I thank you, a Cheann Comhairle, for allowing me raise this most important issue for the people of north west Kildare. A number of my colleagues have requested some time, Deputy Flanagan from Laois-Offaly, who represents the Edenderry area, Deputies Stagg and Power and my constituency colleague, Deputy Dukes. I will endeavour to conclude quickly to allow them say a few words.
Adjournment Debate. - Lullymore (Kildare) Briquette Plant Proposed Closure.
Is that satisfactory? Agreed.
The announcement by Bord na Móna that they intend closing their plant at Lullymore, County Kildare on 5 June next came as a great shock to one of the most efficient workforces here. They have shown whenever it was put to them, they were prepared to meet any targets, comply with any efficiency guidelines, in order to produce and sell efficiently within their catchment area. The workforce have met all the criteria laid down by the board over the years. They are deeply disappointed that there is a proposal to close their plant which is located in an area which has suffered tremendously from the effects of unemployment and job losses in recent years. The area suffered from the loss of jobs in the former shoe factory in Edenderry and in the mushroom industry in the locality. Such effects have been felt all the more severely by virtue of the fact that the workforce at Lullymore are the most dedicated nationwide.
I raise this issue this evening to request the Minister to exercise a number of options open to him. For example, he can evaluate Bord na Móna's proposals for redevelopment nationwide, using Lullymore as a pilot project to develop alternative enteprises, so that that workforce can retain their employment. For example, he can call on Bord na Móna to defer their proposal to close Lullymore until some such possibilities have been examined. I ask him to do so before it is too late and before the spirit of the people of the area has been broken.
The Minister should also be aware that he gave an undertaking in relation to Allenwood power station — which we fully endorsed — ensuring that it remained in existence until all of the available peat had been utilised.
I can assure him that he would receive the full support of all Members representing County Kildare, and others and the admiration of local people if he examined all the options open to him. If not he will be subjected to the contempt of the people of the area.
The Minister has direct, ultimate responsibility for Bord na Móna since he is the owner. Indeed, responsibility for the closure of the briquette factory, if it goes ahead, will lie solely with the Minister for Energy. This factory produces quality briquettes from local raw material, selling all of them at a profit. There is no reason in the wide world this factory should be closed unless it is to be a sacrificial lamb to the God of bookkeeping and right wing ideology. As owner of the factory I ask the Minister ro reverse that decision.
The Lullymore announcement of last week was a devastating blow to the people of north west Kildare, an area which has sufferd enormously from unemployment in recent years. If his decision is not rescinded and the Lullymore factory closes it will have very serious social consequences for the north west Kildare area. I appeal to the Minister to use his good offices to convince Bord na Móna not to go ahead with this planned closure.
Bord na Móna have indicated that the sales of solid fuels have dropped dramatically over the past few years. However, they have to answer a number of questions. Has their marketing strategy been correct? Have they been aggressive enough in tackling the market? It is only since the ban on the use of bituminous coal in Dublin two years ago that they have made any roads into the Dublin market. I call on Bord na Móna to explore the other avenues open to them before they close the factory a Lullymore. The workers in this factory have given great service to Bord na Móna. They have adapted to the new work practices introduced in the factory, co-operated with the company in every way and as previous speakers said, met the targets they were given. I appeal to the Minister to use his good offices to ensure that this factory remains open.
I want to assure the Deputies that my Department and I have been kept fully informed at all times of developments at board level in Bord na Móna. Prior to the recent decision of the board I had discussions with the chairman and received all the relevant information in relation to the proposed closure of Lullymore briquette factory in County Kildare. In the circumstances, there was no need to invoke the provisions of section 18 of the Turf Development Act, 1946. The information submitted to me has already been made available to the press and to public representatives in Kildare by Bord na Móna, with the exception of some commercially sensitive information.
As I have already indicated publicly, I very much regret the necessity for this decision to close one of the four factories due to gross over-capacity in the production of briquettes and the continuing drop in the consumption of solid fuels, including briquettes. I realise the difficult circumstances for the workforce who have given loyal service to Bord na Móna over the years and I know the company will be anxious to do the best they can for them in the circumstances. I have been informed by the chairman that there will be no compulsory redundancies and the staff will be offered the option of redeployment.
In view of Bord na Móna's delicate financial position, there seems to be no alternative course of action. I am informed by the board that this decision will reduce the company's debt by £10 million by the end of the decade. This decision was taken after a careful analysis of all the factors involved and a detailed comparison of the advantages and disadvantages of the four briquette factories at Derrinlough and Croghan, County Offaly, Littleton in County Tipperary and Lullymore in County Kildare. The reasons Lullymore was chosen were detailed by Bord na Móna in information issued to public representatives, and I quote:
(i) Factory production costs at Lullymore are close to 20 per cent greater than the average of the other factories.
(ii) The numbers of employees and the costs associated with redundancy payments at Lullymore are less than 75 per cent of those involved in any of the other factories.
(iii) The factory at Lullymore is considerably disadvantaged by comparison with the other factories in relation to indoor storage facilities.
It is not.
(iv) The impact on sales revenue arising from the closure of Lullymore is considerably less than would occur if any of the other factories were closed.
(v) If a factory is to be closed, the combination of factories which optimises the remaining production capacity in relation to demand is that which excludes the factory at Lullymore.
Total briquetting capacity in the four factories amounts to almost 560,000 tonnes whereas projected sales in the current year amount to about 400,000 tonnes. In effect, capacity exceeds current and foreseeable demand by a little more than the equivalent of a factory's production. Bord na Móna estimate that sales of briquettes will decline over the next decade so that over-capacity will continue to increase.
In 1991 Bord na Móna dealt with their over-capacity problem by closing each of the factories in turn for a period of approximately 16 weeks, but this arrangement did not provide sufficient savings and closure of a briquette factory is seen by the board as an essential element in the drive to improve profitability and secure the long term future of the company.
Any industry faced with a steady long term decline in demand for their products must respond in a commercial manner. Not to do so will only worsen the eventual situation even if the company have a healthy balance sheet to start with. Bord na Móna, on the other hand, are in a very serious financial situation with total debts of over £180 million and a balance sheet deficit of over £70 million. This situation can be improved very substantially by the achievement of cost savings and productivity improvements. The high price paid by the ESB for milled peat bought from Bord na Móna represents an annual burden on electricity consumers of over £30 million. I firmly believe that milled peat should continue to provide a significant part of Ireland's energy resources but the cost must be reduced as much as possible in the interests of competitive electricity prices for the rest of the economy.
In addition, I have already made it clear that, given the continuing pressures on the Exchequer, the question of providing State equity is not an option. The board of Bord na Móna, having completed extensive examination of the issue over the past 18 months, came to what their chairman described to me as "the inevitable decision to close this factory". I believe this decision is a realistic response by Bord na Móna to severe over-capacity in a declining market. We cannot delude ourselves that there are any other easier options open to us as regards the future of Bord na Móna.
A sum of £1 million will have to be paid to these workers in unemployment assistance in the first year.