I welcome Mr. Mark Minihan, chairman, and Mr. Tom Meehan, chief executive officer of the New Ross Port Company. I draw attention to the fact that while members of the joint committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I invite Mr. Minihan and Mr. Meehan to make a short presentation, which will be followed by a question and answer session.
New Ross Port: Discussion with New Ross Port Company.
Mr. Tom Meehan
I am the chief executive of the New Ross Port Company. I am accompanied today by its chairman, Mr. Mark Minihan. We thank the chairman and members for the opportunity to brief the joint committee on the work of New Ross Port Company.
New Ross Port is located approximately 19 miles from the open sea on the River Barrow. Access for ships to the port is initially through the port of Waterford as far as the confluence of the rivers Barrow and Suir and then through the Barrow railway bridge and upstream to New Ross. Navigation in the River Barrow is tidal and in general most ships using New Ross are between 3,000 and 4,500 tonnes. The port handles dry bulk, liquid bulk and break bulk cargoes including oil, fertiliser, animal feeds, cement, coal, timber and steel. Up to last month our principal export was ore concentrates from the Galmoy mine. Unfortunately, this trade has now ceased due to the closure of the mine. We also export products for recycling such as scrap metal, glass and contaminated soil. An unusual feature of New Ross is that three of the four operational port facilities are not owned by the port company.
In recent years, New Ross has experienced a significant decline in trade with throughput down almost 40% between 2004 and 2008. The main reason for this decline has been strategic decisions taken by major port users either to relocate their business to other ports or to cease operations completely. We expect that trade will fall further in the current year due to the general downturn in the economy, the cessation of the ore trade and the fact that a major tenant recently has gone into liquidation. In 2006 the company implemented a staff restructuring programme, which achieved cost savings of €280,000 per annum and reduced the number employed to seven full-time equivalents. This programme was successful and New Ross Port Company recorded operating profits of just under €90,000 in 2007 and €289,000 last year. In spite of the good performance in 2008, the downturn in trade now presents the company with a considerable challenge. The board carefully considered the position, consulted major stakeholders and determined that the best way to fulfil its statutory mandate is to continue in business as an independent entity. We are therefore now engaged in negotiating a further rationalisation programme that will allow the company to trade profitably in the future, notwithstanding the fall in revenue.
We are confident there is a viable future for New Ross Port Company. A number of national and regional companies are based in the port including Esso, Texaco, Goulding Fertilisers, Stafford Fuels Limited, Noel O'Brien Cement and Nitrofert Limited. We have two stevedore companies that are strongly committed to the port and we recently have attracted a major new enterprise to New Ross. Green Biofuels Ireland Limited began exporting biodiesel this year. The product is manufactured in a plant built at a cost of more than €20 million on land leased from New Ross Port Company. We are confident this operation will be a major contributor to our commercial success in the years ahead. At this stage we are not contemplating any significant investment in port infrastructure as the current facilities have sufficient capacity to cope with the level of activity we anticipate for the foreseeable future.
New Ross is positioning itself to meet the challenges ahead. In conjunction with the stevedore companies that operate in the port, we offer an efficient and cost-effective service that is focused on the needs of our customers. In spite of the additional costs which arise from our inland location, we nonetheless are at the lower end of the spectrum as far as port costs are concerned and we are actively seeking new business. I thank members for their attention and we look forward to addressing any issues the joint committee may wish to raise.
Mr. Meehan should expand a little on the reduction in the port's activity and should spell out in more detail the reason for it, leaving aside the closure of Galmoy. Has Galmoy's production ceased?
Mr. Tom Meehan
Production has ceased. The mine closed at the end of May and we shipped out the last cargo of zinc ore at the start of this month. Consequently, that cargo is completely finished. There were a couple of other instances, the most significant of which was an indigenous oil company that had a major presence in New Ross.
Campus Oil.
Mr. Tom Meehan
Yes. In 2005 it decided to centralise its operations in Dublin, which constituted a significant loss of between 140,000 tonnes and 150,000 tonnes per annum. Members will appreciate that port business is driven by volume and that significant difficulties can arise if one loses volume. Moreover, the Albatros fertiliser factory was taken over some years ago by Timac, a French company. The latter persevered with the fertiliser manufacture business for about a year before deciding to exit that business. The firm now concentrates on speciality fertilisers and the volume of product being handled through the port of New Ross has fallen radically. These are two examples apart from the aforementioned ore business.
Why did Campus Oil go to Dublin?
Mr. Mark Minihan
It formed a strategic alliance with another oil company in order that it could bring in bigger ships and greater volumes of a particular product. While it was bringing 3,000 and 4,000 tonne loads into New Ross, it was able to import bigger loads into Dublin by sharing with another company. It made that decision a couple of years ago. In addition, much of its business was located north of Dublin. Its business had changed following its incorporation of Stafford Oil and much of that business was located between Dublin and the Border.
I welcome warmly the chairman and chief executive before the joint committee. From perusal of the company's accounts for 2007 and 2008, I note one of its concerns pertains to its pension deficit. It is stated that the port company has a defined benefits scheme that now is in serious deficit. What impact will this have on the company's plans in the future?
Mr. Tom Meehan
We received an up-to-date valuation in recent days and the position is even more serious than had been indicated previously. This issue has been of serious concern to the board of the New Ross Port Company for some years. As far as pensions are concerned, the Harbours Act 1996 is a straitjacket. We are stuck with the present arrangement until the current members of the scheme either retire or leave the company, which essentially will be when they reach retirement age. We are operating a defined benefits scheme with all the associated costs and expenses for a small membership of six, as well as a further five deferred members. Two issues arise, the first of which is the cost associated with running a defined benefits scheme while the second concerns the problem of being obliged to fund a very large deficit. This has been a matter of serious concern. When I arrived in New Ross in 1992, the pension scheme was in a little difficulty but nothing compared to the present position. The issue was then rectified and, up to the current year, we had been in positive territory as far as our funding position was concerned. However, the position has reversed in the space of 12 months.
The downturn, developments regarding Galmoy and so on have made it difficult for the company in respect of cash flow and so on, in terms of maintaining——
Mr. Mark Minihan
Future funding requirements are horrendous. The scheme lost approximately €400,000 last year, which equates to the scheme's deficit at present. We have just had the valuation that is required statutorily every three years. While we had a fairly small surplus the last time, we are in deficit at present. We have 15 months in which to come up with a funding proposal under the Pensions Act. We considered every other cost-reducing possibility. Since so few people were involved, we tried to make it a self-administered fund because we pay approximately €17,000 per year for the fund's administration. However, we were not allowed because it must be administered by trustees. That €17,000 would probably fund a much larger scheme, but we were tied by the legislation no matter which we way looked.
According to the balance sheets, the company's assets are strong, but this matter — I do not want to spend all of our time discussing it — has an impact on the company's viability plans.
Mr. Mark Minihan
The assets are strong, but they are not liquid.
We have been examining reports and have heard from Waterford, in particular. After various studies and so forth, the New Ross Port Company decided to remain independent. What was the rationale? Our remit is to report to the Oireachtas on ports. New Ross is——
I must interrupt the Deputy for a moment. With the committee's agreement, Deputy McEntee will take the Chair. I must step outside.
Deputy Shane McEntee took the Chair.
For a particular reason, I want the port to do well. Our guests believed that the proposal, on balance, was not in the port's interest.
Mr. Mark Minihan
In New Ross town hall, there is a mace that was on its way from Edward II or someone to Waterford in 1350 so that the latter would have jurisdiction over New Ross. Wexford people stopped it somewhere near the Hook, took the mace and never gave it back.
We are in favour of a merger of Rosslare, New Ross and Waterford ports, which has been tentatively suggested. The scale of New Ross and Waterford and the spare capacities in the estuary would mitigate against our business in the short and medium terms. As someone told me a while ago, I am the chairman and in charge of the family silver. There would be a lot of emotion involved apart from the business.
New Ross is one of the ancestral places associated with my family. What role does the port company play in the overall regeneration of New Ross as an important town? Are the company's proposal on its future development and its business plans integrated with overall proposals? People who have visited New Ross over the years say that it had become stuck in a rut whereas Wexford and Enniscorthy received many developments. New Ross did not seem to be developing in the same way. Will the company make a significant input to the town's overall development?
Mr. Mark Minihan
The input ebbs and flows. For a number of years, the company had a considerable input. It depends on income flow, which has constricted recently, meaning that having an input has been more difficult. John F. Kennedy's visit to New Ross was paid for by the port company because the county manager stated that New Ross town council could not spend any money on it. The port company brought Kennedy to New Ross.
I remember the famous scenes from films. He referred to the Albatros.
Mr. Mark Minihan
Or John B. Kelly. Over the years, much development has come from the port company because our organisation generated funds. The county and urban councils have since increased their spending and have taken over many of the activities that were initially provided by us when no one else would. The lighting on the quay was provided by the port company, as were another number of key improvements.
The company is unusual in that it has three or four private operators.
Mr. Tom Meehan
It owes to the way New Ross developed in recent times. The Stafford family had a presence in New Ross for many years, but it built a jetty in the early 1950s, started stevedoring operations and developed from there. Everyone benefited from the relationship between the harbour commissioners, as they were at the time, and the Stafford group.
It has recently become a concern that most of the port's capacity is under the control of others. While it is not likely to occur in the foreseeable future, some of those facilities could be redeveloped for other purposes. We do not have an alternative.
Unlike Dublin, the port with which I am the most familiar, the New Ross port or its predecessor does not lease out the majority of the 600 acres or so.
Mr. Tom Meehan
No. It is privately owned.
Regarding the proposal for future development and given the fact that the company has suffered a number of unfortunate and serious setbacks, what is its business plan to 2016 and what will its development priorities be? Rosslare and Waterford have been mentioned, but how will New Ross overcome its setbacks and the pension scheme issue? Our guests might refer to the pension fund. Late on this night last week, the Dáil passed a Bill to update the Harbours Act. In the context of the fund, the Bill has not eased pressure on our guests in any way, shape or form.
Mr. Tom Meehan
No. The Bill contained elements of interest, such as an amendment specific to New Ross whereby we can now challenge pilotage charges levied by the port of Waterford. Heretofore, there was carte blanche in that there was no court of appeal to which we could bring an argument. Thankfully, this issue has been addressed.
I refer to the broader picture for 2009 onwards. The throughput so far this year is 14% or 15% less than what the company had expected, according to this report. What would our guests like to occur in the next five or six years?
Mr. Tom Meehan
We will do well if we meet our throughput targets. After June, we are approximately 5% behind our 2009 budget, but one never knows how things have turned out until the end of the year. There is no buoyancy in the market. Not to beat around the bush, we are in survival mode. We are digging in and cutting costs with the aim of surviving the downturn so that we can still be in being to provide a service to our customers when the economy improves.
Regarding an alliance with Waterford, our view was that it would not be in our interest. The trade would tend to centre on the larger entity and New Ross would be left to wither. We did not perceive that to be in the interest of the port company or those who use New Ross as a port.
The bio-fuel project seems like a brilliant idea. Presumably it has good potential.
Mr. Mark Minihan
It is a fantastic project. Most of our business is in bulk and there is not great capital commitment in it. The bio-fuel project has considerable capital commitment and, as a result, having it based in New Ross is the best news we have had on any front for several years. Our traditional cargo, such as fertiliser, was way behind in March and April. That is the time when it should have been in for distribution. In May and June it returned to previous levels and we are almost at our target. Each month brings its problems and benefits if one can get the business flowing.
I hear what Mr. Minihan is saying about the mace in 1350. The witnesses would rather not be linked to Waterford. Are they prisoners of history? Is that logical?
Mr. Mark Minihan
The logic of it is that the tonnage through New Ross does not end in New Ross. It must be shifted out and downstream business arises from this. New Ross was traditionally a bulk port, Rosslare was a roll-on roll-off port and Waterford was a load-on load-off port. It was a very good mix and together the three ports brought us almost up to the level of Cork Port. In recent years, Waterford expanded its bulk capacity dramatically. If we amalgamated, as Mr. Meehan said, our operation would be allowed to wither. The other ports are being under-used at present.
Is it a case of Wexford versus Waterford? A Kilkenny man around these Houses tells me that Waterford does not have a port and that the port is in Kilkenny for planning permission purposes. While New Ross is in Wexford, is it considered to be in Wexford in respect of planning permission?
Mr. Mark Minihan
Deputy Broughan suggested we are stuck in a time warp. There is an element of that because New Ross is a bit like El Paso. We are of County Wexford but the seat of power in Wexford is further east. We are not anybody's child. We are a long way from Kilkenny and a long way from Wexford in terms of local government.
Waterford does not have a port anymore. The Port of Waterford is in Kilkenny. The Wexford versus Waterford issue is the past tense. Should the witnesses adjust their thinking?
Mr. Mark Minihan
The business is not past tense.
Mr. Tom Meehan
Mr. Minihan is from New Ross, I am from Sandymount. I do not have the same emotional attachment to New Ross. Considering it in a detached Dublin 4 way, the case for an amalgamation of the ports of New Ross and Waterford is not proven. On the surface, there is a case for it but when one digs down into it the advantages are nebulous and the disadvantages are very real. There may be an attraction at the macro level, with one company administering the estuary as a whole, but the idea of shifting trade from Waterford to New Ross will not happen. The stevedores control the business and if they have invested the facilities and warehouses in the Port of Waterford they will not move to New Ross. They will fight tooth and nail to stay where they are. We examined it and while there was some emotion, mostly it was a cold, objective decision on our part.
Is there much linkage between the two ports? I see plans to downsize the staff. What will be the make-up of staff next year? Will it include a pilot? Does New Ross buy services from Waterford or are they sworn enemies?
Deputy Frank Fahey resumed the Chair.
Mr. Mark Minihan
We use Waterford pilots and much of the revenue of the Waterford pilots is from New Ross. Much of the container traffic coming into Waterford does not use pilots. New Ross accounts for a large proportion of their work.
What will be the make-up of staff by the time the port downsizes?
Mr. Mark Minihan
It will be mainly operational. The number of pilots will not be reduced. The harbour master will have an administrative role.
Are the pilots on the staff of New Ross or Waterford?
Mr. Mark Minihan
There are two sets of pilots.
As the number of shifts is reduced, could there be links that would be of financial benefit to both?
Mr. Mark Minihan
We have examined that. The only reason we would hold back on it is for commercial reasons. If the costs associated with the joint venture are greater than a single venture, it does not make any sense.
Was the closing of Galmoy mine due to the fact that the material ran out?
Mr. Tom Meehan
It closed early. There was sufficient ore in the ground to keep it going until 2011 but the current low price of zinc was a factor.
The price of zinc has increased. I know this from talking to workers at Navan. Some 12 months ago things were never as bad but now things have never been so good.
Mr. Tom Meehan
Closing a mine such as Galmoy is a long process. As soon as it started it was difficult to reverse it.
Has it started?
Mr. Mark Minihan
It is closed.
Is there any business in the area that can help? Each port should hold its identity because things will change, especially on the east coast.
Mr. Tom Meehan
We are beating the bushes and looking for new trade. We started a new business in the export of scrap metal, a trade that was not a regular feature in New Ross in the past. It started in recent months and is going reasonably well. Business starts off slowly and builds to a level. It takes some years to get it up and running. Export trade in glass was successful in recent years. They are the types of businesses we would like to attract. In the past we suffered from having too many eggs in one basket; we are probably better with a range of smaller customers than with one big one.
Mr. Mark Minihan
The port had a large dependance on fertiliser.
Mr. Tom Meehan
That died a death.
Mr. Mark Minihan
Yes.
Are the waters deep?
Mr. Mark Minihan
They are tidal.
How does the tide affect the port?
Mr. Tom Meehan
The waters are alternating deep and shallow. Navigation is tidal so we can only move ships approximately two hours before and after high water. Some of the berths in the port do not quite dry out but the ships sit on the bottom when they are being loaded or unloaded as the case may be. We have adequate depth for the types of ships that we handle. We carried out a major engineering scheme in 1999 and 2000 which realigned the river and dredged it to 3 m below datum and we now operate at 2.5 m below datum. It is sufficient for us to accommodate the type of business we are in at present.
Is there any role for the IDA and Enterprise Ireland in working with the port authority to try to generate new business?
Mr. Mark Minihan
We stay in contact with the local IDA and Enterprise Ireland personnel. New Ross is a fairly small community so that type of activity would be progressed through the community; the port and council would be involved rather than one specifically. The IDA was not involved in the most recent investment which was the biodiesel plant. In recent years very few port-oriented activities have come from the IDA. Our business has been bulk and we do not handle unitised traffic.
I thank the witnesses for appearing before the committee. A series of individual questions will be sent on costs, wage levels and related matters and we would appreciate a reply.
Sitting suspended at 4.43 p.m. and resumed 4.46 p.m.