I move amendment No. 1:
To delete all the words after "Dáil Éireann" and substitute the following:
"endorses the continuing efforts of the Government to have Clondalkin Paper Mills re-opened on a viable basis".
My concern in this entire matter has been to ensure that two things are achieved. The first is that any investment of taxpayers' money, for which I am the trustee so far as industry and energy are concerned, is a viable investment and, secondly, within that constraint do my utmost to have Clondalkin Paper Mills re-opened. I stress that to open the mills on anything other than the viable basis which is the core of the amendment, would not be to do anyone a favour. It would not be a favour to the workers involved because in an enterprise that is not viable their jobs would be brief and insecure.
I was glad yesterday — and surprised that Deputy Lenihan did not refer to this — to receive a report, which I subsequently studied, of the statement on radio of his colleague, my predecessor, Deputy Albert Reynolds. Although Deputy Reynolds and I have had our disagreements in the past — they have never been very deep — I feel we are at one in our basic objectives in this matter.
I should like to quote from a transcript of Deputy Reynolds's remarks. Perhaps they might help Deputy Lenihan to recast some of the things he said in his contribution. Deputy Reynolds said:
... I wouldn't attempt to get involved in Clondalkin Paper Mills if I didn't believe I could put it together on a viable basis.
He was asked the question:
When you made the initial commitment to Congress you were not making it as a precondition that the Mill should be viable. It was not spelled out clearly?
Deputy Reynolds's reply to that was:
Absolutely spelled out clearly from the first meeting...
That was what he said in regard to viability being a precondition. Again he said:
It is not in question with the workers there because there is no point in opening a lame duck situation that is going to close again in 6 to 12 months.
He was asked by Phil Crotty:
But in a sense you are probably agreeing with Minister Bruton in that you are saying that the Mill must be viable to be reopened?
Deputy Reynolds's reply was:
I have never said otherwise. It was never a question.
Therefore, it is clear from the record that Deputy Reynolds, whatever about Deputy Lenihan, is in agreement with the Government's policy, the policy contained in my amendment here, which is to have the mill reopened on a viable basis only. Given the extent of the taxpayers' commitment that is involved, given also the interest of the workers, the interest of everybody who might become creditor suppliers to this enterprise, in the interests of anybody giving a commitment, either as a worker, investor or as a creditor supplier, it is in all of their interests that the project be assessed carefully first so that everybody can be fully satisfied that it is only being recommenced on a viable basis and that is what I have been trying to do.
In this difficult situation I appeal for calm and restraint on all sides to allow time for negotiation. As I have already indicated, the IDA are in negotiation with two private sector interests from overseas in regard to this matter. Clearly we must aim to get the best possible deal both for the taxpayer and for the potential employees of Clondalkin Paper Mills. I do not believe that forcing the Government's hand, pushing the Government by any means, by applying pressure of any form, into reaching a particular agreement within one, two or three days, is likely to help the Government to make the best possible deal. Clearly the Government's negotiating position would be strengthened if people were to say: "Look, you go out there and make the best possible deal," not: "You go out there and make a deal by next Friday." Anybody who is told that they must make a deal by a particular time — and there have been various ultimata issued in this context — is obviously at a disadvantage in negotiations. As far as I am concerned, as I have said, as Minister for Industry and Energy, as a trustee of the money of the Irish people, contributed through their taxes, I am not going to be rushed into making a deal other than the one I believe to be the best possible that can be obtained.
Deputy Lenihan asked the question: why was this mill bought? He sought to imply at a number of points in his contribution that, having bought the mill, the Government were not serious about trying to have it re-opened. I categorically reject that assertion of Deputy Lenihan. I should like to cite some evidence which I am sure fair-minded people will see to be convincing, though I am not certain it will be sufficient to convince Deputy Lenihan. First of all, if we had not acquired the mill at the time we did it would have been sold by the receiver, for any purpose, not necessarily paper making, and would not have been available to be promoted by the IDA for paper making. Therefore, the very decision of purchasing the mill was clear indication of the Government's anxiety to create the conditions under which paper making could be recommended on a viable basis, a very tangible indication of that anxiety. Having purchase the mill the IDA then contacted 120 firms throughout the world, firms involved in and with an expertise in paper making with a view to endeavouring to interest them in having Clondalkin Paper Mills restarted for paper making.
I should like to indicate briefly if I may, why it is important to contact firms all over the world. This is something that may be of interest to Deputy Lenihan. The fact is that the market for paper is a world market. One is talking here of getting into market opportunities that might exist in the Far East, South Africa, the Middle East, virtually all over the world. These are amongst the markets being discussed at present in some of the discussions we are having with possible promoters. Clearly international companies, with international contacts, are in the best possible position to know where the market niches exist for the type of paper that can be produced in Ireland. We are not simply talking about supplying the Irish market. Indeed, if we want to do the best possible job, we have got to specialise and develop an export business. This is something I had thought was common cause in economic policy on all sides of this House. Clearly it was and is the right strategy to look for international promoters, with international market contacts, to ensure that the best and most sustainable prospects for employment in Clondalkin can be created. To build a project simply around the home market without this well developed international network of contacts would probably be very rash indeed.
Out of those 120 firms who were contacted three firms made site visits to Clondalkin. A detailed proposal was made by one of those, which was mentioned in the public press, FMI, on 30 June last. This was discussed by the board of the IDA very shortly afterwards. They decided, in order to examine it carefully, indeed in order to provide a basis of information for future policy making in regard to this whole matter, to engage consultants, the Boston Consultancy Group, who were taken on by the IDA to examine this project and paper making generally in mid-July. They are, I stress, to my knowledge, the principal international consultants in the area of paper. They are the people with the best international reputation as consultants in this area. Prior to taking on their assignment they had one day and a half of intensive briefing by the Industrial Development Authority on all of the considerations that needed to be taken into account. They were given one month to present their report. They presented it on time in the middle of August.
The Industrial Development Authority again had a 12-hour discussion with the Boston Consultancy Group on the contents of the report. They went through it line by line, paragraph by paragraph. Therefore, it was not simply a case of the Boston Consultancy Group, however eminent they may be, making a report; it was also a case of the Industrial Development Authority giving very considerable time both in initially briefing them as to what their task was and subsequently in going through the conclusions of the report. The IDA considered this report and the discussion report of their own staff and decided they could not support the project as then put forward. In fact, it had been reckoned by the consultants that the proposal had no better than, on average, a 20 per cent chance of success, and, by inference, an 80 per cent chance of failure and the IDA decided that they could not support this proposal.
In my view it has been one of the great strengths of Irish industrial policy that in investment decisions of this kind we have the benefit of an independent authority established by statute. If I may say so, we are much more fortunate in this regard than our neighbours across the Irish Sea. There are many instances of British Governments being forced into taking decisions on political/economic considerations which subsequently turned out to be quite unwise and which they would not have taken if they had had the wisdom which Irish Governments of all political persuasions have had of ensuring that decisions of this kind were taken by an independent authority using the best commercial judgment available to them.
The IDA were established in 1949 by an inter-party Government consisting of the Labour Party, Fine Gael and others, and their present powers were much extended and underlined by Fianna Fáil in 1969. The authority have been much respected by people on both sides of this House. We all realise what a great strength it is that we have an independent body like this to make these sorts of decisions. The authority do not consist solely of people employed by the State. They use much of their own staff for their own work, but they also use international consultants as they did in this case. More important, the authority consist in the main of practical business people who are engaged in making this sort of decision on a day to day basis. That, in my view, is the most important aspect.
The authority, after all that consideration, decided that that particular project could not be recommended. That decision was not altered by the Government when they considered the matter on 14 October. I subsequently made it clear that the IDA would continue their efforts, in consultation with this particular promoter and with any others that might be available, to seek a new project that would have the possibility of viability. As a result, the staff of the IDA have been in Canada for further discussions with the FMI Group. I also received some ten days ago, or slightly less, an approach from a British interest who were anxious to get involved in the setting up of a viable paper industry in Clondalkin. I am glad to say that after the initial inquiry to my office and contact with this interest by the IDA, their board confirmed that they wished to enter into meaningful discussions about the matter. Staff from the IDA, with whom I have had some discussions in the last hour, will be spending two days — tomorrow and Thursday — at the premises of this large British firm for detailed discussions. It is hoped that they may be able to visit Ireland next week. If they do I intend to meet them.
I have also indicated that I am prepared to meet the FMI Group if they consider a meeting with me would be productive. They made an approach to meet me on a day I was not available, but I have indicated then and since that I am anxious to meet them should that be seen by them to be beneficial.
It is important that I should explain to the House some of the difficulties that lie in our way and, notwithstanding the rather trenchant nature of some of Deputy Lenihan's statement, I feel there is a certain amount of common ground between us in that we are all anxious to see the papermaking industry re-established in Clondalkin on a viable basis. We should all realise the problems we face in this regard. No benefit would be served if Deputy Lenihan were to make a political issue out of this. He must see this in its true economic reality because sentiment, however strong it may be and however well motivated, will not sell paper. We have to take account of commercial realities if we are going to set up a business that cannot just produce but sell paper. The two are of equal importance. The concentration so far has almost exclusively been on production and not enough on the selling aspect.
Since the Clondalkin Paper Mills closed, or at least since 1980 — and this is an indication of the extent of the problems in the paper industry worldwide — there have been 470 mill closures in Europe. It has become a much more competitive operation. The size of machine in use has increased dramatically. The capacity of the mill and machines in Clondalkin is about 24,000 tonnes. Machines are now in use with a capacity, and hence efficiency, corresponding to 200,000 tonnes. There has been a great improvement in the internal efficiency of the mills that remains after the very large culling out of mills to which I referred in the form of mill closures of 470. Furthermore, as has been referred to by Deputy Lenihan, there has been considerable emphasis on integrated mills. These have become the mills that have been able to dominate the scene more completely than ever before, mills where there is both a pulping operating and paper production, and the combination of the two has given an advantage to these very large operations with this combination.
These are the competitive realities that we now face. Sensible people will agree that the more difficult the international trading environment in any area — nobody will deny that the paper market is particularly difficult at the moment — the more careful must be the Government in their assessment of projects, because the risk factor in a difficult market is higher than in a buoyant market. Suggestions have been made that there has been considerable improvement in the paper market. I noted that a statement to that effect in The Financial Times in the region of three weeks ago where reference was made to the fact that the mills in the UK were busier than they had been.
