Private Members' Business. - Verolme Cork Dockyard: Motion. – Dáil Éireann (24th Dáil) – Wednesday, 1 Jun 1983

Private Members' Business. - Verolme Cork Dockyard: Motion.

Mr. Gene Fitzgerald

I move:

That Dáil Éireann calls on the Government as a matter of urgency to draw up proposals for the development of ship building and repair at Verolme Cork Dockyard, and as an interim measure in the interest of preserving the jobs of the work force to place immediate orders for the building of a fishery protection vessel and a fishery research vessel.

We have reached agreement on the division of the time between Deputies. I hope this debate will be held in a calm, cool atmosphere with the major concern of all sides being the employment of the workers. The motion calls on the Government as a matter of urgency to draw up proposals for the development of shipbuilding and repair at Verolme Cork Dockyard and, as an interim measure in the interest of preserving the jobs of the work force, to place immediate orders for the building of a fishery protection vessel and a fishery research vessel. The Government have seen fit to amend the motion in a way which scares me. Their amendment states at the end:

to provide subsidies up to the maximum level permitted by the European Commission to enable Verolme Cork Dockyard to undertake and/or complete orders for vessels won on the open market.

This strikes me as saying to Verolme that unless they win on the open market the Government will not give them orders for vessels.

It is ironic that this is the second time I have been involved in such a motion in the interests of the future of Verolme when a Coalition Government was in power. The first time was on 25 and 26 November 1975. We moved a motion then because the Coalition placed orders for bulk carriers in Japan. It is ironic that we should now be asking for a consideration to be given to the acute problem which exists in the shipyard in Cork Harbour. I shall quote what the Minister of the day, Deputy Keating, had to say at column 270 of the Official Report for 26 November 1975:

Let us look at these three interests in order, and if I put them in order, I must put the Verolme workers first. They certainly want security of employment and I do not think there is any division anywhere in the House in regard to our commitment to safeguard that for them. They also want the full range of shipbuilding skills to be developed in that shipyard. They also want a shipyard which is viable, not the obligation of viability in the middle of recession but which is viable by ordinary commonsense criteria in the long term. This is not a place where the Government should be called on to put in money decade after decade.

It is interesting that we have introduced a motion this evening calling on the Government to state clearly their intentions with regard to the workers' future, the skills involved and the major contribution that the shipyard has made to the economic wellbeing of Cork and the surrounding areas.

Cork Deputies opposite know well that Cork city, Passage West, Monkstown, Rochestown and Douglas on one side of the harbour and Cobh and its surrounds on the other side have long been dependent on the weekly salaries from workers in the yard. The skills of the workers are famous throughout the world. The craftsmanship and workmanship can be seen in the major vessels which have been built there over the years, in the repair work which has been carried out through the decades and in the general engineering work which has been a feature of the yard's activities.

The reason we saw fit to move this motion was to indicate to the Minister the acute situation which arises in Cork at present. It is one of the areas which is really suffering from unemployment. The present figure for the city and county is 19,600 unemployed. That is the official figure. One year ago it was 15,100. In Cork city 10,400 people are unemployed whereas only 7,900 were unemployed a year ago. Those figures reveal the reason we are so concerned about the future of the yard. I ask the Cork Deputies opposite to vote for our motion. They will not be defeating or bringing down the Government by so doing but will be telling them to stop before it is too late for the erosion of employment which is taking place in Cork.

The Government amendment states:

... in spite of ... (b) the absence of provision in the Estimates agreed on by the previous administration either for new orders or additional production subsidies...

That statement is incorrect. Even if it was correct, the responsibility lies with the Government to preserve the shipyard's work force. I should tell the House why it is not correct. We prepared Estimates as far back as September/October last year and they were published prior to the year to which they applied. That was the first time that ever happened. It was understandable that there would be contingency provision in those Estimates. We provided a figure of £120 million contingency fund for our capital programme and a further £43 million for equity in State companies. What happened to the £120 million? In the 1983 budget presented by the Minister for Finance in the early months of this year he stated:

In the light of this experience and having regard to the overriding constraint imposed by the need to reduce the Exchequer borrowing requirement, the Government have decided to reduce the Public Capital Programme, as published, by £220 million in total. This reduction includes the deferment for this year of the global contingency provision pending the emergence of projects which would meet the necessary investment criteria. A provisional allocation of £120 million was made by the previous Government for this, but was not earmarked by it for any particular projects.

What is on the Order Paper in the name of the Minister for Industry and Energy is totally inaccurate and incorrect. If he refers to the Budget Statement he will see that the Minister for Finance said that in this House. We are talking about a very small fraction of the £120 million, a mere pittance by comparison with the total. Look at the trauma of the 1,100 people who are employed there. I know that the number has been reduced because of redundancies which took place there last Friday.

I referred to the dependence on the yard of so many people and families on both sides of Cork harbour and city. I referred to the skills in the areas of shipbuilding and ship repair. There are so many angles that one could think of but a shipbuilding industry of that type is of strategic benefit to the country. I will not have any Minister tell me that this company are just another semi-State lame duck. That is not the case. Verolme is an excellent shipyard, but like all shipyards in the western world it is going through a very difficult time because of the recession. Instead of committing several hundred, if not the entire work force, of the yard to the dole queue over a period, the Government should set about establishing a firm and clearcut policy for the future of the yard while providing immediate orders. There are between 300 and 350 workers there who are on notice of redundancy. Some left on Friday last and others are leaving this week. Unless orders are forthcoming quickly there is no guarantee for the remainder of the employees.

I have never supported or encouraged street protests. I do not agree with that form of protest but I can understand the frustration that drives some people on to the streets. There was such an occasion in Cork at the weekend. I considered the protest to be a peaceful one and I trust that the Chair will allow me quote a handout that was given to each of us by the people concerned. It is headed, "V.C.D. Protest Statement" and reads:

The main reason for a protest today is to make known publicly our total dissatisfaction and dismay with the Government's attitude and apparent lack of concern for the future of the State's only shipbuilding and shiprepair yard. In July 1980 the government announced a shipbuilding programme whereby four ships were to be built in V.C.D., namely, one bulkcarrier, two fishery protection vessels and one research vessel. To date only the bulkcarrier, which is being handed over in June, and one protection vessel, which is 50 per cent completed, have been ordered. The two remaining vessels still remain to be decided upon resulting in 350 to 400 people having to be made redundant. Since May 1982 representations have been made by Trade Unions and management to all local politicians, Ministers and party leaders of the need to honour their commitment to V.C.D. in relation to the two remaining vessels to be built. Unfortunately, all to no avail, as tomorrow Friday 27th May, 1983, 94 workers will join the already very long queue of unemployed plus another 175 people being given notice of termination of their employment.

The Trade Unions and workers agree with the rationalisation and inevitable loss of jobs which result, for the purpose of ensuring a viable future for V.C.D. and remaining workforce. However, we cannot accept the offer of redundancy payments being offered by the company which is approximately 10 per cent of local and national redundancy payments. We must emphasise that any amount of redundancy payment is in our view a poor substitute for jobs. On April 20th a delegation from Trade Union Group were informed by John Bruton, Minister for Industry and Energy that he hoped to have an announcement for the yard before May 6th. No announcement was made. On Monday May 23rd the Minister promised to have a cabinet discussion on Tuesday 24th May. No discussion took place. That meeting was representative of management and trade unions within the yard. These unfulfilled promises have resulted in V.C.D. personnel being totally frustrated and annoyed with the present Minister and Government and we now call on the Minister and Government to state publicly their plans for V.C.D. and let us know for definite if we are going to rise or fall as an industry.

The statement is signed on behalf of the work force in Verolme by Liam O'Leary. He will be known to many Members of the House. I need not say more than that.

We are talking about a mere fraction of the £120 million figure. In case anyone on the opposite benches or anyone commenting on the debate here should say that the Fianna Fáil speakers did not suggest where the money could be raised, I can tell the House where it can be raised. In this regard I suggest that the Minister approach his colleague, the Minister for Finance. We all know that independent commentators have said that the budget arithmetic is underestimated on the revenue side to the extent of a net £97 million, underestimated because of the extra revenue that will come as a result of certain impositions.

Last week Deputy O'Kennedy outlined clearly, in arguing for some amendments that he had tabled to the Finance Bill, how this situation will come about. No amendment of any consequence in terms of altering the situation was accepted. All that is required is a very small percentage of that £97 million to enable Verolme to remain in operation and to keep the workers in employment through this year. Of course the yard will seek out orders when world trade and shipping improve, but let us realise how much we can do here to facilitate and to help retain the skills that exist in this shipyard.

In 1975 we found it necessary to bring before the House a motion to deal with a situation in which an order for bulk carries for Irish Shipping had been placed outside the country. I understand the difficulties that the then Government could have encountered with Irish Shipping. We had to put the boot into Irish Shipping to ensure that an order for a bulk carrier was given to Verolme in, I think, 1980. That is the one that will be ready for delivery within a month or two. We have to surmount many problems and obstacles in that respect. As a result of decisions taken by the Government, Deputy Reynolds as Minister brought legislation before the House so that the necessary subsidy could be provided to enable the vessel to be built in the Cork shipyard. In addition, we have been endeavouring to have an order for a coal carrier for the ESB placed with Harland & Wolff in Belfast. Obviously, the facilities at Verolme were not sufficient for the building of that vessel. In the circumstances we considered that there was much economic and political sense in giving the order to a yard in this island, a yard that was depressed and under-utilised. There would have been a spin-off from that order for Verolme to the extent of £3 million or £4 million. The Taoiseach some months ago tried to throw the blame in connection with that order on to our side of the House. I admit that in our dying days in Government we did not make the decision to have the order placed with the Belfast yard. There were difficulties to be overcome and the decision, one way or the other, would have been difficult. However, had we remained in Government I am convinced that the decision we would have taken would have prevented the ESB from placing that order in Japanese yards.

The Government's decision was wrong. It did not make economic sense, especially when we realise what we are facing now. To have placed the order with Belfast would have been a wonderful contribution to the political development of the two parts of this island in that the Government of the Republic would have been seen to hand over a worthwhile order to the work force in Harland & Wolff, thereby helping to retain jobs there. At the same time, a figure of the order I have mentioned would have accrued by way of spin-off to the beleagured Cork shipyard.

B & I in the early months of this year saw fit to place a repair order across the water. The Minister can correct me if he wishes but I believe the figure there was £650,000. The Cork yard were asked to tender and were given a specified time when the contract should be completed. This is a good handy ploy often used to make sure that a particular company will not be able to complete a contract. I am not sure what the difference in price was but time was the great factor. The British yard said they could accept the time factor but that was only in theory. They did not deliver by the appropriate time. The Government should instruct companies like B & I not to repeat this. B & I treated Cork hard enough with their recent decision to stop sailing between Cork and Pembroke but to add insult to injury they gave the £650,000, if my figure is correct, to a British firm. Even if the figure was somewhat less than this it would have been very useful to Verolme if that order was given to them. It would have helped to retain the jobs there.

The main reason why we have put this motion before the House is to ask the Government, before it is too late, to stop this apparent attack on the south of Ireland, particularly the Cork region. I know my Cork colleagues on the other side of the House have as much concern for the future of that yard and those other industries as this side of the House have. I want them to express their views in the most powerful way possible by tonight saying to their Ministers by their vote in the lobbies that they are not prepared to go along with them, that they want this yard retained and they want the work force retained. The work force are prepared to accept that some streamlining is necessary but that must be done in a properly organised way. I have many friends, as I have no doubt all political parties have, in the work force of this shipyard. Some men who are in their late thirties were given the great opportunity when they left school of going to Holland, doing their training there and coming back to use that training and skill for the benefit of the Cork region. Many of those are now married with commitments and they are now being laid off. That is the trauma for all our supporters and this is not confined to any political party. The Minister has a heavy obligation. This is not the right time to see a large number of people being made jobless.

I would like to refer to the redundancy situation. Can we not understand the frustration of the young people I have mentioned? We have often heard opinions offered in the House about how difficult it is to employ the 50-year-old man or the man in his late forties but those are people in their late thirties. They maintain, because of their specialised skills, that it will be extremely difficult for them to get employment in the present economic climate. We have only got to look at certain decisions taken by the Government. Our leader was pilloried and many things were said about him. When we did a deal it was referred to as a dreadful thing but somehow the present Taoiseach seems to do very expensive deals. I am sure my colleague will have more information about the cost of the deals than I have. We heard a lot about the Talbot workers but when the present Government did a deal costing two times or three times more than the Talbot deal we heard very little about it from anybody. We read about it in one of the inside pages of our newspapers. I refer to the Avoca Mines in Wicklow. I remind the Cork Deputies that the Government did a very good deal with the workers there for obvious reasons.

Mr. Reynolds

They made the deal before the election.

Mr. Gene Fitzgerald

I forgot that the commitment was made before the election. If such is the case and if the State paid out redundancy at a certain figure the workers of Cork are entitled to the same concession and treatment as the workers in Wicklow in relation to that issue. The work force accept that a reduction in numbers may be necessary but we should realise that it must be done in a normal way, that it must be achieved and we must then ensure that the bulk of the workers are retained in viable employment at a time when Cork needs jobs so badly.

When the Minister for Health was answering questions earlier today he made the point that he could not this year give the extra week's payment to the long-term social welfare beneficiaries. The reason he gave for not doing this was that his Estimates could not bear an overrun on that side. We must remember that his Estimates on the unemployment side will bear a great overrun unless the Government say stop in this situation. The Minister for Health will have to face up to this. I do not believe that the Cork Deputies on the Government side, any more than I, wish to see the present approach to Verolme continue. I want to repeat that the £120 million contingency fund is there. There is a £43 million provision for further equity in State companies in addition to the £120 million. If it is not there now there is buoyancy, there is unexpected revenue. The ESRI say there will be more revenue than was expected. We are only looking for a small portion of that to keep those jobs going.

What are the two vessels? There is a fishery patrol vessel and a fishery research vessel. I read with interest today that the Aisling arrested three trawlers fishing within the 200-mile limit. I congratulate the crew of the Aisling for achieving that. Does that not mean that the expenditure on the Aisling is making its contribution to the preservation of Irish fishing and our fishing waters? Another fishery patrol vessel is needed and this can be used particularly in our extended waters. The Minister should place that order quickly with Verolme Cork dockyard. The other vessel is a fishery research vessel. We accepted the case for this in principle. Even now, I am informed that the Lough Beltra, a converted trawler, has been laid up for lack of funds. Surely a lackadaisical attitude like this to one of our natural resources is pitiful. There is need for that fisheries research vessel which, in itself, will pay dividends in the longer term by using what could be said to be the widespread resources off our coasts, huge resources still not being utilised to the best advantage of the country.

There are so many things one could say with regard to the closure but inevitably time catches up. Cork is looking to us in this House — not to Fianna Fáil, not to Fine Gael or to Labour but to this Dáil — to call on the Government, to ask them for assistance when it needs it so badly. In the past there was a Fine Gael Minister in this House who referred to the frivolous industries of Cork Harbour, including the one about which we speak this evening. At times one wonders if it is that mentality, handed down from the 1975 motion, that is behind the sort of lack of commitment there appears to be in regard to this yard.

I want to quote now from The Cork Examiner of 11 February 1983, leading article, which issued a warning to the Taoiseach — and I did not write this article — which reads:

Today we offer a public warning to the Taoiseach, Dr. FitzGerald:

The policy of retrenchment pursued by your Government in the South West region of which the deferment of the deepwater berth at Ringaskiddy is the latest example, now poses a serious threat to the economic wellbeing of the area.

In a time of recession, cutbacks are inevitable. But the "economies" introduced by the Coalition Government in the South West are neither logical nor equitable.

They will inevitably lead to greater job losses in an area of already record unemployment. They jeopardise existing industry and services and will seriously curtail growth in a designated centre of prime industrial development.

People in the South West have watched with growing incredulity the continuing series of Government measures which seem deliberately designed to downgrade the South West region and Cork City...

Millions of pounds have been invested in the Cork Harbour project, which is vital in providing the services and infrastructure for further industrial growth. But the entire plan is now being held up for the saving of £1 million which might not even be spent even this year.

Fine Gael and their Labour partners have failed to honour a £30 million project which promised upwards of 2,000 permanent jobs in Cork, and Verolme is still waiting on the Government to fulfil a commitment to give a contract for a fishery protection vessel to the yard.

We have in Cork a very difficult, troublesome scene at present. As I mentioned in Cork County there are 19,600 unemployed, a figure constantly being added to. Deputies on all sides of the House have already met the Dunlop workers earlier this week. In fact the Lord Mayor expressed his views openly and honestly, which view seems to have been endorsed today on the front page of The Irish Times—that Dunlop appeared to have made their decision in Cork. Although this debate is not about Dunlops, let us hope that the efforts of this Minister— and we shall co-operate together—will ensure that the jobs in that plant are retained with whatever involvement of other parties, or State involvement, helps us to do so. I shall not refer to it any further except to say that it was interesting today to see announcements in papers, despite the loss of £80 million by the Dunlop company, despite the laying off of 1,200 people, that the chairman of the company or somebody, saw fit to give him an increase of 21 per cent bringing his salary to £84,000 and the name makes interesting reading—Sir Campbell Fraser.

We brought this motion very sincerely before the House. I have not been emotional, I have spoken in a calm, sincere and deliberate way. Despite the laughs from the opposite side of the House, I think the issue is beyond laughter. I am glad that up to now there has not been a laugh or any interruptions either. We are here on an issue that concerns a very large number of people. I can call it 1,100 but I think we are all prepared to say it cannot be the full 1,100. We want to get the message across that it must be the vast majority of those 1,100, it must be a long-term programme and plan. We want to say to the Minister also that we will be as helpful and co-operative as we possibly can on this side of the House in the interests of the future of that yard. They need something urgently; they need the order for the bulk carrier, they need the order fo the fisheries protection vessel to retain the workforce. The money is there, the money was there in our estimates, £120 million; a fraction is all that is needed, and I took that from the budget speech of the Minister for Finance. But, even if it has been taken out, let us forget that too, because all that is needed is a fraction of the extra moneys that will be available to the Exchequer because of the arithmetic of this budget, the £97 million or £100 million or so, nett, that will be available to this Government, indeed as estimated by independent sources such as the ESRI. A very small part of that can be devoted to retaining the jobs, to placing these orders and preserving workers skills.

I might mention one further point to the Minister. We welcome, we need repair work, the yard wants repair work, as much of it as it can get. But repair work is a very small contributor to the total employment content. In other words, what we need most are more orders. I hope, when the Minister stands up here this evening, he will be announcing orders for the two vessels I mentioned, plus perhaps repair work—which is also welcome—also the general engineering work, and I have seen them working on the sites in Campile, where they did some excellent work. There is also their work on the NET site in Arklow, on mechanical contracts there, which were very successful. There was then the work on the ESB station in Tarbert, again very successful mechanical contracting work. The skills were there for that also. That is very useful work but a small contributor only. Repairs, general engineering works and so on are very welcome. However when the Minister stands up this evening Cork will be looking forward—particularly the workers in Verolme and surrounding areas, Cork city, Passage West, Monkstown, Ringaskiddy, Cobh, and the other side of the harbour—to his announcement. It had been expected over the weekend but the Minister is entitled to his hour of glory also and to his announcement. The Minister can rest assured that, if that announcement is forthcoming this evening, he will have our full support in any measures being taken to ensure we will have a contented, secure work force, not people who are wondering from day to day what will be the outcome. I quoted at the beginning what Justin Keating, as Minister for Industry and Commerce, said in 1975 when we had to have a motion of this nature in the House. I sincerely hope that, when the Minister replies he will be regarded as the first Fine Gael Minister to say: I believe in Verolme Cork Dockyard; I support Verolme Cork Dockyard; I have decided—my Government are supporting me— in giving two orders to Verolme Cock Dockyard and, in the longer term, we are drawing up a plan for the future shipbuilding project in Cork Harbour.

Minister for Industry and Energy (Mr. J. Bruton)

I move amendment No. 1:

To delete all words after "Dáil Éireann" and substitute:

"Calls on the Government, in spite of (a) the very depressed present and anticipated situation in the shipbuilding market, (b) the absence of provision in the Estimates agreed on by the previous administration either for new orders or additional production subsidies, and (c) the difficult budgetary situation, to provide subsidies up to the maximum level permitted by the European Commission to enable Verolme Cork Dockyard to undertake and/or complete orders for vessels won on the open market."

I should like to start by dealing with some of the points contained in the amendment I am proposing, and the Minister of State will be dealing in his speech with the situation in the past of the shipbuilding market in the world at the time. I do not think there is any necessity for me to speak about it on this occasion.

As to the absence of provision in the Estimate, quite frankly if the previous Government, of which Deputy Gene Fitzgerald was a Member, were as concerned as he now says they were about this situation it is quite amazing they did not make specific provision of the placing of an order in this case. Reference to a contingency fund is really not credible. I am quite sure if the then Government were serious about this matter they would not have left it in abeyance in the form of a contingency fund which may be used for any purpose or no purpose at all. If they were serious then they would clearly have made specific provision. They had the opportunity to do so and they did not make specific provision. This is the fact of the matter and we must accept it as such.

I should like now to trace something of the history of the enterprise. Verolme Cork Dockyard employs approximately 950 people in shipbuilding, shiprepairing and general engineering activities at Rushbrooke, near Cobh, County Cork. In 1959 Verolme United Shipyards of Rotterdam acquired Cork Dockyards Ltd. and the company was henceforth known by its present name. The Dutch parent was subsequently taken over by Rhine Schelde Verolme, Holland, in 1971 and the latter company has since held equity of £526,300 or 53 per cent in VCD. It is relevant to note here that the holder of the balance of the equity is the State rescue company, Fóir Teoranta, which has £473,700 in shares. When Fóir Teoranta acquired its shareholding as far back as 1963, it also advanced a loan of £1,447,000 to VCD. Further loans of £600,000 have been made available to the company since then. An interest waiver which applied to these loans has of course cost the Exchequer a considerable amount of money over the years. Equally relevant and indeed salutory to note is the fact that the Dutch parent, a giant company in comparison to VCD, has been unable to withstand the depressed trading conditions in the world shipbuilding market and has gone into receivership.

Shipbuilding is and always has been by far the most dominant of the three activities of the company. Since 1960 it has built more than 30 ships with a total tonnage of more than 600,000 tonnes deadweight, as well as a number of small barges. The type of ship built has varied in size and complexity from small coastal vessels to 70,000 ton bulk carriers and from small naval patrol vessels to car ferries. Offshore construction, mainly accommodation modules, was significant only in the seventies, fluctuating considerably. Shiprepair and general engineering have been reasonably steady sources of work. The company incurred heavy losses in its early years of operation and did not make a profit until 1972. From 1972 to 1978 profits were made mostly due to orders received at the height of the then shipbuilding-offshore boom in 1973 and 1974, but the company has been loss-making since. The actual size of those losses has of course been grossly understated by the fact that State orders were secured at prices substantially above what would have been paid had the orders been placed abroad.

In the period from 1960 to 1975, VCD obtained the majority of its orders abroad — 16 out of 27. The company was at that stage competitive in the international shipbuilding market, mostly due to the lower wage costs prevailing in Ireland. However, since 1975 the world shipbuilding industry has been very depressed, with the consequent substantial overcapacity leading to cut-throat competition and prices which VCD is totally incapable of matching.

We might recall at this stage that at the commencement of this crisis in the shipbuilding industry, the Shipbuilding Advisory Team, which is comprised of representatives of the Departments of Industry and Energy, Finance and Transport and of the Industrial Development Authority, Shipping Finance Corporation and Fóir Teoranta, enlisted the help of consultants A.D. Little Ltd. On the basis of their report, in March 1975, on the prospects for VCD, the Government approved proposals for an investment and development programme at the yard estimated to cost £5.76 million. The consultants had reported favourably on the activities of the company but, in view of the expected drop in the world market for ships, they had recommended a reduction in the yard's dependence on shipbuilding and an expansion of its ship repair and offshore/general engineering activities as far back as 1975. An IDA grant of £1.44 million was also approved towards the cost of the investment programme which was completed in 1979. The company strategy, in acceptance of the consultants' recommendations, had been aimed at diversification, with a 35 per cent reduction in shipbuilding activity to be compensated by increases in its other activities.

Lack of success in this strategy led the Dutch parent RSV, to ask the Government either to underwrite the company's losses between 1979 and 1981, or that its shares in VCD be transferred to Fóir Teoranta or another Government agency at a price reflecting the balance sheet position of the company. This prompted further analysis of Verolme by the Shipbuilding Advisory Team and a report on the matter was completed in December 1979. This concluded that VCD would depend for survival in the period to end 1981 on sufficient orders being obtained from Irish State bodies and Government Departments and that, while such potential orders appeared to exist, the cost to the Exchequer in those three years of having the vessels built at Verolme would be in the region of £21 million, or roughly £6,000 per man per year.

The report pointed out that the company's cash position was weak and even that was masked by prepayments on a B & I vessel then under construction. It pointed out that there would be further cash deficits by the end of 1980 which would have to be funded by the Government. In view of the then existing outlook for shipbuilding, when it was generally accepted that conditions would not improve until the mid-1980's, and the prospective very substantial cost of continuing to place State orders at Verolme, the team recommended that the State should neither underwrite the company's losses nor take over the RSV shares, even if this meant closure of the yard. The team recommended also that, should continued State assistance be provided to maintain employment in the yard, it should be conditional on VCD drawing up survival plans and taking the necessary steps to improve productivity of the work force and management of the shipyard and otherwise reduce running costs.

It was against this background that the then Government took a decision in July 1980 to place further State orders at the yard, namely, it was fully aware that Verolme would continue to depend on the State for its survival in shipbuilding at least until an upturn took place in the market and in the knowledge that, even if the Exchequer could afford the continuing prohibitively high cost of building ships at Verolme as opposed to elsewhere, the prospects for securing a sufficient number of domestic orders to keep VCD fully occupied until 1985 were most discouraging. To date, orders for one patrol vessel and one bulk carrier have been placed and these are under construction at the yard. It must be pointed out here again that the yard only survived through receiving substantial advance payments from the Exchequer in December 1980. Furthermore, the expected cost of the bulk carrier is in excess of £29 million, in comparison to a commercial price of £14.2 million which could have been obtained elsewhere. Thus a subsidy of £15 million has been necessary to build a vessel which provides approximately 750 man years of work or keeps 500 people occupied for an 18-month building schedule. It can be seen that continuation of a policy of placing State orders to maintain employment at Verolme could cost £20,000 per man per year. No indications of the subsidy level involved in building the £25 million patrol vessel are available but it seems reasonable to infer that this also is very substantial in the light of the bulk carrier situation outlined and the fact that a fishery research vessel would cost approximately twice what it could be built for abroad.

In approving the placing of the orders at the yard, the Government also asked the Shipbuilding Advisory Team to again examine the future of VCD. Because of the specialist knowledge required of world shipbuilding trends and because of the prospective heavy additional cost to the Exchequer of having either domestic orders placed with VCD or of subsidising foreign orders to the extent of making VCD competitive in the international market, the team asked UK shipbuilding consultants, A & P Appledore, in association with the Irish firm Reynolds Cooper McCarron, to advise it on the future of the yard. The consultants' job was, in summary, to assess the technical and financial situation in the yard, prospective markets and VCD's ability to trade successfully in those markets both without continued State support for shipbuilding and with levels of support that would be acceptable to the European Commission.

Briefly, the consultants found that Verolme was basically a medium technology shipyard of the 1960s type, whose cashflow position was only healthy because of the advance payments received from the Government in December 1980. They pointed out that VCD was caught in the worldwide shipbuilding recession which has produced intense competition for the much-reduced number of orders available, and that VCD was unable to compete both in terms of productivity and costs. In addition, the recession problems were exacerbated by the emergence as major shipbuilders of a number of Third World countries, notably South Korea and Brazil, who can rely on cheap labour and new facilities to produce very cheap vessels.

The consultants indicated that current world shipbuilding capacity is well in excess of expected demand, even with the substantial capacity reductions and reorganisations which have taken place throughout the world. While it was thought at the beginning of 1982 that supply and demand might begin to reach equilibrium by 1986, developments during 1982 and since have made this too optimistic and equilibrium would not now be reached possibly until 1990. The latter proposition, however, presupposes that capacity would remain at its present level. In practice this is unlikely since, as demand increases, there will be a tendency for countries to reintroduce some of their mothballed facilities, implying some continued level of excess capacity in the market.

As Deputies are aware, there is a very considerable number of ships lying in dry dock at present. If any improvement comes in the shipping market which might lead to a hardening in prices and an increased demand for ships, this very substantial amount of shipping capacity in dry dock could be brought back into production, thereby forcing prices down again. The existence of this substantial amount of unused shipping capacity is a destabilising factor in what is already a very difficult shipping market situation. This instability directly affects the shipbuilding situation also.

The consultants concluded that, in the context of a shipbuilding market worse than in living memory and with no prospect of substantial improvement before the end of the decade, it was highly unlikely that VCD, which last won an order on the open market in 1975, and then through its Dutch parent, could win suitable orders in the international market over the next five years, even with Exchequer funding of between 30 per cent and 50 per cent of the cost of each vessel.

I might point out here that EEC acceptance of such subsidy levels, even if the very high sums involved on an ongoing basis could be afforded by the Irish taxpayer, would be most unlikely. I should also point out that it would, in addition, be necessary to provide subsidised credit for any contracts won, which in view of the very high cost of vessels would add significantly to the burden on the Exchequer. An indication of this is that for a £20 million bulk carrier, on which subsidised credit for 80 per cent would be necessary, annual subsidy costs could easily be £500,000. Since a continuity of such orders would be needed, the interest subsidy costs alone would cumulatively reach millions of pounds in a short time. It tends to be ignored but these costs, apart altogether from production subsidies or uncommercial prices, have cost the Exchequer almost £8 million since 1970, and this cost will continue to rise even without further orders.

I mentioned earlier that a previous Shipbuilding Advisory Team report had recommended that continued State assistance be conditional on the yard drawing up a survival plan taking the necessary steps to improve productivity. In December 1981 the company submitted such a plan to my Department which described a range of investment proposals, to be funded by the Exchequer and costing between £3.4 million and £21.2 million, intended to modernise the facilities and improve productivity. No action was taken on this pending completion of the consultants work, and in September 1982 a revised assessment was received from VCD which indicated that developments during 1982, and in particular the need to revise downwards existing long-term forecasts, made the earlier proposals unjustifiable. In addition, the ship repair market in which the yard operated had deteriorated significantly, with turnover falling to half its planned levels, and there was no sign of improvement in productivity at the yard.

The revised operating strategy recommended in this was to reduce the scale of operations significantly, both in terms of shipbuilding and ship repairing, involving substantial lay-offs. Marketing efforts would be directed at general cargo vessels, supply vessels and others of a similar complexity. Government support needed to implement this would be:

a special grant-in-aid to cover the company's losses for the period 1979 to 1983 estimated at £5.6 million;

a separate grant-in-aid to cover the cost of extra statutory redundancy payments, and an interest-free loan of £4 million to cover capital expenditure and maintenance dredging.

This would be additional to the substantial sums required to subsidise the cost of any orders VCD managed to win, both in terms of production and interest subsidies. Finally, my Department were advised by the company in November of last year that the international shipbuilding market was even worse than in September and that export orders, if they were available at all, would only be feasible with very large Exchequer assistance.

In the light of all the foregoing considerations, the Shipbuilding Advisory Team advised me that it is clear that VCD is not commercially viable at present. The extent of this non-viability has been largely concealed by the fact that the yard's customers have been State and semi-State organisations who have been paying substantially more than market prices in order to meet the Government's wishes regarding employment at the yard.

This Government policy of maintaining employment at the yard at all costs has had two effects: first, because the Government and the State bodies were willing to pay whatever it cost VCD to build ships, VCD has had no need or incentive to take account of developments in the shipbuilding industry in recent years. As a result, not alone has VCD maintained its work force at approximately the same level over the last decade but the productivity of its work force has fallen by about 25 per cent over this period. Thus, VCD has become increasingly uncompetitive in an industry where firms have been forced to become more competitive because of world over-capacity. VCD has been insulated from the commercial environment with the inevitable result that it no longer appears to have the capacity to operate in such an environment.

The second effect was that State-bodies were allowed to buy ships which, in retrospect, they could not afford and which proved in some cases to be surplus to requirements. The excessive costs of these ships, and this is a point to which Deputy Fitzgerald did not advert, have contributed to the deteriorating finances of B & I in particular. As a result of both their financial position and the present and prospective difficult market conditions, the State shipping companies will not be placing any further orders for ships in the foreseeable future.

These two developments have reinforced VCD's dependence on the State for its survival. However, it has now become apparent that there is little immediate prospect of orders from this source because of the Government's own serious budgetary problems. Thus there is no possibility of VCD being able to rely, as it has done in recent years, on a regular supply of domestic orders at inflated prices in comparison with world standards.

Accordingly, in order to survive, VCD must seek export orders at a time when, it must be admitted, it is extremely uncompetitive and when world shipbuilding is in an extremely severe slump which appears likely to last until 1990. While the team recommend that the Government be prepared to offer the maximum — production subsidies — permissible by the EEC Commission — to VCD to enable it to secure such orders, it must be remembered that subsidies of this order have been available to VCD for the past few years and, despite better market conditions and a less uncompetitive position than at present, the yard has failed to secure a single export order.

This, then, was the background against which the Government had to assess future policy relating to Verolme. Past practice of placing State orders with the yard to maintain employment has become excessively costly, as witnessed by the £15 million subsidy needed to build the bulk carrier, and the financial position of both the Exchequer and the State shipping companies is not such as to facilitate the placing of further orders, even were they needed. But there is in fact no need for the level of orders which would be necessary to sustain Verolme in its present form because there is not the demand for shipping that there has been in the past. In addition, it is clear that past practice has been self-defeating in insulating Verolme from the real commercial world and preventing it from having to face the need for the adjustments which could make it less uncompetitive.

In the light of this the Government have decided that the appropriate course to follow is to encourage Verolme to concentrate on winning orders in the open market and to take the undoubtedly difficult steps that will be necessary to enable it to do so realistically. To this end the Government are prepared to give such assistance to VCD as will be permitted by the European Commission. They do so in the knowledge that this will involve a heavy continuing drain on the Exchequer to support the jobs of people involved in the construction of vessels that might thus be won by the yard, but hope that the management and work force will together take measures which would themselves lead to a reduction in the need for such assistance.

In addition, the Government will encourage the yard to place more emphasis in the future on ship repairing and general engineering. They acknowledge that present trading conditions are hardly ideal for such a move, but consider that shipbuilding prospects make it unavoidable. The Government believe that, while the ship repairing market is depressed at the moment, there is certainly scope for improvement on Verolme's performance in this regard, and would urge management and unions to act co-operatively to achieve a situation where State shipping companies will carry out repairs in Verolme not just because it is Irish and at financial disadvantage to themselves, but because they are satisfied they are getting value for money.

Mr. M. Ahern

The Minister's speech is, I am afraid, the answer that was expected but not hoped for and there will be much weeping and gnashing of teeth in the Cork area again to-night. There is not one shred of hope for the continuance of VCD as a shipbuilding yard in the future. That is there in black and white, plain for everybody to see. Verolme Cork Dockyard as a shipbuilding yard will be defunct in a very short period. I was going to start by saying that time is running out for VCD, but time has run out. It was the only shipyard in this country, and in the Cork area it was the biggest single employer. Six months ago 1,100 people were employed in VCD but over that time this number has fallen and 96 temporary workers have been laid off. Last Friday 94 permanent employees were laid off and 164 more got their notice. We do not know how many more but it is quite evident that another couple of hundred are on the list now that the Minister has made his statement.

When the bulk carrier Panamax is completed in June and when the fishery protection vessel is completed it will be the end, as far as I can see, for shipbuilding in Cork, and not only in Cork but in Ireland. This is a step backwards for this country. It is a natural disaster.

From April 1982 to April 1983 the percentage increase in unemployment in the Cobh region alone was up by 30 per cent. Add on the workers and those on notice in the Cobh region and the increase in the region will be up to 80 per cent unemployment in a year or so, with no prospects of jobs in the area. No other region in the area or the country would have a comparable increase in unemployment. It is not only the Cobh region that is and will be affected by the decisions of this Government. The effect will be felt far beyond the town of Cobh, because workers in VCD come from Cork city and the towns of Midleton, Carrigtuohill and Youghal and as far away as Tallow in County Waterford. All these areas will be affected by the impending closure of the shipbuilding process in VCD. Not only will the workers in the immediate area be affected, but many small service industries and small engineering firms in the surrounding area will also be very much affected and will go to the wall because they depended on VCD for their existence. Taking into account the numbers of people in these industries and firms who will be laid off, we will have many more people joining the ever-increasing dole queues in the east Cork, Cork city and Waterford regions. We will also have the spin-off effect on the local shop-keepers, butchers, publicans etc. in the towns surrounding Cobh. Less money will be in circulation and so the closure of the VDC shipbuilding section will have a vast spin-off effect which has not been taken into account in the figures produced by the Minister.

As I said, the figure for increased employment in Cobh was 30 per cent. That will jump up to about 80 per cent in Midleton, where the increase in the year was over 40 per cent. In Youghal it was also 40 or 50 per cent. The Government should not continue running down the industries in the East Cork and Cork city regions, as is evident by the above figures and by the rumours concerning East Cork Foods, which will definitely close. NET are always in doubt, Irish Steel are also gravely in doubt, Whitegate is another industry which is in trouble and so are Dunlop. I cannot see any way in which the Government's public relations office will convince the people that there is not an anti-Cork policy.

An important aspect which has not been mentioned by anyone in connection with the closure of Verolme Dockyard is the tremendous service rendered by them to the community since 1963 when the apprenticeship training scheme commenced. Approximately 450 apprentices were trained in the dockyard. Their trades included painting, decorating, cabinet making, constructional steel work, turning, joinery, fitting, gas and electrical welding. Of this number, 80 are still serving their time and over 200 have left the firm. These have given tremendous service to the country due to the experience they gained in the dockyard. The loss to the economy by the closure of the dockyard is something that is incalculable, because you cannot measure the value of the training given to these people. It is a service which will not be available again. To remedy that, we will have to increase AnCO services and, good as they are, they cannot give the type of experience gained in the workplace.

Fianna Fáil have always held that it is the duty of a Government to provide employment, and this philosophy has not changed. In the thirties Paddy McGilligan expressed the view of the Fine Gael Party that the Government have no function in providing for Seán Citizen. That philosophy prevails to this day. During the period of the Coalition Government from 1973 to 1977 no orders were forthcoming for Verolme Dockyard. This contrasts with the decisions of the Fianna Fáil administration during 1977 to 1981 when they were responsible for placing five ships on the order books of the dockyard.

In 1977 Deputy Justin Keating thought it fitting to have ships built in Japan rather than building them here. This is what is happening again today and will be continued from now on. I am surprised that the Labour Party think it proper that cheap labour should be used for the provision of goods for this country because I did not think it fitted in with their philosophy.

Deputy Barry was left in no doubt as to the feelings of the workers of Verolme Dockyard whom he met during the opening of Ringaskiddy on Saturday last. These workers did not need a Fianna Fáil Deputy to lead them on their protests, as happened not too long ago when a wellknown Fine Gael Deputy led a mob from the Fine Gael rooms in Oliver Plunkett Street to attack Jack Lynch.

Deputy Haughey entered into negotiations for the construction of a bulk coal carrier by the Belfast shipyard of Harland & Wolff for the conveyance of coal to the ESB generating station at Moneypoint. This initiative was of major importance for North-South economic co-operation. It was not physically possible to build this carrier in Cobh as they had not the capacity; but if it had been built in Belfast it would have meant work to the value of about £5 million for Verolme Dockyard. However, the lack of social philosophy regarding job creation was evident in the decision by the Government to allow the ESB to palce the order for this bulk carrier with a Japanese shipping firm. So much for the Taoiseach's constitutional crusade on a practical level.

There was blue murder from Fine Gael and the press when Fianna Fáil placed the order for the bulk carrier Panamax and also for their fishery protection vessel in Cobh. The people of Cobh know that if we were in Government the workers there would have jobs secured for another year or so because we would have honoured our promise and placed an order for a fishery protection vessel and also a fishery research vessel which is essential for the future development of our marine culture. It is a sad day when a vessel of this nature cannot be built here.

The Minister of State, Deputy Collins, at Question Time last March informed us that the Government have no function with regard to the workings of the dockyard. However, I consider that any person who has a 48 per cent shareholding in a business would have great interest in the workings and future of that business. I was very surprised at the admission made by Deputy Collins. It is a cause of great anxiety for the employees of any company under the control of the Government.

The B & I were mentioned by Deputy Gene Fitzgerald. Last March they sent one of their vessels to Liverpool to be overhauled. The cost was not relevant but the time factor was. The Government should have forced B & I to place that repair work in Verolme Dockyard. In the end the B & I did not gain anything by sending their boat to Liverpool as they could have had it repaired just as quickly in Verolme. It is regrettable that the Government will not come to the help and support of local businesses.

The Government are now allowing 500 people to go on the dole at a cost of at least £3 million. It would be more sensible to put this money back into the yard, thus ensuring employment, the psychological welfare of those who are to be laid off and of their dependants. It would also mean that if these people were working they would be contributing through PRSI and PAYE to the Exchequer. If they are receiving dole it is dead money. No one, especially the unions and the workers, will hold that much of the equipment and the practices at present in operation in Verolme Dockyard are not obsolete. They accept that they must be updated or replaced to compete successfully in the market of shipbuilding and repair. They also accept that there have to be redundancies. If the yard is kept for repair work only, it will have a damaging effect on those who remain on there. They have been offered half a week redundancy money per year of work. Avoca mines have already been mentioned, in which case the Government stepped in and increased the redundancy offer to three and a-half weeks. I ask the Minister to do likewise in Cobh. It is important that those who remain in the dockyard will have the incentive to work and will not wonder if they also will get a raw deal when their time comes. There is no use in having a labour force whose heart is not in it. In the case of people who have been given notice of leaving in a month's time, their productivity will drop enormously. This is what has happened in the dockyard in the last couple of months.

Not knowing if they would have a job next week, the week after or in six months' time has had a serious effect on those still in the yard and the worry is still there. Many of these men will know after tonight that they will not have more than a month's employment before they will also be on the dole queue. The work force must have the spirit to keep the dockyard going, for its economic survival. Judging by the Minister's speech, the Cabinet have discussed the Verolme Dockyard, a decision has been taken and it is not a favourable one.

If the Minister does not take note of our request regarding redundancy payments, further harsh decisions similar to what has been announced tonight will have to be made. We had the Alpha years ago, we now have the Omega and the end is nigh. This is a sorrowful day for East Cork, the entire Cork region and the country, on which we have to listen to the Minister's statement that Verolme Cork Dockyard as a shipbuilding firm is no more. It is sad that those on the Government benches have to sit back and say nothing. They know the effect which the pronouncement of the Minister will have in Cork tonight. I again urge the Minister to reconsider his decision not to give more shipping orders to the dockyard. He must not understand the effect this will have on the Cork region.

Minister of State at the Department of Industry and Energy (Mr. E. Collins)

First, I would like to reply to a reference made by Deputy Ahern to a reply given by me to a parliamentary question last March in regard to the Verolme Dockyard, in which I stated that the Government had no responsibility for the operation of the yard. I obviously meant — and most people would understand me to mean — that I was speaking with regard to the day-to-day management of the company. These are matters which are always left to State bodies, to the executives involved. It is their responsibility to run the company on a day to day basis. I want to make that quite clear, in case any other implications might be taken from the Deputy's remarks here tonight.

We should understand quite clearly that we are being asked to place further State orders with the yard, presumably in the belief that this will tide the company over until conditions on the open market recover. That is what was done in the past on the assumption that recovery was only a few years away. It was more than a few years away then, and it is considerably more than that now. It would be helpful at this stage to read an extract from the Report to the Council of the Organisation for Economic Cooperation and Development from its Working Party on Shipbuilding, as recently as 22 April 1983. This is entitled "Trends in the Industry", and it is significant enough for me to quote it:

In the shipping sector, the deepening of the economic recession and the continuous slowdown in oil consumption at world level brought about a record decline in the maritime transport of dry cargo and oil for the major part of 1982. There was a gross excess of tonnage in all shipping sectors, as a result of which many ships were laid up and freight rates were brought down steeply.

The dry bulk trades were particularly affected by the delivery of a large number of ships ordered during the illusory "boom" of late 1979 and 1980. Capacity in this sector increased by 9 per cent during 1982. On top of this, demand for iron ore, coal and wheat — the three main commodities from the standpoint of international maritime movements — was lower than in 1981 and aggregate demand for dry cargo capacity thus fell by more than 4 per cent. By the end of the year some 15 million tonnes dead weight in this category were laid up and freight rates had fallen to their mid-seventies level.

In the oil sector, the situation gives cause for even greater concern. Although the world fleet was substantially reduced during the year by scrapping, which reached record levels particularly in the case of the very large oil carriers, demand for shipping space fell even faster, down to the 1970 level when the oil fleet was only a half what it is today. More efficient energy conservation measures, considerably reduced voyage length, the deepening of the Suez Canal and the new pipelines that have come on stream seem to have helped bring about permanent structural changes which will call for radical alterations to the world oil fleet.

The general cargo market reflects the general economic stagnation, with loading schedules down and keener competition between the shipping lines, those in the OECD countries coming under increasing pressure from operators in the USSR and the developing countries.

The general outlook for world maritime transport for the next three years at least is, therefore, extremely bleak with the very substantial over-capacity and the likelihood of insolvency in many shipping lines. There are many reasons for assuming that this situation will be increasingly reflected in very much fewer orders for new ships.

Already in 1982 the situation and prospects in the shipping area have been reflected in the shipbuilding sector, at least as far as new orders and orderbooks are concerned. As the building of a new ship takes about two to four years, the fall in new orders will only begin to be reflected in the figures of ships completed during the next year. In 1982, new orders for the members of working party as a whole, calculated in compensated gross tonnage, have decreased by some 35 per cent compared with last year, which is one of the steepest decreases registered since the beginning of the crisis in this industry in 1975-1976. The fall in new orders in 1982 has hit all main world shipbuilding countries, members and non-OECD members: in some non-OECD countries long term development plans for shipbuilding have been revised downwards.

The severe deterioration in the new orders situation had an immediate repercussion on the level of the world orderbook. At the end of 1982 it had already fallen by some 17 per cent gross registered tonnes compared with the same period of 1981, and had come down to about the 1979 level, i.e. the lowest level since the oil crisis. European countries and Japan registered a fall in orderbook levels of some 16 and 24 per cent respectively during the period. The share of non-Member countries of OECD in the world orderbook was some 34 per cent at the end of the year.

The figures for ships completed in 1982 do not yet reflect the fall in new orders. The slowdown in production has affected Japan by almost 6 per cent, as well as some European countries. It seems that this trend reflects the increasing willingness on the part of shipbuilders, given their low levels of new orders, to spread deliveries over time in order to avoid excessive disruption in their planned world load in the short term. The shares of world production in 1982 for Japan, European countries and non-OECD countries respectively were 38.9 per cent, 31.2 per cent and 28.0 per cent, against 41.8, 33.5 and 21.4 per cent in 1981.

In 1982, the Sub-Group on Supply and Demand, whose mandate is also to keep the Working Party informed of short and long-term trends in supply and demand, considered the long-term shipbuilding forecasts recently put forward by the Association of West European Shipbuilders (AWES) and the Shipbuilders' Association of Japan (SAJ). These forecasts form a most important and essential aid to governments in the formation of their long-term policies. Though these recent forecasts by the AWES and the SAJ are, generally speaking, more consistent with one another than those put out in 1980, neither, unfortunately, may be called optimistic. Some of the positive trends in the 1980 forecasts are no longer there, at least for the short and medium term. At the general level, the two studies agree in considering that there is no hope of a recovery in output before 1986-1987. Between now and then production levels in terms of ships completed could probably roughly hold their 1982 levels or, in other words, average about 12-13 million tons a year. This level should be compared with the 21-22 million tons in 1976-1977. By 1990, according to the forecasts, output could be about 20 million tons.

The Working Party derived certain lessons for policy from its study of these forecasts, the main one being that, for the medium term, an appreciable surplus of capacity will persist, in spite of the considerable, difficult and courageous efforts made in practically all Member countries since 1976-1977 in the framework of the OECD General Guidelines. The necessary restructuring of the shipbuilding industry which must continue in both qualitative and quantitative terms in Member countries is becoming all the more difficult in that big sacrifices have already been made, particularly at the social level, and that no decisive signs of recovery can be read in the general economic situation or that of maritime transport.

Whilst conclusions need to be drawn from these forecasts as regards the continued adjustment of the industry, others also need to be drawn with regard to the growing part played by non-Member countries. The Working Party thinks it would be useful for some of these big shipbuilding countries to take part in exchanges of views in one form or another on the short and longer term outlook for the world shipbuilding industry. As the Council has been informed, representatives of the Working Party met delegates in the shipbuilding field from a non-Member country in September 1982. These first contacts were judged to be useful and the Working Party hopes to pursue them.

The continuing restructuring and adjustment in the shipbuilding industry calls for a strong sense of international responsibility on the part of all Member and non-Member countries if the measures taken to facilitate this adjustment are not to result in a compartmentation of markets, contrary to the nature and conditions of international maritime trade, which would be extremely difficult to break out of again.

I felt it was necessary to quote that in the House because of its obvious quality as an independent source of review and also because of its expert opinion on the state of the industry and the likely developments in the foreseeable future.

It is brutally clear from this extract that a policy of providing State orders to preserve jobs at Verolme until the upturn occurred in the market could in no way be described as an interim measure. It would in reality be not just a short-term expedient but a medium and even long-term necessity. The Minister has already described the impracticality and unrealism of such a proposition, both in terms of the financial conditions of the Exchequer and the State shipping companies, and in terms of the absence of any demonstrable need for further vessels.

The Minister emphasised the financial burden which has been borne by the B & I because of their policy in regard to placing of orders. There are other complex matters to be taken into account.

Thus the placing of orders for another patrol vessel and for a research vessel would have no justification as being a way to secure the future of the yard. Its only justification would be that it would keep the remaining 700 people, after the current layoffs have been completed, in employment until the end of 1984. And let us be sure there is no confusion on this point. It would not reduce in any significant way the number of people currently being laid off. Both management and unions at Verolme accept that these layoffs are justified and would go ahead in any case. I think it useful at this point also to clear up any confusion there may be as to the need for the patrol vessel — most people would accept that the placing of the order for the research vessel on its own, because of its small size, would not affect the situation at Verolme in a significant way. In the course of 1982 the Department of Defence indicated to the European Commission that in the light of protection measures initiated since 1978, namely increased frequency of aerial surveillance missions, increased penalties and the simplification and stabilisation of Community regulations, the present mix of aircraft and ships, including the one ship on order, would provide adequate fishery protection in the medium term. The Commission accepted this and agreed to the same level of EEC assistance being provided in respect of it. Thus, not only is there no need for the vessel, but there would be no Community assistance towards its financing, nor indeed to its substantial ongoing costs to the Navy. We are, therefore, being asked to spend £25 million — that figure should be underlined — to provide employment to the tune of 500 man-years, that is, the estimated work content of the vessel being equivalent to keeping 500 people employed for one year. This is more graphically illustrated if we consider that this would cost the already hard-pressed taxpayer £50,000 for each of these jobs for that year.

This really is the kernel of the problem. The figure would be very high in the context of any estimate that the IDA could give in respect of creating jobs. As I have said, to this astronomical figure would have to be added the substantial operating costs to the Navy, since the order cannot be justified in terms of the Navy's needs nor within the context of the EEC commitment to Ireland in regard to fisheries jurisdiction.

I would ask the Deputies who wish the Government to place this order to consider the foregoing very seriously. It would appear to me that, unless their proposal is mere political opportunism, they would wish to withdraw it. But should they not so wish, I would hope that they would have the political courage and honesty to explain to the nation just how they would finance the cost of these 500 jobs for one year. It would not of course be by additional foreign borrowing, since The Way Forward commits them to a lower figure than that already set for this year's budget.

Mr. Reynolds

The figure is the same but time will tell.

Mr. E. Collins

I am not prepared to enter into an argy-bargy with Deputy Reynolds. The budget figures recommended in The Way Forward would have resulted in substantially more chaos economically than is the case with the Government's budgetary policies. They would be faced then with the choice of raising taxes or cutting expenditure. Again, I must assume from the Fianna Fáil stance on the recent debate on the Finance Bill that they would not do this by way of raising taxes. Therefore we may deduce that the Deputies opposite would finance these expensive short-term jobs by way of expenditure cuts.

The debate had been running smoothly and I would appeal that it continue without interruption.

Mr. E. Collins

There have not been interruptions from this side of the House. This whole argument must be looked at in the perspective I have outlined. To consider it in any other context would be somewhat remote from reality, but then the Opposition have been remote from reality since they left office.

There was a reference in that OECD report from which I quoted to the need for continuing restructuring of the shipbuilding industry in both qualitative and quantitative terms. Two things must be said here. First, the word "continuing" in that context does not apply to Ireland. Ireland is one of the few countries who, through the practice of placing State orders whenever needed, has not restructured. The layoffs currently taking place are the first signs of an acceptance of the inevitability of restructuring but only in the quantitative sense. Management and unions at Verolme must now realise that there must be qualitative restructuring if Verolme is to have a future. This view is shared by the European Commission in its recent report to the Council of the European Communities where it says that future capacity adjustment in the Community should, taking into account previous reductions in capacity, be qualitative adjustment designed above all to improve competitiveness and profitability. The report goes on to say that in the present depressed state of demand better productivity will come not so much from increased production by the remaining shipyards as from cost savings and higher quality production, which are the prime conditions for renewed viability.

I will refer now to another area where better productivity is vital, namely ship repair. In the past 20 years, VCD's ship repair activity has varied between 200,000 and 350,000 manhours per year. It has been consistently profitable until 1979 and 1980 when it returned losses of £52,000 and £338,000 respectively. Developments generally in ship repair over the last five years have been very disappointing. Manhours worked and turnover have both plummeted, while losses have continued. I understand that the company have identified the following as causative factors for this development:

the ship repair market, in parallel with the dry cargo freight market, has been very depressed since the second half of 1981;

VCD's large domestic customers, B & I and ICL have carried out annual overhauls of their ships abroad. This they did because of high prices in VCD and keen competition elsewhere, but also because both companies have been frightened by labour problems in VCD which, in one or two instances, held up redelivery of a vessel;

to the extent that Irish wages increased at a higher rate than those in the UK and on the Continent VCD have lost competitivity;

the additional cost that overtime and shiftwork arrangements place on the cost of repairs in VCD is very high. It was found in a recent comparison that such additional costs in VCD were three to four times higher than in Rotterdam. On the other hand, if VCD try to avoid these high costs by not working in shifts then they are, on most contracts, no longer competitive on time.

Ship repair has over the last decade or so typically accounted for 10 per cent to 15 per cent of activity in VCD, although their three repair docks have never been used to full capacity. Historically, the yard has relied heavily on the local market, and seem not to have made serious attempts to enter the international arena in anything other than a marginal way. Over the last year or two changing trading patterns, plus diminished enthusiasm for VCD among Irish owners, has meant that even the rather moderate turnover levels achieved in the past have been difficult if not impossible to sustain.

Some relief may be in sight, however, with the coming on stream of the alumina plant and the coal-fired power station in the Shannon estuary. These projects should generate some voyage repair demand and possibly lead to an increased number of dockings. Thus, if VCD were sufficiently competitive, they could look for 36-38 drydockings per year from the local market by 1985, when these developments are on stream. However, at present levels of productivity it seems quite possible that even historical levels of throughput will not be sustained.

In addition, we must remember that if VCD are to maintain substantial employment in ship repair, they will have to expand into the international market. VCD's catchment area for the international market could be described as all ports in Ireland, ports on the west coast of England and Wales, plus vessels traversing the English Channel en route to and from the Atlantic and Bay of Biscay. The traffic in this catchment area is very substantial, and VCD's success in capturing a share of that market depends principally on three factors — deviation, the competition and VCD's own competitiveness. With regard to deviation to VCD it is not as great as might be supposed. A vessel on a trans-atlantic route from the English Channel for instance will only have a marginal deviation, whilst a vessel en route through the Channel to the Bay of Biscay would require a 20-hour deviation to call at Cork. The competition which VCD face is great in terms of the large number of repair yards in the UK and on the Continent, but it is not so great in terms of efficiency. Given the foregoing, VCD's ability to penetrate the international repair market depends very heavily on their own competitiveness. At the moment, this is poor and their market share as a result is minuscule, If, however, there was a real increase in productivity and a more competitive approach adopted by the yard, it could leapfrog the competition and gain a better market share.

I do not share the long-term gloom and doom emanating from the far side of the House in this regard. Perhaps it is a matter of self help, better management, a bit more outgoing and strong marketing rather than the handout attitude so prevalent in Fianna Fáil. The thrust of all I have been saying is that the solution of the yard's problems does not lie in the hands of the Government, nor indeed should it. The Government cannot guarantee employment regardless of cost; they can merely try to provide assistance which will enable a company to get through difficult periods. In this case that assistance is a willingness to provide such production subsidies as would be permitted by the European Commission, despite the knowledge that the cost of this could be heavy to the Exchequer, the Government and the taxpayers. But we are committed to giving that subvention.

The solution to the company's problems can only be with the company itself. The management and unions in Verolme must create their own salvation by devising methods of substantially improving productivity and value in both shipbuilding and shiprepair, by sustaining their reputation for reliability, and quality and by getting out and selling that package aggressively. I hope that this challenge will be met head-on by management and by workers in Verolme Cork Dockyard. If it is met head-on and if the challenges are grasped I have every confidence that Verolme Cork Dockyard in the immediate and long-term will be a successful shipbuilding and shiprepair yard.

Mr. Wyse

I want, first of all, to say how disappointed I am with the contribution of the Minister of State when he tried to accuse Deputies on this side of the House of making a political argument regarding Verolme Cork Dockyard. If that kind of attitude continues in the House, there is very little respect for those of us who stand up fighting for something we think is right on behalf of our constituents. If the Minister of State was sitting on this side of the House I expect he would be in here battling for something which we consider is a very viable industry. I will refrain from becoming political on this because we could very easily use whatever ammunition we have now to embarrass the Government on this issue. This matter is too important. Workers and their families depend on what we have to say here tonight and later depend on the action the Government are prepared to take to save 500 jobs in the Cork area.

We are trying to get the Government to make some move to ensure continuity of employment in Verolme Cork Dockyard. This can be done by investing the necessary moneys for the construction of the two vessels, the fishery patrol and the fishery research vessels. Are the Minister and the Minister of State aware that a letter of intent and a down payment of £700,000 was made to the yard in December 1982 for the construction of the fishery research vessel? I have not heard the Minister or the Minister of State mention this tonight. This showed confidence in the viability of Verolme Cork Dockyard. Surely this constitutes an investment in a worthwhile activity, giving employment, protecting our fishing waters and advancing our fishing industry? I note that the Minister is asking his officials am I correct in this? The Minister should be fully briefed coming into the House on this matter.

Mr. J. Bruton

I am not asking.

Mr. Wyse

Is it being denied? The Minister is aware of the mass unemployment in the Cork area at present because of lack of initiative by the Government to invest moneys in the areas which give employment. Here is one area that gives employment. I gather from reading both Ministers' briefs here this evening they are now going to add unnecessarily a further 500 people to the already long queues at our labour exchanges in Cork. Surely the Government must realise that many of our industries in the Cork area are vulnerable at present because of the recession. Equally, surely it is the Government's duty to come to their rescue, to carry them over that lean period? We have viable industries there. Not so very long ago we were here in this House, in practically an all-party effort, with Members of the opposite side of the House pleading on behalf of the development of Cork harbour.

This is another blow to Cork harbour. I want to take the Minister of State up on something he said here this evening. He said:

The thrust of all I have been saying is that the solution of the yard's problems does not lie in the hands of the Government, nor indeed should it.

I want to ask the Government and the Minister himself: is not a fisheries protection vessel an investment? Does it not protect our valuable fishing waters? Would the Government, or the Minister, say that we are not responsible for protecting our fishing waters? Would the Minister say that the Government are not responsible for research in so far as our fishing industry is concerned? Surely to heavens what we are talking about here is an investment? We are not asking for money for the sake of money, or for the sake of two ships. We are talking about something that is an investment with a return to the Government. I was amazed to hear the Minister of State say it is not their responsibility. The Minister can lecture on management procedures and things of that kind——

Mr. Reynolds

He is not so good at that either.

Mr. Wyse

What we are talking about is the livelihood of 500 families in the Cork area. That is our concern, not a lecture on procedures on management and efficiency. That is not for us, and not for the Government to a certain extent; that is for management themselves. We are concerned with workers, with families, with trying to ease the anxiety now existing throughout the length and breadth of the Cork area.

I ask the Government, I ask my fellow Cork Deputies on the Government side — and I know they will — to co-operate fully in encouraging the Government in investing moneys in the worthwhile projects about which we are now talking. Indeed, I should like to have the views of those people employed in the fishing industry here this evening. I should like to hear them tell us that the construction of a protection vessel is not worth a flick of one's fingers or to hear from those involved in the science of fisheries and things of that kind that a research ship is not worth that either. I am endeavouring to avoid being political, but I say: let us not run away from investment, from something that yields money, and the two ships about which we are talking constitute an investment in the future of our fishing industry. At the same time this will provide necessary employment over a period. We had the Taoiseach saying only recently that we should see some signs of the end of the recession next year. Surely, then, it is not wrong to ask in that period that some investment be made in Verolme Cork Dockyard to tide it over.

Let us all co-operate. We are listening to doom and gloom every day of the week. It is about time somebody talked about injecting confidence into our people. Our people always have been able to face recessions and crises. There is now a total lack of confidence felt by our people — workers, industrialists and the farming community. If the Government are not seen to be investing in something worthwhile why then should anybody else?

I am asking the Government tonight to make that investment. If they do so they will not be investing in something that will have gone by the board tomorrow. They will be investing in a viable project in the future. It must be remembered that we are talking about people, about the Government showing that confidence in an industry for many years.

Both Ministers who spoke here this evening forgot one important thing in so far as Verolme Cork Dockyard is concerned: what about the hundreds of young people trained in their skills — cabinet-making, engineering, painting — boys who later went away and found secure jobs because they had been trained by an efficient industry. Is that not an asset to any country? What are we talking about?

I was amazed at the two briefs of the Government Ministers here this evening. I wish there was a little more common sense, a little more understanding of the needs of our people and of those of the workers of Verolme Cork Dockyard. I ask the Minister and his Minister of State to give this matter very serious consideration and, for God's sake, not to add another 500 people to the long queues of unemployed in the Cork region. We demand that — we are not begging — but we have a right to demand something worthwhile for the Cork region.

Mr. Lyons

The motion we have before the House this evening is definite and explicit. In case anybody has not heard it, I shall go to the trouble of reading it:

"That Dáil Éireann calls on the Government as a matter of urgency to draw up proposals for the development of ship building and repair at Verolme Cork Dockyard, and as an interim measure in the interest of preserving the jobs of the workforce to place immediate orders for the building of a fishery protection vessel and a fishery research vessel."

I put it to the House that that is a clear and concise motion. In reply to it, for the most part we have had 24 pages of absolute waffle — 12 pages from the Minister and 12 pages from the Minister of State and the one message in all that volume of waffle is that the workers of Verolme are not good enough, not competitive enough, not well trained enough and "We leave you to your own resources. You are not the responsibility of the Government and if you close the dockyard, that is your own business."

Over the years Fianna Fáil's commitment to the dockyard was always thoroughly understood by the people of Cork and that commitment was expressed by successive Fianna Fáil Governments and maintained by its public representatives in Cork over a long number of years. In 1965 a Member of this House — his constituency was a bit removed from the Cork scene — indicated in his election address that the dockyard should be closed, that it was a liability on the State. We in the mid-Cork constituency at the time took the initiative in reproducing that man's comments and at the bridge that the late Sean Lemass got constructed to the island we delivered them to the workers as they came off the boat in 1965. In 1975 what was the commitment again of this Coalition Government to this Cork dockyard? The contract to be placed out in Japan or somewhere else. Now, maintaining the ten-year cycle, they have been two years too soon because this is only 1983. Giving them the ten-year cycle, in 1985, in two years' time, they will close the bloody place altogether. That is their commitment. That is their intention. When we were discussing Whitegate in the summer of 1982 Deputy Barry Desmond had this to say about Cork Harbour, and I am talking about Cork Harbour including Verolme:

The harbour of my native county is developing an enormous propensity to rearing white elephants. Perhaps this elephant will be about the same size and length and in cost to the Exchequer as NET and the Irish Steel. The three of them rank in that order.

He gave figures but I have not enough time at my disposal to quote them all. The reference is column 2273 of the Official Report of 8 July 1982.

This is why I used the term white elephant. I propose to examine the white elephant tomorrow night from the tail to the tusks and I think that I will find in it a particularly lumbering giant, admittedly by virtue of a decision of the previous Government, but concurred in by the present one, which is going to be a burden around the Exchequer's neck.

I referred to that for a particular reason. The following night I was coming in after Deputy Desmond.

The attitude of this Government is so obvious. It is an attitude of kill off anything that is going in Cork. They put their finger in the pie and their only ambition is to downgrade the Cork area, the harbour and all that goes with it. We had tonight 24 pages of waffle and no hope for the dockyard. The attitude is not surprising in the light of their past history and their comments and their lack of commitment. Both Ministers blame the dockyard workers for the closing of the B & I; when that was being stated by the Minister I did not hear the Chair telling the Minister it was not relevant to the motion. Perhaps you were not here. My apologies. It was apparently all right for the Government to mention the B & I but I am not supposed to mention anything about Cork Harbour. It is obvious this Government, like previous Coalition Governments want to ensure that the plans and the progress designed for the Cork area are stifled. In the case of the dockyard they are telling them in no uncertain manner they can close it if they wish. They blame the workers for the B & I losses. They say the solution here does not lie with the Government. In the statement the Minister said the solution is not the responsibility of the Government. I contend the responsibility rests squarely on the shoulders of the Government. It also rests on the support to be given for or against their attitude to the dockyard by the elected members from the Fine Gael and Labour Parties. They should show their attitude by the way they turn at the top of the division steps. We have brought in a number of motions here about this Government's attitude to the Cork area. Now I do not mind sticking to an idea and I will take the consequences. I want to be very critical of this Government's attitude to the Cork area. This Coalition Government like previous Coalition Governments have a happy knack of blaming everyone bar themselves. Was it not extraordinary that we went back to ex-Deputy Richie Ryan's Suez Canal? Tell the workers in the dockyard tomorrow that something happening out in the Suez Canal means they are going to lose their jobs. The Government blame everyone for their own lack of initiative and uselessness. There is no need for me to go over again the documentation we received from the workers.

Mr. Gene Fitzgerald

Did you forget to mention who signed them?

Mr. Lyons

Liam O'Leary. When this matter was raised here recently we were aware of the giggling that went on on the Government benches and that giggling was repeated by a Deputy on that side when he entered the House this evening. These matters are too serious for sniggering and giggling, particularly on the Government side, whose responsibility it is. Cork Deputies should not be giggling. They should get in there and support our motion and get this Government to do something for the Cork area. It is about time that Deputies from the Cork area fell into line with our efforts to shock the Government into taking some action that would save jobs in the many areas in which they are threatened. The Minister stated that the solution of the yard's problems does not lie in the hands of the Government, nor should it. That is a very defeatist attitude to adopt.

This Government must rank as the worst of all the Coalition Governments. As in previous cases, they blame everyone but themselves for what is happening. They have no leadership or commitment. They are not giving the dockyard any encouragement and certainly they are not giving it any money. The Government took £220 million out of our capital programme that was put before the electorate. If some of that money had been left in the programme people would have remained at work.

The opening of the car ferry should have been a joyful occasion. What happened was that we were presented with a document from Liam O'Leary on behalf of the work force in Verolme dockyard. This document has been referred to by my colleague already. It is quite frightening. However, it has not stirred the Government into taking positive action. Instead the Minister's speech has consisted of pages of negative comments. The Government are telling the workers who have lost their jobs and those who are about to lose their jobs that they are not worth supporting and that the quality of their work does not warrant support. The attitude of the Government is uncaring so far as those people are concerned. Reading between the lines of the Minister's speech one senses the hopelessness of the Government's attitude towards saving jobs in Verolme dockyard. It is another saga in the story, showing their lack of commitment to the Cork area.

Mrs. E. Desmond

I wish to give portion of my time to my colleague, Deputy O'Sullivan. I wish to compliment Deputy Fitzgerald on bringing this matter before the House this evening. It is what any of us would do if we were in Opposition. However, having said that I am disappointed at the way the Opposition party have dealt with this subject, particularly the last speaker. During my public life in the Cork area there has always been talk about who would keep open the Verolme dockyard. Particularly in the past ten years the dockyard has depended almost exclusively on State orders and there always has been concern on the completion of an order. The Opposition party have tried to create the impression that they were the only party who would keep the dockyard open. I do not accept that. It is not fair to play politics with the livelihood of those who depend on the dockyard for their jobs. It is lamentable that the debate has degenerated as it has done.

In the past few months there has been considerable co-operation among Cork Deputies on all sides of the House with regard not only to the Verolme dockyard but also with regard to other industries that are in trouble in the Cork area. These industries would be in trouble irrespective of the party in power. On many occasions we were led by the Lord Mayor of Cork and Deputies on all sides saw the various Ministers concerned. Despite what Deputies opposite have said, I know there is sincere concern on the part of the Government for those whose livelihood depends on this venture continuing in the harbour area. The Labour Party resent anyone suggesting that their interest is not at least equal, if not as great, as that of any other party.

Deputy Lyons suggested that the Minister and the Minister of State in some way were casting a reflection on the workers. He said this Government had no confidence in the work force. That is rubbish. Everything the Ministers have said has indicated they have faith in the workers and in the dockyard. My experience of the workers is that they are a highly motivated and a most responsible workforce. They have shown themselves keenly interested in the enterprise in which they work and concerned to play their role. They have been responsible about the redundancies and the rationalisation that has taken place. They have made it clear to us that they accept that some rationalisation must take place.

With regard to the protest at the opening of the car ferry last Friday about which we read so much, I wish to say I was present and it is my belief that the reports were much exaggerated. One got the impression that the Minister for Foreign Affairs was in danger of bodily harm but that was not so. A large number of workers were present, many of them carrying placards. Some of the placards could have been kinder but in the main the protest was understandable. It was made by people under considerable pressure and frustration whose livelihood was, in their estimation, under threat. The opening of the car ferry was regarded by them as an opportunity to voice their concern and their grievance. However, the reports one read in the press subsequently bore little relation to what happened. I want to make it clear that no one here is casting aspersions on the work force of the dockyard.

So far as the rationalisation programme is concerned, there will be some redundancies. I hope they will be the only redundancies in the harbour area. I am very concerned to ensure that extrastatutory redundancy payments are made. In other industries in the harbour where there were redundancies such provision was made. For the sake of harmoney and for the continuation of work in the yard, any redundancies that have to take place should be carried out as harmoniously as possible. Those who have been unfortunate enough to be covered at least feel their efforts in the past have been rewarded adequately. Extrastatutory redundancy moneys should be provided for if at all possible for these workers. There is general agreement among the workers themselves and among Deputies of all parties, from the Cork area at least, that this would be a desirable development. That is the first thing that I appeal for tonight.

In my memory of the life of that yard, particularly over the last ten years, it has depended to a large extent on State orders. Of course, State orders would be very welcome now. I listened to the case made by the Minister, the Minister of State and the Opposition Deputies tonight and I see a problem. I got the impression, listening to Opposition Deputies, that they were not in power in 1982 because in that year the Department of Defence made a submission to the European Commission that they were satisfied that the existing fleet of four control vessels and the new design vessel now being built was adequate to patrol our coasts. Because of that submission made in 1982 — I do not know who was in power and it does not matter — one would get the impression that it was something the Coalition Government had done once again. That decision was taken by our Department of Defence. As a result of that the Commission accepted their report and there will be no EEC reimbursement of the £25 million needed.

I would like to see an order for whatever millions are necessary going into VCD tomorrow. I would like to hear an announcement that an order is available tonight. I know the workers there. Some of them are in my constituency; some are personal friends of mine and I am concerned about their jobs. I know the effect that unemployment would have on them and their families. I know their hopes for the future and their fears of all their skills becoming redundant, the years of builtup skills going for nought. That for me is the most important thing and I would be very happy to hear an announcement that an order could be placed.

However, I realise our limitations in Leinster House. I realise that for an order to be placed the Minister would have to get £25 million from the Irish taxpayer. Somebody has to pay for it. Above all else I realise that, whoever were in Government — Fianna Fáil, Fine Gael, Coalition or the Labour Party — we are going through a difficult time. Money is in scarce supply and any money we provide for any project, however worthy, must be got at very great cost to the rest of the community. That is the problem. On the admission of everybody on all sides of the House there is a lean period ahead of us in so far as shipbuilding is concerned. There is a slump at the moment. There is economic depression. There is no production in that area. While doing the restructuring it behoves management and the work force to try to make the rest of the yard viable and competitive. Efforts should be made to ensure that this lean period will not put it out of business. In supporting the Minister tonight my hope is that he does not look on this as the last word and that he will look to where help might be needed to tide them over that lean period.

I was encouraged that the Minister mentioned the Appledore Report tonight because the workers, concerned with their interest in playing their part, were very anxious to know what is in that report for them and what is in it about management. They were concerned that no message back to them or to the public generally was coming from that report. The Minister tonight has told us some not very hopeful news about what the report contained. I would like an assurance from somebody — although I do not know if anybody can give it to me because the Opposition will be replying — that the contents of that report might be made public. That could be a useful exercise because people would know where the faults were and I am quite sure the goodwill would be there in the yard to put those faults right.

I will be supporting the Minister in this because I know that he has listened carefully and sincerely to us and has done his best, and given the impression that he was doing his best, in so far as the whole Cork harbour area is concerned. I know the problems there; and, as we are talking about one industry in the harbour, I can say that it is a very depressed area at the moment. Any support that can be given short term or long term — and I appreciate the Minister's concern for the long term because ultimately that is what matters — should be given to the Cork area because depression, unemployment and hardship exist there.

Mr. O'Sullivan

I share the concern of the other speakers for the future of VCD. It is important not alone for the Cork area but for the nation as a whole. I grew up when people were recruited to go abroad to learn the skills necessary to revitalise Cork Dockyard as it then was. They went to Holland, came back, worked and achieved a very high degree of efficiency. Various speakers have mentioned this here tonight. The skills are second to none and they are absolutely vital to this nation should we ever get out of the recession. In VCD we have the country's only heavy engineering works. Despite all the — I say with reluctance — doom and gloom that have been preached, there is a future for the dockyard. I do not feel at all as pessimistic as people on the opposite side of the House. The work force in the dockyard realise that there is a future for the dockyard if the proper steps are taken and if there is a proper division of the work.

As Deputy Desmond said, we have the Appledore Report. This came into the possession of the Government in September or October of 1982 and I am a little surprised that none of the speakers from the Fianna Fáil benches has alluded to this report. Nobody mentioned it. Blame has been hinted at and people on this side were suggesting that the workers were at fault. There are some businessmen on the other side of the House and I would say they are a little more familiar with business practice than I am — I have had very little business experience — yet here we have an organisation which has not received an order since 1975. I ask Deputy Reynolds, who I believe is a very successful businessman, if he would suffer this type of management. I do not stand up to attack any individual, but we have here a rather unique situation in that the Government have a 48 per cent stake in this company and 52 per cent is in the hands of a company which has now gone into liquidation, or at least receivership. I refer to RSV, the parent company. Now the Government are in a position that we cannot win due to the way the company is structured and we can do nothing about it.

Like Deputy Desmond, I feel that the trade unions in VCD should have the report made available to them because I think it would be rather revealing. They are entitled to this because the jobs of the workers there are on the line. They will acknowledge that there is a need to reduce the numbers of the staff. They are being most responsible. Each and every man there would say, "OK, if the company is to remain viable it is necessary to reduce the numbers". I want to ensure that they will not go down to the point where we will lose forever these very valuable skills and will not be able to put together a team that would be able to compete in the open market. We have these skills.

We will not achieve anything if we indulge in the type of activity that is being indulged in here tonight. It seems that there is little concern. Nobody has suggested that the management of this organisation were an irresponsible body or inactive down through the years. I do not derive any pleasure from attacking any individual or group of individuals, but we must face facts. There was a lack of aggression in their type of salesmanship. They did not go out to win the orders that were absolutely necessary if they were to compete in the field. I will read a statement from Verolme Cork Dockyard, dated 10 December 1982, which is rather revealing:

1983 will be an extremely difficult year for VCD. The future of VCD depends on a large number of external and internal factors. The most important of these are:—

—The International Market;

—Inflation in Ireland;

—The Productivity of V.C.D.

Union members have indicated from time to time that they are prepared to discuss productivity. They realise that if they are to enter into the ship repair business in a big way, it will be necessary for the present structures to be abolished. There is a need for co-operation and this was illustrated in recent times when a Russian vessel came into the dockyard. The workers in Verolme worked hand in hand with the crew of that ship. In the past the practice was that when a ship came into dry dock the crew went on shore leave and were put up in private accommodation. Shipping companies can no longer afford to keep the crew away from home in private accommodation. What now happens is that the crew on board the ship work hand in hand with the dockyard workers. The precedent has been set, but there is room for development. The company realise they are going through a difficult period. I quote again from the statement of Verolme Cork Dockyard of 10 December 1982:

The international shipbuilding market is the worst in living memory. Few if any shipowners are ordering ships, not even in Japan.

The Third World countries Brazil and South Korea have now entered the market, which makes it even more difficult. The points of view expressed by Members of the Opposition indicated that the Government have not shown concern with regard to this matter. Nothing could be further from the truth. We have, as Fianna Fáil did when they were in office, lobbied the Minister week after week in an effort to come up with some satisfactory solution. The figures before us are stark and disturbing, but nonetheless there is still a willingness and a determination from people on this side of the House to ensure that this yard remains viable. However, the leadership will have to come from within the management in that yard. Some of the clerical workers in the yard have agreed a system of work sharing where one-third of the staff will go out for a four-month period. This is the type of thing we are likely to see, not alone in Verolme Dockyard but right across the whole industrial area. The workers in Verolme have proved they are responsible, capable and willing to ensure that this industry will remain viable, but they will have to be shown leadership at local level. The management will have to be aggressive and, if that is done, we will have nothing to fear.

The Minister said he would do what is possible under EEC regulations and I sincerely hope that that will be sufficient. We share the concern of our colleagues in Fianna Fáil, but our approach is somewhat different. We do not share their gloom and we still feel that, even at this late hour, it is possible for Verolme Cork Dockyard to become viable. That will have our full support. I hate to end on a note of rancour but the motion tonight is nothing more than a political gimmick and I will not be a party to that.

Mr. Reynolds

I shall take up the note on which Deputy O'Sullivan finished, that he will not be a party to a political gimmick. It is a good while ago since I first met Deputy O'Sullivan when I was in Cork on my first official ministerial visit in 1981 and I was very well treated. The first request I got from Deputy O'Sullivan, who was then Lord Mayor of Cork, was to do something about Verolme Cork Dockyard. He was very concerned about the matter as were all the other Cork Deputies and the work force. I was a new Minister with a new portfolio and I assured Deputy O'Sullivan that, within my confines as a Minister, I would look after Verolme Cork Dockyard and I am sure he is honest enough to admit that. Subsequently, I was taken on a trip down the river and shown the problems. I will not condone bad management or restrictive practices because that day is gone, but the Deputies opposite should not point the finger at us about downgrading the work force in Verolme Dockyard. They should take away the two speeches, study them closely and they will see who downgraded the work force in Verolme Dockyard.

I will not go into it any further as I am not here to fight with anyone. It is a very serious matter and I can see the shock on the faces of the Deputies opposite. I know they genuinely feel for the whole Cork region and the economic withdrawal that is taking place by the Government in the Cork region. Not a single hope has been expressed. Deputy Collins finished on an optimistic note by saying he did not believe in the pessimism expressed in this House tonight. Neither do I, and I would share the optimism of Deputy O'Sullivan and Deputy Collins if they could show the way forward for Verolme Cork Dockyard. All they have said is that they will provide the subsidies up to the EEC limit which, in effect, is 30 per cent if you get orders on the international market.

In our motion we have only asked what any good chief executive would ask for in running any business. We have asked the Government to draw up a five-year plan for the development of Cork Dockyard if they believe it is going to continue. It is obvious that the Government do not believe it is going to continue. I think this matter merits a two-hour debate in this House to go into the detail of what is being fobbed off on the people of Cork, but it will not be fobbed off by this side of the House. I deplore the Deputies over there pretending they are the custodians of honesty, integrity and expert financial management. They have accused us of being a party of spendthrifts. If they check the records they will see that last year was the first time the expenditure as projected in the 1982 budget was brought and kept in line, and nobody can deny that. In July 1982 we took many hard decisions which had to be taken and we stood over them. The party opposite should not be trying to get cheap publicity by attempting to convince the people that they are the custodians of integrity, honesty and courage. Those are qualities which the Government needs today.

I was amazed at Deputy Bruton trying to make a very cheap political point. As a former Minister for Finance, he should not be trying to convince the House and the public that there was no specific allocation for Verolme Cork Dockyard in the Estimates for 1982. He talked loudly and clearly about Dáil reform and how he would love to bring the Estimates in earlier. We introduced them in October. Deputy Bruton, as a former Minister for Finance, knows that there was a contingency fund of £120 million for capital projects. He knows, as former Minister for Finance, that the Estimates must be prepared ahead of time. He stated tonight that the facts about Verolme Dockyard were not known and that a full assessment was not made until November 1982. We went into an election campaign and yet the Minister tries the cheap gimmick of telling the people that we should have known the position. I defy the Minister or anybody else to produce the civil servants from the two Departments who would say openly and honestly that they discussed the future of Verolme Dockyard. I discussed it personally in the Department of Finance and the officials are quite open and honest about it. They know that in the contingency plan, subject to a Government decision and a full assessment of the situation, there alone the decision would be made. That is what happens every year. Is there specific money for an allocation this year? There is not. I am not going to waste my time on that. The Ministers talk about honesty and courage but I sat as Minister for a short period of six or seven months and I closed down Ardmore Studios because the Government and I did not believe that it had a future. I closed Avoca Mines because we knew it was at the end of its line.

(Interruptions.)

Mr. Reynolds

I closed Min Fhéir Teoranta because it had no future.

An Ceann Comhairle

There must be no interruptions in this debate and I want it to conclude that way.

Mr. Reynolds

Let nobody say that I lack courage or honesty. This is the sort of financial management that this country wants. I will give every project a fair deal, as I would give to this one. The Government with their Taoiseach, the Minister for Labour and the Minister for Education, went electioneering in Wicklow and when they found the Avoca miners picketing with placards, what did they do? They bought them off with a promise of £1 million. They must now go along the same road because the people being made redundant in Verolme Dockyard demand the same treatment of three-and-a-half week's service. The Government did that for a company which was not State but privately owned, but here is a company in which the Government try to convince us they have no say and that it is a matter for the management and the workers. Yet the State has a 47 per cent shareholding in this company and if the Government think they can pass the buck they have another guess coming.

They ran in fright when the first problems came up in Cork. What did the Taoiseach say in Cork about unemployment there which has risen by 50 per cent since this time last year? He said that the Government were going to give Cork more IDA people. The Minister knows that that decision was taken by me last October. On decentralisation of small industrial developments into the region, the Minister made an announcement in Cork about the Sherling Drug Company of Bandon details of which had been long before published in the Cork Examiner, and the North Star Electronic Company was announced again, also.

When the problems concerning B & I arose in Cork, the Minister for Transport did not get the same reception in Cork as I got from Deputy O'Sullivan. All he could say to the staff of the Cork Examiner was that he attracted people to west Cork for holidays. The people of Cork are entitled to better direction and leadership than that and if the Government are not prepared to give it to them, they should pick up their bags and go and give the job to those who have the courage to do the job which has to be done, take the decisions and not pass the buck. I never have run away from a courageous decision which had to be taken and never will. If I had done so, I would not be here today.

There are two points of view in relation to Verolme Dockyard. Nobody can say that shipbuilding is an economic proposition in any part of the world today. The Minister tried to direct attention to the world market price for a ship and pointed out that Verolme Dockyard cannot compete. He had not the courage to mention the hidden subsidies in Korea, Japan and elsewhere and the cheap labour. He should compare like with like. When looking at any business proposition that is what one has to do. The philosophy of the Government is dictated by bookkeepers but a point of view should be considered other than that of accountants and consultants. I am a businessman and if I let an accountant run my business entirely, I would be out of business. Consultants are brought in to do many jobs, but the interpretation of the consultants' report is important. At the end of the day, the man in authority makes the decision and on his head is the success or otherwise of the enterprise. The Minister has not done that in this case. It is a one-way traffic.

I cannot understand the Minister's statement that the problems of B & I were part of the problems created by Verolme Dockyard. I was Minister when the B & I venture was finished. I asked B & I where the fixed price contract was and they had none. I dare anybody to try to pass the blame to somebody else.

Deputies

Hear, hear.

Mr. Reynolds

I also resent the Minister talking about the heavy subsidy on the Panamax carrier. It is very important that the facts of this case be known. A Panamax coal carried was recently ordered in Japan for the second time by the ESB under the Coalition Government. I heard the Taoiseach, the man of integrity, putting all the blame on Fianna Fáil. Unfortunately, I was in my room listening and was not in the Chamber. As Minister, I bluntly had to tell the ESB on three different occasions that that ship was not going to be placed on order in the Far East until a full assessment was made into all the circumstances and until the Government had an opportunity to decide the facts of the case. Let the senior civil servant involved confirm the truth of what I am saying. Late at night he had to contact me to tell me that the ESB had directed their chief executive on two occasions to place that order. I will stand over it in public that I informed him that the Government were the Government and that decisions in the national interest should be taken by the Government and not by a semi-State body or anybody else. I make no apology for that. The Government must take the overall point of view — not the bookkeepers' or the consultants' point of view but the overall national economic view.

Another view was expressed by Deputy Justin Keating in 1975, the view of 1,100 people who have spent their lives building up crafts in what Deputy O'Sullivan confirms as our major engineering works. The Government do not care about building up engineering skills. They would close the gates because the book-keeper says that that is the right answer today. There must be confidence that this country's situation will pick up and that there will be enough business coming from Moneypoint in County Clare. The management and work force have now seen the light and know that over-costs should be reduced. I would be the first to say that if there are over-costs and overmanning, they should be reduced. Do the Government believe that Ireland should have a fine engineering works like Verolme and a fine shipbuilding yard or do they believe that we have not the capacity to do it? The ships produced in Verolme Dockyard are a credit to Irish craftsmanship. These skills are visible on the ‘Leinster', at the launching of which I was happy to be present. They are to be seen in the Panamax carrier. The Government should not try to gloss over all the problems.

A difficult decision must be made. Confidence must be shown in the Verolme Cork Dockyard but the Government have not shown that confidence tonight. I hope that on reflection they will decide that Ireland is to have a shipbuilding industry. The Government must decide whether we are to have a large engineering works in which young people can be trained for the future to do the jobs which have to be done. That is important. Let the Government decide and not try to pass the buck. They campaigned to get into Government and are in Government. It is their decision and they should take it. If they cannot stand the heat let them get out of the kitchen. That is what they must do.

Mr. J. Bruton

We are not complaining about the heat.

Mr. Reynolds

They should not come in here complaining about the work force.

Mr. J. Bruton

The Deputy is becoming overheated.

Mr. Reynolds

The Government should have confidence that this enterprise can be made to work, but it is quite obvious that they have decided it will not. When I raised this question in Cork a few months ago, nobody heard anything about it. I knew the philosophy and thinking of this Government and they are not the philosophy and thinking of the Labour Ministers in the previous Coalition. But the present Labour Members take a different view. I go a long way with Deputy O'Sullivan and say that the work force are prepared to play their part.

The Government have the responsibility of producing a plan for the development of the enterprise if they believe in it, which I doubt after the speeches here tonight. They have to give that plan a vote of confidence by placing the two orders that it is within their capacity to place. Let them not talk about subsidies being put into Estimates last October. If the State places the orders no subsidy will be involved because they will be paid for by the Department of Defence. The Government should produce the plan and give them the two orders if they have the courage and honesty to say they believe in this enterprise. If they do not it will go for naught. That is what will happen with the industrial base here. The Government do not believe in the philosophy nor will they have a reasearch vessel. They will not give £16,000 a month for research into the richness which abounds in the seas of Ireland. They have no belief in the future, no philosophy and no confidence in the ability of the country to solve our problems. They should do the honourable thing: get out and we will put in the right plan and the orders for the Verolme Cork Dockyard.

Mr. Gene Fitzgerald

May I ask the Minister a brief question?

An Ceann Comhairle

No, I am sorry, the time is up.

Question put: "That the amendment be made".

The Dáil divided: Tá, 70; Níl, 63.

Tá

Allen, Bernard.
Barnes, Monica.
Barrett, Seán.
Barry, Myra.
Begley, Michael.
Bermingham, Joe.
Birmingham, George Martin.
Boland, John.
Bruton, John.
Bruton, Richard.
Burke, Liam.
Carey, Donal.
Collins, Edward.
Conlon, John F.
Connaughton, Paul.
Coogan, Fintan.
Cooney, Patrick Mark.
Cosgrave, Liam T.
Cosgrave, Michael Joe.
Harte, Patrick D.
Hegarty, Paddy.
Keating, Michael.
Kenny, Enda.
L'Estrange, Gerry.
McGahon, Brendan.
McGinley, Dinny.
McLoughlin, Frank.
Manning, Maurice.
Mitchell, Gay.
Mitchell, Jim.
Molony, David.
Moynihan, Michael.
Naughten, Liam.
Nealon, Ted.
Noonan, Michael. (Limerick East).
Coveney, Hugh.
Creed, Donal.
Crowley, Frank.
D'Arcy, Michael.
Deasy, Martin Austin.
Desmond, Barry.
Desmond, Eileen.
Donnellan, John.
Dowling, Dick.
Doyle, Avril.
Doyle, Joe.
Dukes, Alan.
Durkan, Bernard J.
Enright, Thomas W.
Farrelly, John V.
Fennell, Nuala.
FitzGerald, Garret.
Flaherty, Mary.
Glenn, Alice.
O'Brien, Fergus.
O'Brien, Willie.
O'Keeffe, Jim.
O'Leary, Michael.
O'Sullivan, Toddy.
O'Toole, Paddy.
Owen, Nora.
Pattison, Séamus.
Quinn, Ruairí.
Ryan, John.
Shatter, Alan.
Sheehan, Patrick Joseph.
Skelly, Liam.
Taylor-Quinn, Madeline.
Timmins, Godfrey.
Treacy, Seán.

Níl

Ahern, Bertie.
Ahern, Michael.
Andrews, David.
Andrews, Niall.
Aylward, Liam.
Barrett, Michael.
Barrett, Sylvester.
Brady, Gerard.
Brady, Vincent.
Brennan, Mattie.
Brennan, Paudge.
Briscoe, Ben.
Browne, John.
Burke, Raphael P.
Byrne, Hugh.
Byrne, Seán.
Colley, George.
Conaghan, Hugh.
Coughlan, Cathal Seán.
Cowen, Bernard.
Daly, Brendan.
Doherty, Seán.
Fahey, Francis.
Fahey, Jackie.
Faulkner, Pádraig.
Fitzgerald, Gene.
Fitzgerald, Liam Joseph.
Fitzsimons, Jim.
Flynn, Pádraig.
Gallagher, Denis.
Gallagher, Pat Cope.
Geoghegan-Quinn, Máire.
Haughey, Charles J.
Hilliard, Colm.
Hyland, Liam.
Kirk, Séamus.
Kitt, Michael.
Lemass, Eileen.
Lenihan, Brian.
Leonard, Jimmy.
Leyden, Terry.
Lyons, Denis.
McCarthy, Seán.
McEllistrim, Tom.
Molloy, Robert.
Morley, P. J.
Moynihan, Donal.
Nolan, M. J.
Noonan, Michael J. (Limerick West)
O'Dea, William.
O'Hanlon, Rory.
O'Keeffe, Edmond.
O'Kennedy, Michael.
O'Leary, John.
Ormonde, Donal.
Power, Paddy.
Reynolds, Albert.
Treacy, Noel.
Tunney, Jim.
Walsh, Seán.
Wilson, John P.
Woods, Michael.
Wyse, Pearse.

Tellers: Tá, Deputies Barrett (Dún Laoghaire) and Quinn; Níl, Deputies B. Ahern and V. Brady.

Question declared carried.

Motion, as amended, agreed to.

Dáil Éireann díospóireacht - Wednesday, 1 Jun 1983

Private Members' Business. - Verolme Cork Dockyard: Motion.

Deputies

Tá

Níl

Dáil Éireann díospóireacht -
Wednesday, 1 Jun 1983