I would like, first of all, to thank the Senators who contributed to the debate. I appreciate the time factor is a problem here. I wish to point out that this particular issue of Scarriff has been put in a way that it is implied that my Department and I are taking a special delight in this. I would like to disabuse anybody of that idea. The Government are concerned, and I am personally concerned, at the social consequences of this major upheaval, the fact that Scarriff is in receivership. I would go along with much of what has been said by Senators on both sides of the House here tonight. I would point out, however, that my main concern at the moment is that there is a receiver in situ in Scarriff, while not physically there at the moment because of certain circumstances, and I must ensure that anything I say does not prejudice the receiver's efforts in trying to get some party interested in taking over Scarriff as a going concern.
The other point I want to make at this stage is that there is a receiver there who has legal functions to carry out as a receiver, as Senators will appreciate. My involvement at this point is very peripheral as, indeed, is the involvement of the former directors of CPL. So, really, we are depending on the goodwill of the receiver and the attitude he adopts. Having said that, could I also point out that the IDA are fully briefed on the situation and have already sent inquiries to several chipboard manufacturers with a view to interesting them in taking over the plant. The receiver, I understand, has also made approaches to the IDA in this respect. In relation to promoting, through the proper channels, Scarriff as a going concern, in the hope that somebody will come along to take it over, he can rest assured that every effort will be made by me and the people in my Department.
I would like to tell the House what I and my predecessors have done to try and save CPL. Last May, Senators will recollect that I stood in this House seeking the Seanad's approval for the guarantee of an additional £700,000 at that time to underwrite the CPL's borrowing. I expressed the hope at that time that discussions taking place in relation to the future of Scarriff would end successfully. I expressed that wish in good faith because at that time we had discussions going on with a German company who had since late 1982 expressed an interest in Scarriff, and later on in 1983 a Spanish company expressed an interest in Scarriff. These were live companies showing a very definite interest in Scarriff at the time. When discussions finished with these people — in the case of one of them, they expressed no further interest and in the case of the second the kind of money talked about was an exorbitant sum — I requested that CPL and their board would submit their proposals for restructuring.
These proposals were discussed at length by officials in my Department with the managing director who is also the chief executive, Mr. Wilmot. The end result of that was that, having discussed them with them and having got to the bottom line, which in effect would be for any kind of chance to be given to the company of viability we were talking here of £6 or £7 million cost to the State.
I have heard and read in the newspapers about sums of £1 million being mentioned as being sufficient to ensure viability. I have not received any proposals of this nature on paper from anybody.
I mentioned in the Dáil last week the sum of £3.5 million as being necessary now. I said at the time that this would be necessary to tide the company over to the end of 1984. This would be in the form of a drip-feeding exercise and in no way would it secure the future of the company, even in the short-term. It was purely for the coming year. One has to take into account the fact that £3.3 million of State funds has already been invested in the company since its inception two-and-a-half years ago in the form of shares and direct loans, £1 million, grant assistance £200,000, free timber and harvesting subvention roughly £1 million — the free timber comes to about £200,000 and the harvesting subvention about £800,000 at the rate of £7 per cubic metre — and loan guarantees £1.1 million — they are to banks.
The receiver who is in there at the moment has been put there by the bank. That places me in a rather invidious position in that, as I said before and I repeat now, my involvement at the moment is somewhat peripheral to the whole thing. That is the level of public involvement.
I think it was Senator Kiely who raised the issue of our involvement. It is £3.3 million as against roughly £250,000 by private shareholders. I would also like to point out that at the time of their inception in 1981, as part of the package, £1.012 million was provided for capital purposes on the basis of a 60 per cent grant for equipment to be purchased by CPL. Of that £1 million plus only £200,000 has been taken up simply because, in order to avail of the 60 per cent grant, it would be necessary for CPL to provide a 40 per cent upfront cash deposit on purchase of plant and equipment. This they were unable to do. Senators should be aware that at the time this company were formed as CPL the IDA would not have hand, act or part in providing the normal assistance that goes with a manufacturing unit. That is how the Department of Fisheries and Forestry got involved in the first place in taking over the functions of the IDA who felt at the time that they were not justified in expending State money on a venture which was a high-risk venture and which they saw as something which would be non-viable.
The question of profitability has been raised in relation to more recent times. All I can say — different figures have been bandied around — is that figures that I have used in the Dáil and outside the Dáil in public fora have been figures which I have taken from the company's own management accounts. I have no purpose in concocting figures or distorting facts. I am going on what has been given to me in the management accounts of the company. Up to the end of December — the company came into being in May — they lost just over £256,000. From January to December 1982 they lost £292,000. From January to the end of October this year they lost £339,000.
Let me say that the turn-about which has been talked about for the past five months is simply an improvement. For the same period last year there was a loss of £21,000. This year there was a loss of £9,000. This company, despite what has been said, on the basis of figures supplied to me are not profitable, and private consultants commissioned by my Department, on a financial basis, who in turn sought technical consultants to decide on the technical aspects of this company, also said that a large question mark hung over the viability and the profitability of this company.
The mill in Scarriff, which is under CPL, is the same mill which was under a different company prior to that, which was in receivership from April 1980 to April 1981. During that period of one year their trading losses exceeded £400,000. That was the company which saw losses of £300,000 in 1979, £400,000 in 1978 and £1.1 million in 1977. This was the predecessor of CPL. For some reason — I am no expert in the field of chipboard making — a problem of long standing has existed in Scarriff. I fully appreciate the difficulties that arise here. I would point out to Senator Honan, who raised the question of withdrawal of timber, that the timber supply was suspended only on cessation of operations by CPL pending advice from the receiver. I have not got a request as of now to restore timber supplies.
I would like to point out to Senator Honan that it is not a question of my being big or small, going back on my word or changing my decision. I would be delighted to be in a position to stand here and say: "Go home, Scarriff are open, everything is all right." Unfortunately I cannot say that. It would suit me for many a reason to be able to say that. I would say that Senators, and in particular local representatives, could assist if they could get local people to desist from their present action and allow the receiver who, whether we like it or not is now the person in charge, to carry out his function. Every effort will be made to seek a replacement for CPL, let it be a continuation of chipboard manufacturing or some other industry. At the moment the existing position does not help the efforts which could be made if the receiver were allowed to carry out his functions.
I have already mentioned the involvement of the IDA which Senator Honan also sought. In relation to the cost per job which Senator Kiely mentioned, we are talking here about the calculations by the IDA and they relate normally to industrial jobs in a factory. On the basis of what proposals we have we would be talking here about 200 jobs basically at a cost of £35,000 per job. This is regarded as somewhat high and outside the normal limits which the IDA deal with.
I would like to point out to Senator Hillery that the State did not withdraw the State guarantee. I appeal to people speaking in places like this to be careful about the words they use. That kind of statement is open to serious misinterpretation, because if that were interpreted in a certain way it could cast serious doubt on the financial fiscal viability of this country and its banking institutions and on the State as a whole.
I hope that the efforts which are being made can be made without any hindrance. Senators can be assured that I will use my good offices to try to bring about a situation where these people can be employed in future in an industry in that area which we all know is very badly needed. I appeal that it be done in a calm, rational way. Hysteria or any kind of protest will do nothing to improve the chances of doing what we all wish to do, that is to provide the kind of employment that is needed.
The Seanad adjourned at 8.35 p.m. until 2.30 p.m. on Wednesday, 7 December 1983.
