I propose to take Questions Nos. 2, 4, 8, 28 and 56 together.
Last April the Government considered the survival plan for Irish Steel Ltd. and approved the opening of negotiations between management and unions to achieve the levels of cost reductions and efficiencies needed to enable the company to continue in business as a viable commercial entity. This plan was prepared by the then chairman of the company, Mr. Diarmuid Quirke, and identified minimum net savings of £8.4 million per annum. This is the plan which the new executive chairman is negotiating with the unions and the cost savings identified in it are in those areas identified in the Simpson Xavier report.
Savings must reach at least £8.4 million net per annum as a basic minimum and there is no room for compromise or fudge on that. Indeed, with losses at Irish Steel continuing to average in excess of £1 million a month it is clear that the company will have to find further ways of reducing costs and making economies to bridge the gap between the planned net annual savings figure of £8.4 million and annual losses of over £12 million. Ways of achieving these additional savings are being examined by the Irish Steel board and will not require a further contribution by the workers at the plant.
Unless agreement is reached by tomorrow on the cost savings package there can be no question of further Government investment in Irish Steel. Without cost savings of at least £8.4 million net and further State investment there is no future for the company. Closure, regrettably, is the only alternative. I have repeatedly made that clear. I have also made clear the implications of closure. It is the immediate loss of 560 jobs. Further job losses in other local industries which supply goods and services to Irish Steel would also be inevitable. Admittedly job losses are envisaged under the cost savings plan but there is a big difference between the 151 redundancies in the plan and the 560 redundancies which closure of the plant would entail.
The European steel market continues to be extremely difficult and while recent events in Brussels suggest that the European Commission's restructuring plan for the industry, which involves capacity cutbacks of at least 19 million tonnes in hot rolled products and 70,000 or more job losses, is back on track it is still too early to say whether it will be successful. An improvement in steel prices would be expected to follow its successful implementation and this would, of course, benefit Irish Steel. However, given the company's scale of losses an improvement in steel prices would not, in itself, be sufficient to eliminate the cash haemorrhage and achieve commercial operation.
Furthermore, in regard to the European Commission the regime on State aid operated by it for the steel industry means it would be necessary to secure the unanimous approval of all the other member states to any further State investment in Irish Steel. An important aspect to getting this approval would be to show that Irish Steel can function as a viable commercial entity in the market-place. Irish Steel as it stands is not viable and cannot hope to be unless the £8.4 million net cost savings are agreed and implemented in full as soon as possible.
The 30 June deadline set by the Government for the conclusion of negotiations with unions is upon us. Even at this eleventh hour I appeal to all concerned, with the assistance of the Labour Relations Commission, to use what little time remains to reach agreement on the cost reductions plan. The scale of the company's losses does not allow the deadline to be extended or a smaller cost reduction package to be agreed. Should the Irish Steel board report to me on 30 June that the management and workforce have not been able to achieve agreement on the cost reductions plan, I will regrettably have no option but to recommend closure of the plant to Government. That, unfortunately, is the harsh reality facing us all.