JOINT COMMITTEE ON THE ENVIRONMENT, TRANSPORT, CULTURE AND THE GAELTACHT debate -
Thursday, 15 Dec 2011

Role and Functions: Discussion with Shannon Foynes Port Company

Chairman

The next item is an introduction to Mr. Michael Collins, chairman designate of the Shannon Foynes Port Company. I welcome Mr. Collins in his role as chairman designate.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Mr. Michael Collins

I thank the Chairman and the committee for the opportunity today to address it following my nomination as chairperson of the Shannon Foynes Port Company. My address will take five to seven minutes, if that is not too long, and I am very happy to take any questions. The only time constraint is the time constraint of members. I wish to cover two aspects, my business career details and my vision as chairperson of Shannon Foynes Port Company. I am a seasoned professional with extensive experience on all aspects of management gained across a number of large and complex industries. This experience ranges from preparation of strategic and operational plans to optimising operations to ensure competitiveness and survival in the global marketplace.

I joined Aughinish Alumina in January 1980 and was appointed CEO in January 1999 on the ownership change from Alcan, Montreal to Glencore AG, Switzerland. The Aughinish Alumina operations represent an investment of $1.25 billion and, with an annual output of 1.8 million tonnes, is the largest alumina refinery in Europe. It is recognised in the industry as one on the leading refineries in the world in terms of output, safety and environmental standards, operating efficiencies and people productivity. As CEO, I was responsible for the preparation of detailed annual plans covering each activity and I was held fully accountable for performance against the approved plans. Throughout my career at Aughinish I played a key role in the development of the operations as CEO and prior to that as a senior manager with varied responsibilities including finance, which is my core skill, commercial, with direct responsibility for extensive global procurement requirements, pension trusteeship, organisational change and company secretary, including the necessary legal interfaces. I have served on the national executive of IBEC and am a past chairman of its energy policy committee. I am also a past chairman of the European Union alumina producers, a grouping within the European Aluminium Association and have represented the interests of the industry at EU level. I have also served on the boards of alumina operations in Italy and the West Indies.

In June 2003 I transferred to Jamaica as CEO of West Indies Alumina Company, a joint venture owned by Government of Jamaica and Glencore AG. These operations comprised two alumina refineries, extensive bauxite mining, a railway system and a large shipping port which served the needs of West Indies Alumina Company and significant third party business. It had a workforce of 1,700. During my career there, I led on the development of an operations plan covering production increase, efficiency improvements, people productivity and systems enhancements. I gained shareholder approval for that very detailed plan and got its implementation under way.

I retired from full-time employment and as chief executive officer, CEO, of Windalco in July 2006 but continue as an international consultant to Glencore on alumina refinery operations. In this role, I have carried out a number of studies on its behalf, including a port upgrade study at their alumina refinery in Texas, USA.

My career history prior to joining Aughinish in 1980 included six years as chief financial officer, CFO, of a major motor group. I also worked for four years in the soft drinks industry in Cantrell & Cochrane in Dublin and, prior to that, in the building products industry in Roadstone in Dublin.

My management and financial experience is extensive and I hold particular expertise in leading on the development and optimisation of complex capital intensive operations, improving workforce organisation and productivity and, of course, my expertise is in all areas of financial planning, reporting and control. I also have a record of delivering high performance year-on-year and meeting or surpassing agreed targets and objectives. That is a summary of my business career experience.

I will move on to my vision as chairperson the Shannon-Foynes Port Company. The Shannon-Foynes Port Company is the business enterprise which is responsible for the maritime management of the Shannon Estuary. It services a number of facilities and customers and handles in excess of 10 million tonnes per year. Its contribution to the economy of not only the mid-west but nationally is significant and vital. It is critical, therefore, that the company continues to be run and developed on business grounds, including meeting its financial responsibilities to its shareholder, the Government. Business grounds must also recognise the varying interests of all stakeholders.

Taking into account the above, my vision as chairperson will be to work with the board of directors and through the CEO and his team on all aspects of the enterprise. The term "all aspects" is best summarised under two areas, namely, operational excellence across all activities and the development and progressive implementation of a business strategy to secure and grow the business. This strategy, where appropriate, will be complementary to and supportive of the overall development of the region.

Operational excellence is built around clear and achievable targets and objectives covering all key areas such as safety and environment, people, governance, financial, etc. The targets and objectives will be consistent with the overall strategic direction. Actual performance will be measured and reviewed hard nosed against the targets on a regular basis. My initial meeting with the CEO of Shannon-Foynes Port Company gives me comfort that a focused and professional approach is under way and my objective is to contribute to building and consolidating this approach.

On the business strategic side, in my business experience it cannot be assumed that the customer base today will be the same in ten or 20 years. Shannon-Foynes Port Company is no different from any other enterprise in this regard. The Shannon-Foynes Port Company business strategy must, therefore, identify, pursue and deliver new customers to ensure its growth and survival. The strategy will also identify and cater for the impact on the company of any such new customers. In developing a realistic strategy, it is critical that Shannon-Foynes Port Company works with other interested parties in the region and nationally, such as IDA Ireland. I recognise from my brief discussion with the CEO that the company is well advanced in its strategic thinking.

I see my vision and goals as ensuring operational excellence and performance delivery year on year, meeting or exceeding the shareholder expectations and also having in place a realistic strategic plan which adds tangible benefits as each element is implemented. All of this will be in the context of a strong, unified board working in harmony with the CEO and his team and with good relationships and support from the appropriate external bodies.

That summarises my vision and career experience. I would be only too happy to take question on any aspects.

Deputy Niall Collins

I welcome Mr. Collins and thank him for his opening statement which was very informative in terms of detailing his CV and the experience he brings to the role. Bringing chairpersons designate before committees is a great innovation. As a Deputy who represents the Foynes side of the Shannon Foynes Port Company - its headquarters is in Foynes - I, along with Deputy Patrick O'Donovan, wish Mr. Collins well in his role. The Shannon Foynes Port Company is a major employer and it is of huge strategic and economic importance to the mid-west region and the country. Given the extensive experience Mr. Collins outlined in terms of his career to date, the port company and the State, as a shareholder, will be in very safe hands.

Deputy Dessie Ellis

I thank Mr. Collins for his very good presentation. His credentials are very impressive. He has a had a long and very distinguished career. As I am not as familiar with the Shannon Foynes Port Company as I am with some of the others, I am curious to know how many people work there. There is a huge amount of leisure activity in the Shannon area as well as the transportation of cargo. Is that part of the company's portfolio, namely, improving the leisure side? Has Mr. Collins any ideas in that regard? In regard to the fishing industry in that general area, will Mr. Collins give the committee some idea of the sort traffic in and out of the port? Is there scope for more? Mr. Collins laid out some of his ideas in terms of looking to the future and improving competitiveness and so on. How can competitiveness be increased and where is the scope to increase it?

Mr. Michael Collins

I have not got my feet under the table yet. My only direct contact with the port company has been 35 minutes with the current CEO when I visited the Department in Dublin last week. Obviously, I was a customer of the port as CEO of Aughinish Alumina, so to that extent I am very familiar with the bulk cargo side of what is coming in and going out of the estuary and the fact that a few very large customers make up the vast bulk of that. However, in my brief discussion with the CEO last week, he was quite informative and he covered all of the areas in some detail, or in so far as the time allowed, and where the priorities lie. One of those he mentioned specifically was cruisers coming into the Shannon. At this stage I do not have knowledge of the extent of that or of the objectives of the port authority working with the other agencies to grow that. However, from that brief initial meeting, it is an area of which the port company is well aware and is locked on to. The potential for growth there is something we must definitely explore. I do not know the impact of the fishing side on the port company or vice versa but it is an area I have noted and it will be included in the areas at which we will look strategically.

Deputy Kevin Humphreys

I welcome Mr. Collins, who has a very impressive CV. He mentioned shareholders' expectations. What would be a reasonable dividend? I would be interested to learn from where the opportunities for growth will come for the Shannon Foynes Port? I know that as CEO of Aughinish Alumina, Mr. Collins was a major customer in the bulk market. Is there a growing role for ro-ro or could he see the Shannon Foynes Port being developed as an European hub? A terminus for cruise liners was mentioned. Could he outline what cruise liners could berth there?

Mr. Michael Collins

The Deputy put several questions. I was surprised at my initial meeting that no dividends have been forthcoming to date. I can understand the reasons for that when I look at the balance sheet. The port has been reasonably profitable in recent years. A key objective of mine is to pay dividends in the shortest possible time. We discussed that during my interview process with the Department. It is only right that the Shannon Foynes Port Company meets its obligations to the Government and that includes payment of dividends. I will be very disappointed if we cannot achieve the objective of paying a dividend in the shortest possible time, whether we start with a token dividend and grow it from there. Our initial priority, was to address the deficits currently on the balance sheet, which have been addressed for the past few years.

The Deputy asked about my vision for the company. I understand there are deep water facilities adjacent to the Foynes general cargo port. How that might be exploited and what needs to be done to exploit it came up in our conversations with the CEO last week. On the wider issue of the cargo traffic through the Shannon Foynes Port, it has been bulk cargo and other than business from Aughinish, it has been substantially energy related. I do not think that should change as there are opportunities to grow the energy side of the business and everybody knows that the LNG project is being evaluated. I do not know precisely at what stage it is at this time. It is difficult to see Shannon Foynes Port going forward strategically if it ignores the agri-sector as well. From my brief meetings, I consider there is potential in the agribusiness. To summarise, the business needs to grow from its base of handling bulk and energy related cargo to doing business in other directions. There is no question about the need to do business in the agri-sector. The Shannon Foynes Port goes deep into the hinterland and it is an ideal set up for that business.

The infrastructural deficits, in particular the road and rail connections need to be addressed if it is to grow the roll on-roll off market. In particular, the rail connection has a higher priority than the roads and this has been expressed publicly by my predecessor. I am not saying anything that is not well understood and acknowledged.

The port is dependent on the bulk business from a small number of customers and that customer base must be broadened if we want to secure the long-term growth and survival of the port. That falls within the strategic direction we must take.

Deputy Kevin Humphreys

Is there adequate depth to consider the possibility of developing Foynes as an European hub for the larger cargo ships which can then transfer some of their cargo to smaller vessels which can ship the cargo to Europe?

Mr. Michael Collins

I could not comment on that. I know that idea has been in the public domain for quite some time. In my days as CEO of Aughinish, there was talk of transit shipping for bulk cargoes, breaking it down, storing it and then shipping it on to Europe. I do not know what, if anything, has been done to progress that concept. Certainly it will be on our agenda as we look at the strategic direction for the port. I am not knowledgeable at this point of the background work or fact gathering that has been done in that area. It is a valid area to consider.

Deputy Kevin Humphreys

I thank Mr. Collins for his response.

Chairman, I suggest that we invite Mr. Collins to return to the committee in a year's time when he would be better able to give his views on this very important strategic asset. This asset has not been well developed and there is an opportunity for it to play a bigger role in the economy.

Mr. Michael Collins

Absolutely yes, Chairman.

Deputy Patrick O’Donovan

I apologise for being late, and it was unfortunate that I missed the presentation.

There are a great many people in the west Limerick area and along the Shannon estuary who are very pleased to see someone who knows the estuary so well, having worked in one of the largest industrial facilities in the country, return to the Foynes area.

I totally concur with Deputy Humphreys that the strategic importance of the port of Foynes and what it could do for the economy has not been recognised. Shannon Foynes Port has what most ports would give anything for, the natural advantages of being a safe and sheltered port with enormous depth. It has been under-utilised.

I am glad that Mr. Collins has identified business from cruise liners, as part of the vision. Deputy Humphreys stole my thunder because I too would like Mr. Collins to could come back in 12 months to outline the situation. We are very fortunate that Shannon Foynes Port has depth, shelter and connectivity to the national rail infrastructure, that is broken only in two different locations. With a speed restriction, there is potential. There is major potential in mining across east Limerick and south Tipperary that is waiting to be exploited. Hopefully everything will go according to plan and that it will generate employment. From the strategic point of view, we need more engagement between the board of Shannon Foynes Port, CIE, the National Roads Authority and the local authorities to put forward a vision for what is the most important element of infrastructure on the west coast.

Fadó, fadó, people of significant vision, the Spring Rices of the world designed the port and brought the railway from Limerick via Ballingrane on to Foynes because they recognised the potential of the estuary. A few exceptional people have come up against massive resistance from some of the publicly funded agencies, so that their vision has not been exploited to its full potential. It is great that somebody who has great experience, not only of working on the estuary but working in private industry that had a significant dependence on the public sector is now the chairman of the board.

It is of major importance that the local stakeholders, whether the public representative, residents and people with commercial and pleasures interests in the estuary are engaged with and are a part of the development of the port of Foynes and the greater estuary. It has significant potential, one can have commercial traffic, industrial development and at the same time, it can be a harbour of pleasure and wildlife preservation, for example the dolphins from Tarbert and so on.

I wish Mr. Collins well in taking on the important role of chairman of the Shannon Foynes Port. In 12 months time, I would like to see what has been achieved in realising the vision of those who built the railway to the port of Foynes 150 years ago.

Mr. Michael Collins

Chairman, I seek to give some clarification, based on Deputy O'Donovan's contribution.

When I mentioned the cruise liners and other aspects of the strategic direction of the Shannon Foynes Port, I am re-echoing the discussion I had with the CFO. As I said in my opening statement, I like the strategic thinking that has come through from that very brief meeting. I agree that strategic planning has to be done thoroughly and realistically. It has to include all the stakeholders who add value and try to maintain a uniform approach. Ultimately, it is as good as its delivery. As we know, that delivery requires the will of those at estuary level. It requires political will as well. Some of the issues that are arising in areas of great potential will require political input and will. I agree that if we work together, this sector has a great deal of potential. That needs to be recognised if it is to contribute to the meeting of the jobs target, to mention a more critical matter. It has potential. It is running on a pretty small customer base. That base is very solid, thankfully, but it needs to grow because it has a lot of potential. I agree with the point that was made about the railway connection. The vision that was shown at that time needs to come back as a key factor in the strategic direction and implementation of this facility.

Chairman

Does Mr. Collins want to add anything as a final comment before we conclude?

Mr. Michael Collins

No. I thank the Chairman. I appreciate the opportunity to address the committee this morning. I will be happy to come back with my colleague, the chief executive officer, in 12 or 15 months' time to give the committee a factual update on how we are progressing. We will speak about the good things and the roadblocks that exist at that time. That would be useful for us. It will keep our focus and direction going.

Chairman

The committee maintains its own website. With Mr. Collins's permission, we would like to post his presentation on the website.

Mr. Michael Collins

I have no problem with that.

Chairman

I thank Mr. Collins for appearing before the committee this morning and assisting it in its deliberations. Is it agreed that the committee will inform the Minister for Transport, Tourism and Sport that it has concluded its discussion with Mr. Collins and will forward a copy of the transcript of this meeting to the Minister, Deputy Varadkar, for his information? Agreed.

Sitting suspended at 10.45 a.m. The joint committee resumed in private session at 2.47 p.m. and went into public session at 2.55 p.m.