I move amendment No. 3:
To delete all words after “Dáil Éireann” and substitute the following:
— An Post is a commercial State company with its own Board and a mandate to deliver a postal delivery service, and a viable post office and mails centre network;
— staff in the Cork mail centre have delivered a consistently high level of performance over the years and have given great service to An Post;
— the impact of email and other forms of online communication on mail volumes have presented significant challenges to the existing postal business model, with the Cork mail centre operating at 25 per cent capacity and, in response, the An Post Board has put in place a strategic plan to transform the company in both the mails and retail business;
— An Post needs to reduce its letter processing capacity in line with global industry trends, and switch investment into its eCommerce/parcels network to ensure the future sustainability of the company;
— the closure of a mail centre was considered by the Labour Court in its recommendation of September 2017, which provides that 50 per cent of the savings arising from the closure of a mails processing centre will contribute towards pay awards in An Post; and
— continued transformation of the postal business will be difficult but the new changes will allow An Post to continue to be financially sustainable and in a position to avail of opportunities in the digital/eCommerce environment;
— An Post has committed that all staff will be offered strong exit packages, redeployment opportunities within An Post’s delivery and post office networks in the Cork area, further education grants and support in securing jobs with new employers;
— An Post is engaged with the Communications Workers’ Union (CWU) to ensure the best possible outcome for affected staff and has indicated that it will continue to work with the CWU in addressing all issues that may arise;
— An Post plans to invest over €15 million in parcels infrastructure across Cork City and the wider region over the next three years and that a major parcel delivery centre for Cork will open by 2022;
— An Post employs over 9,000 staff, continues to have a strong regional focus and will still employ almost 1,000 people in the Cork area;
— the Government has taken significant action to ensure the future viability of An Post and secure the future of the company, and these actions have resulted in a restructuring of the company, expansion of services in the post office network and have protected thousands of jobs in the postal sector across the country;
— a Government investment of €30 million was secured for An Post in order to safeguard the five days a week mail delivery service (€15 million) and to protect post office counter services (€15 million); and
— the Government continues to provide significant business to An Post through the Department of Employment Affairs and Social Protection social welfare contract and National Treasury Management Agency business; and
commits the Government to:
— ensure that all relevant State supports will be made available to the workers impacted by this announcement; and
— monitor the An Post commitments to invest in the Cork area and the ongoing delivery of its strategic plan.”
I thank the Deputies for raising this issue. I understand that it is a matter of significant concern for local workers and there is no doubt that those workers have provided a great service. This is not a reflection on the quality of work or the dedication they have shown over a number of years.
The sad fact that lies behind this decision is the substantial decline in the use of traditional mail. As the Deputies will appreciate, the volume of mail has halved in the past ten years and that decline is projected to continue. As Deputies will recall, this led to a very serious financial situation for An Post just two years ago when we had to introduce special legislation in this House to increase the cost of stamps. We also had to invest €30 million to support An Post and ensure elements of its public service commitment, such as the five-day service and post office counter services, continued. The market in which An Post is trading is changing rapidly and it had to respond by developing a restructuring programme. We are now seeing early signs of that programme's success.
The Deputies are correct that although parcel delivery services were exploding, An Post experienced a decline in its market share. One of the strategic decisions it has taken has been to radically change that and grow its parcel business.
One of the elements that allowed that to happen on the scale that it has was a negotiation with its employees. As a result of that negotiation, restructuring has taken place in the context of how the company delivers services. It has facilitated seven-day delivery in its parcel service and greater flexibility to increase the company's market share in this thriving business in respect of which there is sharp competition. Nonetheless, the company is doing very well in that business as a result of the restructuring to which I refer. The restructuring, which, as Deputies will be aware, was the subject of a Labour Court recommendation, involved a decision to make certain productivity improvements, one of which was to reduce the number of sorting centres from four to three in light of the dramatic collapse in the volume of mail. This is the outworking of that decision.
While I can understand both the concern locally and the reason the Deputies have raised this matter, An Post recognises that if it is to be a public service company it must take account of the change in the shape of the expectations of its customer base. If people are moving away from mail towards parcel and from some of the traditional post office services and demanding new retail services, it must show that it has the capacity and the strategy to deliver. That is at the heart of what it is doing and there are signs it is being successful in the context of repositioning itself so that it will have a strong growth prospect.
It is interesting that, contrary to what the Deputies have suggested, this is not a short-term commercial perspective An Post has taken. At the heart of its strategy are four key principles, including, that it has to be customer-centred so it has to know the direction of business customers want of it and respond to that and that it has to be a responsible employer, meaning that it must make the changes necessary to provide high-quality and sustainable employment that will endure into the future. That is what it is seeking to do and the very significant success it has enjoyed since it started to make these changes is a very good indication of where it is heading. However, it must be competitive in these new areas, which is important. It has had to make changes in work practices and investment to be competitive. Part of this has been a significant investment of €50 million in its services, so it restructured that business.
I acknowledge that which is happening is very disappointing but I also acknowledge An Post has been very careful to ensure that there are strong exit packages for workers who will be directly affected. It will have redeployment opportunities for the workers affected and it has a 100-strong employment force in Cork county, there will be support for the many changes in training and supports for people who do not choose to redeploy and want to go elsewhere, not only from An Post but from the wider State services.
This was a decision of the board. Under law, some of the things the Deputies are seeking to do, namely, to instruct An Post, is directly contrary to the laws we have established here. It is not for the Minister, the Government or the Dáil to instruct An Post. We have set up a way in which our State companies are managed which gives the Minister responsibility for certain high-level policy decisions. However, the commercial management and working out of these decisions must be done locally. An Post will be sitting down with the trade unions involved to work through the various terms and support workers in this difficult transition. It has already engaged with the unions and that will continue.
Deputy Barry raised the role of the McKinsey & Company in this matter. I understand that it was involved in the restructuring programme from the beginning, dating back to when it was first engaged in 2016, and that it has been a support to An Post. There is not a McKinsey report on the closure of mail centres. McKinsey & Company has been an element in the development of An Post’s strategy. The choice made by the board has had to balance the company's various needs, its employer interests, its ability to service its customer base and the best way in which it can manage from a cost point of view the changes it has to make. That calculation must be done by the company in the best interests of its employees, its customer base and the future of the company. That is what has underpinned the approach it has taken.
It is important to recognise that An Post is making significant investments in the Cork area, specifically in respect of the future of its parcel delivery service. Deputies are right to indicate that this will be a growth area. Even though mail delivery will continue to decline, which puts a major burden on the company, it must continue to win new market share in the other areas in order to counteract one of its continuing declining revenue streams, which, up until recently, represented more than 50% of its overall revenue. The company must undertake to successfully transit from an area of business that is highly loss-making and in serious decline to develop these new areas.
I must congratulate the board of An Post, the workers and those involved in management for undertaking and executing a strategy that is bringing about results. We see the success of the two new distinct business units the company created, the relaunched parcel business and its growing role in financial services, an area in which it can bring new services to its customer base. It is one of the biggest retail outlets in the country and it must develop that retail potential for its future recovery.
I accept that this is a disappointing day. There is no way of glossing over that from the point of view of the workers concerned. An Post is doing this in order to ensure that it will be repositioned in a very strategic way to service its customers in the future. It is also seeking to ensure that it will deliver the services required of a postal communications company. It has looked at successful models in Germany, Canada and other countries where successful change has been undertaken and where the businesses of the companies involved are strong and thriving. It is encouraging to see the early signs that this restructuring is working and that we will have growing, albeit different, employment over time as An Post successfully builds its new future.
While I thank the Deputies for raising this matter, I cannot support the motion. As indicated, I have proposed a counter-motion in amendment No. 3 on behalf of the Government.