I wish to share my time with my colleague and party spokesman on Labour, Deputy Tom Kitt.
Adjournment Debate. - County Wicklow Plant.
That is in order.
I am grateful for the opportunity to speak on this issue. Woodfab's sawmilling operations are located at Aughrim and Fermoy. The company has a total workforce of 213, of which 155 operate at Aughrim and 58 at Fermoy. Of the 155 workers at Aughrim, 65 have been laid off in recent weeks, 57 yard workers and eight office or supervisory staff. I understand the eight office staff are allied in the dispute to the yard workers who have been laid off.
It seems extraordinary that at a time when the economy is booming and the construction industry is flourishing, timber workers in Wicklow are being laid off. It is even more extraordinary when one considers that Wicklow is the premier forestry county. The grave concern about these layoffs in the Aughrim and general south Wicklow area is understandable, particularly in relation to business people and their workers who will feel the brunt of this extraordinary situation.
Aughrim forms part of the south Wicklow hinterland of the town of Arklow, and Arklow and its surrounding areas have been blighted by unemployment for the past two decades. The rundown in traditional industries has resulted in the loss of 3,000 jobs and this latest tragedy simply cannot be allowed to happen. Urgent and potent action is required forthwith in the form of ministerial intervention.
I have spoken with the workers and senior management in Woodfab as well as Coillte Teoranta representatives at director level. All those I met were very forthcoming with information but it is obvious that a powerful catalyst is required immediately to address this problem, to bring about a solution and to save these jobs.
There is a long standing dispute between Woodfab and Coillte Teoranta and between the Irish Timber Council and Coillte in regard to timber prices. That appears to be an underlying factor in this crisis. In the time available it is not possible to go into detail but I ask the Minister to take up this matter immediately.
I ask the Minister, in liaison with his colleague, the Minister for Agriculture Food and Forestry, to seriously examine the relationship between Coillte and the sawmill companies. I understand a new timber sales regime is to be put in place. That should be expedited.
There is little sense or joy in reading the accounts of Coillte Teoranta while layoffs of this level obtain in the premier forestry county. The situation at Woodfab is ludicrous. Many long serving skilled office and yard workers may lose their jobs. It is obvious that heads must be knocked together and logic applied if this dispute is to be resolved.
I support my colleague, Deputy Jacob, and echo his concerns about the valuable jobs that are in jeopardy as a result of a number of factors. I hope the Minister of State can give Deputy Jacob and myself some reassurance that the Government intends to take action because the news from Woodfab is worrying. People who have been working with this company for the past 30 years are being laid off. They have made an enormous commitment to this company.
Some of the causes underlying this problem relate to the fact that the Woodfab logs are too expensive and the production value has thus declined. Coillte's pricing policy is an issue in this debate in addition to the fact that Woodfab must compete with the timber producing industry in central and eastern Europe.
The Government should establish an independent regulatory authority to decide on a proper pricing policy for timber because Government intervention is clearly required. The Minister and the Government should be concerned when they hear a SIPTU official criticising Ministers for their lack of interest and lack of action on the loss of these jobs. As the SIPTU official said, this dispute has lasted since last June yet the Government has not shown any interest in it.
We have all been impressed with Coillte's work over many years and we have seen the impressive planting throughout the country. We have waited for the obvious investment to materialise into real jobs. Most lay people would expect new jobs to be provided as a result of the tremendous work done by Coillte rather than the job losses that are now taking place. They cannot understand what is happening and clearly expect the Government to intervene. The pricing policy for logs must be dealt with and the Government must intervene directly to save these valuable jobs.
I have been asked by the Minister for Enterprise and Employment, who is abroad on official business and unfortunately cannot be here this evening, to reply to the Adjournment Debate on his behalf.
At the outset, the Minister wishes to assure the Leas-Cheann Comhairle, Deputy Jacob, and Deputy Kitt that the proposed redundancies at Woodfab Limited are a matter of great concern to him. He fully shares their anxieties at the effects this will have on the workforce and consequences for the local economy.
Woodfab is a 100 per cent subsidiary of the Smurfit Group and was acquired in the late 1980s. The company has two manufacturing locations, namely, Aughrim in Wicklow employing 157 people and Fermoy employing 58 people. From inquiries made with Forbairt the Minister understands that due to difficulties in both the Irish and UK markets, the company is planning to rationalise the Aughrim plant. This will involve closing down its large log line with a loss of 29 jobs; a closure of its night shift operations, part-time workers, with a loss of 28 jobs and a reduction of eight staff employees. Woodfab claims that high log prices are the main factor for these job losses but accepts that the failure of the company to invest in new technology over the past eight years is also a factor. The sawmilling sector is critical to the long-term success of the Irish forest products industry. The sector processes all of the sawlog produced by Coillte and it supplies the board mills with sawmill residues. This residue represents 50 per cent of the logs.
Significantly capacity increasing investment took place in the late eighties and early nineties which has resulted in serious sawmilling over-capacity. While a number of these top mills — 80 per cent of timber is processed by eight mills — are competitive by international standards, the sector has not generated sufficient profits for reinvestment in new technology and the development of new innovative added value products. A number of factors have contributed to this low level of profitability, namely over-capacity in primary processing which has created a strong demand for logs resulting in high log prices, even by international standards; residue prices are low compared to international prices. This issue should be resolved when LPC Louisiana Pacific Coillte Ireland Limited — in Waterford and the Masonite plants in Carrick-on-Shannon, County Leitrim, are in full production; strong competition on the home market forcing down prices at very competitive levels; exports have reduced due to the high value of the punt vis-à-vis sterling and the main export market, i.e., the UK, is being supplied to a greater extent by new exporting countries with cheap timber and labour costs, i.e. Lativa and Estonia. Overall the sector is experiencing severe difficulties because of high log prices.
Under the Forestry Act, 1988, Coillte Teoranta has a commercial mandate to sell its timber on an equitable basis. Coillte sells its timber mainly through the tender system and it is open to all sawmills to tender for that timber. Coillte's commercial mandate requires it to maximise the price it obtains from its timber sales.
Discussions are on-going with the representative body of all the major sawmillers in Ireland, the Irish Timber Council, of which Woodfab is a member, for the purpose of putting in place a new timber sales system. The new regime will be based on an electronic bidding process and will include more regular timber sales. It is envisaged that the new system will better meet the current and future needs of sawmillers in marketing fluctuations and raw material demands. As with the current system it will be open to all sawmills to bid for timber on offer.