I now come to a Private Notice Question to the Minister for Enterprise and Employment in relation to the threatened job losses at Verbatim, Limerick. I call on Deputy Mary O'Rourke to put her question to the Minister. I greatly regret that time has run over by some minutes because I wanted to facilitate Deputy Wallace. I call on Deputy O'Rourke to put her question to the Minister.
Private Notice Question. - Limerick Job Losses.
A Leas-Cheann Comhairle, before Deputy O'Rourke——
Deputy O'Rourke has been called.
Why does the Chair allow the Minister to answer questions by making statements?
I ask the Deputy to resume his seat and raise the issue with his colleagues.
The Minister did not answer one question about the four occasions he misled us. It is a disgrace.
Deputy O'Rourke to put her Private Notice Question to the Minister.
I do not think I can pour oil on troubled waters, but we will do our best.
What steps, if any, does the Minister for Enterprise and Employment intend to take to avert the job losses which are threatened at Verbatim in Limerick?
Verbatim was established in Limerick in 1979 by Verbatim Corporation of the US to manufacture floppy discs. In 1990 Verbatim was taken over by Mitsubishi Kasei Corporation which became Mitsubishi Chemical Corporation in 1994, one of Japan's leading chemical, plastics and computer media companies with sales of US$15 billion in 1996.
In recent years the company has been faced with increasing competition from low cost countries and the prospect of product obsolescence.
Arising out of a review of the worldwide floppy disc market, Mitsubishi Chemical decided that employment at the Limerick plant would reduce by approximately 220 people to approximately 180. The House will realise, of course, that while the support agencies play an important role in helping industry to develop and expand, much depends on the external trading environment and the competitive intensity of the market segment in which a company positions itself.
IDA Ireland is continuing to work with management at the Limerick plant to see whether additional products or functions can be assigned to the Ireland Verbatim operation.
IDA Ireland has also continued to explore other opportunities for investment in the Limerick area generally. For example, the Deputy will be aware that last month I announced the establishment of PKS Information Services, a computer outsourcing and systems integration company who are creating 126 jobs over three years. Other announcements in 1996 were the 60 job expansion at Schaffner Interpro and the 27 new jobs at Form Grinders Ltd.
Further employment opportunities for the Limerick area are also being actively pursued and I am hopeful that these will be productive. The services of the industrial development and training agencies will continue to work to promote employment in the Limerick area.
The Minister said IDA Ireland continues to work with management at the Limerick plant to see whether additional products or functions could be assigned to the Verbatim Ireland operation. However, today's edition of The Examiner quotes an IDA spokesman as regretting the Verbatim announcement but saying he fully understood the commercial reasons behind it. If one was feeling benign one might regard that as a practical statement but it does not tie in with the Minister's assertion that the IDA continues to work actively to see if additional functions or product making could be assigned to Verbatim. What has the Minister and the IDA done to protect the remaining jobs and, if possible, prevent further job losses? There seems to be a distinct complacency in the IDA statement which does not match the Minister's remarks.
I assure the Deputy there is no complacency on the part of either me or the IDA. The agency has worked with Verbatim for a considerable time and looked at other possible product developments. Most people recognise that the floppy disk technology in which Verbatim is involved is being superseded by CD-ROMs, for example. That has meant a dramatic change in the company's market position. The IDA strategy with Verbatim, the strategy of many other countries in similar positions, is to look at new product development opportunities. The agency and the company have looked at one possibility and are actively working together on other possibilities. As the Deputy will appreciate, having worked in this Department, the difficulty is that even with good early warning systems some projects inevitably do not survive, given the nature of business competition and changing technologies. Our strategy with Verbatim is to seek to redirect the company into areas of the marketplace which can grow, thrive and provide secure employment.
Does the Minister accept that the loss of these permanent full-time jobs, after the job losses in Packard, Semperit and Tambrands, is a worrying trend? To what does he attribute this trend?
Redundancies in Ireland are at an all-time low. In terms of the five year average we are at our lowest point for many years. There is not a widespread desertion of Ireland by companies, international or otherwise. There is no "flight of the earls". At times companies get into extremely difficult market conditions; they may face competition from low cost countries or be working in areas of technology which are being superseded. That creates pressure and every country in the world experiences a natural turn around of types of industry, some in decline, others in growth. Ireland has been extremely successful in positioning itself to avail of high growth companies, as can be seen from the fact that the IDA's record is even better this year than last year, which was better than the year before.
The projects mentioned by the Deputy are large but individual cases do not indicate a trend from the point of view of Ireland's ability to attract overseas industry. We have had good overseas companies who have been here for long periods but individual companies get into difficulties at times and closure and downsizing are parts of commercial life, unfortunately. This Government's strategy — which I think is the only strategy to pursue — is to redirect ourselves into areas of high growth, where job prospects are secure. We are vigorously pursuing this strategy.
The Minister talks as if Verbatim was set up many years ago. In early February 1987 the Minister for Industry and Commerce, Deputy Noonan, made the dramatic announcement of investment of £60 million in that firm. On that occasion he promised that a great number of new jobs would come on stream. Can this Minister say how much of that £60 million was invested in Verbatim and how many jobs it realised?
Verbatim was established in 1979.
I am talking about this investment.
It had a period of growth and would have reached its peak about 1989, when it employed roughly 600 people. The company has had a long history in Ireland and it was successful when that market was on the crest of the wave. The IDA has worked with the company in looking at new areas of technology but unfortunately today's announcement reflects Verbatim's inability to identify new product opportunities for its Limerick plant. However, we are continuing to look at new opportunities with the company. The floppy disk market has become extremely difficult — it is subject to severe pressures from low cost countries and there is excess capacity. It is this which has driven Verbatim to make its decision. I am confident there are job opportunities in the pipeline for Limerick and I hope new projects will materialise. I am heartened to see that last year 9,000 more people were at work in the mid-west region. The area has a strong, buoyant economy and I intend to vigorously pursue job opportunities for Limerick.
The Minister did not answer my question. It is regrettable that so many full-time and part-time workers have been laid off. I asked the Minister whether the £60 million investment announced in February 1987 was made and how many jobs it realised.
The information available to me does not contain the investment sums. I know grant payments were made to the company which realised 620 jobs at peak in 1989. The company has unfortunately not been able to maintain its competitive position in this market and, as the Deputy says, it is extremely regrettable that 220 jobs have been lost. However, I am confident that replacement industry can be found for Limerick and I am heartened by the buoyant nature of the mid-west economy, which is attractive to inward investment. We can look forward to good opportunities for the future.
Will the Minister ask the IDA to reply to my query about the £60 million investment?
The £60 million would have related to the company's investment. The IDA has standard grant agreements, as the Deputy is aware, and it only makes grant payments in accord with capital commitments. My information is that it made substantial grant payments and the jobs were largely realised at the time of the investment. There would be normal "pay back" clauses if the company failed to realise the commitments; grants are not paid if the jobs are not realised.