We are joined by the chairman designate of Wicklow Port Company, Mr. Brendan Newsome, to discuss his proposals for his new role and his views on the challenges facing the company. Members will be aware of the Government decision of May 2012 regarding new arrangements for the appointment of persons to State boards and bodies. The committee welcomes the opportunity to meet with the chairman designate in public session to hear his views. We trust this will provide greater transparency in the process of appointing members of State boards and bodies. I welcome Mr. Newsome and invite him to make his presentation to the committee.
Wicklow Port Company: Discussion with Chairman Designate
Mr. Brendan Newsome
I thank the Chairman and members of the committee for the opportunity to make a presentation on the subject of my suitability for the position of chairman of Wicklow Port Company. I was born and reared in Ashford, County Wicklow. I am married to Jane and we have two boys, Giles and Philip. All of my working life has been spent in active involvement in the business community of Wicklow town and county. I have submitted a brief curriculum vitae to the committee but I will deal with some aspects of it.
Since 1980 I have been managing director of my own company, Wire Ropes Limited, based in Wicklow town. The company employs between 20 and 70 people. The number of employees was 70 in the very best of times but the number is much lower now. Between 1982 and 1990, I was president of the County Wicklow region of the Federated Union of Employers, now IBEC. I gained much of my knowledge and information on industrial relations and corporate governance during that period. We served all companies from Baltinglass to south Arklow and Gorey. In 1983 and 1984 I was president of the Wicklow and District Chamber of Commerce. This provided a good opportunity to meet with prospective investors in the Wicklow area and to work with the IDA in attracting new business to the area. It was a good business experience for me.
In 1984 I was appointed to the board of the Wicklow Harbour Commissioners which was my first experience of corporate port business. In 1991-92 I was elected chairman of the Wicklow Harbour Commissioners. In 1991, I was appointed to the board of the Wicklow County Enterprise Board. It is an excellent organisation, very well managed and a great place to learn about small businesses, grant schemes, etc. In 1991, I was also appointed to the board of management of Abbey Community College. In 1992, I was elected to the national executive of the Small Firms Association. It is another excellent organisation, the annual general meeting of which I will attend this afternoon following this meeting. I have remained on the executive of that organisation and I have found it to be of great benefit to me in business during the past 18 to 20 years. In 2002, I was appointed to the board of the Wicklow Port Company when it was corporatised and during the period 2002 to 2012, I was chairman of the port company audit committee. I served for one year on the National Economic and Social Council and I also serve on the audit committee of the county enterprise board.
To move on from my personal details to the company, I will focus a little on the past. Members may ask why I would do that. The reason is that Wicklow is interesting from a historical point of view. In a book, Wicklow Harbour - A History, written by Jimmy Cleary and Andrew O'Brien, it is reported that the Vikings first came to Wicklow in 827 AD and they plied their long boats up and down the coast around the Wicklow-Arklow area. Norwegian and Irish were spoken at that time and it is reported to be from the Viking era that Wicklow got its name, from the old Norse name Vikingalo. The next settlers were the Anglo Normans in 1170. Moving on to 1881, a new breakwater at Wicklow Port was constructed under an Act of Parliament in the reign of Queen Victoria and 200 men were employed at the peak of its construction. Currently it is the east pier at Wicklow Harbour.
Moving on to the present time, a number of leisure and community groups operate in the port and contribute to the local community. They include the two Wicklow sailing clubs, the rowing club, the swimming club, the diving club, the sub aqua club, the Chamber of Commerce, the RNLI, the Coast Guard and others. We will continue to liaise with these community groups within our terms of reference.
The Round Ireland Yacht Race, a biannual, 704 mile international event in the yachting calendar, of which members may be aware, starts and finishes in Wicklow Harbour. It has now grown to be an excellent visitor tourist and leisure attraction and is greatly enhanced by the weekend Sailfest festival organised to attract visitors to Wicklow Town during the race. The Wicklow Regatta Festival is held annually on the August bank holiday weekend within the port limits and is the oldest regatta festival in Ireland. It is over 134 years old.
The location of Wicklow Port and the Wicklow Town relief road are two of the best kept secrets in Wicklow and the east coast. The port is strategically placed to give access to the north, the south and the west. On leaving the port, if one wants to travel north, one joins the N11, comes onto the M50 and one can be at the Sandyford roundabout in 30 minutes. If one wants to travel south, having travelled 3 km from the port, one joins the N11 heading south and one can be at the Gorey roundabout in 30 minutes, from which one can continue on to New Ross, Wexford and the south Wicklow hinterlands.
The future plans for the Wicklow Port include a five-year rolling plan, projections and budget and that plan will be updated on a yearly basis.
I have set out in my submission statistics covering imports and exports for the 2007-12 period. Focusing on 2007, the level of imports through the harbour was 221,000 tonnes and an indication of the death of the Celtic tiger is that the level of imports dropped to 84,000 tonnes in 2008 and they have dropped gradually by 60% to 70% and then by 80%. The imports reflect a reliance on one product in particular, namely, timber for housing purposes, in the years up to 2007.
Another cost item is dredging. There are plans for a dredging programme in the harbour and it is awaiting a decision from the EPA.
To give an overview of how the port is doing, Wicklow Port is a small company. It is a mean, lean operation, with a decent balance sheet and no pension shortfall. All outstanding loans will be cleared in 2013. In addition, the port company does not directly incur the cost of employing dockers or cargo handling machinery, cranes, fork-lifts etc., as these are provided by the stevedores and ships agents company, R. F. Conway and Company. Consequently, Wicklow Port is one of the most efficient and competitive ports on the east coast.
Unfortunately, the downturn in the economy since 2007 has meant that the company is treading water while waiting for the economy to improve. This is similar to many small companies at present but in Wicklow, imports were seriously affected by the downturn in the construction industry where the main imported product, timber, suffered a reduction of 60% per annum. In addition, imports of plasterboard almost ceased through Wicklow Port.
However, I am optimistic that our economy will recover from this deep depression. Ireland is regaining its competitiveness with exports increasing by 15% since 2009. With action having been taken on the sovereign debt and, hopefully, a deal from the EU on our bank debt, I believe we can bounce back from this dark economic period. With a resumption in growth, there is no better barometer for the health of an export-led economy like ours than the country's ports, of which Wicklow Port is a good example.
While accepting that these are difficult times for small indigenous industries, there are many comparisons between running a small port company like Wicklow Port and an SME like my own. In 2008 my company was faced with a serious downturn in business, like many other small firms in the country and to the credit of the staff, including the managing director, it was agreed to take a reduction in salary rather than reduce the number of staff and the shareholders have agreed to forego any dividend since 2009.
From my experience of business culture here, I have learned over many years of my adult life to protect the balance sheet and to retain a healthy bank balance, thereby providing for the rainy day or recession. This is particularly relevant now as cashflow problems cannot be currently remedied by bank borrowing. This is the same philosophy that has seen the port company through the current recession.
While we in the port company are poised to take advantage of any pick-up in the economy we have not been complacent in our search for other products to import or export. Currently, we are exporting a new product, RDS, a refuse-derived fuel, which is being exported to Germany and Holland where it is used for fuel their national grids. We are hopeful this will become a regular export of 50,000 tonnes per annum. In addition, scrap metal continues to be one of the more recent growing exports from Wicklow.
Glass cullet is another recent export product coming through the port from County Kildare. Any improvement in the economy will see some improvements in timber imports.
One of the highlights of the past five years for Wicklow Port Company has been the completion of the port town relief road at a cost of circa €60 million. There was also the agreement to spend a sum of €1 million between the town council and Wicklow Port Company in upgrading the South Quay, which is the town's relief main street. This was done by way of an agreement and fíxed contract with the town council. That gave me some pleasure because I insisted on the legal agreement and fixed contract. To the credit of the town council and the contractors, the job was completed at a fixed price. That happens only on rare occasions and we were very pleased with the outcome. Another highlight was the return of the Murrough Compound, owned by the port company adjacent to the port, under a CPO by the county council for the construction of the port relief road. It has been considerably improved and returned in an environmentally friendly state, for which we thank the county council on its efficiency. Also the registration of all the company's property is now in the process of being completed. I thank the former chairman, Mr. Fachtna Whittle, and the law agent, Ms Deirdre Burke, for their help in expediting these issues. I record my thanks to the former chairman, Mr. Fachtna Whittle, for his service to the company and the courtesy he extended to me and my board colleagues during his period as chairman from 2002 to 2012. For me the most satisfying aspect of the past five years at Wicklow Port Company is the honour that goes with the decision to have Wicklow Port Company remain in the commercial State sector.
Other important issues to be considered for the future include a survey/analysis of the company's fixed assets values, including depreciation. Private investment for construction of a marina should not be ignored. A feasibility study on marketing and future developments should also be considered.
Small companies are the lifeblood of the economy and we would be a poorer place without a commercial port company in Wicklow. I intend that the company will return the trust placed in it and the best way of doing that is to return to profitability. I intend to advise the new board that there are some issues on which we will keep an open mind, such as partnerships, outsourcing etc.
On the issue of the current review of port's policy, whatever policy is adopted, it is a matter on which I shall lead and implement with the board, on behalf of the shareholder, if confirmed as chairman of Wicklow Port Company.
I thank the Chairman and members for the invitation to appear before the committee and for their time and patience. I do not mind repeating that Wicklow Port Company is an efficient and competitive company and we are ready to start work. In the event of being confirmed as chairman of Wicklow Port Company, I look forward to working with the appointed directors.
I thank Mr. Newsome for a thorough explanation of his position. I will take three questions from three members.
I thank Mr. Newsome for his presentation. I am glad to see a local person running such a company because there is more of a vested interest given that the person is a local and his qualifications are very good. Also, he has much experience in the job. In the present economic climate the issue is how to generate more business in the port. He mentioned some of what is being done in terms of refuse derived fuel, RDF, and scrap metal. Is he looking at any other areas, such as the leisure industry? I appreciate there is much going on, such as the annual yacht race, but is there any other area that could be considered? For example, are there any anniversaries in Wicklow where events could be run to coincide with those?
How many people work in the company and what are the general spin-offs? The tonnage through the port had decreased considerably but is starting to increase again. What are the spin-offs in terms of the jobs? If the tonnage level is increased, does it affect the local community or mainly people from outside coming in? I imagine there should be a local spin-off. In terms of the size of the port, what is the acreage involved and what needs to be done to modernise the port and would that entail extra costs? I appreciate that funds are tight but what would be required to bring it up to a certain standard where we could attract in more businesses?
As chair designate, Mr. Newsome mentioned that he had a five-year rolling plan. What are its main aims and what does he hope to achieve through that plan in the next five years? I am delighted to hear that he shares his port facilities with sporting organisations, sailors and motor ski boats. Is there a speed limit in the harbour and, if so, what is it? If it is busy, we must think of swimmers who also use it and their safety.
I will allow Mr. Newsome to respond to those questions and I will take two further questions.
Mr. Brendan Newsome
I usually take one at a time.
I can see from his profile that he takes it step by step.
Mr. Brendan Newsome
I thank Deputy Ellis for his question regarding more business. We are always looking for more business. The larger ports take the largest tonnage in any product. We are limited to looking for niche markets which I mentioned in my submission such as scrap metal and RDF. RDF is a new product and about which we are very excited because we expect a minimum of 50,000 tonnes per annum. RDF is a win-win because it takes pressure off the country generally from the point of view of landfill, as landfill is running out and the European Union is becoming concerned about our reliance on landfill. Given that millions of tonnes of refuse is going into landfill, a start has been made to put it into RDF. It is packaged and wrapped four to five times and arrives in a bale, the shape of a glass. There is approximately a tonne in each bale and a ship takes 3,500 tonnes.
Where does it come from?
Mr. Brendan Newsome
The RDF comes from the Greyhound company in Dublin city. The company packages the bales. There was initially a slight perfume off them, but the wrapping is solving that problem. If they get wet, there is a slight problem, but the company has worked on it and it has turned out to be a win-win because the reliance on landfill sites has been reduced. We are falling into a trap in this regard and will be penalised if we do not scale down the reliance on landfill sites. The bales go to Germany and Holland where they are incinerated and the energy generated is fed into their national grids. One might ask why we do not have incineration facilities, but that is a different discussion.
With regard to Deputy Dessie Ellis's question about more business, we hope that if there is a levelling off or even an upturn, there will be a return to timber. We only need approximately 5,000 tonnes to double the current tonnage in the port. Wicklow Port was one of the biggest importers of timber. However, we lost one of our plasterboard products as a result of competition from our big brother in town, but we will not complain about competition because we are heavily engaged in it and remain one of the most competitive ports on the east coast.
The Deputy asked how many we employed. We have a chief executive officer who is the harbour master and has a part-time secretary in the office. We also have a general operative. They are the directly employed personnel, but most of the people working in the port are from Wicklow and employed by the stevedores who employ people to operate cranes, hoists and forklifts. A carrier company also employs many people.
We work closely with the chamber of commerce which is also involved in tourism and, for example, in developing the old jail in the town. Wicklow Port is less than 100 yards from the main street and, therefore, close to activities in the town. That is one reason the expenditure of €1 million on the south quay was a big help to those on the main street because we are able to divert traffic on to the quay and it is a much better organised and efficient service.
With regard to our aims for the future, we are still looking for niche products that can be exported in a reasonably good manner from the port. Like my own company, when there is a recession, sales are down. On the financial side, no matter how much costs are controlled, there will be no miracles if a company does not retain sales. That is where we are and competition is fierce. Not only are we experiencing a recession, everybody else is cutting costs and looking for a slice of the action. While the port continues to seek niche business, we are under no illusions about the challenge to be faced in the next few years until the economy recovers to a reasonable level. I am confident that will happen, given the manner in which issues are being tackled. I do not know that there is much more about which I can assure the Deputy.
We continue to seek opportunities with the help of the chief executive officer and the stevedores who are in the marketplace all the time looking for more business. I am happy and confident that business will pick up, but the secret is when a company is in a depression, that it must look after its cash because it will not get any when it runs out from the banks. That has been a good policy for my company and I try to use the same criterion as chairman of the port audit committee. It is not the most popular thing to do to tell others that we should hold on to money until the economy picks up and that we should wait to see how our operating accounts are going. We should not spend it all in one go and be forced to go to the banks which will say "No". We would then have to go the Minister who will say he cannot give it to us and the Department will also state there is no money available. Our policy to date has been prudent and wise in preserving our balance sheet and cash.
I had a question about the leisure industry.
Mr. Brendan Newsome
There is an opportunity in that sector to seek people who might be prepared to invest, perhaps through a public private partnership, in the development of a marina. Many are of the view that Wicklow Port is an ideal location for a marina, but I have been saying for 30 years that we need investors because the company and the Department do not have the money. We need another breakwater and a pier. Then we would be home and dry with a marina, but along the east coast there are more marinas than there are yachts at Malahide, Howth, Dún Laoghaire and Arklow. Tiomáin go mall. Bí cúramach because an oversupply will not give a return on an investment in this area and any private partnership would realise this, but we are open for business and to talking. We would welcome the opportunity to consider anything on the leisure side in that context. There are other areas in the leisure sector, but I would be less than honest if I did not say they are unlikely to deliver a great return on investment.
What does the port company hope to achieve in the five-year rolling plan? What is the position on speed limits in the harbour?
Mr. Brendan Newsome
We do not have traffic in the inner harbour. Therefore, we do not have a problem with speed limits, but they are 50 kph or 60 kph. Is the Senator referring to the water or the road?
I am referring to the water and the danger to jetski users in the harbour.
Mr. Brendan Newsome
There is a speed limit of 50 km/h in the harbour.
I doubt it is that high. I live beside a harbour where the speed limit is 5 km/h. I wondered whether the same speed limit applied in Wicklow Harbour.
Mr. Brendan Newsome
We do not have any limit as low as that. That is about 3 mph.
Mr. Newsome will need to check.
Mr. Brendan Newsome
I will. Perhaps the sign indicated a figure of 5 km/h, not 50 km/h.
Now Mr. Newsome is talking.
I am delighted that the port chairman is so prudent with the company's money. If he had been an adviser to the previous Government, we might not be in our current position. I understand how difficult it is for small ports, given my knowledge of New Ross and Waterford ports. It is a challenging time for them to seek new business.
Is it correct that the port's pension scheme has no effect on the viability of the port? Could Mr. Newsome, whose company is perhaps bucking the trend in this area, expand a little on that? The projections for the period to 2016 suggest a return to profitability through a major reduction in port maintenance expenditure. Could Mr. Newsome comment on that also? There are sometimes spikes regarding port maintenance but it levels out after a number of years.
I take Mr. Newsome's point that the port company is actively looking for business in niche areas. It is very prudent to carry out a feasibility study on the challenges the port will face. It is worth looking at the business and development plan.
Could Mr. Newsome state the largest ship size that can be accommodated by the port? There seems to be a growing market in respect of scrap metal and oils. Ports are trying to examine this.
Is there any merit in designing a tourism product based on the east-coast ports such that there would be an attraction in Wexford, Waterford, New Ross, Wicklow and Drogheda? Has any thought been put into this? Could Mr. Newsome comment on it?
Mr. Brendan Newsome
On the last question, the Deputy's suggestion is like the one implemented in Wales. Wales has such a project but it is not related to ports alone. One should have an open mind on the idea. There are many reasons for the port authorities in Wicklow, New Ross, Rosslare and Wexford to talk. The patch seems to be little overcrowded at present and there is insufficient business. There are too many companies for the amount of business generated. In Wicklow, we have no illusions about the fact that the challenge is quite serious. If one does not hold or improve sales, cutting costs, to whatever extent, will not be a magic bullet for anything. We all know that.
Regarding the largest ship size, we take in ships with a capacity of up to approximately 3,000 tonnes. A dredging programme is planned and we await the decision of the EPA, which must move a little slowly at times, on the improvement of dredging in the harbour. With improved dredging, we would take in somewhat bigger ships.
The River Vartry flows through Ashford, the village in which I live. I recall the river being flooded and thousands of salmon going up the weir towards Roundwood and spawning. An agreement was reached whereby Dublin Corporation could take a lot of water to supply Stillorgan and south Dublin. On the statute, which I was very interested to see, there is an agreement whereby the corporation would assist with the clearance of the river, by way of dredging, from Roundwood to Ashford and into Wicklow Harbour. If X million gallons of water are taken from the river, the flow is very often reduced to a trickle. When the water reached the harbour, sluicing was not occurring to the extent that it had been up to 1948. Consequently, the requirement for dredging is more regular than it was heretofore. Perhaps it was hardly needed in the past. I would be very interested in knowing the fate of the plan by Dublin Corporation to assist in the debt associated with clearing the harbour as a result of its taking the water into south Dublin.
I do not know whether we can bring it before the committee.
Mr. Brendan Newsome
The cost of a complete dredging plan is now approximately €250,000. We would very much welcome any comments by Dublin City Council if it finds that its files still contain the agreement. Perhaps our local Deputies might find that file.
We are getting ready to let them in next.
Mr. Brendan Newsome
On the pension cost, there is really no issue. The port did not fall into the trap of having significant defined-benefit pension plans. There are strategic reasons for the low figure. It is partly due to the age of the personnel. There is a defined-contribution plan in place, contributed to by the members. There is no negative aspect to the pension. We are very lucky in that respect because most pension schemes in port companies and State companies, and many private companies, are in deficit. There is tight financial control in the company and I am pleased that this will remain the position.
I call on the Wicklow Deputies.
I welcome Mr. Newsome. It is interesting to hear the questions asked and the level of surprise among contributors that the company has accounts in balance and that it has no extended debt or pension burden of any significance. As the chairman designate said, the port has managed to tread the water healthily while waiting for circumstances to improve. There is a lesson to be learned from that. Mr. Newsome says it is the best-kept secret. It certainly is but we just heard of Dublin City Council's best-kept secret, which we will have to investigate. If the agreement is on statute, it is on statute; it is as simple as that. We should examine the matter. The amount of water the council takes from Vartry Reservoir leaves the flow very small at times.
Wicklow Port is the only port in the country at which water, rail and road infrastructure meet at one point. When there is capacity overflow in Dublin, for example, Wicklow is regarded as a handy alternative. When business is tighter, business tends to be sucked back to the middle. As Mr. Newsome stated, the port ought to be competitive.
I have noticed an increase in the number of fishing vessels landing their catches in Wicklow. Has Mr. Newsome any figures on that? Are there any attempts at further development in this regard? Is there sufficient capacity to generate secondary employment or industry in this area? I refer to processing and marketing. A fish retail outlet opened on South Quay in the past 12 or 18 months.
Second, Mr. Newsome answered the question about the vessels' capacity, but what is the number of vessels inward and outward at the port? It is operating at a second level now, but what is its maximum potential if it could expand? Is it double, treble or quadruple? As a commercial port company, it would be interesting to know the amount of slack it can take up and its capacity to develop more business. I believe it is looking at other innovative businesses.
I wish Mr. Newsome the best of luck in his appointment as chairman of the port company. He obviously has an intimate knowledge of the company, having been involved in it for a number of years. That knowledge is reflected in the issue he raised about the statute and Dublin Corporation. Perhaps he should put it on the agenda for his first meeting and write to Dublin Corporation and quote the statute. Dublin City Council is fairly adept at following up commitments itself. Certainly, we should write to it about it because it is a legitimate issue.
Wicklow Port and Arklow Port sometimes remind me of old traditional golf clubs in that there is a particular group that uses them but other people do not know what happens or are afraid to get involved. I realise that is a quite simplistic view. However, when Mr. Newsome takes over as chairman he will hopefully have a very progressive board and there is an opportunity for a new beginning, although it is important to acknowledge the work the others have done in the past. Perhaps a public meeting should be held to change the mindset a little and make people in the broader area more aware, as that awareness is often lacking, of what is there, what the company is doing and that it is open for business.
If Mr. Newsome were to pick a single issue that is holding back the development of the port, aside from the obvious one he mentioned about an investor to construct the breakwater and pier, what would it be and what can the committee do to try to assist him and the port company to develop?
Mr. Brendan Newsome
With regard to what is holding us back, if I could wave a magic wand and get rid of Dublin Port, it would solve half of our problems because we could improve our business dramatically. However, that is not going to happen. I am not aware of anything that is holding us back at present. The stevedoring company protects the company from the point of view that it is not a cost or burden on the company. It has resolved the employment issue with the dockers. It deals with that and we do not employ dockers in the port. The stevedoring company pays the people to drive the fork-lifts, cranes, carriages, lorries and so forth. It is a very go-ahead company. There are people who would say it is not able to deal with it because they do not get on with it but that is not my experience. My experience of the company, especially the stevedores of R. F. Conway & Company Limited, is that they are very co-operative. They will deal with any new business, niche or otherwise.
The statistics from 2007 to 2012 refer to the capacity, which Deputy Doyle mentioned. We are way down, at about 70% or 80% less, on 2007. One could take the 2007 figure, multiply it by two and consider that our capacity. We have a long way to go to get back to the 2007 level and I do not wish to give anybody the impression that it is going to happen this side of the recession being resolved, because it will not happen in that timeframe. However, as a competitive company, we are ready to pick up once the recession starts to be resolved and if Europe is kind in giving us some money for our bank debt, we should move forward. I have no doubt that the will and energy are there, and it is my intention to move forward. My own business, which is in the port area, is a multiple of the size of the port in terms of financials, sales and so forth, but the same principles apply whether one's company is large or small. As I always repeat, one does not need to be a rocket scientist. One must control and preserve one's balance sheet and cash so one is not running to the bank, which will more than likely give one a Harvey Smith and say it has no money. That is my gospel and I stick to that when running my business.
That concludes our consideration of this topic. Is it agreed that the committee will inform the Minister for Transport, Tourism and Sport, Deputy Leo Varadkar, that we have concluded our discussions with Mr. Newsome and that we will forward a copy of the transcript of the meeting to the Minister for his information? Agreed.
Thank you, Mr. Newsome, for attending the meeting and for being straight about your ideas. I have no doubt that you will be an excellent chairman. I wish you well.
The joint committee adjourned at 11.25 a.m. until 9.30 a.m. on Wednesday, 5 December 2012.