Dáil Éireann díospóireacht -
Wednesday, 12 Jun 1991

Closure of Briquette Factories.

Mr. Enright

Tonight I raise a most important matter affecting two important factories in County Offaly. This evening Derrinlough and Croghan briquette factories ceased to function and are closed for the next 18 weeks, save for maintenance staff in each factory.

There are four briquette factories in the country — Derrinlough, Croghan, Lullymore and Littleton. In 1988 and 1989 the sales of briquettes were £23.4 million and they accounted for 20 per cent of the company's total sales.

My reasons for opposing the closure of Derrinlough and Croghan briquette factories are as follow. Approximately 60 workers will be laid off in Derrinlough and approximately 45 workers will be laid off in Croghan at a time when they should be at peak production during the summer months. The Government must be aware that such job losses across Offaly are a matter of deep concern to me as somebody elected by the people of Offaly to speak on their behalf in Dáil Éireann.

I am opposed to these closures. I believe they are wrong and unnecessary. Unemployment is already too high in the country. These lay-offs will aggravate further an already difficult situation, made even worse by the announcement yesterday about Atlantic Mills, a textile firm in Tullamore which is laying off approximately 35 workers.

I have already written to the managing director of Bord na Móna and asked him to reconsider the decision to close Derrinlough and Croghan briquette factories.

My main reason for raising this matter here tonight is to bring to the attention of the Minister for Energy, as a member of the Government, some points I believe are of the utmost importance. Briquettes and turf are indigenous fuels which provide a great number of jobs in the midlands. Jobs are high on Fine Gael's priority list, as is a clean environment. The Government speak about a clean environment, yet not alone are they allowing a tax on briquettes and turf but they have increased VAT from 10 per cent to 12.5 per cent.

Burning briquettes and turf benefits the economy by savings on imports of coal and oil. The Government are imposing a tax on environment friendly fuel. Briquettes and turf should be zero rated and if there is some difficulty with this under EC law, then the maximum VAT rate should be 1 per cent.

In the last three to four years nearly 2,000 jobs have been lost in Bord na Móna, which has had a very severe impact on the economy of the midlands. It has been a major disappointment to Bord na Móna, the people of Offaly and the people of the midlands, that the Government did not provide any type of material support for Bord na Móna. Bord na Móna's financial position was due in large measure to their making major investments in indigenous resources as part of the Government's energy policy, but now that international energy prices have fallen Bord na Móna and their staff have been left high and dry by both Fianna Fáil and the Progressive Democrats. Bord na Móna are handicapped by a huge debt of about £100 million which costs the company approximately £22 million in interest repayments each year.

In speaking for the people of Offaly, and particularly the workers in Derrinlough and Croghan, let me say that even at this stage the Government should recognise the importance of maintaining our four existing briquette factories. Briquettes and turf are indigenous, clean fuels. Natural gas is equally clean, and it is Irish. BGE gave a £600 voucher to encourage people to install the natural gas in their homes and allowed a 50 per cent discount on therms used above a certain figure. Rather than letting go 100 workers in County Offaly, the Government should display an understanding of the seriousness of what is happening to Bord na Móna. Their sales in Derrinlough have been excellent and there are also excellent staff-customer relationships. Sales in Croghan have been equally good and there is a similarly good relationship there between staff and customers. Bord na Móna workers and staff have made tremendous sacrifices to ensure the survival of their jobs and of the company. Such efforts deserve a much better response from the Government than being told they are to go on the dole for four months.

I have known Bord na Móna workers over the years and they take pride in their work and in their company. They never wanted the dole. These factories should be kept open and the Government have it in their power to ensure that.

Minister for Energy (Mr. Molloy)

In order to ensure the facts are presented to the House, let me say at the outset that briquette production capacity in the four factories, Littleton, Derrinlough, Croghan and Lullymore, amounts to 568,000 tonnes per annum while the estimated volume of sales in the current year is 396,000 tonnes. I should make it clear that the temporary closures of the factories is a decision made by the board as part of their day-to-day activities and thus did not require my consent as Minister for Energy or that of the Government. It would be quite improper of me — and I do not believe that the House would find it acceptable either — to seek to interfere with the board carrying out their statutory functions. Nevertheless the board have notified me of their proposals in view of the importance of the matter to the workers concerned.

I think it is important that the temporary closure of the company's four briquette factories at Derrinlough, Croghan, Littleton and Lullymore be viewed in its proper context. This decision by the board stems from the company's recurrent problem of briquette production over-capacity combined with a high level of stocks on hand at present. It also takes account of the board's need to tackle the current high level of borrowings.

While I fully appreciate and share the Deputy's concern for the effects of these closures on the workforce and on the local communities, I believe that the board's emphasis on improving the profitability of the company, while it may have painful effects in the short term, represents the best means of ensuring the long term viability of the company. The Government are determined to ensure that Bord na Móna should be in a position to continue to make a significant contribution towards the national energy requirement and in doing so provide viable and sustainable employment.

The House will be well aware that Bord na Móna have encountered severe financial difficulties in recent years. The board and management have undertaken, with the co-operation of the workforce, a major reorganisation and restructuring designed to address these problems. The company has been divided into three divisions, dealing with separate areas of its operations. Worker enterprise schemes, new technologies and a number of other operational measures have been introduced in order to improve efficiency. All of these measures are designed to ensure that Bord na Móna operate in a commercial fashion and are structured so as to increase competitiveness in the marketplace. This, in turn, will enable them to maintain secure and viable employment and allow them to continue to contribute to regional and national prosperity.

Peat will continue to have an important role in the national energy market. The efficient development of our indigenous energy resources forms a major part of the Government's energy policy. The benefits of having this secure sources of indigenous energy are considerable. It improves the balance of payments situation by reducing our reliance on imported fuels, improves the security of fuel supply and, of course, provides significant economic benefits to the national economy and particularly to the Midlands region.

It must be recognised that there is a serious difficulty with briquette production over-capacity. The total production capacity in the four briquette factories at Littleton, Derrinlough, Croghan and Lullymore is significantly higher than the company's estimated level of briquette sales. While the ban on the sale of bituminous coal has enabled the company to increase their share of the solid fuel market in the Dublin market, this increase has been largely offset by the decline in the overall size of the Dublin solid fuel market together with increased competition from private turf producers in rural areas. The board are fully conscious of the need to consider all options to increase the volume of briquette sales and are actively seeking to do so.

The temporary closures, for approximately 16 weeks in the case of each factory, have been specifically arranged in order to coincide with the period of lowest sales of briquettes — the summer season. I have been advised by the board that the closure period will be used to undertake the annual overhaul of the plants. This process takes about three weeks and will require the presence of all staff. In addition, sales will continue during the period of the closure and some necessary administration and security cover will be required. Having allowed also for three weeks annual leave by all staff and by rotating the available work on sales, administration and security among all the employees, the board estimate that the average length of lay-off per employee will be approximately six weeks.

I might mention that the current temporary closures are not unique. There have been similar closures in the past, usually owing to local circumstances. The Croghan plant, for example, was temporarily closed between December 1989 and February 1990 owing to their being an excessive build-up of briquette stocks at the factory at that time. I should point out also that I have been assured by the board that the temporary closures will not affect the company's ability to meet all demands for briquettes in the next heating season.

The board have acknowledged the contribution being made by the workforce at Derrinlough, Croghan and indeed at all of the other works to this necessary reorganisation of the company. For my own part, I have been impressed with the way in which the close co-operation between the board and the workforce — required to ensure the success of the reorganisation — has been forthcoming.

The position, in summary, is that the temporary closures have been decided on by the board in order to tackle the problem of production over-capacity in the context of an overriding need to reduce their level of borrowings. The board have arranged these closures to coincide with the period of lowest sales and in a manner specifically designed to minimise the effects on the employees concerned.