Adjournment Debate. - County Kerry Job Losses.

I thank you for allowing me to raise this very important local issue. The announcement by Melchert Electronics Limited that due to a downturn in business, coupled with the negative effect of exchange rate problems, they have been forced to make a number of workers redundant was greeted with great disappointment and concern by both the workforce and the people of Listowel and North Kerry. It is expected that the number of redundancies will be in the region of 35. However, I am fearful that there may be more job losses if the Government do not initiate an emergency relief programme to retain the maximum possible number of jobs in the factory.

These job losses are a shattering blow to the economy of Listowel and its hinterland. Listowel is already a black spot for unemployment. Last week 1,900 people signed on for unemployment assistance and unemployment benefit at the employment exchange; 700 of these are living within a six-mile radius of Listowel. The loss of these full-time jobs will add further to the existing gloom and with the approach of Christmas it is a harsh body blow to the families involved.

Melchert Electronics Limited was established in Listowel in 1977 and commenced production of single-sided printed circuit boards with a workforce of ten people in July of that year. This had grown to 40 people by the end of 1977. In 1985 a major extension was provided and in 1987 Melchert became part of Krupp Atlas Electronics Group. In 1991 the workforce was 156 and turnover was in excess of £5.6 million. The workforce now stand at 148.

Melchert Electronics has been a great and consistent employer over the years, with an excellent industrial relations record. It has always been a highly regarded employer and has had a major impact on the economic life of Listowel and North Kerry. Melchert manufacture customised printed circuit boards for all segments of the electronics industry. It exports 48 per cent of PCBs to the United Kingdom. Because of the decline in the value of sterling it has lost a considerable amount of money in the UK market. The whole electronics industry is going through a bad patch.

If Melchert Electronics is to have a viable future in the very competitive field of printed circuit board production, it needs to upgrade its technology. However, there are no grants available for re-equipment from the IDA, following the decision by the Government to withdraw grants for upgrading equipment. I call on the Minister to reverse that decision and to restore grants for the modern technology required. It is imperative that the Minister should provide assistance for Melchert Electronics from the market development fund of £50 million established by the Government recently to assist firms which have been seriously affected by the recent turmoil in exchange rates. The dramatic fall in the value of sterling since mid-September has caused immense difficulties for Melchert Electronics.

In order to avoid further redundancies and secure existing jobs it is vital that the Minister accept the application from Melchert management for a market development grant. He should also make every facility available to them to ensure the survival of their company and workforce.

I have been keeping myself informed of the situation affecting Melchert Electronics Limited and I share the Deputy's concern at recent developments which have led to the announcement of redundancies at the Listowel plant.

The company performed well until recent years when losses were incurred due to severe price competition on the company's export markets. The IDA were very much aware of these difficulties facing the company and, over the years, have been keeping in ongoing contact with the company's management in an effort to assist them in the long-term development of the Irish operation.

The Deputy will appreciate that the electronics industry is global in nature, highly competitive and characterised by short product life cycles. The product segment of the market in which Melchert operate has in particular been subject to increasing price competition from the Far East and also rapid technological advancements in the production processes. These factors have tended to erode profit margins for producers in this market.

I am advised by the IDA that the continuing recession in the UK has caused considerable difficulties for Melchert's Listowel operation and losses have accrued as a result. This situation has been further exacerbated by the recent dramatic fall in the value of sterling and the ongoing turbulence in the currency markets.

These factors are obviously a matter of serious concern to the German parent company and the IDA advise me that the company had no option, faced with severe competition, technological change and a deteriorating trading position but to implement 40 redundancies out of a total workforce of 150 approximately. As the Deputy is aware, I have no direct responsibility for the action of the German parent company or any other firm in the running of its business. However, unfortunately, it must be appreciated that painful action is often necessary as to delay such action could lead to more drastic steps at a later stage.

I am, of course, acutely aware that manufacturing firms face serious difficulties in maintaining positive margins in sales in the UK market as a result in the change in the value of sterling. For this reason, the Government have taken positive steps through the immediate establishment of the market development fund of £50 million for the period up to the end of March 1993 to assist firms which have been seriously affected by these developments. This fund is administered by a special management team drawn from experienced executives from a number of State bodies. The team is responsible for the day-to-day running of the fund, the operation of the eligibility criteria and all decisions on whether applicants qualify for support and the level of support, if any, to be made available.

I understand from the IDA that Melchert has applied for assistance under the market development fund and every effort will be made to ensure that the company is facilitated, in so far as possible, to overcome the current problems. In this regard, I can assure the Deputy that the IDA are keeping in close touch with the situation at the company and I have asked them to continue to endeavour to ensure that every effort is made to safeguard the maximum number of jobs possible at the Listowel plant.

In conclusion I would add, that I am conscious of the employment situation in the Listowel area and of the impact, both economically and socially, of the job losses at Melchert. I can assure the Deputy that both SFADCo and the IDA will continue to intensify their efforts to increase employment in the Listowel area. Indeed, I understand that the availability of a 20,000 sq. ft. factory unit, which is in excellent condition, is a valuable asset in the overall marketability of the area for industrial development.

The Deputy will realise, however, that while support agencies play an important role in helping industry develop and expand, much depends on the external trading environment. It is, unfortunately, the case at the present time that many of the markets on which we depend, particularly the UK, are experiencing prolonged recession.