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Seanad Éireann debate -
Wednesday, 23 Mar 1983

Vol. 100 No. 3

Adjournment Matter: Tuam Sugar Factory.

A Chathaoirligh, the first thing I want to do this evening is to thank you for your impartiality in allowing this matter be discussed now, in that there was some difficulty in the manner in which it was arranged. For your decision, as Cathaoirleach, in allowing it to be discussed I want to express my thanks. I am sure I am expressing the thanks of Senator Hussey as well on your having seen to it that what I thought should have happened is now happening, as pronounced by you. This has been certainly an old swan song, as it were, in the Houses of the Oireachtas over the years, that is, the proposed closure of the Tuam sugar factory as part of Comhlucht Siúicre Éireann Teoranta's national enterprise. It has arisen again, this time through the statements of the chairman, Mr. James E. Fitzpatrick, at the board in a recent television interview in which he talked about the report and accounts of the company for the year ended September 30 1982. Here I want to quote from The Irish Press of Tuesday, 8 March 1983. One can see from that statement the desire of the Sugar Company — illustrated by the statement accompanying the Report and Accounts of the Sugar Company for that year — that from their point of view there was no other option left for the salvation of the Sugar Company who found themselves in a £22 million loss this year, but to propose the closure of the Tuam sugar factory.

The Tuam sugar factory itself had a working loss of £1.4 million. There is at present a lot of hypocritical talk about that figure. I do not accept, nor do the people in the Tuam area of County Galway, or the west generally, the cost penalty basis pronounced by the chairman of the Sugar Company — obviously endorsed by many members of the board of the Sugar Company — that because the Tuam sugar factory is situated and operational where it is there is a cost penalty incurred to the tune of £1.6 million. This argument is advanced just because it is located in the west. That is not acceptable to any politician, of any grade, on the west coast. That is not acceptable to any of the people whom politicians of any political party accept on the west coast. Most certainly it is not acceptable to me.

I welcome the Minister here this evening to listen to our case. He could have passed this matter over to any of his Ministers of State, although I know one in particular who might not have liked to undertake the task. However, it happens to be in his constituency. I am delighted that the Minister is here this evening. I want to point out to him a few matters of which he may be aware already, which we, in this Parliament, speaking through the people, want to see implemented. What the total capital allocation of £50 million made available to the Irish Sugar Company since the end of May 1978 meant to the Tuam sugar factory was a total of £765,000. Therefore, how easy it is for the chairman of the Sugar Company to pronounce that had he got rid of the Tuam sugar factory then an anomaly adversely affecting the whole financial structure of the Sugar Company would have been eliminated. We do not accept that.

The chairman of the Sugar Company made another pronouncement in that same issue of The Irish Press which I cannot understand at all — that in the company's rationalisation plans 150 jobs are to be eliminated by end September. I want the Minister to listen to the following facts. When the last programme of the closure of the Tuam sugar factory was before the Houses of the Oireachtas — which was diverted at the instigation of the Leader of the Fianna Fáil Party, the then Taoiseach, the works committee, the “Save Tuam Committee”, all the people implicated in the industry, on a given programme, advanced that they would cut their costs in Tuam. From 25 September 1981 to the 28 January 1983 a reduction in the number of workers in the Tuam sugar factory alone took place to the tune of 58 people. Yet the chairman of the Sugar Company tells us and he boasts about it in black and white that he will have 150 fewer people employed in the entire Sugar Company by the end of September. Tuam accounts for more than half that number.

I ask the Minister is that a justifiable programme that he has asked the Sugar Company to provide him with, so that he can make his case to the Government for the salvation of Tuam sugar factory? There are many other reasons. Those are points that are very relevant and must be taken into account. They sought rationalisation in Tuam and got it. Out of a total investment of £50 million freely given by the Government to the Sugar Company in the last four years we in Tuam have taken merely £765,000. That is quite a small amount of money in terms of the total cost. There was a loss factor of £1.4 million in the workings of the Tuam sugar factory last year. Yet Mallow subscribed only a profit of £750,000; Carlow subscribed a similar profit. Thurles had a £1.4 million loss and Tuam a £1.4 million loss. One can see from those figures — when one takes that meagre amount of capital of £765,000 for Tuam — that we behaved adequately in the Tuam sugar factory. A loss of £1.4 million is very little, when one sees that the Sugar Company lost £22 million in one financial year.

For the last 12 years, in this House and in other places, I have begged and beseeched every Minister of every political party to do something about the abnormality of the Sugar Company and their performance in this city. They have a seven-storey building in St. Stephen's Green packed with people from all the country, doing what, I do not know. In my opinion therein lies the cost. There in lies the ruination of the Sugar Company — seven storeys full of them. What they are doing or what productivity they yield to the Sugar Company I have never been able to understand. In all the rationalisation programmes that have taken place there, will the Minister tell us this: how many of their senior executives have been made redundant? As I know, from managerial positions upwards, only one redundancy was effected in the Sugar Company. I can tell the House something else — it was enforced on a man who had ability and gave a lot to the Sugar Company in his 20 years employment. There are many people knocking around at that level who did not give half as much as he but who are still on their £15,000 or £20,000 a year. They are the people who are bringing down the Sugar Company not the Tuam sugar factory, not the workers in Tuam sugar factory, or the farmers who gave 7,000 acres last year, and who would give 10,000 acres this year, when all the Sugar Company could take from them was 9,000. We have an over-filled contract whose worth to the farming community of Connacht last year was £4.5 million, and to the workers in Tuam only £2.1 million approximately. The tax paid to the State, not like other companies in the west, was £1,160,000, and rates paid to Galway County Council were £40,000. That is the Tuam contribution to the State and it is nothing to be ashamed of.

I would be ashamed of any Minister of any Government who would even tolerate any expression whether on the part of the chairman or any member of the executive of the Sugar Company of closure of the Tuam sugar factory. I am sure the Minister will not allow it happen on this occasion. I humbly beg him to face facts with them, asking them to cut, where necessary, and not down in Tuam in the west.

I should like to support Senator Mark Killilea and to illustrate, in the few short moments available to me, importance of the sugar factory to Tuam and indeed to the national economy. For a number of years now the closure of Tuam factory has been proposed by the sugar company. It must be obvious to everybody at this stage, particularly after the recent pronouncements of the chairman of the Sugar Company, that the only thing that will save the Tuam sugar factory is a political decision by the Government, by the Minister for Agriculture in particular who has responsibility for the sugar company.

I would ask the Minister to listen to our plea, to please tell the Sugar Company now that they must keep that factory open. We, in Fianna Fáil, gave that commitment to Tuam a few years ago when the closure talks first started. We still stand by that commitment. Since the recent controversy started the Minister of State at the Department of Agriculture stated that the factory is safe for the year 1983. We all know that the factory is safe for this year. But we are concerned about 1984, 1985, 1986, 1987 and 1988. We want to hear from the Minister for Agriculture that he is prepared to give that commitment to Tuam and the west. It needs that commitment. It would be a terrible disaster to the area if that factory were to close down.

Senator Killilea has given some of the figures relevant to the situation in Tuam. I just want to give a few more that may convince the Minister and his officials in the Department of Agriculture of the importance of the factory to Tuam and the surrounding area. The total value of the beet crop to the Tuam growers amounts to £4,500,000. The value of wages paid to employees, after PAYE, is £2,105,000. As Senator Killilea said, the tax paid amounts to £1,160,000 and the rates to Galway County Council, a considerable amount also, £40,000. Animal feeds value of beet crop as feeding is £200,000; value of pulp-produced £1,550,000. As well as that the Sugar Company carries out a turf-cutting operation. For the past couple of years they have been cutting 100,000 tons of turf at a value of £3 million. If that turf were not there we would probably have to be importing oil or some other type of energy as a substitute, so it constitutes a great service.

I shall not have time to go through all the figures I have here. But I wanted to illustrate those few to highlight the importance of the factory to the area. The average number employed per year, year ending September 1982, was 406. The action committee in Tuam — since the controversy about the closure started — have tried to effect economies in their own area. They have got a certain number of people to retire voluntarily. That is a good thing because it reduces the work force and the Sugar Company bill. Indeed they have succeeded in getting 58 people to accept voluntary retirement. In itself that is a great credit to them. They are really concerned about keeping the factory there and maintaining it at a certain strength.

The loss to the Exchequer, in the event of the closure of the Tuam sugar factory in PRSI paid, year ending September 1982, amounted to £492,207. PAYE amounted to £520,468, bringing a total of £1,013,675. The VAT loss to the Exchequer paid year ending September 1982 on non-claim amounted to £147,000. Unemployment benefit and PRSI payments would amount to £1,700,000. Therefore the total loss to the Exchequer would be £2,860,675.

Therefore the House will see that the decision to close this factory must be reversed at any cost. It is not just the town of Tuam — although I would say almost every family in Tuam have some connection with the factory, has some member working there, whether it is a husband, a son, a daughter or whoever; they have an interest in the factory — but everybody there is concerned to see it maintained. It affects not just the town of Tuam but the whole Connacht area. It would be disastrous, could we not maintain that factory in Tuam, a factory supplied by the farmers of the western area, whose land is quite suitable for growing beet, farmers who have shown their willingness to support the factory by increasing the acreage in beet from something like 3,500 a few years ago to anything up to 10,000 this year if contracts were made available to them. But I understand all they can get is about 8,500 to 9,000 acres. That is the situation. The local farmers are willing to support the factory while the Sugar Company over the last few years have made every possible effort to run the factory down. In fact they took away the manager last year, leaving the factory at present without a manager. The manager was transferred to Carlow. To my mind that constituted a downgrading carried out by the board of the Sugar Company. It was a disastrous decision at a time when the going was tough for Tuam, that the only help the Sugar Company could give the Tuam sugar factory was to withdraw its manager and send him down to Carlow. This is what has been happening.

I hope the Minister will give the commitment to the workers, to the people of Tuam and to the people of the west that that factory will be maintained there. It was established way back in the early thirties not for economic reasons alone but for social reasons. Those same social reasons still obtain there for maintaining the factory. I would ask the Minister to give that commitment here this evening.

I had almost forgotten what it was like to hear Senator Killilea in full flight. It is one of the more invigorating things in Leinster House whether it be in the Upper or Lower House. The pity is that he and the Minister of State at the Department of Posts and Telegraphs cannot arrange to be in the same House at the same time. We miss their verbal clashes.

Senators will be aware of the overall position of the finances of the Sugar Company. In July of last year the House had an opportunity of considering it when it debated the terms of the Sugar Manufacture (Amendment) Bill. This renewed the long-standing commitment of successive Governments to the future of the Irish sugar industry. The House will recall that the Bill raised the statutory ceiling on the Sugar Company's capital from £10 million to £75 million. Senators will recall also that on all sides of the House they assented to this considerable commitment of Exchequer resources, on the assurance of the then Government, represented by the Minister of State of the day, that an ongoing plan for the rationalisation of the company's activities would be undertaken and implemented. There was wide recognition of the unavoidable reality that the Sugar Company did not and indeed could never function in a vacuum. EEC rules, which have been of such benefit to Irish agriculture, carry with them the principle and the reality of free trade in sugar. Unfortunately, we have had very substantial increases in the amount of sugar imported here in recent years. It was appreciated that attention had to be paid to the cutting of costs and to the shedding of activities which constituted a drain on the company's profits, profits which henceforth, as in the past, should be used for the renewal of capital equipment.

Our sugar industry is over 50 years old and the factories need constant attention. This is what the House's agreement in the 1982 Bill was founded on. That is what the Sugar Company has been facing up to in the meantime. Luckily, the 1982 sugar campaign was the best ever. Our A and B quotas were filled and we found ourselves in the unforeseen position of producing C sugar. There is no doubt in my mind that the performance of the campaign demonstrated the capacity of the Irish industry to excel itself. However, we should not overlook the ideal circumstances under which it was achieved. This development has had its effects on the Tuam catchment area as in the rest of the country. Indeed, acreage there was up for that campaign. The contracts concluded for the 1983-84 campaign will reveal an increase in acreage of nearly 20 per cent. Nevertheless, it is still by far the smallest sugar factory in western Europe. The existence of these contracts is a guarantee that the 1983-84 campaign will be worked at Tuam. For the long-term future much will depend on the Sugar Company's ability to get themselves back into consistent profit, profit that will generate capital for plant replacement and further investment and that will adequately remunerate the capital which the State has provided to the company.

The Exchequer furnished £30 million to the company last October. A condition attached to that investment is that the company would have to furnish a report and plan on the progress they are making towards viability. This plan will have to be furnished by 31 May next. The company's accounts for this year registered an unprecedented loss of over £22 million. Admittedly, much of this is attributable to necessary expenditure resulting from the drive towards rationalisation. Much of this loss was incurred in the food sector in the Erin Food plants around the country. Consequently, the Government agreed with the decision of the Sugar Company to close down two of the Erin Food plants — the Matterson plant in Limerick and the Erin Foods plant in Midleton, County Cork. The Erin Foods venture generally——

They were stone crazy to do that too, of course.

That follows the closure of Fastnet in Skibbereen and the food processing plant in Carlow. With losses of that magnitude it is quite understandable that the Government should be alarmed at the losses. The losses in food processing alone in 1982 amounted to £9 million and there was a further £11 million paid in redundancies and other special measures. But the losses were absolutely horrific. We cannot overlook that fact.

One cannot overlook the comment on Tuam by the chairman in his report accompanying the accounts for the year ended 30 September 1982. He chose, as he has every right to, to point out what he sees as a problem for the company, that is the continued operation of the Tuam sugar factory. I have said that it will certainly remain open for the 1983-84 campaign. However, I cannot prejudge the situation beyond that.

As I have said, one of the conditions attaching to the State's recent investment of £30 million was the provision of a report by the company on the progress being made towards viability and of a further rationalisation plan. Incorporated with that let me say that in coming months I will be looking very closely at the whole structure of the Sugar Company, from top to bottom, including the seven-storey building, which Senator Killilea mentioned, off St. Stephen's Green.

The Minister knows it himself.

There will be no part of the industry which will not be seriously scrutinised. If we feel that there should be rationalisation in areas other than those attended to already then we will do so. The House need have no doubt about it. The Government are looking for nothing less than a profitable sugar industry which will last for many years to come, a profitable industry as a whole to which every constituent part will contribute. Profitability is the only long-term guarantee of survival. I want to make it quite clear that I do not regard the Department of Agriculture or the Sugar Company, for that matter, as being an extension of the Department of Social Welfare. If projects are to survive they will have to illustrate a profit-making vein. Any venture, within the structure of the Sugar Company, which is not profit-making will be examined very closely indeed.

The Seanad adjourned at 8.30 p.m. until 10.30 a.m. on Thursday, 24 March 1983.

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