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Dáil Éireann díospóireacht -
Tuesday, 13 Mar 1990

Vol. 396 No. 9

Adjournment Debate. - Irish Steel Limited.

On 6 December last this House had a short debate on the future of Irish Steel. I raised the matter then because I was deeply concerned about the deferral of deadlines in this takeover. At that time other Members, including Deputy Toddy O'Sullivan, Deputy Allen and Deputy Dennehy, also expressed their fears regarding the future of the country's only steel plant.

We were told by the Minister of State that the plan presented by the Cork consortium needed to be examined even though the outline of the plan had been presented to the Government before the end of 1988. The full business plan was presented in September 1989. While there is an acceptance that any plan of this nature has to be carefully scrutinised and closely examined we are now informed that it will take another three months or more before a decision is made. That is completely unacceptable to me and — I am sure — to the workers and their dependants.

While the background to the problem is relatively straightforward the public perception is that there is serious disagreement within the Cabinet about this whole issue, so much so that it is now reported that the Taoiseach has directly intervened to sort out differences which have arisen between some of his Ministers. The workers and management in Irish Steel have shown, by their efforts over the last number of years, that they are determined, with dedication and willingness, to co-operate with any reasonable and constructive takeover proposal or international sharing arrangement.

Trade union officials and shop stewards have shown great restraint and responsibility in dealing with this very sensitive and important issue which has economic implications, not alone for the city of Cork and county, but for the whole county. We are all aware that substantial taxpayers' money has been invested in this plant but, more importantly, there are 600 jobs directly involved and another 500 downstream jobs which also depend on this plant. These jobs are vital in the greater Cork area, an area which has already been devastated by unemployment.

Irish Steel, by international standards, may be a small plant but for those workers, their families and the surrounding area — including Cork city — it is a major industry with thousands depending directly or indirectly on its future survival. Is it too much to ask that their future should not become a political football between two Ministers from different parties in a Coalition Government? There is now great urgency to clarify the Government's position in view of the reported statement by Dr. Korf who has indicated that any agreement he had with the Government has now been terminated. I have not heard a denial from a Government spokesperson that this is not so. The deafening silence has created its own fears among many people in that area.

If there are other interested parties involved in negotiations regarding the takeover of Irish Steel there is an obligation on the Government and on these other parties — whoever they may be — to make sure that the same co-operation and openness which was displayed by the Cork consortium will be continued. This, of course, will include the protection of existing jobs and a substantial investment of capital.

There must be a clearcut statement from the Government so that the workforce can be fully informed and any doubts about the plant's future dispelled. Maybe it is time for the politicians to step aside and to let the IDA — or some other Government agency — to take over any outstanding negotiations. It is vital that the public and the workforce and all those depending on the plant should have a clear idea of what is happening. The urgency of this debate is confirmed by the Government's sell off today of Irish Life.

It now appears that the Coalition Government have embarked on a policy of selling off State assets but a Government which embarks on such a policy without protecting the jobs and the taxpayers' money and without full information on the implications for the workforce do so at their peril. It is time for the Government to come clean on Irish Steel and to allay the fears of their loyal workforce. It is time to give hope to their families and to the community who, as I have said, depend so much on Irish Steel not alone for their livelihood but for their very existence.

Would it be possible to comment on this matter for a minute or two?

If the Minister so desires, I am sure the House will agree.

If Deputy O'Sullivan would agree——

I do not mind at all.

As a former long-term employee of the company, I feel I would be letting the side down if I did not contribute to the debate. I agree with most of what Deputy O'Sullivan said. He appealed for Ministers not to make a political football of the issue and I reiterate that. Irish Steel is far too important to the employees and to the locality for that to happen.

I agree with the call for openness and co-operation from any other companies interested in a possible take-over. This is essential and I have no doubt it will happen but I would give one word of caution. I am not anxious to see delays by anyone — the Government, employees, their representatives or management — regarding a take-over. In the past we made serious mistakes, Tara Mines being the classic example of which is being discussed at the moment. I am concerned that we would not go down that road. I ask that the best possible study be carried out and I add my voice to the request from Deputy O'Sullivan for openness. We must ensure that we get the best possible deal, not just for the State, which is important, but also for my former colleagues in Irish Steel and for the Cork area generally which, as Deputy O'Sullivan has said, was totally devastated in the years from 1983 to 1987.

Irish Steel based at Haulbowline, County Cork, is a significant employer in the area. While the plant may be comparatively small when compared to the large integrated steel mills of Europe, we all recognise its employment of around 640 is of major importance to the Cork area. The company are principally involved in the production of structural steel sections which amounted to approximately 280,000 tonnes in the year ended 30 June 1989 and generated a turnover of £80 million for the company.

Because of the nature of the products and the size of the plant in relation to the home market, Irish Steel export over 80 per cent of their annual production. This almost total dependence on the export market leaves the company open to the fierce competition of the European steel market which for many years was dogged by over-capacity and low productivity.

Now unlike many of their European competitors, losses had been a recurrent problem until 1988-89. The main reason for the better performance in the year ended 30 June 1989 was the exceptionally strong demand for structural steel throughout Europe. The manner in which Irish Steel capitalised on this growth is reflected in the fact that the £80 million turnover in 1988-89 represented an increase of 40 per cent on their 1987-88 turnover of £58 million. However, there has been a weakening in market demand of late and it is difficult to estimate how long the more subdued demand for structural products will last. This has specific relevance for the profitability of the company because their output falls into the area of commodity steel rather than more specialised products, such as alloys, which would be less vulnerable to price and volume movements as market demands fluctuate.

Over the years, ISL have received total Government support amounting to roughly £190 million made up of equity, grants, repayable advances and State guarantees. Of this, £143 million has been advanced since 1982 and cumulative losses as at 30 June 1989 amounted to £97.5 million. Needless to say, company losses and state advances of this magnitude were not sustainable and the realism of that situation was reinforced on 1985 by the adoption at European Community level of rules prohibiting State aid for European steel manufacturers. In these circumstances, it was made repeatedly clear to ISL that it was up to them to review the whole range of their operations with a view to containing costs and ensuring that the company were in a position to generate the funds needed for on-going investment. This was the reason the company had since 1985, been engaged in a search for a suitable foreign company which could be of assistance in this regard, unfortunately without success.

It was against this background that the search for a commercial partner that would ensure the future viability of Irish Steel and their workforce commenced in 1988. It was recognised that any partner would be required to bring to the company much needed finance and marketing and technological resources. This inevitably requires the carrying out of a due diligence exercise on behalf of the company, their employees and the taxpayers of this country.

It is in the employees' own immediate and long-term interest that all options for the future of the company are thoroughly and expertly investigated, so that when the Government take a decision on the matter they will do so in the knowledge that the option chosen represents the best way of securing the future of the company and their workforce and also the best possible terms for the State. With this in mind, the Investment Bank of Ireland have been engaged to explore all available options. This is currently being done as expeditiously as possible.

Finally, I would refer the Deputy to the following statement issued on Friday, 9 March.

The Government wish to confirm that negotiations are being undertaken to ensure the future of Irish Steel and the maintenance of its employment. A number of possibilities exist and the Government are confident that, within a period of three months, matters will be successfully concluded and the future of the company and its employment assured.

I do not propose to make any further comment at this time except to assure all concerned that the Government are giving this matter particular attention and it is in the best interests of all concerned that these negotiations and discussions would continue.

The Dáil adjourned at 11 p.m. until 10.30 a.m. on Wednesday, 14 March, 1990.

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