Dáil Éireann debate -
Wednesday, 28 May 2003

Vol. 567 No. 6

Adjournment Debate. - Job Creation.

Mr. Ring

I rise with anger at the Government, particularly the Minister for Enterprise, Trade and Employment, who made a commitment regarding jobs in County Mayo. This week the Government proved that it has no interest in the people in Mayo or in jobs there. I will describe what happened in the past month. A factory in Ballinrobe was owned by a company that went into liquidation. A man bought the assets of that company and entered into an agreement with IDA Ireland that he would buy the factory for €775,000. The factory has lain idle for over 20 years and the State and the taxpayers will pay €120,000 for the next 15 years to the man who owns the factory. This week this company thought that it had entered into an agreement with IDA Ireland to buy a factory and get employment grants, but IDA Ireland did not see fit to provide the company with grants to employ 75 people over the next four years. It is appalling that the IDA entered into an agreement 20 years ago with private investors and having regard to what it paid them in rent for the factory for the past 20 years, it will pay them €120,000 for the next 15 years for an empty factory. That would not happen in a Third World country. It would not happen in Iraq when it was in its worst state, but it happening here. This company was prepared to invest in this country and to employ people, but the IDA could not see fit this week to give it employment grants to employ these people.

I ask the Minister to immediately investigate the following matters: why the IDA is paying somebody €120,000 for an empty factor; why the IDA did not enter into an agreement with this company; who made that decision; why was it made; and is the Government interested in providing jobs for County Mayo? We know that the three towns in Mayo it is interested in are Westport, Ballina and Castlebar. This was the only chance Ballinrobe had of creating employment in this factory.

The Government must immediately enter into negotiations with this company, which took its business out of this country today and brought it to Northern Ireland and to Wales where it will create jobs that could have been created in County Mayo.

I am sharing my time with Deputy Cooper-Flynn. I will let her take over from me and I hope she will agree with me.

Ms Cooper-Flynn

I thank the Ceann Comhairle for agreeing to allow me raise this matter. I wish to comment on a number of points made by Deputy Ring. I would like to explain the background to this matter but first I wish to thank the Taoiseach and the Minister for Enterprise, Trade and Employment, Deputy Harney, for taking time in recent days to speak with me on this matter and to talk to the IDA.

I will put this matter into context. There is a company called Silflex. It is interested in setting up business in Ballinrobe. It is a manufacturer of silicone hoses and is based in Wales. It does not sell to the automotive industry but to private individuals who are car enthusiasts. It manufactures a niche product. If one reads car magazines, which I must confess I do not, one will come across the name of a company called Vanko, which is the product it manufactures. This company is 13 years old and in the past ten years it grew by 20% compound year-on-year. It exports worldwide to 37 countries as far away as Japan. It has sales of €4 million in 2002 and it has 102 employees. By anyone's reckoning it is a successful company that has been in existence a long time.

This company wants to create 15 jobs in Ballinrobe in a year and to increase that number to 75 jobs over three years. It is prepared to invest €1.1 million of its own money in Ballinrobe. It will buy a factory that the IDA built 20 years ago for a market value of €755,000 – a figure determined by valuers brought in by the IDA. It will equip the factory with electrics at a cost of €150,000 and buy plant from Ablecrest, a company that formerly operated there, at a cost of €368,000, all of which amounts to an investment of €1.1 million of its own money.

What has the IDA offered this company that is prepared to do all this for the town of Ballinrobe which has been starved of jobs by the IDA? The IDA is prepared to offer it €3,300 for every job created, which would amount to €247,000 over the period involved. If I was to set up a cottage industry in my back garden and approach my local county enterprise board, I would get €6,600 per job. The offer of €3,300 per job by the IDA is a disgrace. The IDA will sell this company and get it off its hands at a market value for €755,000.

I wish to set out the facts about this advance factory. I appreciate that I do not have much time, but I ask the Minister of State to bear with me on this point because unless he can give me good news, I believe this point is worth making. Some 20 years ago an advance factory was built in Ballinrobe. This was policy around the country at the time. In the past 20 years the IDA has paid more than €2 million in rent for a factory that, by its own admission, has remained empty. If that factory was to remain empty over the next 15 years, the IDA would pay a further €2 million in respect of it. That would represent throwing some €4 million of taxpayers' money down the drain. All I am asking the IDA to do is to up its offer to this company by €200,000.

Acting Chairman (Ms Enright)

The Deputy's time is exhausted.

Ms Cooper-Flynn

I have to correct one point and I realise you are anxious to proceed with the Adjournment. A PR person on behalf of the IDA went on radio today and said that the level of its offer to this company was €1.25 million and accused this company of been greedy in looking for additional money. That was a lie and I want to lay it to rest. The IDA is trying to offload a loss that it would make on a bad deal done 20 years ago to a company, but all this company wants to do is to create jobs.

Acting Chairman

I will have to call the Minister of State to reply. The Deputy has exceeded her time.

Ms Cooper Flynn

The Comptroller and Auditor General should be called in to investigate this scandal because that it what it is. If someone in the IDA wants to engage in a face-saving exercise at the cost of 75 jobs in Ballinrobe, I am not prepared to stand by and watch it.

Acting Chairman

The Deputy has well exceeded her time.

Ms Cooper-Flynn

I ask the Minister of State to call in the Comptroller and Auditor General to investigate this matter. The Minister of State should not allow the pride of a person who made a bad decision in the IDA and who wants to palm off a loss that the IDA would make for a bad decision made 20 years ago, to intervene in this regard. He should not allow the IDA to do that. This is far too important an issue. If the IDA acts in this regard, its balance sheet will show a loss of €750,000, but is that not better than throwing a further €2 million of taxpayers' money down the drain? I thank the Chair for its patience.

Mr. Kenny

I want to support Deputies Ring and Cooper-Flynn on this matter which is of importance in my constituency. I look forward to the Minister of State's reply.

Minister of State at the Department of Community, Rural and Gaeltacht Affairs (Mr. N. Ahern)

I thank Deputies Ring and Cooper-Flynn for their comments. I am conscious, as is the Minister, Deputy Harney, of the need to attract new investment into County Mayo and particularly into Ballinrobe. I agree with the Deputies that it is disappointing that it has not been possible to bring the negotiations with this company to a successful conclusion. I am assured that everything possible is being done to make locating in Ballinrobe an attractive proposition for the company and I would regret if it was to make the commercial decision to locate the project elsewhere. However, the IDA's negotiations with the promoter are continuing and its position is that it is open to negotiating a higher rate of subvention for a more advanced integrated manufacturing proposition which the promoter might wish to contemplate. That negotiation is continuing.

It would be inappropriate for the Minister or for anyone else in Government to second guess the IDA's judgment in deciding the appropriate level of assistance warranted in the case of individual projects. IDA Ireland has statutory responsibility, assigned to it by the Oireachtas, for the attraction of foreign direct investment to the State and its regions. Negotiations on grants or on the management of IDA's industrial property portfolio is a day-to-day operational matter for the agency. It is not a matter for Ministers, the Government or for Dáil Éireann. The law sets out the responsibilities clearly. It is the IDA that evaluates proposals and that decides how to negotiate to get value for the country. It has done so in this case, as in all others, and it is convinced that its negotiating stance is the most appropriate in view of the proposal. The effective grant cost per job, taking into account both the property deal proposed and the employment grant, is substantial for the project in question which is a basic manufacturing and assembly operation.

In my experience and that of the Department, it is unprecedented to debate in the House the negotiating tactics of the IDA during a negotiation. It would be a pity if every time a promoter was negotiating for more cash, a parliamentary debate was used in an effort to put pressure on the IDA.

Mr. Ring

We have to do that in Mayo because there are no jobs there.

Mr. N. Ahern

That would not be wise or good for Ireland.

Mr. Ring

If the IDA was to do its job, we would not need to do this.

Ms Cooper-Flynn

The IDA has said the negotiations are over.

Mr. N. Ahern

A reason Ireland has had so singular a success in attracting foreign investment, compared to other countries, is that the negotiation of deals is a matter for the IDA. It must remain that way.

The IDA's track record is second to none. It is perhaps the most professional investment agency in the world. It is highly respected by its counterparts around the globe who constantly seek to emulate its success in attracting foreign investment into the country. In the past 12 months alone, 44 IDA backed projects forecasting more than 8,000 jobs have been announced.

In the case of the building in Ballinrobe, to which the Deputies refer, it is owned by a private company and has been vacant for most of the past 20 years. On 2 January 1983, IDA Ireland took out a 35-year lease on the building, with rent reviews every five years. The annual rent, up until January 2003, was €92,481 per annum and the agency is currently involved in rent negotiations with the owners. I heard the comments of the Deputies in that regard and I note them strongly.

To secure the project for Ballinrobe, IDA Ireland was willing to purchase the freehold title to the building and sell it to the company at a substantial cost to the agency. In addition, IDA Ireland offered grant assistance based on a number of commercial factors and the limited planned capital investment by the company concerned. The IDA Ireland offer is high for the sort of project that has been proposed.

IDA Ireland is doing well in locating and increasing the number of new greenfield jobs in the Border, midlands and west region. In 2002 44% of all new greenfield jobs were located in the BMW region compared with only 25% a few years ago.

Regarding what Deputy Ring said about County Mayo, since 1997, the number of IDA supported companies and jobs in Mayo has increased from 17 with 2,624 employees to 25 with almost 3,500 employees at the end of last year.

IDA Ireland's ability to do good deals for Ireland is beyond question. That is why I must question the wisdom of Deputies raising this matter as an issue for debate during negotiations.

Mr. Kenny

They are perfectly entitled to do so.

Mr. N. Ahern

I am confident that the strategies and policies pursued by IDA Ireland, together with the ongoing commitment of Government to regional development—

Mr. Ring

The company has left the country

Mr. N. Ahern

—will bear fruit in terms of overseas investment and jobs for the people of Mayo.

I note what the Deputies said about the cost of renting this building over 20 years. They might have a sound point in that regard. However, the Department is strongly of the opinion that their tactics at this stage are wrong and it would rather the matter was left to negotiations between the company and IDA Ireland. It is to be hoped their efforts will be successful.

Ms Cooper-Flynn

On a point of order, I thank the Minister of State for letting the House know that negotiations are still in progress. That will come as news to everyone involved given that IDA Ireland says it is firmly of the view that this is the appropriate level of grant for the project and it is not its intention to increase it. I thank the Minister of State and am delighted to know negotiations are still in progress.