can the Tánaiste clarify the route she intends to take to reassure these employees? I know she said she will ask FÁS to take action, but can she tell the House if any alternative industry will come to Arklow?
I am not responsible for stories that appear in English newspapers. I do not read The Guardian on a daily basis and I was not in contact with the newspaper before the story appeared. I regret very much that someone saw fit to leak information to the newspaper, as a great disservice was done to the company and its workers. Unfortunately, employees sometimes learn of their fate through leaked information and it is always regrettable. It was clearly a matter for IFI to deal with its workforce of 620 people and I regret that it did not have an opportunity to do so. IFI employees have a great deal of experience; the average length of service is 21 years and the average salary is about €50,000 per annum. They are reasonably well paid and experienced. I will make every effort through FÁS, the national training agency, to ensure they are retrained for new jobs. Gloom and doom was predicted when Irish Steel closed 18 months ago, but 75% of the workers who were interested in further work, who were not retiring—
That was a different time.
Indeed.
The Tánaiste, without interruption.
Some 25% of the Irish Steel workforce are still in a pretty hopeless position.
Deputy Allen says that I am talking about a different time, but our unemployment rate is still one of the lowest in Europe, at 4.2%.
That is no consolation to the 600 IFI workers who are about to lose their jobs.
Deputy Allen will get his opportunity to speak.
No, it is no consolation.
It is very easy to pay lip-service and to shed crocodile tears.
It is much easier to play politics.
I am not playing politics.
I think the Deputy should listen.
I stayed quiet.
Deputy Allen should be orderly now.
The Minister should not accuse us of playing politics.
The Tánaiste, without interruption.
The Deputy's colleague—
The Minister is playing people politics and we do not want to tolerate it.
I resent that very strongly.
We are in here to talk politics. We are politicians.
The Deputy is not here to play politics with people's lives.
We are not playing politics.
Deputy Allen.
All the State agencies under the auspices of my Department, particularly FÁS which is charged with training and retraining people for jobs that are being created, will be put at the disposal of the IFI workers. This will be done as quickly as possible, just as it was for other workers who found themselves in this position.
Will there be employment for the workers?
Order, please. The Tánaiste should be allowed to continue.
I hope many of the workers will find alternative employment, like the Irish Steel workers.
Will replacement jobs be secured for Arklow and north Wexford?
Order, please. Other Members are waiting to ask questions.
I hope the liquidator will be in a position to sell parts of the business to interested parties. Perhaps that will be the case but I do not wish to build false hopes. That possibility must not be ruled out.
What discussions has the Minister held with Bord Gáis on the price of gas and the transmission costs of gas? Will she comment on the significant hike in gas prices recently and the enormous costs of transmission, which have been highlighted in the media for some time? The cost of transmitting gas from Scotland to Marino Point was out of control. Will the Minister justify this cost? If she cannot do so now, will she forward that information? Is it true that this issue, above all others, has led to the closure of IFI? How much will the redundancy package cost? How much can workers expect following the decision? Will costs be incurred by the State at the sites at Marino Point and elsewhere? For instance, must the sites be returned to greenfield status whereby the plants would be dismantled and the sites restored to their original state in the 1970s?
The Minister has also referred to ISPAT. How many workers lost their jobs at the plant? How many are in full-time, permanent, pensionable employment? How many were trained? How many retired? It is fine to state that 75% of those who lost their jobs were re-employed but the Minister said in an earlier reply that 75% of those who were interested were re-employed. That is a significant distinction.
Will the Minister provide a breakdown of the age profile of workers at Marino Point and the other plants? She stated in her reply that difficulties were noted five years ago. What action did the shareholders take at the time to turn the situation around? Did she allow the position at IFI to drift to the point we have reached? She also stated the company was making a loss for five years. When did it last make a profit? Did it make a profit in 2001?
Of the workers who approached FÁS when Irish Steel closed 75%, or 175, are in full-time employment. I am not certain about the pensionability of the employment but it is good, full-time employment. I do not have the age profile but the average experience among workers in IFI is 21 years service. I expect FÁS to compile such data quickly.
The Deputy asked what the State did. First, the Exchequer took over the company's debt two years ago. It had reached £250 million at the time. We invested €34 million over recent years with the other shareholder. We also sought a buyer for the company. IBI was appointed a number of years ago to find a buyer in the domestic or inter national market but, unfortunately, that was not possible. More recently, international bankers were appointed but they also did not have success.
Gas was heavily subsidised for a considerable time and there was a contract between IFI and Bord Gáis to supply gas at a set price. That scenario changed. Bord Gáis is a commercial company, which is the responsibility of the gas regulator. It is not up to me or the Government to seek to make another company commercially unviable. Importing gas to Ireland, converting it to urea and ammonia and transporting it by rail to Arklow via Dublin poses significant difficulties for the production of fertiliser and that is why it can be imported more cheaply.
The costs involved in converting the plants into greenfield sites will be borne by both shareholders on a 51:49 basis and not exclusively the Exchequer. This is a matter for the liquidator who will be appointed by the company's creditors, not the Government, as is the issue of redundancy. We made it clear to the company recently that if in the interest of achieving a viability plan it would have to make people redundant, we were prepared to make money available towards redundancy payments, and that remains the position.
Did the Minister have a choice?
The company rejected that. Deputy Timmins asked whether part of the company could be kept open. If that had been a scenario to make the company viable, the shareholders would have supported that. The company did not put that option forward. With regard to redundancy, I hope the workers are dealt with fairly and reasonably.
Why was the proposal not put forward?
I base my first question to the Minister on a reply by her to a parliamentary question that I tabled on 8 June 2000. In light of a request by the company for €25 million for investment, which she refused, does she find it grotesque that between 1987 and 1999 the parent company of IFI, Nítrigin Éireann Teoranta, paid £188 million in interest to the banks on borrowings of £164 million? Does she agree, in the context of the disaster that beckons for 620 workers, this bank robbery in reverse should be investigated? Does she further agree if those funds had instead been invested in diversification in IFI, for example, in the area of natural fertilisers, compost alternatives etc., a viable and vibrant company could have been maintained?
Does the Minister concur €25 million is a tiny fraction of the £188 million paid by a State-owned company to the banks without a murmur of opposition from successive Governments? Does she also consider it grotesque that Bord Gáis, a publicly-owned company, should summarily pull the plug on another part-owned State company without holding exhaustive discussions with workers on how the plant could be managed so that it could remain open? Is it the case, in view of the Progressive Democrats' hostility to public enterprise and the party's penchant for privatisation and Thatcherite policies, that when the company sought extra investment, it was approaching the wrong door? Do the workers, therefore, have every right to feel betrayed?
I will not get into an ideological or philosophical debate with the Deputy. NET was holding debt on behalf of IFI and the interest the company paid to the banks was on moneys invested in IFI to keep it going.
A total of £188 million?
In today's monetary terms, €750 million in taxpayers' money was put into the company, which equates to more than €1 million per job. Last year the company lost €30 million which was about €1,000 per week per employee. If a company is not viable after a sustained period of support from shareholders, including €34 million over the past two years, the shareholders must make choices. This is about choices and priorities, particularly when it comes to the expenditure of public money. With no viability plan on the table the company acknowledged that, even with the cost cuts put forward and €10 million from shareholders, it would still make substantial losses this year and no shareholder could reasonably be expected to invest money.
Bord Gáis is like any other supplier and it was coincidental that it happened to be involved in the last few days. It also indicates the state the company was in: it was a further nail in the coffin. The company was not closed because of Bord Gáis – there were other fundamental reasons. It was not viable in current market circumstances to make fertiliser in this country when it can be imported at substantially lower prices from other places, particularly from where gas is available for very little cost. No one could expect Bord Gáis to make gas available at almost no cost because it must cover its costs for bringing the gas here in the first place.
Does the Tánaiste and Minister for Enterprise, Trade and Employment publicly acknowledge that the workforce in IFI has been particularly supportive of the company and has foregone wage increases over the last two years? Will she acknowledge that the manner of notification, through a British newspaper, was an outrageous affront to a workforce that has been very supportive of the company? Will she confirm the number of related jobs that will be affected by this closure, particularly hauliers and workers in Iarnród Éireann and the Port of Cork? Does she agree that Ireland is now the only European country with no indigenous fertiliser industry and that such an industry is of vital interest to the country? Does she agree there is no comparison between the retraining of Irish Steel workers and workers in IFI, particularly with the age profile of the IFI workforce and the different economic circumstances at present?
It is always dreadful for a workforce to learn of its fate in a newspaper, Irish or British. I was not responsible for that and I strongly condemn the person who leaked information to any publication.
I met the union and worker representatives on 12 September and made it clear that money would not be forthcoming from the Government and that the same applied to the other shareholder, with whom I had many meetings, unless there was a viability plan on the table. Notwithstanding the terrific efforts of workers and management at the company, that was not possible. I pay tribute to the workers who worked extremely hard in difficult circumstances over many years to turn this company around. It is not their fault that this can be done much cheaper elsewhere. Because it is such a gas intensive industry, it was much cheaper to do it elsewhere and that is why the company was unable to trade successfully.
There is not a huge difference between the former Irish Steel workers and IFI workers, either in terms of age or skills, nor has the climate changed that much in 18 months as far as employment is concerned. There are 36,000 non-EU workers here and 70,000 foreign workers in total. We generate thousands of new jobs every year and the challenge is to find as many new jobs as possible for those being made redundant.
When there are job announcements, the Taoiseach or Deputy Harney are to the forefront. She should understand that we are cynical when job losses are announced in a British newspaper. If they had not been announced in that newspaper, how would she have made the announcement? Does she agree that many of the workers are still in the dark? Who is the liquidator and what guidelines has he been given? The Tánaiste and Minister for Enterprise, Trade and Employment mentioned that efforts may be made to save some of the jobs. What level of redundancy payment will be involved?
What about the creditors? I was contacted this afternoon by some hauliers who are owed substantial sums of money by the company. What assurances can she offer to those companies?
I realise that Cork, Belfast and Arklow are of equal importance but what jobs are in the pipeline for the Arklow area? There was a high profile announcement two years ago, which was outside the Tánaiste and Minister for Enterprise, Trade and Employment's remit, but did she ever discuss the provision of those jobs with the local authority?
Will the Tánaiste and Minister for Enterprise, Trade and Employment comment on the price increase that may come about on agricultural inputs? It is cheaper to import fertiliser but there could be an increase in the cost of agricultural inputs when we stop our own production. She is going to Wicklow tomorrow. Will she meet any local groups that would like to meet her?
The State was a 51% shareholder in this company. Was the decision made singly by the Tánaiste and Minister for Enterprise, Trade and Employment or by the Government as a whole to go along with the closure? Was it a case of all or nothing? The workers from Arklow knew there were difficulties and they were aware of the economic realities but it is a matter of concern that the board of directors did not come up with a viability plan for some of the plant. Surely if the State owns 51% of the company there is an onus on the Tánaiste to come up with a viability plan. I feel sorry for workers in Cork but if there was some streamlining, the plant in Arklow could have been afforded an opportunity of survival. That is the major sin and it should be explained.
The Deputy acknowledges at least that the high profile job announcement was not made by me; I do not make all job announcements. The board of IFI met yesterday at midday. Shortly before that meeting the acting chairman called me to tell me the likely outcome and I discussed that at yesterday's Cabinet meeting. It was then a matter for the IFI board to tell its staff and make a public announcement, which it did yesterday afternoon.
Creditors are a matter for the liquidator. The liquidator will not be appointed by the Government or the shareholder but by the company. I do not know who it will be. I cannot say if every single creditor will be paid, although I hope that will be the position.
The price of fertiliser is falling rapidly and the market is declining so I do not believe there will be an increase in agricultural inputs in the short to medium term. The market is extremely competitive, so much so that we have not been able to survive in it.
Bringing gas from the North Sea to Cork, then making the raw material to be transported by train through Dublin to Arklow was uneconomic. The international advisor spoke to some companies, one in particular, that he felt might keep the Arklow and Belfast sites operating but there was no interest in the idea. That was discussed in the company as a possibility, but it did not come to anything unfortunately. Clearly, if any part of the company could have been saved that would have fitted with my priority which is to maintain jobs. I will meet workers and their representatives from Wicklow and Arklow – and perhaps Belfast – at 10.30 a.m. tomorrow.
It was a Government decision. There was no proposal from the worker directors.
The Deputy must be fair. There are a number of Members offering questions.
In case there is any doubt, the Government did not choose the strategy adopted in the end.
The Government supported it.
Deputy Coveney must respond. A number of Members wish to get in.
I am glad we got an answer to the final question as to who made the decision. Is the Minister aware that there is a great deal of blame being attributed to her and her party? It would be dishonest of me not to tell her that. Members of the Government parties are saying right-wing policies have led to this closure and I do not say that to play politics, I do so because it is factual.
A question please.
I asked the Minister if she was aware of that, which is a question.
Does the Minister stand over her quote in the Irish Examiner today in which she says she left the workers in no doubt that taxpayers' money could not be put into this company unless a viability plan was forthcoming? I am interested to know if her understanding is the same as mine, which is that the workers were employed night and day in putting together a viability plan to be proposed to her as the majority shareholder. My knowledge particularly relates to the workers in Cork, whose plan involved sacrificing nearly €4 million in wages in an effort to save a company in which many of them have worked for 20 years.
Can the Minister inform the House of the number of European countries which do not have fertiliser processing plants? Is Ireland on its own in this regard and does she believe we are at some risk in relation to a steady and consistent supply of fertiliser into the future given that we are an island and particularly vulnerable to unstable markets and reliance on the shipping of product from mainland Europe?
I was astonished at the answer Deputy Stanton received earlier on the cost of dismantling the plant. Taking the Cork example, I remember quite clearly difficulties we had with the Seveso 2 directives when problems emerged for IFI at which time very significant figures were put on the table with regard to the cost of dismantling the plant. We were talking about €150 million or more. Does the Minister not find it astonishing that a majority shareholder would decide to close a plant without any indication of the cost of returning the area to a green field site, which is necessary in this case considering the Seveso 2 directives relating to the potential dangers should the plant close?
Can the Minister outline what in her view will be the likely loss of associated jobs, particularly in Cork, as a result of the closure of this plant? Has she spoken to the Minister for Transport, Deputy Brennan, in relation to continued viability of the rail line to Cobh after the plant closes? What will be the impact on Cork Port which sees a number of ships coming and going to and from the IFI plant? I can come back with supplementary questions.
I am aware of some of the things that were said. I heard an interview on Cork local radio this morning in which a Government backbench Deputy took a particular view of me and what I stand for. I am the Minister who brought in the minimum wage and I have also presided over some of the biggest ever tax cuts for workers. This was common sense, quite honestly, and it was not the Government who decided to close the company. The IFI board made the decision yesterday because the Government and the other shareholder made the decision that in the absence of a viability plan it could not justify putting in money. The reason the decision was made by the board of the company was that if it continued to operate it might have been in breach of the law by recklessly trading. We were waiting for a viability plan, but it was not forthcoming. Even if the proposed huge savings, including great sacrifices on the part of the workers, were made and the need for more money from the shareholders was met, the company still predicted further losses for this year. That is not a viability plan and it came in advance of any decision made by Bord Gáis or any other supplier.
Did not the workers ask for two weeks? Can the Minister clear that up because it is a big issue? They asked for a fortnight to put together a package.
The board of IFI decided that it had to announce the cessation of trading yesterday for legal reasons. The Government did not decide that the company should close. The board decided that there were legal implications for board members if the company continued to trade beyond yesterday.
Does the majority shareholder have no say in that?
That is a matter for the board of directors. In relation to the EU, there is only one other country where the Government is involved in making fertiliser.
That is not what I asked.
There is a huge over supply of fertiliser in Europe, if that is the question.
What discussions has the Minister had with BGE regarding the closure of IFI? She has not answered that question. Does the Minister agree that she is hiding behind the coat tails of a decision made by the board of IFI when she is a 51% stake holder in the company? The decision was a Government decision and if it had the will to keep IFI afloat, it would have been kept open. It was a Progressive Democrats and Fianna Fáil decision with the full backing of the Government and nobody can blame the Minister.
It is a bit much to come here and be accused of playing politics. The decision that was made was political. Representatives from all parties spent long hours and many nights trying to help the IFI workers to put their case and accusing us of playing politics here is a way of protecting the Minister's own skin. Instead of treating the company to crocodile tears and damning one-liners, I would like the Minister to explain and break down her statement that €725 million of taxpayers money had been paid to keep IFI afloat. Rather than give us the easy one-liner and have it accepted as fact, can the Minister give us a breakdown of that figure?
What discussions took place with BGE in relation to IFI? It is something of a coincidence that at the time a viability plan was being finalised BGE screwed another semi-state company and put it out of business. What annual contribution does BGE make to the Exchequer? It is a payment that is forced out of it and made it take this kind of decision. In her answer the Minister spoke about the viability plan that was finally submitted projecting further loss and failing to establish a viable basis for going forward. Could she be more precise? What were the projected losses? How can the Minister state that the plan was not viable for the future? Can she be more precise?
I may have to refer the calculation of the money to someone else as it is not my calculation. It was done by the officials in the Department of Finance and my Department. I will ask them to send the relevant calculations to the Deputy.
As regards the question of why I said it was not a viability plan, the company put forward the plan. It said it wanted €10 million from the shareholders, but even with that we would lose at least €7 million. That was in advance of BGE looking to be paid as the gas was supplied and not given the 60 days' credit. It is unfair and wrong to say that BGE pulled the plug. That was a further example of the attitude adopted by suppliers. All suppliers must look at their commercial operation. This is a regulated sector. BGE is regulated by a State regulator. I am not free, and neither is anyone else in Government, to interfere on behalf of any other company.
The Government pulled the plug and BGE facilitated it.
Is Deputy Allen seriously suggesting that, after providing €750 million in today's terms and €34 million over the past two years, any Government in current circumstances would put more money into a company which could not be made viable?
The Minister cannot give us the figures.
What figures?
We asked the Minister about the €750 million.
Is the Deputy disputing that figure because no one else is disputing it?
Order, please.
We asked the Minister for a breakdown. A decision was made about the 600 jobs, but the Minister cannot give us the figures.
Order, please. The Minister is in possession.
Last year the company lost €30 million after it received €34 million from the shareholders. That is more than €1,000 a week per employee.
On a point of order, the Minister did not answer a number of questions.
That is not a point of order.
What about the cost of BGE to the Exchequer?
Devastation has hit east Cork with the closure after a long number of years of what we thought was a viable operation. The estimated cost of the closure, which includes redesignating the site as a greenfield site and the redundancy payments, is approximately €200 million. Half of that cost must be borne by the State. The Minister said in her reply to a number of questions that fertiliser is available throughout the world and in European markets. Is she stating that there will always be cheap fertiliser for the agricultural community because of a one year surplus? I understand that 600,000 tonnes of fertiliser have been manufactured by IFI and sold in the Republic.
A question please, Deputy.
The total cost of gas last year was €60 million, while transmission costs amounted to €15 million. The total turnover was €138.95 million. Does the Minister regard these figures as exorbitant? Can she negotiate a more acceptable figure which would make the industry viable?
Some 40% of the fertiliser purchased in this economy was bought from IFI, while 60% was bought from other sources. It did not have a majority of the market in the South. Some 60% of the market in the North was supplied by IFI, while 40% was supplied by other sources. I do not anticipate any difficulties as there is a huge oversupply. The market is declining and prices are falling rapidly. They are among the reasons that it was becoming increasingly difficult for IFI to continue to compete and survive. If someone can bring fertiliser into the country at $40 or $50 dollars a tonne cheaper, the consequences are clear to everyone.
I am aware of the effect that will have in Cork, Arklow, Belfast and the surrounding areas. People travel longer distances to work than some people might understand. I am aware this will have a serious impact on the local economy. That is why for many years since 1987, when IFI was established, so much support was given by successive Governments to try to turn the company around. When I met representatives of ICI and officials from my Department from time to time over the past five years we had discussions about when the market would turn around. We have waited a long time for that to happen.
In the circumstances in which we find ourselves, no Government could justify putting more money in when the company, after being given €10 million of an investment and accepting huge savings by the workers and others, was going to have a €7 million loss for the rest of this year. It might have also built up bad debts and creditors if the regrettable decision made by the company yesterday had been delayed. It is now a challenge to work to find alternatives as quickly as possible.
As regards the situation in Arklow, the Minister stated she is not willing to put more money into IFI. However, we are not talking about the closure of a factory which makes windows but about a chemical plant. There are significant costs in terms of jobs, the local economy, the decommissioning of the plant in Arklow, commercial rates to the local authority and the impact on Iarnród Éireann. Those costs must be offset against the possibility of keeping that plant open. Has the Minister assessed whether it would be better to close the Arklow plant or to give it a new lease of life? I am not talking about a major investment but about some capital investment to ensure it has its own source of ammonia. The Minister repeated the point about the dependency of the Cork plant.
A question please. We must soon wind up these questions.
Could the Minister elaborate on the point she made earlier that she is depending on the views of a private company on whether the Arklow plant could have a viable future? Has she done the sums? Will she reconsider Arklow as a stand-alone plant which has a future with a modest amount of capital investment? That would be better value than the approach the Government has adopted for what I view as ideological reasons.
We do not need the Deputy's views, only a question to the Minister. The Minister should be allowed to respond.
The Minister will hear my views.
As regards the environmental closure costs, I am told that an estimate was put on that during the work done by advisers for the company when they sought to find outside interests. The sum of money mentioned was €10 million, but I do not know on what basis that was calculated. Among the issues considered is the one the Deputy raised. It was put forward by some that if Marino Point was closed, with the high cost of taking the gas there and converting it into raw material and the transportation costs, perhaps Arklow and Belfast could have been viable. That was examined both by the company and by the advisers who sought to find an outside buyer. Unfortunately, that did not materialise as part of the viability plan. It is now a matter for the liquidator. Sometimes scenarios are possible in a liquidation situation which are not possible outside it. I do not want to build up false hopes because it would be irresponsible to do so, but perhaps there is a possibility that something, such as the Deputy suggested, could be the outcome of the liquidation.
Can the Minister give us a guarantee about redundancies and creditors? Now that the company is going into liquidation, it is of major concern that people who traded with it in good faith on the basis that it was protected by the Government might not be paid. Is the Minister satisfied that sufficient time was given to the company to come up with a viability plan in view of the efforts made by the workers to save costs? What cost will be incurred by the State if the plant is to be decommissioned to meet EU directives? Were such costs taken into account when the decision was made to close the plant?
The decision was taken by the company that in the absence of more money from the shareholders it had to cease trading. The shareholders made that decision because there was not a viability plan. I am anxious that the workers get a reasonable and fair redundancy package and I hope they do. We will work to make that possible. As I said earlier in the context of some redundancies being necessary in order to save the wider operation, the Government was prepared with the other shareholder to set some money aside and have it ring-fenced for redundancy payments because one can never be certain that workers will receive a fair and reasonable redundancy payment when liquidation arises. This is the reason we indicated to the company that we would like the shareholders to put a sum of money into this company and have it ring-fenced for redundancies.
In relation to decommissioning costs, as they are called, all these issues were examined when the advisors were preparing advice on the possible sale of the company. That is where the figure of €10 million or £10 million – I am not certain which – came from.
Are these dismantling costs?
I understand that to be the case. However, the company will also have assets which will be sold. All the costs must be taken into consideration. One sets the money that can be raised from the assets of the company against any environmental and other costs associated with the closure of a company of this kind. I acknowledge that IFI is a chemical company and that the costs associated with the closure of such companies are sometimes unknown until the process begins. However, I understand the advisers put the figure to which I referred on the process.
Does the Minister accept the Government, as the major shareholder, has a part to play in this process? Surely she must accept that the Government could have saved the company if it had been prepared to do so? The rumour mill has already started with the suggestion that once this company enters the liquidation process, there could be a repeat of the Irish Steel episode. People are very worried by the prospect that no offers will be made because the company has entered the liquidation process. This is what happened in the case of Irish Steel.
Will the Minister outline plans to ensure the employees get alternative employment given that they will be seeking jobs from the same pool as the former employees of Youghal Carpets and the remainder of Irish Steel? Will she also outline what redundancy payments will be offered to employees? Will it be the standard statutory redundancy and, if so, does she agree this would be a very poor reward facing into Christmas for people who are in the main in their 50s and have very few prospects?
I would regard statutory redundancy as being very unsatisfactory and unfair to these workers. Since the State was the major shareholder in this company, I want to ensure the workers receive fair and reasonable redundancy payments. I cannot be responsible for the rumour machine. If the Deputy is asking whether someone will buy the company for a euro or a pound, I do not believe this will occur. It will be a matter for the liquidator. In a liquidation process, expressions of interest are sometimes forthcoming which are not forthcoming where a company is solvent. It may well be that some companies in the international marketplace are interested in parts of the company. If we could save any of it, that would clearly be the priority.
Does the Minister believe that the negative publicity surrounding the Seveso II directive last year and throughout the past 18 months, its effect on Passage West and the venom directed against IFI at the time had a negative effect on the decision of the board on whether to proceed? As a former Irish Steel employee, I had a particular interest in trying to follow events after ISPAT. Will the Minister give Members with an interest in the matter a briefing on the potential future use of the site and what is likely to happen to the land in which the Government holds a 51% share? There is still total confusion surrounding the ownership of land on Haulbowline. The future of the land is particularly important as it may affect people seeking employment in that area?
The comments made in respect of the Seveso directive do not have any bearing on the company decision. On the future plans for the site, I hope it might be possible for the liquidator to salvage parts of the business. This depends on expressions of interest received. Ultimately, in the event that this does not happen, the future of the different sites will be a matter for the local authorities and their zoning policies.
Six Deputies are offering to speak, all of whom have already spoken. If they each ask a brief question, we will be able to take all six and a final reply from the Minister.
Does the Minister have any idea what the dismantling costs will be? Is it true that the site must be returned to a green field site? Will the State make available money for redundancy payments? The Minister used the term "fair and reasonable" with regard to redundancy payments. What does she regard as fair and reasonable?
The Minister stated that €750 million in present day terms has been invested in the company. I stated that an equivalent of €238 million has been paid by NET in interest to the banks. Adjusted for inflation, this figure would probably amount to €300 million. Is it not amazing that she passes that off as a by the way, a normal commercial transaction? This is 40% of what the State says it invested.
The Deputy is making a statement.
Does this not speak volumes about the pro-big business policies of the Government which completely leave the workers out of the loop? Will the Minister now put in the €25 million to give the company a respite and develop an alternative plan, including natural fertilisers, organic alternatives and so on, to keep this plant open and save the jobs?
We have had eight questions over 15 minutes on the loss of 600 jobs.
Private Notice Questions usually take about 45 minutes.
Will the Minister explain her statement that Exchequer support for NET and IFI has amounted to €750 million in present day terms? What does she mean by "present day terms"? Is she inflating the figure to create an artificial sum? Does she agree that the Government, as the major shareholder, should have been more proactive in dealing with the growing crisis in IFI? Is it not odd that it was only when the company sought €25 million in July that the Government made a move and asked it to produce a business plan?
The Deputy should be brief to facilitate some of his colleagues.
Why did the Government, the major shareholder, do so little to work with the company and help it produce a viable business plan given that it had been accumulating losses for several years?
As the Minister has no control over the liquidators, she cannot give any guarantee to hauliers other than a hope that the liquidator will facilitate them. The payment to hauliers, for example, is a matter beyond her control. With regard to the State's 51% shareholding in the company, can one assume that the board of directors which represented the Government operated in an autonomous manner and the Government did not give them a policy direction, in other words, the directors of the Arklow plant, for example, operated without any contact with the Government? What is the point of the State having 51% of the company if it has no role in it?
I notice in this morning's paper that the brother of the—
Please ask a question.
—Minister for Justice, Equality and Law Reform described as crazy several of the policies of the Minister for Finance. In that context, from where did the €50 million price tag come at a time when the board was trying to sell IFI as a viable company and maintain as many jobs as possible? Why did we set the price at £50 million? Why did the Minister turn down the figure of £10 million? It is stated in some reports today that the Minister was seeking an asking price of £50 million for the company? Is the IFI another casualty of the crazy Minister for Finance?
Does the Minister accept that the reason the State had a majority shareholding in this company was because it was in the national interest to have a fertiliser processing industry here? Is this the only country in the European Union that does not have a fertiliser processing plant? Does the Minister think we are in a vulnerable position in terms of supply as a result?
In 2001 the company showed a profit of £13.4 million, an improvement on the previous figure of a loss of £14.4 million. The figures for 2002 are not available. Why did the company go from a profit to a loss? The Minister said our fertiliser requirements were 1.5 million tonnes and that 600 tonnes were supplied by IFI. The European requirement is 12.5 million tonnes. There is a surplus of 1.5 million tonnes in the European Union.
A question please, Deputy.
This is a relevant question, which the Ceann Comhairle will acknowledge given that he comes from a farming constituency. Workers are being thrown on the waste heap. Will Irish farmers have to pay an exorbitant price for fertiliser as they had to do two years ago? At that time the Minister of State, Deputy Parlon, was president of the IFA. We begged the then Government to open up our ports to enable fertiliser to be imported from countries outside the European Union and reduce the tariffs to help Irish agriculture. Fertiliser at the time was making £180 per tonne—
The Deputy is making a statement. I will soon call the Minister for a final reply.
This is a cyclical industry. Will workers be thrown aside and will farmers have to pay an exorbitant price for fertiliser in a year's time to enable them grow their crops? If we are going to adopt the approach of closing everything we inherited from Seán Lemass, this country will be in a dire position.
(Interruptions.)
I cannot be tempted by every intervention which I hope the Deputy understands. With regard to Deputy Higgins's point, he is right about interest rates. That is the reason our membership of the euro zone has brought them down to such an unprecedented low rate.
Groan, groan.
I hope the Deputy understands that is one of the many benefits of further enlargement of the European Union and that those interest rates on such borrowings would not be charged now.
Some 40% of what we borrow goes to the banks.
Please allow the Minister to continue without interruption.
Deputy Allen asked me what I was talking about. I am talking about present day values. Whether people talk about wages or pension or other rights people build up, they talk in the context of today. Two years ago we took over a debt of €250 million to help the company.
Was that pounds or euro?
Pounds.
I thought it was £180 million.
It was £180 million or £190 million.
By the IFI or NET?
Please allow the Minister to continue without interruption.
NET holds the money for IFI. It is the debt holding arm of IFI. At the time of marginal profitability to which Deputy O'Keeffe referred – I know he is a business man – that was not sufficient to capitalise the company and its working capital needs were growing all the time. They are now £100 million.
Deputy Stanton asked what I meant by redundancy in this context. That will be a matter for the liquidator, the workers and their representatives. I want workers to receive a fair and reasonable redundancy payment. We indicated previously – I discussed this matter on a number of occasions with the other shareholder – the need to ringfence a sum of money to make sure the workers would get a reasonable and fair redundancy payment. That remains the position. That will require the Government and the other shareholder to make such a commitment. We will do so. I do not know whether I have answered all the questions.
What about the cost of the greenfield site?
The Minister has not.
I never answer anything to the Deputy's satisfaction – at least some things are consistent. Before dealing with the cost of the greenfield site, in reply to Deputy's Broughan's question, there was never a question of the price of £50 million being put on the company.
What was its price?
The price one would get would be the market price, the price that obtains in the market. I have been in constant contact with the company in recent years. As the Minister with responsibility in this area, it would be wrong of me to be meddlesome and interfere in the day-to-day operation of the company, but the matter of IFI has been on my desk for most of the past five years. We tried unsuccessfully to dispose of it a number of years ago. We took over its debt and, two years ago, together with the other shareholder, put £34 million into it. We had many discussions with the other shareholder, ICI, and the chairman of the company about the ongoing concern of everyone associated with it about the fertiliser industry in Europe.
What about the cost of the greenfield site?
Is this the only country in Europe that does not have a fertiliser processing industry?
In 1987 when the State decided to get involved in IFI much of the discussion was in favour of the State not doing so. That was 15 years ago and circumstances have fundamentally changed since. There was a good deal of support for the State not getting so involved at that stage, but a decision was taken for it to become involved. It has been a very costly experience in terms of the taxpayer ever since. Notwithstanding all the efforts made by many, we are where we are today. There is an oversupply of fertiliser in Europe. There are no market problems in the European Union.
While IFI had 40% of the market here, there are other suppliers. I have no doubt that farming interests will be—
The marketing strategy should have been addressed. What about the cost of the greenfield site?
When the advisers were appointed to advise on the disposal—
Does the plant have to be converted to a greenfield site, dismantled and cleaned down and, if so, what will it cost the State?
It will not only be a cost to the State, as the company is jointly owned by the State and the ICI. I do not have a figure.
It has increased from £10 million to £200 million.
The Deputy should allow the Minister to answer the question.
It is amazing that the Minister does not know the answer to this question, which I have asked five times.
It is not amazing that I do not know the figure. We have been trying to sell the company as a going concern in a solvent position.
That is not the question.
I ask the Deputy to be orderly. The Chair has been more than generous with the time allocated for this question.
Nobody can know the cost until one is faced with the scenario; it will depend on conditions at the time.
The cost will have implications for the Exchequer.
The decision made was that the shareholders could not put more taxpayers' money into the company, more good money after bad, when it could not have been turned around. That is the decision we made.
Such a site could cost the State £200 million, taxpayers' money. Does the Minister not have any idea of the cost of such a site? She does not know whether it would cost £100 million or more.
Written Answers follow Adjournment Debate.