The purpose of the Bill is to amend and extend the Shannon Free Airport Development Company Limited Acts, 1959 to 1963.
The Bill is designed to provide for the further financing of the Shannon Free Airport Development Company Limited by extending the limits on investment contained in the current legislation. The Bill provides for:
(1) An increase from £4,000,000 to £6,000,000 in the aggregate of the amounts which the Minister for Finance may subscribe in taking up shares of the company;
(2) An increase from £2,000,000 to £3,000 000 in the aggregate amount of grants, voted annually, which may be made to the company, and
(3) An increase from £2,000,000 to £3,000,000 in the existing statutory limit on repayable advances by the Minister for Finance for the provision of houses and community services.
The Development Company was set up to promote the increased use of Shannon Airport for passenger and freight traffic and for tourist, commercial and industrial purposes. The main activities of the company have been the attraction of industries to the airport and more recently the development of Shannon as an international warehousing centre.
Share capital subscribed to the company is used for the provision of factory buildings. These are normally rented to the occupiers but factory bays may also be purchased outright or may be built on sites leased from the company. Repayable advances are used for the provision of dwellings and community services for the purposes of the Industrial Estate. The houses are provided by the company at reasonable rents or to purchase, and developed sites are also made available for persons wishing to build their own houses, and for speculative building. The grant-in-aid moneys are applied towards meeting the company's running expenses and providing financial assistance to industries including grants towards factory buildings, new machinery and the training of workers.
The finances provided to the company under existing legislation up to 31st March, 1965, were as follows:
Share capital |
£3,423,000 |
Repayable advances |
£1,878,000 |
Grant-in-aid |
£1,605,500 |
The balances remaining under existing statutory provisions are therefore:
Share capital |
£577,000 |
Repayable advances |
£122,000 |
Grant-in-aid |
£394,500 |
It is expected that these balances will be exhausted at an early date and it is necessary, therefore, to promote amending legislation to provide for the further financing of the company so as to enable it to plan ahead and to enter into commitments with industrialists and others. The revised limits proposed under the new legislation should suffice until about 1968 when it is proposed to afford the House a further opportunity of reviewing the progress made by the company.
The company has been making steady progress in attracting new industries to Shannon. At 3lst March, 1965, there were 14 manufacturing and ten trading concerns in operation at the Airport. Thirty-two standard bays and three small bays were occupied by these firms on a rental basis and two firms were in occupation of their own factories—one built with the aid of a grant from the company and the other purchased from the company after allowance bad been made for the equivalent of a building grant from the company. The output of the existing factories, practically all of which is exported, includes pianos and floor maintenance equipment, jersey fabric and fashion garments, office machines and equipment, diamond drilling equipment and electronic components, and the range of services provided includes warehousing and freight forwarding, data processing, public relations and management consultancy.
Eight warehousing units of 3,750 sq. ft. each have been constructed and two more are being constructed as part of the company's plan to encourage warehousing, freight consolidation, freight forwarding and redistribution of goods at the airport and to establish Shannon as a centre for the distribution of goods in international trade. At 3lst March, 1965, three of the units were occupied and five were allocated to prospective tenants, three of which were previously located in temporary premises at the airport. Although terminal freight at the airport in 1964 rose by 31 per cent to 4,182 tons from 3,196 tons in 1963, freight generated by the Industrial Estate—which was about one-fifth of the total—was down by about nine per cent compared with 1963. However, in the first three months of this year Industrial Estate freight was up by nearly 70 per cent compared with the first quarter of 1964. The development of terminal freight traffic is difficult mainly because of the great disparity at present existing between air and surface rates but as this gap narrows it is expected that the volume of air shipments will increase substantially. The encouragement of warehousing is expected to give a considerable fillip to air cargo shipments. The company is also active in securing improved cargo rates, improved services and speedy clearance at destinations and in the publicising of the facilities available by air.
Employment has been growing at a satisfactory rate since the Industrial Estate was set up. From a figure of 453 at the end of March, 1961, it rose to 1,151 at March 1962, to 1,542 at March, 1963, and to 2,109 at March, 1964. At 3lst March, 1965 employment had risen to 2,927, of whom 1,538 were male, and the increase of over 800 in the past year is most satisfactory. The Second Programme for Economic Expansion envisages that about 5,000 persons will be employed in the Industrial Estate by 1970. On the basis of progress to date this target should be achieved always provided, of course, that a sufficient labour force continues to be available. No immediate difficulties are anticipated in finding male employees as trainees or unskilled workers though some problems are being experienced in finding men in suitable age groups. Skilled men who have emigrated are being attracted to return. Special consideration is being given to the provision of accommodation for female workers who may wish to reside at ihe airport. Industries employing predominantly male labour are those which are most encouraged and the projected community development should ensure the establishment of families in the estate. A notable feature in the development of the Industrial Estate has been the rapid rate of expansion of some of the firms and, in fact, the four major established firms have been mainly responsible for the inerease in employment. Many of the firms have plans for further expansion and one of them now employing about 780 people envisages a work force of up to 2,000 by 1969.
So far, the importance of the Shannon project has been seen principally in the employment which it has provided and which continues to grow, and in the increasing business at the airport itself, where once the indications seemed to be that traffic might decline to a level which would mean virtual closure of the airport and widespread unemployment. Another aspect of its great national importance can now be measured because Córas Tráchtála recently completed a study of exports from the Shannon Free Airport Industrial Estate during 1964. During the calendar year 1964 £14m. worth of manufactured goods were exported—equivalent to 20 per cent of total Irish manufactured exports or to 25 per cent of total manufactured exports from the rest of the country outside Shannon. It is clear also that the rate of output in Shannon is rising more rapidly than in the country as a whole, so that this proportion can confidently be expected to increase. From this aspect alone—the contribution it is making to the national balance of trade—the Shannon project merits full support.
Although the rate of introduction of new firms has not been as great as the rate of expansion of established ones there has been no decrease in the number of inquiries being received by the company from industrial interests. While a certain amount of factory accommodation must be provided in anticipation of actual demand, factories are built on the basis of likely demand and building programme are sanctioned on this basis. The company's factory building programme as incorporated in the Second Programme envisages a construction rate of eight factory bays each year to 1969-70. The company's programme to attract new industries is being promoted in the US, heretofore the most fruitful market, the UK and Europe. Because of their dependence on export markets, the success and expansion possibilities of industries are particularly susceptible to changes in international trading conditions, particularly the imposition of new tariffs such as the 15 per cent UK levy or restrictions imposed by other countries on investment abroad. While every effort is made to ensure that industries establishing at Shannon will be viable, there is no absolute safeguard against the risk of a set-back arising out of circumstances beyond control of the company and of the industries themselves. To cater for the smaller company with perhaps limited capital, the company has arranged for the construction of a number of small factory units. It is, of course, impossible to foresee with any certainty the extent of future development but the proposed increase in the share capital to £6m. should be sufficient for the next two or three years.
As the Industrial Estate expands, the demand for accommodation both for married and single people at the airport grows and the company is meeting this demand by providing houses to rent or purchase and also by providing developed sites for speculative building or on which persons may build their own houses. It is necessary to strike a balance between over-ambitious planning and under-planning. It is important that workers should not be discouraged from taking up employment at the airport because of lack of suitable accommodation. This is especially so in the case of key workers in new industries. It has been the policy to provide housing at the airport in line with likely demand and the company's housing schemes are planned on this basis.
It is recognised that community development must be maintained in line with development on the industrial side. The present resident population at Shannon is about 1,200 and the amenities include shops, primary schools, banking and postal facilities, a recreation centre and a public house. Shannon has been selected as a location for one of the new comprehensive schools. It is estimated that the population will have risen to about 3,700 by 1970 and the company's building programme is proceeding on this basis. This programme is incorporated in the Second Programme which envisages a construction rate of about 80 houses a year.
Up to 3lst March, 1965, expenditure on housing amounted to £1.82m., all of which had been provided by way of repayable advances. 292 houses and 137 flats had been completed. Almost all of these houses and flats were either occupied or allocated. A further 26 houses were under construction. Rents are fixed in relation to what the tenants can reasonably be expected to pay and a subsidy is provided from the annual Transport and Power Vote to meet the difference between the rent paid and the economic rent. The economic rents are calculated on the full cost of construction after deduction of the equivalent of the normal housing grants available to private persons under the Housing Acts. Provision is made in the rental agreements for inereases in the rents as wages generally increase thus reducing the amount of subsidy required. In June, 1964, the rents were increased by seven per cent. Tenants desiring to buy their own houses are encouraged to do so.
In addition to houses provided by the company for rent and sale, 20 sites have been developed by the company for private construction of executive type houses and building has commenced on six of these sites. A significant advance is the undertaking by a private builder of a scheme of about sixty three and four-bedroomed houses for private sale on a site provided by the company and this is one of the most encouraging signs of the establishment of a permanent community at Shannon. However, the bulk of the housing requirements of workers on the Industrial Estate will have to be financed out of State funds for some years to come.
The company have been authorised to purchase additional land in pursuance of their development plans as embodied in the Second Programme for Economic Expansion. The additional land which also provides for planned expansion beyond 1970 will be used for the building of houses, a town centre (commercial and shopping, civic and cultural and car parking), the provison of educational and institutional facilities and open parkland containing recreational facilities.
The company are co-operating fully with the planning authorities in the co-ordination of development plans for the Limerick/Clare region in which Shannon plays such a significant part and the company's own plans will be dovetailed into the overall planning for the region as a whole.
The success of the company"s tourism promotion activities in conjuuction with other promoting bodies including Bord Fáilte, the Mid-Western Tourism Organisation, and the air companies is reflected in the increase in terminal air traffic at the airport in 1964. The growth in this traffic more than offset the decrease in transit passenger traffic so that the combined total rose by almost 50,000 to 380,000, an increase of 13 per cent over the previous year. New services on the Shannon-Paris, Shannon-Manchester and Shannon-London routes, the new transatlantic turn-round service being introduced by Trans World Airlines and increased frequencies by Aerlínte and other operators should also provide a very considerable fillip to the growth of passenger traffic through the airport.
During 1964 the company's Mediaeval Tour and Banquet attracted 20,000 people, the great majority of whom were tourists, including North American visitors to Europe encouraged to stop over at Shannon. So successful has the Mediaeval Banquet become that capacity at Bunratty is now nearing saturation point and the company has been forced to look around for other venues to cater for the overflow. The establishment of the Folk Village beside Bunratty has added greatly to the attractions of the Castle and 62,000 people visited the Castle and Folk Park in 1964.
The Bill also provides for an increase from £2m. to £3m. in the aggregate amount of grant-in-aid which may be paid to the company. These grants provide for the running expenses of the company and also enable the company to pay grants to industrialists for buildings, machinery and the training of workers. Grants paid to the company to 3lst March, 1965 amounted to £1,605,500. In addition the company received £654,000 by way of rents and other income. £1,387,000 was used by the company for promotion and administrative expenses and grants were made to industrialists as follows:
Machinery |
£525,000 |
Factory premises |
£127,000 |
Training of workers |
£181 000 |
It will be seen that the confidence which I expressed in the continued I progress of the company when recommending the 1963 legislation for the approval of the House has been fully justified and that in fact it has become necessary to inerease the finances provided for in the 1963 Act earlier than was then contemplated. The increase in the limits proposed is necessary to enable the company to fulfil its obligations under the Second Programme for Economic Expansion. The company must have adequate finances to proceed with its programme and it is accordingly necessary to promote amending legislation to enable these finances to be provided. The outline which I have given of the progress made by the company to date affords ample proof of the continuing value to the national economy of the Shannon enterprise and I am convinced that the additional finances now sought will prove to be a prudent investment in the national interest.
I recommend the Bill for the approval of the House.