I call on the Leader to outline the arrangements for the debate.
Seagate Technology Closure: Statements.
As I stated on the Order of Business, there will be eight minutes per speaker. The debate will be open ended and will conclude with the final speaker. On behalf of the House I thank the Tánaiste for making a special effort to travel directly from Clonmel to be here by 2.30 p.m. I welcome her to the House. The Tánaiste began her political career in Seanad Éireann and we are extremely proud of her achievements. Long may they continue.
: I thank the Leader for his kind remarks. I wish to express my appreciation to the House for delaying the debate for 30 minutes to facilitate my return from Clonmel. I extend my sympathy to the Seagate workers, their families and the people of Clonmel and the surrounding area. The news they heard last night was devastating for all of them.
Seagate came to Ireland in late 1995 following the previous Government's approval in June of that year of the project for the manufacture in Clonmel of hard disk drives. Including working capital, the company was to invest just over £82 million. This was a major investment and grant aid of £17 million was approved. The company has received, by way of employment grant aid, slightly in excess of £11 million. It was to employ 1,400 people by the year 2000. It began production in late 1995 and quickly achieved its employment target. The company currently employs over 1,100 full-time and in excess of 300 temporary workers in Clonmel.
Shortly after I assumed office in August, I travelled to the United States on an industrial promotion trip with the IDA. As part of that trip I visited the headquarters of Seagate for two reasons. First, it is customary for new Ministers to visit client companies located in Ireland and introduce themselves. Second, because there had been approval for a new investment project worth £148 million at Ringaskiddy, County Cork, which would create over 1,000 jobs by 1999, I wanted to discuss the progress of this project with representatives of Seagate.
The meeting in question, which took place on 27 or 28 August, was attended by senior executives of Seagate and I was accompanied by the chief executive of the IDA and the Secretary General of my Department, Mr. Paul Haran. The meeting was upbeat and positive and the representatives of Seagate informed me of the company's wonderful experience in Clonmel, complimented the workforce and informed me that rapid progress was being made in respect of the Cork project and that the planning process was well underway. The representatives also complimented the various Irish consultants they had hired for their expertise and the speed with which they were prepared to provide assistance. I left the meeting in a very positive frame of mind.
At the beginning of October I was informed, through the IDA, that Seagate proposed to make an announcement that it was going to postpone the Cork project for six months. The company informed us that this was not unusual — it has happened before with other major investors — and it was due to changed market circumstances. Because the investment in Cork was so great — £148 million — the company was clearly not going to bring a facility on stream until the products it manufactured were needed in the marketplace. I was informed that the construction on the facility would begin shortly before the products were required. I was disappointed with this news but accepted the company's assurances.
A number of days later the IDA was informed that the company intended to carry out a review of its operation worldwide. As part of that review process, the Clonmel plant would come under scrutiny. When I heard that news on 3 October I telephoned the company's senior vice president, Bill Watkins, who has responsibility for this area. It took some time to contact him because he was travelling in the Far East. I spoke with him on the following Friday afternoon and he informed me that all of the company's operations were being re-evaluated and reviewed in view of changed market circumstances. He said that the market for the hard disk drives manufactured in Clonmel had become stagnant, that Seagate had a declining share in that market and that some products cost less to produce in the Far East so the company had to re-evaluate and retrench its operations.
I asked Mr. Watkins if he would meet with senior executives of the IDA so that we could be involved in the re-evaluation process and he agreed to do so. Martin Cronin, the second highest officer in the IDA, travelled to the United States with other executives that weekend and met representatives of the company on Monday, 6 October. Mr. Cronin received assurances that the IDA would be fully consulted in respect of the review and re-evaluation. That consultation subsequently took place.
I made arrangements to travel to the United States on 26 October to meet senior executives of Seagate. I met them on 27 October at the company's Californian headquarters where I was informed that the review involved two matters as far as Clonmel was concerned. First, the company was considering upgrading the Clonmel facility and investing more money in it so that an upgraded, viable product could be manufactured there. Second, there was a possibility that the workforce at the plant would be reduced by something in the region of 750 following the introduction of automation which would make the product more viable. I emphasised the importance of upgrading rather than downgrading the plant. I assured the company that there would be IDA support if it was decided to make a further investment in Clonmel with a view to producing a more upgraded and viable product. I was informed that the review would be carried out in subsequent weeks and that representatives of the company would visit Ireland as part of it. That visit took place on 5 to 6 November because the representatives wanted to meet with the management in Clonmel to discuss the various options.
Mr. Glen Peterson came to Ireland on 5 November and met the management of the Clonmel plant. He discussed the options and met representatives of the IDA before returning to the United States. He informed the IDA the he would recommend that the workforce at Clonmel should be downsized to approximately 750 and automation should be introduced. He stated that his recommendation would be put before the board of Seagate which would make a decision on 8 December. Unfortunately, neither of the options about which I was informed were taken up and the board made the decision to close the Clonmel plant.
On Tuesday last, when I became aware that representatives of Seagate were coming to Ireland to inform us of the decision, alarm bells began to ring. I knew they were not coming to give us good news because that could be conveyed by telephone. I believed that we would be informed that fewer than 750 jobs could be maintained at Clonmel. However, when I met the representatives yesterday, following the Order of Business in the Dáil, and they informed me that the plant would be completely closed, I was shocked as were the executives of the IDA who were present. At no stage were we led to believe that the Clonmel facility would be closed. I expressed in the strongest terms my anger and that of the Government and of the workers at Clonmel. It is unprecedented that a company which made such a major investment should close within such a short time.
When I asked the company why it had come to this conclusion, it instanced a number of factors in addition to those I mentioned. It said that shortly after it decided to come to Clonmel in 1995, it acquired another company, Conner Peripherals, which also makes hard disk drives. As a result of acquiring Conner Peripherals, there was an overcapacity in the organisation in relation to disc drives and the market was declining, as was its share. Therefore, it could not justify keeping another operation anywhere making disc drives. It was not closing the Clonmel plant to move the facility elsewhere, it was simply taking what was is done in Clonmel out of the equation completely. It also said that producing disk drives is much more economic in the Far East where they can be produced for about one-third of the cost of producing them here. It told me the market was stagnant and that currency issues were also a factor in its considerations.
I regret this has happened, particularly because many of these workers have gone through this process before. Many are former Digital workers and it is not that long since Clonmel, like Galway, experienced the gloom and disaster arising from that closure. The company asked for an embargo time of after 6.30 p.m. yesterday. Clearly, I did not want to break it, although I informed the Taoiseach and the Minister of State at the Department of Agriculture and Food, Deputy Davern.
I decided to travel to Clonmel later yesterday evening to meet community leaders and the workers. I wanted to show solidarity with workers facing a bleak Christmas because of losing good employment which they had only for a short time. The Seagate workforce is dynamic, young, enthusiastic and highly motivated and will be an asset in seeking to get a replacement industry. I also wanted to talk to community leaders because Seagate was worth £20 million per year to the local economy and 95 per cent of the workers come from within ten miles of the town of Clonmel. Clearly, this closure has huge economic consequences for Clonmel and the surrounding area.
I have decided to establish a task force comprising local business people and chaired by the county manager. It will also have a workers' representative. The job of the task force will be to help me, IDA Ireland and others to find a replacement industry and to look at the training and other needs of the workers to advise the Government and other agencies on what they can do to assist. I got an assurance from the company that it will make the facility available to a new investor at a reasonable price. The facility, which is state of the art, will be attractive. We have a number of new projects in the pipeline for next year and a number of companies currently looking at sites around Ireland. IDA Ireland will now take those companies to look at the Clonmel site. The fact that it will be available shortly and that we have a readily available workforce will make Clonmel extremely attractive.
I also got an assurance from the company on severance payments. Somebody working in the company for two years will get an average severance payment of 15 weeks pay while somebody working there for less than that period will get an average of 11 weeks pay. I am not suggesting that is wonderful, but it is better than what it might have been. These workers do not have statutory rights because of the short time they have been employed by the company. The company will repay in full the employment grants it got because it has not stayed for the requisite time. We have a legally binding commitment from the parent company on that matter. I also asked the company to make money available to establish a job centre to help workers obtain training for other jobs, which might be necessary for some, provide counselling and help with the other needs workers will have at this difficult time.
This morning I met in excess of 400 workers and, notwithstanding their devastation and the fact that many have huge commitments in terms of mortgages and young families — in many cases two members of the family work at Seagate — I found them extremely positive. They want to look to the future; they want alternative employment and for me to help them bring that about. I gave them an assurance that I would do so. They feel angry at what has happened and their experience with Seagate has not been good.
Although Seagate told me this morning that the Cork project was still on because the products it will make there will be of much higher value, more capital intensive and will make more sense in the context of the Irish Republic than what it produces in Clonmel, I would find it difficult to recommend to IDA Ireland and the Government, without a serious re-evaluation, to proceed with the Cork project because of this experience. This has been a bad experience for the Government and the workers. Our experience of Seagate has been disappointing. If Seagate comes back next April when the review of the Cork project is completed and tells me it wants to proceed, we will be very cautious before recommending that more taxpayers' money be given to this company. I do not want workers in Cork to face what those in Clonmel have to face. It would be irresponsible of me, as Minister, to close any door because one must not do that in politics. We will, however, move forward cautiously.
I thank you, a Chathaoirligh, for facilitating me. I will be happy to stay for the debate and look forward to hearing contributions by Members of different parties. A debate will begin in the other House at around 3.50 p.m. so I would appreciate if I could leave to be there for it.
I thank the Leader and the deputy leader for arranging this important debate. I would like it to be a constructive one because this is probably the most serious issue this Seanad will discuss. I am delighted the Minister made an effort to go to Clonmel and to come to the House to hear what we have to say.
I come from the constituency of South Tipperary and know of the devastation felt in my constituency since hearing the news yesterday. Tipperary is a proud county which has led the way in many fields, including hurling and business. Tipperary people have a strong tradition of loyalty and pride in their county but that pride was savagely dented yesterday evening with the announcement of Seagate's decision to close the Clonmel plant. This closure not only affects Clonmel but all of South Tipperary. Some 200 people from Cashel are employed by Seagate while 50 people from the village of Ardfinnan close to Clonmel work there. This closure will have an impact across South Tipperary.
People have taken out car loans and mortgages and committed themselves to 20 years of repayments. The worst story I heard was that at 3 p.m. yesterday a young couple signed for a mortgage in a building society in Clonmel, yet at 6 p.m., they did not know from where their next pay cheque would come. That is the saddest situation in which a person could find themselves.
From what the Minister said, this company has a lot for which to answer. I will not go into the details but I would like to know where we will go from here. Would it be possible to ask the company to stay on until we get a replacement industry because it would fill a vacuum over the next few months? The Minister is committed to getting a replacement industry. By asking the company to stay on, we would be showing solidarity with the people of South Tipperary. As the Minister said, there are projects in the pipeline — companies ready to come to South Tipperary.
The closure of this plant also highlights the severe problem in south Tipperary. As the Minister will be aware, I was a member of a deputation from Tipperary Town which met her on 1 October. Senator Ó Murchú was a member of that deputation also, as were members of the county council, Tipperary Urban District Council, representatives of IDA Ireland and other officials. Tipperary town has suffered greatly as has my town, Cashel. All the towns and villages throughout the county are badly affected. I welcome the setting up of the task force headed by the county manager, Mr. Ned Gleeson, who I know will do everything possible.
I want the Minister to give a commitment that other measures, such as the relocation of a Department, will be put in place in south Tipperary in tandem with finding a replacement industry. Every public representative in the constituency has spoken at various times about this and it would be a positive development. The Government has a chance to show solidarity with the county which has suffered most by announcing the relocation of a Department there.
The Minister mentioned of the severance package for the workers. It is not great, but it is better than nothing. However, 300 part-time workers are being thrown to the wolves and, according to stories which I have heard from the constituency, these people will get nothing. Can the Minister do something for those people? Three hundred jobs is a huge number and some avenue should be found to help those people because, even though they were part-time jobs, many of those workers were of as much service to the company as some of the full-time workers.
The whole of south Tipperary has been affected by this closure and I ask the Minister to do her utmost to address this very bad problem in my constituency. We are relying on the Minister to do what she can.
I welcome the Minister although I, like everybody, regret the occasion which has warranted her attendance here.
When Seagate Technology was set up in Clonmel in 1995 the move, which was approved by the previous Government, was widely welcomed. Seagate Technology was a blue-chip company and a market leader in its field. It ran a good show and, as a replacement for the Digital plant, it made an enormous contribution to Clonmel and the surrounding area to the tune of £20 million, as the Minister outlined earlier.
The decision that the plant is to close is devastating. The announcement, 14 days before Christmas, is a severe blow to the 1,400 employees in Clonmel and I want to convey to these people my personal sympathy at their plight.
In 1992 Digital in Galway faced major difficulties in its hardware manufacturing facilities and subsequently the company had to make the decision to close that section of its business. At that time the people in Galway and I, as an employer in the region, felt that Galway would become a ghost town and no longer prosper. There was enormous despair and a great fear of the unknown. Employees, suppliers and towns-people all wondered how they would cope, but I assure the House, the people of Clonmel, employees, suppliers and all involved in Seagate Technology that we did. Indeed, as I will outline later, things have improved significantly.
In August, the Minister visited Seagate Technology in the United States and there was no mention of problems there. In October when the Tánaiste and IDA Ireland became aware that there were clouds on the horizon, the matter was immediately addressed and senior IDA Ireland executives went to the US to meet the company.
The Minister travelled to the US at the end of October to meet Seagate Technology management. At that point the parent company was reviewing the situation. As the Minister outlined there were a number of options; down-sizing or upgrading the plant. However, the outcome of the review, as we all know today, is the closure of the Clonmel plant, the loss of employment and source of income of 1,400 employees, and the loss of a major contributor to the area.
At this stage we could all get bogged down in attributing blame, in recriminations and in cheap political point scoring, but what good would that do? What we must do is look to the future. Let us remember the old cliché: nothing ventured, nothing gained.
In the real world, he or she who hesitates is lost. The Minister has not hesitated but has taken decisive and positive action. Yesterday evening she travelled to Clonmel in recognition of the enormity of the blow to the town and its environs.
The Government has already commenced the task of rebuilding. It is committed to supporting the employees and the people of the area. As we speak, I am aware that the Department of Enterprise, Trade and Employment is finalising details on the establishment of a task force. As she said, the Minister is consulting at all levels — Government, support agencies and local — to see who should be represented on this particular initiative. I plead with all present, particularly those who spoke earlier, to support this task force in spirit and vocally.
These initiatives work because of the concern, commitment, innovation, hard work and dedication of all those involved. Continued criticism and recriminations are not helpful and do nothing to assist the task at hand, that is, the replacement of the 1,400 jobs in Clonmel.
To prove that task forces work and give people a feeling of optimism, I want to outline the success of the Galway task force. Digital's software division in Galway has expanded and employment has increased.
What about the success of the last Tipperary task force?
Digital opened a new technical support centre creating 100 new jobs.
But we are talking about Tipperary.
Boston Scientific created 2,500 new jobs in Galway; APC, 550 jobs in Galway and 245 in Castlebar; Saville Systems, Thermo King Ireland Limited, and Nortel have continued expansion. Other companies, including S & P Media International, Nelipak Thermoforming Ireland Limited, Biocompatibles Cardiovascular Ireland Limited, Contech Medical International Limited, Data Dimensions, Multistream International Limited, DER and AND Ireland Limited, which have set up in Galway are tangible proof of the success of a highly motivated and committed task force.
I appreciate the Senator's concern for Tipperary. All I am saying is that this has worked in the past. I cannot comment on other task forces in other areas; I can only comment on what I know.
I also know that the people involved in the Clonmel task force will be committed hard working individuals and, with our help, support and encouragement, they will be highly successful. That is the hope of everybody in this and the other House.
Let us not forget that, in a world of enormous competition, Clonmel and its environs has two major assets at this stage: a hard-working, highly skilled, well trained, committed workforce of 14,000 people; and a high-tech state of the art site and building.
The economy is attracting outside investment every day and Ireland is a major player in the global market when it comes to attracting jobs and investment. Representatives of IDA Ireland are working extremely hard. Let us spare a thought for them because their feeling of loss and failure is great. Their sense of regret is second to none, but they will rise to the challenge as they have done in the past, pick up the pieces and continue to do their job in the most effective and productive manner.
We should support the efforts of the Government and the Minister to address this challenge and not deal in the language of recrimination and blame. It will not secure replacement jobs for the 1,400 people in Clonmel. We will no doubt learn from this disaster and that knowledge will be invaluable to us in future. For now, we need support, optimism, commitment and an all out effort. The Minister has made this effort. I applaud her quick action and convey full support to her in her actions.
I wish to share my time with Senator Ross.
Acting Chairman
Is that agreed? Agreed.
I welcome the Minister. She and I are old friends. I share with my colleagues the most brutal sense of shock which the people in Clonmel must also feel. As the Minister rightly said, this matter is unprecedented. I welcome her willingness not to show the usual diplomatic restraint and to say she is angry, because everyone is entitled to be angry about this. While we should not seek to apportion blame, this is nevertheless an appalling way to treat people. No one should be treated like this. It is also the wrong way to treat this State which, some would argue is excessively generous to multinationals, but which always meets its side of the bargain. I wish the task force well and I am sure it will be successful. If there was ever a time when it was less unpleasant to be unemployed, it is probably now when opportunities are available and possibilities exist.
There are lessons worth learning from this. What happened between 13 June and 6 October when we went from the announcement of 1,000 new jobs to a position where everything was up for grabs? The marketplace does not change that dramatically. No major economy of which I am aware has flipped into recession in that period. Japan is doing badly but it was doing badly last June. Something stinks about this operation. IDA Ireland needs to dig a little deeper into the causes of this not for the sake of recrimination but because we need to learn more about it. It is extremely important we learn from it.
This multinational is playing games with us and I will give some examples. The Minister mentioned the suggestion of introducing automation and reducing jobs. If Seagate was not operating its Clonmel plant at the limits of technology when it started, it had no intention of staying. No dramatic new technology exists which it could have considered introducing. Automating such a plant is an ongoing process and is not something which can be postponed until a great day dawns. That suggestion makes its motives more suspect. The suggestion that the Cork operation might be proceeded with because it is so different from Clonmel is meaningless. Such a dramatic change in hard disk drives does not happen. The idea that the company would close a factory in Clonmel, open a factory in Cork and train a new workforce is absolute bunkum. I believe they are conning the country. We need to dig deeper into this. I do not suggest the setting up of a public inquiry but there should be a detailed investigation and all the information should be published. There is something very suspect about announcing 1,000 new jobs at a stage when a company is obviously on its way down. It is unprecedented.
I greatly sympathise with the workers and it is ironic to hear that they will ask SIPTU to assist them in organising themselves. The Irish Congress of Trade Unions has conducted a long standing campaign to get trade union recognition in multinational firms in the information technology sector. The workforce deserves to be organised as a matter of principle as it gives it a negotiating position, something these people do not have.
I hope the financial institutions that queued up to give these young people mortgages will develop a level of compassion. I hope they will not force considerable interest payments on young people who took out mortgages in good faith and are now left with no means of paying them. The Minister could remind the financial institutions that they have social obligations to people other than their shareholders.
I concur with virtually everything Senator Brendan Ryan said because, above all, this is a human problem. Seeing these people on the television was a nasty reminder of the depressing days of old when we did not have a Celtic tiger. Once again, the first time they heard of the closure was on the news. They had not been told by their employer that it was going to happen. That is the most inhuman and unacceptable way of treating any human being. I can understand why multinationals close factories here, as can everyone, but I can see no reason they should do it with such a cruel and ruthless streak. They are treating human beings like machines.
I congratulate the Minister. This situation has been thrust upon her and everyone in this House agrees with and supports her genuine efforts, the way she has treated this as a matter of urgency and the courageous way she has taken on the multinationals. I gather she said this morning she had some harsh words to say about Seagate. It is not easy even for a Minister to take on a multinational because it will come back for more and political goodwill can be extorted from it at a future date. Ministers can always use multinationals to announce new jobs, thus receiving some sort of kudos. The Minister has not succumbed to that temptation and it is a matter of great credit to her that she has taken on Seagate.
I have not heard a decent credible reason this has happened. I do not believe multinationals who throw out words such as "overcapacity". Senator Brendan Ryan is correct. How can there be such dramatic overcapacity now when it did not exist two years ago or even six months ago? I do not understand and I do not find it credible. I do not believe the mutterings and implications that we are becoming uncompetitive in terms of labour and that it is cheaper for companies to locate elsewhere. That cannot have happened in such a dramatic way in two or three months.
I would like two outcomes from this brief debate. First, we should have some sort of inquiry. I do not mean a witch hunt but rather an inquiry to find out why this happened. It should not be a case of IDA Ireland being asked if corners were cut or whether someone did this, that or the other, but rather that we know so that we do not make this sort of mistake again in future. If it means not trusting multinationals that is the lesson to be learned. I do not know whether it means that. We must find out how this happened because it remains a mystery.
Second, if that inquiry is held, we should also ask ourselves whether this has more serious implications for the Celtic tiger than we believed possible 24 hours ago. I do not know the answer to this question either. Is there something fragile about the Celtic tiger which is breeding an over-confidence in our belief in this economy? Is this company the first of others which are going to move for similar reasons or because we are making a fundamental mistake about multinationals? We need that sort of reassurance. Will the Minister hold such a constructive inquiry into why this happened? I congratulate her on the extremely dignified and human way she has behaved in this crisis.
I welcome the Minister and thank her for returning at short notice to take this debate which I know she was anxious to do.
Everything which could be done in this case has been done; but despite that the company has decided to put 1,400 people out of work, with all the devastating consequences that entails. It was with a great sense of shock and depression that we heard the unexpected news of the closure of the Seagate plant in Clonmel. It is difficult to imagine the scale of the shock of the workforce in Seagate and of the surrounding community in Clonmel and its hinterland. The blow is huge and is especially harsh in falling so close to Christmas. Many employees have entered into mortgages and other financial commitments, and the immediate priority for the Tánaiste, the Government, the State agencies and Seagate itself must be to minimise the effects of the closure on the workforce and to ensure that a replacement industry or industries is provided in the Clonmel area, so that new employment opportunities are created and hope is restored.
I have faith in the ability of my party leader, the Tánaiste, Deputy Harney, to secure such a replacement industry for Clonmel. She recently succeeded in attracting a replacement industry to the Packard Electric plant which closed in Tallaght last year. She will give her total commitment to securing a similar success in Clonmel. I applaud her for her swift response to this crisis. She has already established a task force which will commence rebuilding and finding jobs. I also note her remarks about recovering the grants which the State put into the industry.
She is also to be congratulated for going to Clonmel as soon as she heard yesterday's announcement and meeting Seagate workers, Corporation members and community leaders in the town. As we have frequently seen in the past, it is all too easy for Ministers to make high profile, PR-friendly outings when new jobs are announced, new companies are brought here or premises are officially opened; it is far more difficult and unusual to find a Minister prepared to turn up when a plant is closing, to explain issues to workers, to listen to people and to co-operate with the local community in dealing with events and to attempt to put the pieces back together.
It is also perfectly clear that the Minister discharged her responsibilities by going there. Consequently, it was wrong to demand that she be present in the House at the commencement of business today because that was impossible. It was only shortly after the Order of Business that she became aware we were seeking a debate and, to her credit, she came here to take it.
Nonetheless, neither a debate, political point scoring nor facile soundbites will keep Seagate in Clonmel. I wish it were otherwise but that is the way of the world. Successive Governments have sought and encouraged large, multinational companies to locate and invest here. Thankfully we have moved away from the "keep the multinationals out" philosophy which had some currency several years ago. The historic scale of our unemployment could not have been tackled other than by an integrated policy of encouraging indigenous industries, especially those based in the food sector, complemented with large-scale inward international investment.
The success of this policy has been striking. Employment in overseas electronics companies based in Ireland has gone up from 8,000 in 1986 to 33,000 today. The IDA and everyone involved deserves credit for this performance, which is also a handsome tribute to the quality of the Irish workforce, and to the type of skills in Clonmel and elsewhere. These companies now account for a third of total Irish exports. In my county, Kildare, companies like Intel and Hewlett Packard have transformed the employment prospects for many people. It is also worth recording that nearly half the companies in this sector have been here for more than ten years. While we accept this is a volatile industry — Seagate is a casualty of this volatility — and that some of these companies have a short life cycle, the strike rate is nonetheless encouraging. Without wishing to understate the severity of the blow suffered in Clonmel at Seagate, and previously suffered at Digital, Packard Electric and Semperit, it is clear the successes greatly outweigh the failures and that there has been a good record in finding replacement industries for the failures.
It ill behoves anyone in Seanad Éireann to politicise this grave matter. I note and welcome Senator Hayes's comments in that respect. It should be the task of all parties to co-operate with the Government and the IDA so that we continue to bring industries here and provide jobs. Sending negative signals, whether from this House or elsewhere, does not help such a process and may be detrimental in terms of attracting those industries.
The Minister said she was taken aback by the suddenness and severity of the Seagate announcement, as were the workforce and the former Ministers who presided over its establishment and opening. Even at a meeting between the herself and the company in America last August, there was no hint of the difficulties which caused this closure. The first inkling of potential trouble was only two months ago, and the Tánaiste and the IDA acted swiftly when the future of the planned Cork plant became questionable. It would have been totally imprudent and irresponsible to breach confidentiality while there was any hope of rescuing the Cork investment or the Clonmel plant. Such breaches in the past have put new inward investment at risk.
I agree with Senator Ryan and Senator Ross that it is difficult to see how a company such as Seagate, with £670 billion in sales and £470 million in profits, cannot make money in Clonmel. One sometimes wonders about how losses are apportioned between plants and within corporations. Transfer pricing, and costing, can be factors in establishing a case which otherwise might not be made. Substantially lower production costs in the Far East, compared to those in Ireland, are cited as one of the reasons for closure. I know from a senior source in an American computer company based both in Ireland and the Far East that unit costs of production can be lower here because of the high productivity of the Irish labour force, even though wage levels may be higher here than in the Far East. It is important that this country should state that in a highly competitive and volatile environment, we can compete with the lower cost economies of the Far East.
The immediate task facing us is to put this unfortunate episode behind us, to find replacement jobs in the Clonmel area and to continue to attract new companies to provide the jobs needed.
Mr. Cregan
I wish to share my time with Senator Burke.
Is that agreed? Agreed.
Mr. Cregan
Like others, I am saddened at the loss of Seagate in Clonmel. I welcome the Minister and I understand how hard it must be for her to travel from place to place to explain the loss of 1,400 jobs. We must proceed with extreme caution. Previous speakers have spoken about the number of multinational companies with which we deal, particularly those from America. We were not careful enough in choosing some of the companies we lost. The Minister said we must be more cautious and I welcome that remark.
I am a simple person and I cannot understand why the announcement was made on 13 June if the plant was not going to open. I also do not know why the announcement was not made before the election; we might have a different Government now if it had been. We must again emphasise the importance of not continually bringing the same type of industry to one area. Many parts of the country have several high-technology computer plants. Our workforce is highly trained but we should not give the impression that this makes us better able to compete with, for instance, Far Eastern countries.
Jobs in the company's proposed plant in Cork are being advertised in the national and local newspapers and some people have applied and been interviewed. It is frightening to think that just a few months ago the company could announce the creation of jobs in Cork when there must already have been problems in the Clonmel plant. I do not understand how that can have been done. I realise the Minister is seeking an explanation. I would not hold out great hope for the Cork plant. I cannot understand how Seagate might close the Clonmel plant and open another more advanced plant in Cork. Naturally, I would welcome it.
I welcome the Minister's statement that she will be extra cautious. We must ensure that in the long term we are not dependent on such multinational companies if we wish to build an industrial infrastructure. The Celtic tiger is bounding at such a speed that we must be cautious of such companies setting up shop here and leaving two or three years later. We must create an infrastructure for the future.
In the Cork region the setting up of a particular plant was objected to on environmental grounds. I would much prefer to have had that plant rather than have had the announcement of an industry on 13 June which may not now come into being. I hope it is built but not at the expense of jobs in Clonmel or anywhere else in the country. We must not allow a situation to develop whereby the multinationals can decide to move from one region to another at the expense of all involved.
I thank Senator Cregan for sharing time. I welcome the Minister and thank her for being present. I have great sympathy for the workers in Clonmel. What has happened must be a great shock to Clonmel and the surrounding region. The greatest shock must be the loss of livelihood for the workers and their families. The people of Ballina had a similar experience a few months ago when the Asahi plant announced its closure. I understand the Minister is travelling to County Mayo tomorrow and I hope she will have good news for the people of the region.
Senator Brendan Ryan and Senator Ross made interesting points. I agree with Senator Ross that if an inquiry is to be set up it must seek explanations for this closure. I welcome the setting up of the task force. A task force can carry out good work and have an important input in attracting industry to regions. Senator Cox referred to the Galway task force and I congratulate it on its work in attracting industries to that area and saving others. Credit for the jobs with APC in Castlebar must go to the former Minister for Tourism and Trade, Deputy Kenny. It was acknowledged last week in Castlebar by the president of APC that the jobs would not have been brought to Castlebar were it not for the efforts of Deputy Kenny.
If there is a will there is a way. Members of Government can achieve more than a task force because they can direct the IDA. With regard to finding a replacement industry for Asahi in Ballina I urge the Minister to bring that matter to a conclusion. I have great sympathy for the people of Clonmel and I hope a solution will be found.
I wish to share my time with Senator Cassidy.
Acting Chairman
Is that agreed? Agreed.
I come from a neighbouring county to County Tipperary and I am disappointed at what has happened in Clonmel. As other speakers have said, there is little point in recriminations. I thank the Minister for getting involved immediately in trying to soften the blow, difficult as that will be, for those who may be made redundant in the near future.
Clonmel has suffered greatly, but there is little point in blaming the multinational companies exclusively for the job losses there. Two multinational companies have caused problems there, Seagate and Digital, but an indigenous company, Kent Corporation, also did so. When we criticise multinational companies we must remember to examine carefully indigenous companies that develop beyond their capabilities. The Kent Corporation not only caused problems in Clonmel but seriously affected Mahon and McPhillips in Kilkenny.
Multinationals have had a reasonable track record in Ireland and the large numbers of people working for them are satisfied. The multinationals have given a great boost to the economy over the past few years. However, we must be careful in the future. The Asian tiger economies were the precursors to the successful Celtic tiger economy. However, the economies of South Korea, Japan and Thailand are collapsing. Hong Kong was supposedly one of the most successful tiger economies, yet 65 per cent of the people there live on benefits. That economy benefited the few, yet people criticise the hand-over from Britain to China. Hopefully, when the Chinese take over the Hong Kong economy the benefits will extend to more of the people who work there.
This debate seeks a replacement industry for Clonmel, be it multinational or indigenous, but we must be careful not to suggest that one failure should lead us drive out international investment. International companies come to Ireland because it is beneficial for them, but we also benefit from their presence.
Kilkenny is close to Clonmel and it has also lost investment from multinationals. However, there remains a certain amount of such investment in Kilkenny. Last year's chairman of Kilkenny County Council is one of those who has lost his job with Seagate. It is not just Clonmel which will suffer from this closure. We must ensure that we do not drive away multinational investment. It is a matter of grave concern and we must do our best to replace the jobs in Clonmel.
I concur with the speakers and thank the Minister for coming to the House to listen to us. I assure her of our full support for her efforts in dealing with this problem and congratulate her on setting up the task force under the chairmanship of the County Manager, Mr. Ned Gleeson. As Senator Cox said, there are many benefits to such a task force as is obvious from the experience in Galway. Hopefully what happened in Galway will happen in Clonmel.
We have a very good, young workforce. The Seagate complex is a state of the art building, so there are a number of positive factors from which the task force can work. The reputation of this company preceded its coming to Clonmel. Seagate has made enormous profits and employ a huge number of people. Members are shocked, as I know the Minister and her officials are, by the short notice given to the workforce. Is it possible that this company would show its genuine concern for the people of Tipperary, Kilkenny, Cork and the rest of that locality by deferring its decision and giving the workforce three months notice? We have heard of the personal traumas of young people in particular who have mortgages and other overheads.
It is a hard business decision but Ireland is a friendly destination where multinationals make significant profits. The efficiency of the staff employed here by multinationals is way above that of other countries. Senator Lanigan, a senior Member of the House, shared his experience of visiting many countries. The Irish workforce is second to none. We have a great young Minister who is respected everywhere she goes.
We call publicly on this company to state, if it is genuine in maintaining good relations with the Government, the Oireachtas and the Minister, to defer this decision for three months to allow time for the IDA, the Department, the Minister, the Government and everybody concerned to put another factory in place in Tipperary.
Acting Chairman
The Minister wishes to address the House at 3.40 p.m., with statements resuming thereafter. Is that agreed? Agreed.
I wish to share time with my colleague, Senator Gallagher. I welcome the Minister and commend her for making a special effort come to the House. I also hope her injury heals as quickly as possible.
As I listened to the litany of events outlined by her, I had a sense of déjavous. All the classic signs of closure were apparent from August with the postponement of the Cork project for six months, the announcement of a global review and the comments by the vice president that the disk drive market was stagnant, that Seagate had a declining share of the market and that the Far East provided the same products more cheaply. The warning signs were strong at this stage. Did the Minister communicate with the workforce at that time or did the IDA seek to intervene and raise the problems with the management on behalf of the workforce?
The Minister was informed that the company was going to upgrade equipment and introduce automation in order to reduce the workforce to 750. It must have been clear by then that the company was going to close. Did anybody tell the workers what was happening? There was no union in the company because the management would not allow one. In the absence of a union the Minister must be responsible for the welfare of those working in that factory and there is a special onus on the Minister in that respect.
Why has there been no word about the factory in Derry where 1,400 people are employed? Has the IDB, the Northern Ireland counterpart of the IDA, been more successful in retaining the Derry plant? Although it does not seem as though there will be an expansion at that plant, it will retain its workforce.
I support what has been said in relation to an inquiry. The smoke screen presented by the company is a sham. The manner in which the decision was announced suggests one was made some time ago, and I would like an inquiry established to examine this matter. The minimum the company should do is introduce a phased withdrawal, as Senator Cassidy suggested, to allow a considerable period of time to elapse before the final withdrawal takes place.
Our main concern is for the workforce and the human tragedy of those who have taken out mortgages and who heard the announcement on the 6 o'clock news before the Minister was able to directly inform them that their jobs were gone. What does the Minister intend doing in relation to the task force? Will she place a workers' representative on it? This should be an essential element of the task force.
There has been a fundamental breach of the labour/employer relationship in this case, with no consultation with representatives of the workforce. This constitutes a shattering of Partnership 2000. The lack of consultation is unprecedented. The future of Partnership 2000 must now be in question. It is also directly contrary to Article 2.1 of the EU directive which states that "where an employer is contemplating collective redundancies, he shall begin consultation with the workers' representatives in good time with a view to reaching an agreement". Why was this course not followed? The company has breached European and Irish law.
We also must examine the company's refusal to allow its employees to be members of a union. If there was a union it could have negotiated with the management and the outcome would have been different. Will the Minister say whether the Government will promote union representation in multinational companies?
I support the workers in Seagate in Clonmel. I come from a town which lost a major industry earlier this year while in September another of our major industries was put up for sale. I am aware of the sense of shock which such events send through a community. At least four months notice was given in the case of Atlantic Mills in Tullamore while Sherwood Medical is remaining in touch with the workforce regarding its future intentions.
I wish the task force well. Such groups have worked in other places, although I wonder how successful they can be because of the number of them which we have in place.
The workforce has been treated very badly by the company as there was no consultation. I would have expected some mechanism to have been found, with the Government acting as an intermediary, if there were difficulties about which the workers were not being told. Workers have a right to be informed and consulted and that should have been done. Consultation does not prevent jobs being lost but it does help people prepare and make some advance arrangements. In this context I ask the company to defer its closure for a period of months to allow for some adjustment.
We must agree that the rights of members of a workforce to organise themselves and to be represented should be a fundamental part of industrial and social policy. I agree with the point about the need for examination not only with regard to Seagate, but other companies setting up in Ireland. We are glad they come to this country and all public representatives seek them for their areas. We depend on the IDA and the Department to vet these companies and to ensure a reasonable level of job security. I am amazed that in this case and others, such as Sherwood Medical in my area, large amounts of public investment can be authorised only months in advance of announcements about the detrimental futures of plants.
Acting Chairman
I call the Minister to reply. She is winged but I am sure she is not down.
: I thank the Chair for facilitating me and the Senators who contributed to this responsible and calm debate. Members did not try to score political points and that is as it should be; I will not seek to score political points. Many people are asking with the benefit of hindsight and 20/20 vision if this plant should have been located in Clonmel. However, at the time it was a very good decision and the previous Government was right to support it.
Regarding Senator Costello's query, there will be a workers' representative on the task force. In relation to trade union recognition, trade union membership is voluntary in Ireland. People are not mandatorily required to join a union. In Ireland 48 per cent of the employee workforce belong to a union, but in France, where there are a number of mandatory requirements, the level is only 10 per cent. A working group under the auspices of Partnership 2000 is currently examining the issue of trade union recognition and I understand it will report to me soon on that matter.
Why did it happen? I asked the company that yesterday because it is incredible and there are some questions I cannot answer. The company is a world leader in its field and we were delighted when it decided to locate in Clonmel in 1995. I am not an expert on computers. I only knew about them in general before I was appointed and I had to learn about hard disks, disk drives, peripherals and the other jargon in this sector. The company is making a commodity product in Clonmel in what is called the peripherals area of the industry. It is a low value added product which is labour intensive. It is essentially an assembly plant. The company has a much more high tech, capital intensive, value added operation in Derry; the proposal for Cork also involved this type of operation.
The company made the point to me that it can make low value products much more cheaply, at a third of the cost, in the Far East. In addition, soon after Seagate decided to locate in Clonmel, it acquired a company called Conner Peripherals which made hard disk drives. This immediately created over-capacity. I asked why Seagate purchased that company within a couple months but I did not receive satisfactory answers.
Soon after it purchased Conner Peripherals, which had a capacity of 1.3 million square feet of factory space, Seagate closed down 0.5 million square feet in Italy, Scotland and Asia. It also told me the market has changed in two years. The electronics industry is a very fast changing market. A representative of a major employer in Dublin told me recently that over the next 15 months the company will not only change the products it makes in Ireland but also the process involved. This is how quickly the sector is changing. There are 150 electronics companies in the Republic which employ 33,000 people and account for £7 billion of exports. By and large, they are outstanding employers. Over half of those companies have been in Ireland in excess of ten years. It is a most important sector involving high quality employment.
Regarding the issue of how the closure in Clonmel is being handled, I was involved in the Packard Electric plant closure. It probably does not matter how or when one hears about a closure but there is a way of doing business and that is that the employer should tell the workforce. Packard Electric workers learned their fate on the 9 o'clock news and that hurt them because they had worked there for a long time. I spoke to only a few people yesterday about Seagate, three members of the Government and officials in my Department and the IDA, because I did not want the news to leak. I was driving to Clonmel when I heard it as the headline story on the 6.30 p.m. news. I was bitterly disappointed because I knew the effect it would have on the workers. Husbands and wives who heard it on the news arrived at the gates of the plant last night to tell the employees of their fate. This added to the tragedy and sense of disaster.
It is a disgrace.
I do not know how that happened. Many people heard about it during the afternoon when meetings were called by the company. The workers began to realise something was afoot when they were asked to attend meetings between 6.30 p.m. and 8.30 p.m.
Regarding the grant Seagate received and comments that it conned the country, it has been an expensive exercise for the company. It was an investment of £82 million, including a fixed capital investment of £21.6 million. It drew down employment grants of £11.6 million which it must repay in total. This was also a factor in its considerations. The cost of severance payments will be over £6 million and many other costs will be associated with the closure. Why did it happen? Mr. Ron Verdoorn was central to the company's decision to locate in Ireland but he no longer works for the company which has new management. The company repeated yesterday what it told me in October, that if the decision was being made now it would not locate a disk drive facility in Ireland. The representatives were talking with the benefit of hindsight but they said it is a stagnant industry. In addition, disk drives are now more powerful and consequently fewer are required. This is another reason for the over-capacity.
The job of the task force will be to help the workers, their families and the area and to come up with suggestions for alternative employment. It will try to drive the move to find an alternative investor. I hoped to announce the membership of the task force this afternoon — I want it to have a business focus — but a number of the key businessmen I want to take part in it are abroad. I want to speak to them personally and ask them to participate before I make an announcement. One of the people to whom I wish to speak is travelling in the United States. I hope to be in a position to make an announcement in the next few hours.
Regarding Senator Cregan's point, the Cork proposal was leaked during the election. The Clonmel facility was opened on 4 June. I am not making a political point but people knew Seagate intended to locate in Cork and they wanted to release the news. The former Minister, Deputy Richard Bruton, did not announce it until the day after the election and I acknowledge the honourable role he played throughout. He was one of the people I telephoned before 6.30 p.m. yesterday. He was involved in bringing Seagate to Ireland and I felt I should tell him the position as a matter of courtesy. I do not suggest he was involved in leaking the news of the closure.
The economy is dependent on multinationals. Ireland currently attracts between 30 and 40 per cent of projects coming from the United States to Europe, notwithstanding the fact that it has less than 1 per cent of the European population. These companies come to Ireland because of the low corporate tax rates. The 10 per cent tax and the skills base are major attractions. However, the tax only comes into play if a company makes a profit. Seagate has lost $63 million in Clonmel, which is equivalent to IR£45 million. Last year the Irish subsidiaries of foreign multinationals paid £700 million in corporate taxes. If they had been located in other European countries, they would have paid three times that amount. They saved approximately US$2 billion by virtue of their location in the Republic. The rate, which remains a major attraction, and the professionalism of the IDA are the reasons Ireland is doing well.
However, we must learn lessons in relation to the lower end of the market. Ireland would not support many textile sectors because they are very labour intensive and they do not make sense in this economy. For every worker in Germany, one can get two Irish workers. However, for the two Irish workers, one can get 126 workers in some parts of the Far East. I do not suggest Irish wage levels should be reduced to those of the Far East.
Thank you very much.
That is the competitive world in which we operate. How do we survive and thrive in that world? We must continue to aim for value added products, high-tech activity and labour intensive development. A re-evaluation is being carried out in my Department and by the IDA as a result of the shock announcement yesterday.
As regards telling the workforce, my job as Minister in dealing with client companies is to maintain confidentiality. I acted as I did for a number of reasons. First, I did not want a company which was in difficulty to have more difficulties. Second, I want companies to know that they deal with me in complete confidence. That must also be how they deal with Government. Third, I did not want to talk down the company. If I had gone to the workers and said, as I was led to believe on 6 November, that the most likely decision was 750 job losses and the implementation of some automation in Clonmel, I would have created panic. In addition, I would have been asked which 750 jobs were to go and I could not have answered those questions. At that stage it was only one of two possible solutions. We were told it was the most likely one, but we were not told that closure was even on the agenda.
All Ministers have been involved in rescue missions and company restructuring, and nine times out of ten the problem is sorted out. It would not have been right for me, when told on 6 November that 750 jobs were likely to go, to leak this information. It would have been wrong because it was the duty of Seagate as an employer to tell people what was happening. I wish this had been done differently, especially coming up to Christmas. Some of the Seagate workers were having a Christmas party tonight.
As I said on radio, one of the saddest things that happened last night was when I met a 16 year old schoolgirl with a bad heart condition. Her father had not worked for years but got a job in Seagate a year ago. She cried when she asked me if he would ever work again. When one saw the workers this morning, one could not but feel that things should have been handled differently.
I thank Senators for the very dignified debate. It will be appreciated by the workers.
May I——
Acting Chairman
The Senator may not speak a second time.
The Tánaiste may want to respond to my question about asking Seagate to remain in operation until a replacement has been found.
I apologise. I suggested the second week in February to the company, as they were going to close for two weeks at Christmas. They informed me that they had lost $63 million, £45 million, and that the board decision taken on Monday was final. The meeting yesterday was hot and heavy. We were very angry and shocked because we were never led to believe that this was on the agenda. That will have to be taken into account in future dealings with Seagate. It would take a lot to accept the credibility of a company that could come to this decision after such a short period. We will have to move very cautiously in connection with this company.
I wish to share my time with Senator Coghlan.
Acting Chairman
Is that agreed? Agreed.
It is unfortunate that we will not all be able to address the Minister directly as she must address the Dáil, but I thank her for outlining the steps taken before and since this terrible event occurred. She toured the country and was satisfied that Seagate was in Clonmel to stay.
Some might wonder at a west of Ireland Senator's interest in Clonmel. My interest is threefold. Like everybody else, I sympathise with those people who are facing Christmas in desolation. They are wondering about their future and are concerned about mortgage and car payments. Second, I spent some years in that area and I know people who are now unemployed. I sympathise with them and their families as well as others who will be affected, such as shopkeepers. Everyone in the area will suffer as a result of this closure. My third reason relates to the experience in Galway when Digital closed. The devastation in the city was almost like that of a death in the family. A vacuum was left that people did not know how to fill. We did not know how those jobs would be replaced. Those jobs were not lost to the Middle East but to Scotland, which offered greater grants.
I concur with the point made by speakers on the dramatic and sudden way this happened. There were no signals that this was about to happen, which indicates that we must be very wary. Those living in towns dependent on American industries would like clear markers when such companies intend shedding jobs or closing down. I am not suggesting an investigation, but warnings should be given.
We will have to look at the skills available in an area. Assembly by machinery is simple. The machinery does not go on strike or demand pay increases. It is easy to move it from one country to another. We must attract skilled jobs and establish research and development to ensure that industries stay here. A company that is tied down by research and development is not as likely to move.
The Minister has pointed out that the company has no intention of staying on. The way this factory closed dehumanised the people of Clonmel. They were treated as objects rather than people. This side of the House has been supportive of the Tánaiste. We have not used rancour but have acted in this debate in a way that indicates our concern that something be done.
I join with other speakers in thanking the Minister for addressing the House. I regret she has had to go to the Dáil, but that is understandable. She seemed to be able to write with her left hand, but I look forward to her right hand being taken out of its sling, because she needs to give a good handbagging to whoever in the IDA needs it as well as the Seagate management.
This is a devastating blow not just to Clonmel but the entire country. The loss of 1,400 jobs is a huge human tragedy, and it was shocking that the workforce were informed by the media. The Tánaiste and the IDA were apparently aware of the dangers last October. What, if anything, did the IDA do since then? Where does Seagate stand in relation to repayments of £16 million in State grants? I accept the Minister's statement that the company has mentioned repayment, but how secure is that commitment? The company has been in Ireland only two years.
Clonmel suffered another serious blow in the closure of Digital. When is its bad luck going to end? Where does this leave the projects we were lead to believe were in the pipeline for Cork and Derry? The Minister has said that Seagate explained that it is in a declining market. If that is so, surely that would have been spotted when it opened the Clonmel factory. Questions must be asked about the IDA vetting procedures. The Minister also stated that the decision was contrary to the options outlined to her.
I was taken by Senator Dardis's contribution on the possibility of transfer pricing on costs, which relates to the IDA's vetting powers. It is serious because this could have been a rationalisation decision rather than one based on other factors, as we have been lead to believe. The Minister stated that Seagate intend manufacturing higher value products in Cork. Why did the company not show good faith and transfer some of the Cork operation to Clonmel, given that there is a skilled workforce already there? Senator Tom Hayes mentioned 300 part-time workers who will receive no recompense. The Tánaiste must see what the State can do to help them receive some payment. We experienced this in Killarney in 1995 when the highly skilled Pretty Polly workforce lost their jobs. The Pretty Polly factory is still vacant and those highly skilled workers are mostly idle. I wish the taskforce and the Minister well in their efforts. I hope the IDA show the necessary degree of urgency in providing replacement jobs in Clonmel.
I thank the Leader of the House for arranging this debate and the Minister for her prompt and positive response and for giving us an opportunity to express our concerns to her. The closure of the Seagate plant in Clonmel will go down as one of the most surprising and sudden closures in our industrial history. The traumatic news of this closure will send tremors of earthquake proportions to the foundations of the morale of the people of Clonmel, Tipperary and the south-east region.
It is evident from the Minister's contribution in the House that she, too, was taken greatly by surprise. She gave us a very astute and expert appraisal of the background to this problem and the present position. She left no room for misinformation. This must be the starting point of any action we bring to bear on this situation.
My colleague from south Tipperary, Senator Tom Hayes, set the right tone for this debate. We should have positive concern for this matter, coupled with a concerted and united approach to finding a solution, namely, a replacement industry for Clonmel of the same size and value.
Not only must the workforce bear this news at a festive time of year, the fact that it is a holiday period means there is a very grave danger that the momentum for a solution will be stifled. Opportunities could be lost as a result of the Dáil and Seanad going into recess for several weeks next week. If the necessity arises, the Seanad and Dáil should be recalled over Christmas. It is quite evident that all Members, irrespective of where they come from, realise the seriousness of this matter.
When one remembers the gloom when Digital withdrew from Clonmel in the early 1990s, great credit is due to the community there for the manner in which it responded. I come from Cashel in South Tipperary and I am keenly aware of Clonmel's successes in that regard. A few weeks ago I complimented members of Clonmel Chamber of Commerce and Clonmel Corporation on their success in developing the town, not only in the context of urban renewal but under many other headings also. There are echoes of the early 1990s in this present difficulty.
Many commentators tell us the disk drive industry is subject to three year phases, going from boom to bust. It that is the case, we must bear it in mind in any future developments. Many of the skills used in computer technology are transferable and the computer industry is exceptionally buoyant in some parts of Munster. However, we must put down a marker against seeing that as a total solution because it is most unlikely the unskilled workers in Clonmel could travel to Limerick, Cork or any other part of Munster. The solution must be within Clonmel itself.
I was pleased to hear the Minister say a taskforce has already been established. I am not too clear if she mentioned whether the grant aid paid to Seagate would be repaid. I have seen newspaper reports that that is the case and I would expect it to be the starting point.
On the other hand, we will not achieve anything or serve the people of Clonmel by instigating recriminations or witch hunts about multinationals because there is not a town or city in this country which would not welcome a multinational industry. However, we must ensure that the jobs which are provided are secure. The people of Clonmel, having suffered twice in the past three or four years, will find it difficult to restore morale to the level at which it was 48 hours ago.
The financial institutions should also be part of finding a solution. Reference was made to the necessity for them to show understanding towards those who find themselves in an unexpected position not of their making. It is vital to the morale of the people of Clonmel and Tipperary that everything is done to ensure no extra pressures are brought to bear on them. There should be a formal liaison between the people of Clonmel, the taskforce and the financial institutions to ensure that happens.
I hope the momentum which the Minister has set in motion will be continued on an hourly, rather than weekly or monthly, basis. Given the economic success of much of the rest of the country, it should be possible to direct all our energies towards Clonmel in the immediate future. I thank the Minister and the Opposition who have set a tone of unity and co-operation. We would not be thanked for giving the people of Clonmel any less than that.
I wish to share my time with Senator Taylor-Quinn.
Is that agreed? Agreed.
I thank the Minister for her swift response to this industrial catastrophe in Clonmel. Senator Burke referred to her visit to Ballina tomorrow. We have great expectations in Ballina, and I am not talking about Dickens. I am sure her visit will be in different circumstances to those which have her in this House today.
The sudden announcement of this closure raises serious questions about strategic planning and management at Seagate. Last May, great hopes and expectations were raised about an impending announcement by the company in Ballina regarding the creation of 1,500 jobs. It involved much effort and commitment over a considerable period by officials of Mayo County Council, Ballina Urban District Council and industrial committees. However, at the end of May, we were told that Seagate would not consider our location as viable because we could not guarantee the company 1,500 jobs, this in an area where there are 9,000 unemployed on the live register. We subsequently discovered that Ringaskiddy was to be the beneficiary of the company's expansion, but this was subsequently put on hold and we know what has happened since then.
In view of these developments and the company's strategic management programme, serious questions must be asked about Seagate. We all know that businesses close and that they are subject to economic and market conditions. A company such as Seagate should be able to withstand temporary blips in the marketplace.
Senator Ó Murchú referred to the problems in the hard disk business. New developments in laser technology are overtaking hard disks at a furious rate and there will be major changes in the industry within the next few years. This probably influenced the company in its decision to close Clonmel. However, that is no consolation to the people of Clonmel and the employees at the plant who now face a bleak Christmas. The economy of the south-east will be plunged into considerable despondency by this announcement.
The company must be questioned on the manner of its decision. The announcement takes the biscuit in terms of bad industrial relations. With its record of encouraging false hopes around the country with major expansion plans which apparently could not be justified, the company decided to close the factory without prior consultation. It lost money hand over fist in Clonmel but nobody was aware of this.
The decision underlines the way growth in the economy is fuelled by hi-tech and electronic industries. We welcome them; I am not here to denigrate any foreign company. Foreign investment is vital and more of it is needed. However, we must be careful. The Celtic tiger is riding on the back of these industries. There should be liaison between the Department and major multinationals regarding their accounting and invoice systems. Questions need to be raised as to how a company such as Seagate, with all its expertise at management and other levels, could incur such huge losses. It is unbelievable that a company could collapse in such circumstances.
I wish to share my time with Senator Gibbons.
Acting Chairman
Is that agreed? Agreed.
The disappointment in Cork is acute. However, our main concern must be with the workers, families and community in Clonmel who have suffered repeatedly. They face a bleak Christmas.
The Tánaiste said the plant was worth £40 million per year to the local community. It is a lot of money to take out of a community and is only a statistical measurement of the tragedy. The human dimension is unspeakable.
I congratulate the Minister on her prompt response and hands-on approach. She went to Clonmel and confronted the company with openness, honesty and great courage. In the circumstances she got the best bargain available in the short term.
I commend the Minister for her work in establishing a task force. I wish that body well. I also commend her for her hands-on approach in attempting to secure the best available redundancy settlement and for her efforts in ensuring that the premises occupied by Seagate will be kept and hopefully made a home to a replacement industry. I hope such an industry will be found sooner rather than later and that it will be of sufficient size to at least compensate for the loss of what was a promising plant in Clonmel.
There are facts regarding Cork which I wish to put on the record. On Monday, 26 May the national daily newspapers reported that 1,000 new jobs in Cork were to be created by the hi-tech hard disk manufacturing firm, Seagate Technology. As if to qualify the leak, it was also reported that a formal announcement was not to be expected until after the general election. On 3 June the newspapers reported that there was grave disappointment in the north-west following the decision by Seagate to locate in Cork. On 13 June it was reported that the Cabinet backed the Seagate plan. Given these circumstances, expectations were raised in Cork. Plans were put in place and investments made in expectation of the company's plans becoming a reality.
While the Minister's first priority must be Clonmel, these facts cannot be ignored. Every effort must be made to get a firm and honourable commitment from Seagate to honour its promise to Cork. The company was described by one newspaper today as being somewhat footloose. If this long-term commitment cannot be extracted from the company a proper and adequate replacement industry must be found for Ringaskiddy.
Everyone's sympathy is with the people of Clonmel and the workers who have lost their jobs. Clonmel has a chequered history. When Digital closed a few years ago it had a traumatic effect on the area. This was quickly followed by the demise of Kentz Engineering. There has also been serious flooding in the area on a number of occasions. The people of Clonmel have had a bad time over the past few years. This closure is more than many of them can take. We must be concerned about people and their quality of life.
I welcome the Minister's statement, her extremely prompt action in dealing with the problem and her offer to help the people of Clonmel to find a replacement industry in the not too distant future. I welcome the establishment of the task force. It is unfortunate we must have such task forces but they have worked well in the past. I have no doubt this task force will be the same. Clonmel has suffered many difficulties over the past number of years but it has got off its knees on innumerable occasions and it is capable of doing so again. The Minister mentioned the people's positive attitude in these circumstances which will help the task force in its work.
A number of Senators expressed their desire for an investigation into what has happened and the role the company and IDA Ireland have played over the past number of years. The Minister said the Department of Enterprise, Trade and Employment and IDA Ireland were re-evaluating the situation to see what can be learned from this tragedy and to ensure it does not happen again. It is extremely important to move forward and to find one or a number of replacement industries for the people of Clonmel. The people involved in peripheral activities, such as servicing this plant, must also be considered.
It is important to find out if IDA Ireland's policies are focused in the right direction. Computer technology is changing at a phenomenal rate, so we must keep pace with what is happening. We must be careful when assessing new projects. IDA Ireland's role in building the Celtic tiger has been extremely good and one of which it should be proud. It is important that it carries out this investigation to see if mistakes were made so that we can learn from them and move forward.
We, on this side of the House, appreciate the fact that the Leader made time available for this debate, that the Minister was here and that she is now represented by the Minister of State at the Department of the Environment and Local Government, Deputy Molloy.
This debate should send a message to the workers in the plant in Clonmel that they have the full sympathy of all Members of this House. The manner in which the company treated its employees is despicable and inhuman. People in companies throughout the world should not be treated in such an inhuman manner. It is unacceptable to tell people such news two weeks before Christmas. I hope the Government and IDA Ireland conveys our condemnation to the management of this company. Such behaviour is not in keeping with basic human rights.
This company has been in Clonmel for only a little over a year and a half. Modern technology is developing at a rapid rate and those involved in the electronics industry recognise that. It is unacceptable to suggest there was no warning because I am sure it was known what was happening. This incident is similar to what happened in Digital in 1993 when its hardware plant was moved to Scotland. There were shenanigans behind the scenes with the industrial development authority in Scotland and the owners of the company in Massachusetts. It came down to the Social Chapter and the Maastricht Treaty and the fact that bigger grants were offered by the industrial development authority in Scotland than those negotiated here. This happened during a change of Government when our eye was off the ball. A task force was set up and a replacement industry was found which has been successful.
Another similarity is that Digital and Seagate were not unionised. The Minister said that only 48 per cent of workers are members of unions while 52 per cent are not. Senator Ó Murchú said we do not want to criticise multinationals because we are heavily dependent on them. Nevertheless, many workers in multinational companies are prevented from becoming members of unions. Workers should be free to become members of unions if they so wish. The workers in Seagate did not have union representatives to negotiate with management. The Minister and IDA Ireland must consider this issue when negotiating with companies in the future. Individuals should be given the right to become members of a union in any company. There will be other such scenarios in non-unionised companies throughout the country. I do not come from a unionised background but I recognise the need for unions.
There were warning signs as early as last August. Is there a special unit in IDA Ireland which closely monitors companies in difficulty? While I accept that Seagate manufactured basic hard disk drives and that the market changed, I do not accept that this company or IDA Ireland did not know what was happening. If they did not, their eye was off the ball and that is unacceptable.
The Minister said this is an expensive investment for the company as it has invested over £82 million in the plant and received grants of £11.6 million, which will be repaid in total. This is not an expensive investment for Seagate. It is transferring operations to another country where its products will be manufactured for one third of the cost. In real terms, the actual cost to Seagate is small. I have no sympathy for the company as it is going to make money on this move.
Senator Caffrey noted that the Celtic tiger's success is based on hi-tech industries. This closure shows politicians, the Minister and Forbairt that we must be increasingly vigilant when it comes to these hi-tech industries and the massive changes which are taking place. We must have our finger on the pulse so that we know exactly what is going on.
Senator Quill expressed her anxiety to get Seagate into Cork. I would question any constituency wishing to attract Seagate given the despicable manner in which it has treated its workforce. It is an unpredictable, unreliable company and we do not want to repeat this experience. Seagate has let down the people of Clonmel in an appalling, despicable manner coming up to Christmas. I hope that the people who came together in Clonmel in the past will do so again successfully in conjunction with politicians, the various agencies and the enterprise boards. It is an enormous task to replace 1,400 jobs. My sympathies go out to the workers and their families who are facing this disaster at Christmas. I hope that every effort made will be more than successful.
I wish to share my time with Senator Dan Kiely.
Is that agreed? Agreed.
The number of Senators who have taken part in this debate is an indication of the seriousness with which this matter is being viewed. I am very concerned about what has happened in Clonmel and I commend the Minister on her speedy reaction. Her reaction to the company's decision indicates that she has a hands on approach. She did everything she could have done and the House should acknowledge that the Minister and the Government did their best. However, they were dealing with a multinational company which had other concerns.
I condemn Seagate's behaviour. However, we have many fine multinational companies and we should not tar them all with the Seagate's brush. There are many fine multinational companies in
Cork. We have had our problems. When one considers Seagate's behaviour towards the 1,400 people employed in Clonmel, the Tánaiste should look again at the arrangements under which the company is coming to Cork. The foundation on which it based its move to Clonmel was not successful. If a similar foundation is being used for its move to Cork then one must ask if this is a safe and sound company?
The expectations raised by the various investments announcement by Seagate are quite significant. What has happened is wrong at any time of the year. Perhaps the investigation announced by the Minister will provide answers as to what went wrong in bringing such a cruel industry to Ireland. We welcome and need inward investment by multinational companies, but we need good investment. Perhaps we should change the ground rules before locating any company similar to Seagate in any part of the country.
I compliment the Minister for her speedy reaction to this serious matter. Someone must pay the price for this decision. The ball is being tossed from pillar to post and no one seems ready to take the blame. The blame must lie with someone. President Truman said that the buck would stop at his desk and the buck will have to stop at someone's desk for this tragedy.
It is sad that 1,400 workers in Clonmel are facing a bleak Christmas with no future job prospects. Some people say that multinationals are welcome to our shores. However, these companies are coming to a tax haven offering low corporate tax rates. They should be vetted before they come here.
Some Senators suggested that Seagate's business involved a three year operation. Someone should have informed the financiers, such as the IDA, that this was a shaky company. Perhaps they should not have been brought here at all. We might have been better if these jobs had not been created in the first place.
I welcome the creation of jobs and I compliment the Government on those it has created. Senators have spoken about the Celtic tiger shouting and roaring around the country. However, there is not a ‘pusheen' growling in Kerry never mind the Celtic tiger. Not one job has been created in Kerry in the past ten to 12 years. We would welcome any employment. Kerry experienced two major blows in the past 12 years. The closure of Neodata with the loss of 103 jobs was a devastating blow to Listowel. In the past four or five months the closure of Melchert Electronics resulted in the loss of 35-40 jobs. This proved the ruination of a small town in north Kerry.
I appeal to the Government to relocate jobs throughout the country so that everyone shares in the boom of the Celtic tiger. We have an educated workforce and the space. On Kerry Radio the former Tánaiste, Deputy Spring, stated that the reason jobs were not being attracted to Kerry was because companies were looking for green field sites. We have nothing but massive green field sites in Kerry.
There is something radically wrong with the IDA, because when it invites visitors to Ireland it seems to bring them to the most attractive places situated within the shortest distance from the airport at which they arrive. It is not inclined to transport them to other parts of the country. There is an airport in County Kerry which cost an enormous amount of taxpayers' money to build. The county is lacking in major infrastructure — it does have the best waterway in western Europe — but it remains undeveloped.
It also has great golf courses.
I am aware that when the IDA invites visitors to Ireland it only takes them as far as Limerick or Galway. However, they are not brought to County Kerry because IDA representatives believe the distance involved is too great.
As I stated at the outset, someone must pay the price for this blunder because Seagate was allowed to establish its business in Ireland and given grant aid. Someone must take responsibility for the suffering of the people in Clonmel. Who invited Seagate to Ireland? Who investigated Seagate and carried out research into its operations?
Given the time of year at which this situation has arisen, I feel sorry for the people of Clonmel. I hope a replacement industry can be introduced there. I compliment the Minister for the honesty she displayed in addressing the House. I congratulate her for the attempts she made to protect the workforce at Clonmel in a way in which their counterparts at Packard were not protected. Seagate has another subsidiary company in Ireland and I suggest that officials of the Department communicate with it to discover their future plans. I welcome the debate and I thank the Minister for her swift action. I hope a replacement industry can be put in place in the near future.
Níl morán le rá agam, ach ba mhaith liom cúpla poinnte a phlé ar an ábhar tábhachtach seo.
I join with other Members in sympathising with the workers in Clonmel who are distressed by the announcement of the closure of the Seagate plant. At the beginning of her contribution, the Minister stated that she was not computer literate when she assumed office. However, I believe she displayed an impressive grasp of the issues affecting the industry and an understanding of the problems involved and the manner in which they arose.
The closure of Seagate is a mistake of monumental proportions. In a situation such as this there is an obvious temptation to point the finger and find a person or parties responsible. In most cases that tends to be a futile exercise. Obviously someone will be held accountable. While the workers have been badly affected, I have no doubt that the management of the company will be obliged to be accountable to its shareholders for the mistake which appears to have been made. While the closure appears to be a dramatic volte face on the company's part following such a short period, it is involved in an industry where technology changes rapidly. To some extent, that may mitigate our criticism of its actions.
I wish to emphasise two points. First, it is important that what is a local disaster not only for Clonmel but the entire south-east region and bordering regions does not begin to undermine the information and computer technology industry, which is a very important sector in the country's economic base. The industry is an important component of the thrust of the country's economic development because we have concentrated on educating and training young people to be able to work in it. In the circumstances it is important that the industry is calmly appraised to ensure that any lessons to be learned will be taken on board and that necessary changes in policy will be applied in the interests of maintaining the major overseas investment which is vital to employment and the economy.
My second point involves the IDA. Some Members remarks may have implied that the Clonmel project was not evaluated properly at the outset. From my experience, the IDA has a tremendously impressive track record in respect of attracting industry to Ireland. It competes strongly with agencies in Britain which, in many instances, has access to greater resources. Despite that fact, the IDA has done exceptionally well. It is important that the agency should not be inhibited in its efforts by our applying criticism to it in this instance.
I wish to make a suggestion based on my experience of visiting overseas industries, particularly those in the United States. Over the years, a strong group of companies from the US have become involved in industrial development in Ireland . There is a need for the overseas section of the Industrial Development Authority to consider closer liaison and communication with the parent companies of multinationals established in Ireland. I visited the headquarters of a number of these companies and I was informed that while they were examining the feasibility of establishing in Ireland there was close communication and liaison and meetings took place constantly. The IDA should introduce a modus operandi whereby, subsequent to their establishment, regular contact with the parent companies could be maintained. This might flag any prospective difficulties well in advance, but it does not apply in this instance because there has been close communication with the company.
I support the thrust of Senator Taylor-Quinn's contribution. Everyone in Ireland has the constitutional right to join a union and that right cannot be taken from them. However, the industrial relations climate in the US does not accord with our system of adopting a partnership approach to business. The Americans have a major consideration — and this is not borne out in light of the reality of industrial relations here — to take into account when establishing in Ireland whether they must recognise a union or make their own arrangements with the workforce involved. We should not stray into that area in a situation of this sort. Whether the workforce at Seagate were represented by a union or not, it must be conceded that market realities would presumably have forced the company into its current situation.
Communications with the workforce is another issue of concern; and this should be addressed in any arrangement between employer and employee, where the relationship is commensurate with the progressive nature of the economy and that of most modern companies. However, it is important not to introduce red herrings into what is a disastrous situation for the employees of Seagate. If we do, we will find ourselves at a significant disadvantage with neighbouring countries in terms of the constant competition to attract overseas investors to establish industry in Ireland. I hope the lessons of Seagate will be calmly and suitably appraised and that any moderation or changes needed in policy will be applied as a consequence.