I have given permission for the following matter to be raised on the Adjournment — the State's investment in Storage Technology Products, Finglas, and the finding of a replacement industry therefor. I received requests from Deputies Tunney, Flaherty and De Rossa. Parts of all three were in order. Deputy Tunney was in order, so was Deputy Flaherty and part of Deputy De Rossa's request. I understand that the Deputies have agreed to share the time between them.
Adjournment Debate - Closure of Finglas (Dublin) Industry
I thank you, a Cheann Comhairle, for having given me the opportunity of raising this matter on the Adjournment. I suppose I should ask you also to accept our apologies for having found it so difficult to put ourselves in order in raising this matter. In passing I must say that the need that exists for whatever committee of the House to deal with it should not be the case. We have here the extraordinary position in which — from the research I have conducted in the last hour or two — the State had an investment of £3,750,000 of taxpayers' money originally in a company calling itself Documation, an American company, the one that piloted this industry in the Finglas area, which was taken over in 1980 by Storage Technology Products, a company that now, apparently — as far as its 363 workers are concerned — sent in a receiver on ten minutes notice. I think the House should ponder on a situation that so permits. I have had an interest in Irish entrepreneurs and have accompanied some to the IDA hoping that it would be possible — here I have one specific case in mind in the Finglas area — that grants would be given to an Irishman who was prepared to invest £500,000 in developing an industrial site. We were told by the IDA that they could not give him a penny.
Leaving that aside for the moment, the present unfortunate situation is that a capital investment of £2,500,000, together with a training investment of £886,000 has yielded the appalling dividend that in Finglas there are 363 people who at this time last week thought they were in full, safe, comfortable employment — as a result of an investment by the State, on behalf of the taxpayers of Ireland — and now find themselves bewildered and, regrettably, forced to sit in until they can discover what their employment position is.
The whole situation is such that it warrants not merely an expression of concern by my colleagues, Deputies Flaherty, De Rossa — and I am speaking for Deputy Michael Barrett as well — and myself, but one to which we must apply ourselves asking how this can happen. Then, it having happened, we, elected Members who are expected ordinarily to represent the investment and the people affected, must walk this tightrope so that we can gain permission to give the matter expression in this House.
I know that everybody here shares our feelings for the workers in question. They have been driven to the point at which their only redress is one that is not ordinarily recommended, that of sitting in, endeavouring to hold the fort until they can discover what is to be their fortune, misfortune or, we hope, good fortune. I know from inquiries I have made at the Department, the Minister and his Minister of State were unaware of this shock announcement. Since then I have been given a copy of a cablegram. It is rather brief, typical of the manner in which employees are treated in America. In a short statement, affecting the employees in Finglas, part of that cablegram said:
The company also said that it has placed its Dublin, Ireland subsidiary, Storage Technology Products, B.V., into receivership. This subsidiary, which was acquired in 1980 with the acquisition of Documation, Inc., had 363 employees and was engaged in the manufacture of products for the European marketplace. The company said that in the future these products would be supplied by Storage Technology's Puerto Rico and US facilities.
Not one word of sympathy or consideration being expressed for the staff employed in Finglas, again reflecting the horrible situation obtaining in these large corporations and their lack of sensitivity for their employees.
The Deputy has been speaking for approximately eight minutes.
I am very conscious of the fact that Deputies Flaherty and De Rossa want to speak. With your permission, Sir, I was hoping to give myself another two minutes.
Let us not waste time talking about it.
And then Deputies Flaherty and De Rossa can share the remainder. Because of the limitations on us we all feel frustrated and annoyed. Nevertheless we have been given an opportunity of raising this matter. We look forward to hearing from the Minister of State, to hearing some good news we might bring back to these workers that all is not lost, that alternative arrangements are being made so that they may continue to enjoy good employment.
The final thought I would leave with the House is that we must all ponder on what else could have been done with that £3,750,000. Surely it does not require any great economist or entrepreneur to discover alternative investment sources for that £3,750,000 so that we would not now be here endeavouring to ascertain where that money went — because it did not all go into the pockets of the employees — and how better it could have been deployed.
Let us take whatever are the appropriate safeguards so that a similar situation will not recur. More immediately and finally I hope the Minister of State will be able to assure us that we can take back to these workers the news that their future is relatively safe in his hands, that he has news for us that alternative arrangements have been made so that their employment can be secured.
I would like to share the sense of relief with Deputy Tunney that at last we have managed to raise this matter in this House. It is a pity that it is so difficult to raise a matter which is of major concern to a particular area.
The closure of Storage Technology Products has been a devastating blow to the community in Finglas. Parts of Finglas have a very high level of unemployment. We have lost a number of older industries in the past but Storage Technology was one of the bright new hopes for the future and its loss hits the area very hard. Its workforce is young, recently recruited and well trained. The closure of this plant raises very serious questions about IDA investments and the monitoring of those investments. Only last year I welcomed in this House and in my constituency the allocation of EC and IDA funds of over £3 million to these premises, but today my major concern is that the Minister will do all he can to ensure that Storage Technology will be maintained as a going concern.
I would like the Minister to tell me what the relationship with the parent company is now. Is there any hope of a reorganisation of that company in the United States or are the links permanently broken? Is there any hope in that direction? Is there any hope of finding an interested party who would take over this business as a going concern?
I suggest that the Minister look at the undoubted assets and attractions of this plant. As I mentioned, the workforce is young and specially trained. This firm is very important for the families in the locality. Over 80 per cent of the staff come from Finglas. The closure of this plant is another blow to this area which has already been badly hit by unemployment.
Deputy Tunney said a section of the workforce are in occupation of the premises. This is due to the disgraceful treatment meted out to the employees by the management and the fact that they did not make any announcement about the closure. There has always been an excellent industrial relations history at this plant. This makes it all the more unacceptable that a workforce which co-operated at all times with management should be treated in this way. When selling this plant the Minister can sell that fact. Despite the occupation of the plant by certain sections of the workforce, there is a goodwill among the workers and they treat the plant with the utmost respect. Their occupation of the factory is a reaction to the treatment meted out to them by management.
On the assumption that Deputy De Rossa is to get five minutes Deputy Flaherty has one minute left.
This is a modern IDA plant of the highest standard. It has had an investment by way of equipment of the order of £3 million from the IDA and the EC. It would be a scandalous waste of taxpayers' money if we were to write that money off without the most energetic fight. I urge the Minister to spare no effort to find an interested party who will take over this plant as a going concern.
It goes without saying that if Storage Technology Products closes with a loss of 363 jobs that would be a very severe body blow to an area with an unemployment rate far above the national average. There is 50 per cent unemployment among the people between 15 and 25 years in the Finglas area. There are a number of worrying aspects relating to this case, one of which is the 24 hours' notice given to the staff that the Irish subsidiary was going into liquidation. It is extraordinary that management should decide to put the Irish subsidiary into liquidation and not into receivership which would have left a receiver with a much freer hand to find an alternative project for that factory.
However, we must recognise that the electronics industry is changing, and is in the process of very fast change, and that failures are bound to occur. I believe some kind of early warning system should be in existence which would include bodies like the IDA and the Department monitoring what is happening in the world of electronics and monitoring what is happening to the parent companies of the Irish subsidiaries.
As I understand it, the parent company attempted to diversify and failed, resulting in massive losses. They are trying to cut those losses now and, in effect, they have cut off the Irish arm of their operations. However, we should not go off with the idea that electronics is not the area to be in. It is the only area which is providing growth in employment in this country and we should not be advocating the transfer of funds by the IDA from the electronics industry to other areas, particularly traditional areas which are in decline.
There is the worrying aspect that some of our electronics industry is subject to being "knocked out" overnight. I would like to see the Minister taking steps to ensure that we have far more indigenously based industries and that we are not entirely dependent on large conglomerates and multinationals which can shut at a moment's notice.
The point has already been made that the IDA have invested £2.8 million in capital grants in this company. I would like the Minister to say if he sees any prospect of that money, and the jobs being saved. I understand the liquidator told the staff at a meeting yesterday that he has an interested party who wants to look at the factory but he requires that they give up occupation of the factory before he will introduce that interested party to the plant. I would like the Minister to confirm that there is an alternative project avaialble, or that somebody is interested in setting up an alternative project there, so that the 363 workers can be assured that this is not a ruse simply to get them out of the factory to enable it to be closed down and auctioned off. It is important that the Minister confirms if that is true. I should like to echo the point made by the other speakers about the difficulty in getting an issue like this raised. I know it is not the fault of the Ceann Comhairle or his staff but is due to the operation of the rules as they exist. Perhaps proposals could be made to the Committee on Procedure and Privileges to have the matter dealt with.
I share the concern of the Deputies who have spoken with regard to the future of the company and the maintenance of the jobs of the workers there. I want to point out very clearly that a provisional liquidator has been appointed. Therefore, it is essentially a holding operation. Only when the liquidator completes his assessment of the company's position will it be possible to see what the future holds and what possibilities there are for the preservation of the existing operations or the substitution for them of new operations. In all of this our primary concern will have to be the preservation of the existing jobs or as many of them as possible. In the present situation I sympathise very much with the workers. However, until the liquidator has assessed the situation it would be premature to speculate as to what might happen. Such speculation could indeed be unhelpful in present circumstances.
On the background to recent events of the company it is important, first, to understand that this situation is due to causes external to this company. Storage Technology Corporation of Louisville, Colorado, its United States parent, is experiencing difficulties. Press reports in recent times have indicated that its trading position deteriorated to the point where it has been obliged to secure the protection of the United States' courts under chapter 11 of the United States bankruptcy code. This basically means that it is protected from the legal actions of creditors while it tries to work out a plan to pay its debts and reorganise its business.
The parent firm's difficulties arose from the two main causes, first, a delay in getting a major new product developed and on the market; and, secondly, it had to drop plans for a new computer after it had spent heavily on its development. Its tape-drive products which are produced at the Finglas plant mainly for the European markets were unable on their own to maintain the firm's position. Its overall problems, therefore, have been affecting the performance of the Finglas plant.
The decision to appoint a provisional liquidator on 9 November did not, therefore, come as a total surprise. As I have explained, there had been difficulties. I should also point out that the plant at Finglas suffered substantial losses last year and is likely to have suffered continuous losses this year.
Turning to the workforce, 363 people were employed by the company in Finglas on 9 November. Over 90 had opted for voluntary redundancy terms offered by the firm over recent months. The fact of a provisional liquidator's appointment does not necessarily mean that any or all of these jobs will be lost. Any conclusions on that score must await the provisional liquidator's assessment. I must say quite clearly — and this point was raised specifically by Deputy De Rossa — that the sit-in over recent days is not helpful in present circumstances. I understand that following the provisional liquidator's meeting with the trade unions yesterday evening the workers were today voting on whether or not to allow the liquidator limited access to the Finglas plant. I hope they decide to do so because otherwise he will be unable to conclude his vital assessment of the situation. Preventing him from doing his work serves only to prolong uncertainty about the future of the company and does not improve the prospects for finding a way forward such as allowing visitations to the plant by possible take-over companies. It would be premature at this point to make any prognostications in that regard.
In these circumstances I can only assure Deputies and the House that the seriousness of the situation is fully appreciated and that the IDA and my Department will continue to keep in close touch with the situation. Depending on the course of action decided on as a result of the provisional liquidator's assessment the IDA, in the interest of protecting their existing investment in the firm and in the interests of the workforce, will seek either to secure the existing operation by whatever courses of action are open to them or else to provide an alternative project.
Deputy De Rossa discussed the position of the multinationals. It is far too early to say what conclusions, if any, we can draw from this case about the nature of multinational firms. We must remember that firms the world over, whether small or large, get into difficulties. Sometimes these are resolved and sometimes they are not. Size is no protection against getting into difficulties. Furthermore, simply being in an industry like electronics or computers is no guarantee of success, as we have seen on a number of occasions. These are extremely competitive industries. They are subject to rapidly changing technology. There is very little margin for error in bringing forward the right new products at the right time. Firms which falter have to take prompt corrective action on a variety of fronts.
The recent White Paper on Industrial Policy made it quite clear that for the forseeable future we must continue to attract overseas firms to meet our employment and other growth targets. It is inevitable that there will be some difficulties, and even closures, from among those firms. That is the nature of our development policies. The challenge here in the electronics area is to increase the level of domestic linkages and to ensure that overseas firms locate their key business functions here. The White Paper emphasises the need for both. It is only by doing so that we will be successful in achieving a transfer of technology into this country which will be of help to the growth of indigenous firms in these high tech industries. We cannot hope to grasp the changing advanced technology on our own. For the most part we must rely on a transfer of technology into the country. That is a vital and essential element of industrial policy.
Deputy Tunney referred to the substantial investment of £3,750,000 as a grant aid to the company and asked what else could have been done with that £3,750,000. I suggest that at the time the investment of the taxpayers' money in the Finglas plant was welcomed by all concerned. The firm was seen as a high-flyer in the electronics industry. We cannot have our bread buttered on both sides. We cannot welcome the firm one day and more or less abuse it the next day. That is not facing up to reality. The IDA will exercise their legal authority over whatever grant moneys are due to be repaid to them. If that is necessary it will be done. Hopefully, there will be a more favourable outcome. I cannot say at the moment what the outcome will be.
Deputy Flaherty sought clarification on the relationship of the Irish company to the United States parent. The position is maintained. The parent company has filed under chapter 11. That does not mean there has been a break in the link between the parent company and its subsidiary here in Ireland. It is still one group.
I am very much aware of the hurt and frustration this has caused to the workers of the area. They have our full sympathy. I offer the goodwill of the State, and particularly of the IDA, in an effort to resolve the problem. Hopefully, the parent company will resolve its financial difficulties under chapter 11 in the United States legal system. It is a good chapter and it has ensured a favourable outcome for many companies in similar situations. Hopefully, that will be the position here. It would be slightly premature for us to say much more about the matter at this point. We have to see what happens under chapter 11 and we have to see the decision of the provisional liquidator in regard to the future of this company.
I thank the Minister for his comprehensive reply to the debate. Could he tell us how long it will take the provisional liquidator to indicate what the true position is.
17 December?
I suggest that the fact that he has not been able to get access to the plant and to the records within the plant creates a most unfavourable position to the detriment of the workers in the plant and to the detriment of the possibility that the plant will survive.
My information is that he must report by 17 December.
Can the Minister confirm the liquidator's information that there is an interested party? If he could confirm that I feel certain the problem about access and occupation would end practically overnight.
I cannot confirm or deny. It is now primarily a matter for the provisional liquidator to assess the position of the company to allow him to make a decision on the future of the plant. If he cannot gain access to records and information in the plant he will not be able to say to alternative buyers that they can come in and visit and examine the plant because he will not have full information available to him. I can say quite definitely that the sit-in is militating against the better interests of the workers.
The Dáil adjourned at 5.34 p.m. until 2.30 p.m. on Tuesday, 20 November 1984.