Dáil Éireann díospóireacht -
Tuesday, 2 Mar 1993

Vol. 427 No. 2

Adjournment Debate. - Steel Industry Jobs.

Mr. Mulvihill

I am pleased to have this opportunity of bringing the matter of the future of Irish Steel before the Dáil. I raise this matter, not to cause alarm or to spread feelings of gloom and doom further across our country, but to secure the maximum support for the Irish Steel plant, not only from the Irish Government, but also from the European Community.

I make this speech at a time when the terrible news from Digital in Galway is still hanging over us. I do not want to see another Digital type situation at Haulbowline, County Cork.

There are 560 workers who earn their living at Irish Steel and they are very concerned about their jobs and about the future of the plant. What has been described as "crisis talks" between EC Industry Ministers on the future of Europe's ailing steel industry are at present taking place. We await the outcome of these talks, but it is vitally important that Irish Steel not be put at risk.

In this context, I would like to welcome the recent statement of Ireland's EC Commissioner, Pádraig Flynn, when he stated that the threat to jobs in Irish Steel was non-existent. The Commissioner said that there was no question of Irish Steel closing and we must ensure that this guarantee is maintained. I also welcome the assurances given by the Ministers of State at the Department of Enterprise and Employment, Deputies O'Rourke and Brennan.

However, despite this firm undertaking from Commissioner Flynn, I must confess that I am greatly concerned about the veil of secrecy surrounding the EC's plans to re-structure the European steel industry. Unfortunately, history has all too often shown that the word, "re-structure", means redundancy and unemployment for workers who find themselves trapped in these situations.

I decided to raise this matter in the Dáil after reading a publication from the Commission of the European Communities. I wish to place the following brief quotation from this document on the record of the House.

EC TO CUT STEEL: The European Commission said on Wednesday that Community steel producers must be prepared to accept deeper cuts in capacity in return for EC aid to re-structure the industry. The Commission has proposed a financial package ... to alleviate the economic woes facing steel-makers. The industry is suffering from over-capacity and increased competition from cheaper steel imports from central and eastern Europe.

The Commission proposal was considered at a meeting of industry ministers last Thursday with a view to a final decision in May.

The tragic Digital story must not be allowed to be repeated in Cork. As well as the threat to the Irish Steel workers, there is also the failure of the Cork dockyard in Cobh, beside the Irish Steel plant, to create any real sustainable employment. This is not good enough, and does not measure up in any way to the promises and commitments given two years ago, when this dockyard re-opened.

As I have said, this House must do all in its power to ensure the viability of Irish Steel. The Irish Steel workers have already made great sacrifices and I do not know what more is expected of them. However, I believe it is time to end the uncertainty hanging over their jobs. I ask the Government to guarantee these men their jobs.

Minister of State at the Department of Enterprise and Employment (Mr. S. Brennan)

I thank Deputy Mulvihill for raising this issue. I fully understand his concerns.

First, I wish to confirm the Government's full and wholehearted commitment to the future of Irish Steel Limited. Next I want to make it clear that, although there was never any pressure from the European Community to secure the closure of the Haulbowline plant, at a meeting of Industry Ministers in Brussels last Thursday I pressed for and secured formal recognition of Ireland's special position as a country with only one small steel firm.

Following that meeting I issued the following statement:

At the meeting of Industry Ministers called to discuss the crisis in the European steel industry, the Minister for Commerce and Technology, Seamus Brennan, pressed for Ireland's special position as a country with a single, small steel plant to be recognised in the restructuring of the European steel industry. The Minister's intervention met with a positive response from the Commission and the Member States. This will ensure that the restructuring of the steel industry in Europe, which aims to eliminate 30m tonnes, poses no threat to the 550 jobs at Haulbowline in Cork.

The meeting of Industry Ministers had been called as the Deputy said to discuss plans for the rationalisation of the Community steel industry which is estimated to have overcapacity of more than 30 million tonnes of crude steel. We considered a progress report from the EC Commission on their approach to secure the definition by the steel industry before September 1993 of a precise programme for capacity reductions over the next two years — a programme sufficient to permit a lasting reorganisation of the Community steel sector. The essential basis of this programme which was endorsed by the Council will be the voluntary closure of mainly uneconomic plants by the industry itself. There is no compulsion involved and there is no question of Irish Steel participating in this programme. I am satisfied that is the case after last Thursday's meeting. The EC Commission for its part proposes to support the industry in its restructuring efforts mainly by financial measures aimed at helping the 50,000 or so workers who will be affected. The Commission will also propose to ensure through a balanced package of external trade measures that the restructuring in the Community is not negatived by low priced imports from outside the Community.

It was clear to me from last week's meeting that although we will not be contributing to the cutbacks in capacity it was very important for us all to show solidarity in this matter and I think a very clear signal went out from the meeting to the industry.

Irish Steel, with 90 per cent of its output sold in Europe, is very much part of the Community industry. It is not, and indeed cannot afford to be, immune to the difficulties in the Community market. It has already taken a number of measures funded from its own cash reserves in order to improve its competitiveness. A staff rationalisation programme involving 90 redundancies at a cost of £1.75 million was implemented, restrictive working practices were abolished and an £8 million capital investment programme was undertaken. However, the continuing decline in European steel prices, which have dropped 30 per cent since 1989, has nullified efficiency gains and the company's performance has been further affected by currency losses and market difficulties from the devaluation of Sterling, the Lira and the Peseta. After recording trading profits, before depreciation, for the three years ended 30 June 1991 totalling £16 million, Irish Steel had a trading loss of £1 million in 1991-92 and is facing a substantial trading loss for the current year.

By European standards Ireland's steel production at 300,000 tonnes annually is minuscule at 0.25 per cent of total Community production. Irish Steel has a modern efficient steel plant and under normal trading conditions has operated profitably. Indeed, with almost 90 per cent of its output exported to Europe, it stands to gain considerably from a recovery in the market. I have to say, however, that the companies which will emerge from the current restructuring will definitely be leaner and Irish Steel will have to fight for its share of this more competitive market. I have said this to the company and I wish to reiterate it here that Irish Steel's future can only be safeguarded by continuing efforts on its part to maintain and increase competitiveness. There will be no further threat from the capacity cuts advocated by the European Community, however, that does not take the pressure off the company itself to continue to perform competitively. The State aids code applied to the steel industry is extremely rigorous and it is simply not open to the Government to provide additional funding at will for the company.

There are already some signs of a faint recovery in steel prices which if maintained might soon restore the more efficient companies to profitability. Irish Steel is well placed to benefit from a recovery in the marketplace and I have every confidence that with the co-operation of its workforce the present crisis in the industry can be survived.