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Dáil Éireann díospóireacht -
Wednesday, 29 Jun 1994

Vol. 444 No. 6

Ceisteanna—Questions Oral Answers - Viability of Irish Steel.

Richard Bruton

Ceist:

2 Mr. R. Bruton asked the Minister for Enterprise and Employment whether he has satisfied himself with the progress being made to secure the future of Irish Steel; and the further steps, if any, he proposes to take in the matter.

Máirín Quill

Ceist:

4 Miss Quill asked the Minister for Enterprise and Employment the further steps, if any, that can be taken to guarantee the future viability of the Irish Steel plant at Cork Harbour.

Dinny McGinley

Ceist:

8 Mr. McGinley asked the Minister for Enterprise and Employment the steps, if any, he will take to secure the survival of Irish Steel.

Eric J. Byrne

Ceist:

28 Mr. E. Byrne asked the Minister for Enterprise and Employment if he will make a statement on the progress made to date regarding efforts to secure the future of Irish Steel; if he has received any recommendations from the board on the future of the company; and if he will make a statement on the matter.

Bernard Allen

Ceist:

56 Mr. Allen asked the Minister for Enterprise and Employment if he will make an up-to-date statement on the future of Irish Steel.

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.

Why is the Minister so adamant about the deadline of 30 June if both sides are meeting with the assistance of the Labour Relations Commission? Is it not foolhardy to set such deadlines? Will he agree that if everyone adopts the approach of waiting to see who blinks there will be a disaster? Echoing what members of the clergy and the Cork community are saying, will the Minister allow time to settle this in a way which would save the company?

I share the Deputy's concern. It is not an arbitrary timetable. The company is losing money as we speak. The timetable was set out in April following the Simpson Xavier report which was produced after Christmas following previous discussions and negotiations. Postponing the deadline will not change the figures. There is little more to be discovered but if something is found of course any reasonable and sane person would be open to considering it. Postponing the deadline from 30 June to 5 July will make no difference to the need to find savings of £8.4 million.

As we speak, negotiations are underway and I am very conscious of not making any comment which might prejudice their outcome — the matter is much too serious. Has the Minister received any indication as to the way the negotiations are proceeding and whether any agreement has been reached? If he was assured by the chairperson that the negotiations could be successfully concluded, would he reconsider his decision and allow an extension of time so that the negotiations could be completed?

I appreciate the Deputy's comments, and I want to thank all Deputies in the House for their co-operation in this very difficult and sensitive matter. We are talking about the future of 560 jobs in a company which is the lifeblood of a community in Cobh. I understand that progress is being made at the negotiations. The net points of the negotiations are well known to everybody at this stage. As I speak, there are 36 hours remaining for the negotiations and I hope that these points and any additional information which may have been outlined in SIPTU's confidential consultants' report will be of assistance in arriving at savings of £8.4 million. I have no prescription as to how the savings of £8.4 million can be made but I am reliably informed that this is the net saving required. If agreement can be reached by 30 June so much the better, but if the chairman says an extra few hours will ensure that the negotiations can be completed successfully then, of course, I will be reasonable.

To respond honestly and frankly to Deputy Quill's question, I would not like it to be taken that the negotiations can be let run on indefinitely. The Government and I — and other Ministers have had responsibility for Irish Steel from time to time — want to see a satisfactory solution and if a little more time will produce this, of course I will respond positively. In saying this I want to make it clear that the deadline by which they must report is 30 June, at which stage I will review the position.

Given his indication that once he knows the position he may be flexible and extend the deadline of 30 June, how does the Minister propose to deal with any legislation necessary for investment in Irish Steel if the Dáil is not in session? Does he propose to introduce legislation which would give him the capacity to deal with this issue? An extra half an hour or hour may not be sufficient to solve all the issues. Will the Minister make extra time available if discussions are proving fruitful? If he imposes the deadline there will be a loss of 560 jobs on Friday and a receiver will be appointed on Monday. Those are the stark and tragic consequences of inflexibility.

I am very conscious of the points made by the Deputy and I know Deputies on all sides of the House would not want me to make a comment which might prejudice the outcome of what I understand are fairly productive negotiations. That said, I believe a restructured Irish Steel can be a viable commercial entity and I will do everything possible to ensure that this is the case. The company is losing money on a monthly basis but at least the unions and management are talking to each other in a constructive and calm manner with a desired and shared objective. This lesson might usefully be transported north of Cork.

How does the Minister propose to deal with an injection of funding?

I am sorry, Deputy, but I cannot permit any other Member to intervene at this stage.

It was just a reminder.

How does the Minister propose to deal with the legislation? In the event of a satisfactory conclusion to the negotiations is he satisfied that the maximum number of jobs will be retained in the plant? The aim must be to guarantee the viability of the plant and to retain the maximum number of jobs in order to ensure the preservation of the plant and underpin the local economy which benefits to the tune of approximately £7 million per year from the plant.

I apologise for not answering Deputy Bruton's second supplementary question. I am assured by my officials that I have the necessary legislative powers in the short term to respond to any rescue plan for Irish Steel. If subsequent legislation is needed to enlarge the plan this can be done in due course. There is no legislative impediment to the implementation of the survival plan.

I share Deputy Quill's desire that Irish Steel should be put on a sound viable footing. All State companies can and must be sound, commercial and innovative. The state-owned Renault car corporation in France is the sort of model to which we could usefully look in this regard. There is an additional factor to which we should have regard, that is, after Spain we have the highest level of unemployment in the European Union. The maximum number of jobs possible should be retained in the plant.

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