A Leas-Cheann Comhairle, who is replying on behalf of the Government?
Adjournment Debate. - Plant Closures.
The Minister of State at the Department of Enterprise, Trade and Employment.
It is always good to see the Minister of State in the House but I would have preferred if the Tánaiste had come in tonight to reply on such an important issue.
The Minister is very busy.
There are 500 workers in Limerick who will not be very busy in the near future.
The announcement on Friday that Krups would close with the loss of 500 jobs is a tragedy not only for the workers who will lose their jobs but for the communities in the neighbourhood of the Krups factory and for Limerick city and county. Krups was an internationally known company when it set up in Limerick in 1964. Its reputation in Germany and throughout the world at that time was for expertise in heavy engineering and its decision to set up a light engineering firm in Limerick was a cause of great celebration. It was a major success for the then new policy to revolutionise manufacturing industry in this country by attracting well-known international companies to set up in Ireland.
Krups in Limerick specialised in electrical household goods. It provided excellent employment over the years and in the 1970s employed in excess of 1,500 people. In recent years, Moulinex, a French based company, took over the household appliance section of Krups. There was a scaling down of both production and employment and when the announcement came on Friday last, 500 people were in permanent employment at the plant.
The announcement was a major surprise even to the workforce. A total of 150 part-time workers had been let go in late spring and when the workers assembled on Friday morning to hear a special announcement from management, they were expecting at worst an announcement that everybody would be put on a three day week.
The causes of the closure at Krups have been well recited since Friday and I will not go into them here. I have, however, on behalf of the workers and management of Krups, three demands to make of the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney. I demand that the Tánaiste state clearly when she knew that Krups would close and the action she took to forestall the closure. Is it true she visited the headquarters of Moulinex in France several weeks ago to discuss the closure and that, in the course of these discussions, she was allowed participate in organising the arrangements for closure? What does she say to the allegation that the management of Moulinex allowed her and her IDA advisers to choose between the closure at Limerick and a possible closure at the Krups plant in Thurles, and that the Irish participants opted for the Limerick closure? If this is so, what were the considerations which led to this choice?
I demand also that a proper compensation package be quickly negotiated with the workforce. The workers are highly skilled and on a gender breakdown it is 70-30 in favour of women. Many of the women come from communities adjacent to the plant and are the sole wage earner in the family. When I visited Krups on Friday, the first person I met was a young woman with tears in her eyes who said she had a mortgage, four children and a husband who is unemployed, and she will not have a job after Christmas. Other workers have their own stories, some very tragic. Almost all the workers need new jobs quickly and decent redundancy packages in the meantime to bridge the gap between closure and re-employment. Taking into account the excellent record of the workers, the fact that not a single job was lost through industrial action in 25 years and the unexpected nature of the announcement, anything less than six weeks' redundancy payment for each year of employment, in addition to statutory redundancy, is the minimum acceptable package.
As well as decent redundancy payments I expect management at Krups and the Government agencies to put in place a major out-placement programme for workers seeking immediate employment. FÁS should carry out a skills audit in Limerick city and county and organise appropriate training for ex-employees of Krups in those skills where a shortage is identified. Out-placement alone, however, will not solve the problem. The Krups plant is modern and effective. It is the only major manufacturing plant within the city boundary. Its workers are drawn from particular neighbourhoods and, without exaggeration, the Krups plant is vital to the future of these neighbourhood communities. If Krups' workers are scattered throughout the region, the community closest to the factory will die economically.
The Tánaiste's task force, chaired by the IDA, must ensure an appropriate replacement industry is set up in the Krups plant as quickly as possible and that job offers in this new plant will be made in the first instance to workers redundant from Krups. No other solution is viable. The task force, if it is to be effective, will need the strong political backing of the Tánaiste to ensure the Krups plant is given top priority by the IDA as a location for overseas manufacturers interested in setting up in Ireland.
The closure of Krups was a sad day for Limerick but it is only one of a series of closures in recent weeks. The House is conscious not only of the Krups closure but of the redundancies at Fruit of the Loom in Donegal and the redundancies announced in Mullingar which will shortly be discussed in the House. The Tánaiste must clarify whether these are once-off, unconnected events or part of a pattern. If they are part of a pattern, she must state the underlying causes for this spate of redundancies and the policy changes she intends making to forestall further redundancies. I would like her to give an indication of the prospects for inward investment in industry in 1999. Is the IDA pipeline drying up and, if so, what are the implications for the national economy?
I am pleased to deputise for my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, who, due to a prior commitment, could not be in the House tonight. Members of the Government have collective responsibility and within the Department we discharge that responsibility as a team.
I thank the Deputy for raising this matter on the Adjournment. I share fully the Deputy's concern and disappointment over the recent decision by the Moulinex Group to close the Krups plant in Limerick. I am conscious of the effect the closure of this plant will have on Limerick and, most immediately, on the employees concerned. Krups has been a very good employer for Limerick for more than 30 years. Its workforce over those years has gained a well-deserved reputation for adapting to change and improving both its skills and productivity, and their industrial relations record has been second to none. In such circumstances it is all the more difficult to accept the closure of the plant.
On the Tánaiste's visit to the Krups plant yesterday she met with representatives of the company's management and workforce. She assured everyone that all possible options were explored over a number of months to safeguard jobs at the plant. However, despite best efforts by all concerned, this did not prove possible due to the seriously deteriorating market situation affecting the Moulinex Group.
The Moulinex Group have two operations in Ireland, Krups in Limerick employing 500 people, and GMX in Thurles where 300 people are currently employed. Krups Engineering Limited was established in Limerick in 1964 and is engaged in the manufacture of small electrical domestic appliances. The plant was owned by Krups until January 1991 when it was taken over by the French owned Moulinex Group. Since 1993 the Moulinex group has been involved in an ongoing restructuring of its global operations against a background of increased worldwide competition. This restructuring included cuts in production facilities and significant job numbers, mainly in France and Germany. However, Ireland fared well under these measures as two new motor lines were established and additional assembly was transferred here. This resulted in an increase in activity in Ireland over the past two years. Unfortunately, the group's restructuring efforts have been undermined by a seriously deteriorating market. In particular, the economic downturn in the Russian and Asian markets, which accounted for more than 10 per cent of the group's turnover, has meant that many of its manufacturing plants are operating below capacity. Against this background, Moulinex has embarked on further reorganisation of its activities and has decided to centralise motor production in two plants in France.
As a consequence of the transfer of motor production from both the Limerick and Thurles plants, Moulinex has decided it is no longer viable to maintain both facilities in Ireland and remaining production will be concentrated into a single site location. The Thurles plant has been chosen as the site for the centralised production in Ireland and this safeguards 250 jobs at the GMX plant. As we all know, Krups in Limerick will close, with production being wound down over the coming months.
I assure the House that, in the face of these developments, exhaustive efforts were made to safeguard jobs at Limerick and Thurles. The Minister for Enterprise, Trade and Employment asked me to state that she is satisfied that IDA Ireland and Shannon Development, in their dealings with Moulinex senior management, did their utmost to advance the case of the Irish plants. The Minister supported their efforts when she travelled to Paris in May last and met with senior management of the Moulinex Group. At that meeting the company indicated that it was continuing in its strategic review of its global operation against a difficult market background. However, as already explained, the market situation has deteriorated significantly and this has seriously exacerbated the group's difficulties.
The closure of Krups is a major upset to all concerned and requires immediate action to address the setback. As the Deputy is aware, the Minister established an inter-agency response group which is chaired by Mr Frank Conlon, area director, IDA Ireland, and includes representatives from Shannon Development, FAS, the Limerick City Enterprise Board, the PAUL Partnership and representatives of Krups Ltd. Representatives of the workers, the local chamber of commerce and the city manager are also joining the group. The Minister met with the group yesterday and it outlined its plan of action which involves working closely with local interested parties to ensure that all efforts are effectively co-ordinated towards achieving the key priorities of securing alternative jobs for the workers and addressing their retraining needs. In this regard, FÁS is carrying out a skills profile of the Krups workforce in order to identify employment prospects arising from new and expanding projects in the Limerick area. I am also encouraged to learn that Moulinex is funding and co-operating in the organisation of services to employees on re-skilling, financial advice and counselling.
Finding a replacement industry for Limerick is also a key priority but this may take some time as it is necessary to ensure that a quality and secure replacement is found. Fortunately, the Limerick region has shared in and contributed to economic growth in Ireland and has seen tremendous development across a range of sectors and activities. Manufacturing employment in the region has increased by over 20 per cent since 1993. The area has a quality infrastructure and its proximity to Shannon Airport and the University of Limerick is a strong attraction for overseas investment.
The Plassey Technology Park, Raheen Industrial Estate and the Shannon Free Zone are the chosen locations for a growing number of high technology companies. In addition, it is expected that the strong level of recruitment by existing companies in the area will continue, due to the high level of industrial grant approvals in recent years. In this year alone, Dell Computer announced a major expansion in Limerick city and will recruit 650 employees by year end. Both Shannon Development and the IDA are committed to ensuring that these advances continue.
It is important that everyone pulls together in addressing this setback for Limerick. However, given the improving employment situation in the Limerick area, the recent announcement of future job opportunities and the ongoing efforts of the State agencies, the Minister and I are confident that the work of the inter-agency response group will prove successful.
I thank the Chair for allowing me to raise this matter on the Adjournment. Friday, 23 October, was a black day for Mullingar because Tarkett (Ireland) Ltd. announced the closure of its plant there with the loss of 141 direct jobs. That figure represents up to 20 per cent of the industrial workforce in the area and placed in context of the local population and the scale of job losses it is on a par with any of the major industrial closures which have occurred throughout the country at plants such as Krups in Limerick or Digital in Galway.
The surprise announcement that the Tarkett plant is to close came within a few weeks of Christmas and has been devastating for the workers and their families. Many of those workers have given 20 years service to the company, which was established in Mullingar in 1977. They have families, homes, mortgages and financial commitments and, as we approach Christmas, this announcement is devastating. We must also be aware of the other jobs which will be lost as a result of this closure. For example, those of contract cleaners, caterers and suppliers. I must make particular reference to a 64 year old man who supplied a specific service to Tarkett enabling him to provide adequately for his family. He will also lose his income without the prospect of a redundancy payment and with little hope of finding alternative employment.
The closure is all the more baffling when one considers the commitment of the workforce which, over the years, contributed handsomely to the profits of this company and its parent group. Indeed, the plant produced a profit of £3 million last year. The decision to close it, which was taken far away from Mullingar, is cruel in this regard.
The creation of a task force is welcome but I am surprised and disappointed that neither Westmeath County Council nor the county development team will be represented on it. I hope the Minister of State will take that point on board and communicate it to the senior Minister. It seems ludicrous that the premier body in County Westmeath, namely, the county council, should be excluded from membership of the task force.
The finding of an alternative industry for the Tarkett plant must become a priority. This plant, comprising ten acres under one roof on a larger site of approximately 120 acres, with excellent access, car parking facilities, etc., must be marketed internationally by IDA Ireland to find a suitable investor. The location of Mullingar — 50 miles from Dublin and only one hour from Dublin Airport — and the fact that it is a thriving town with adequate infrastructure should be the major selling point for this plant. With the regionalisation of the country now imminent and if the Government will take the final decision, Mullingar, County Westmeath, will be located in an Objective One region and investing companies will be entitled to up to 40 per cent support for capital investments. This should tip the balance for inward investment in favour of Mullingar and it should be a major marketing point for a replacement industry.
As budget day approaches, I call on the Minister for Finance to review the tax treatment of redundancy payments. This is particularly important when one notes the length of service of many employees of this company. My colleague, Deputy Penrose, will refer to specific details in that regard. It is important that FÁS should provide a comprehensive skills audit and also the training that may be required to enable these workers to gain new employment. The possibility of enabling some of the workers to establish enterprises and become self-employed should also be explored. Every effort must be made to support any employees who take this route.
While I welcome the presence of the Minister of State to take this debate, I am disappointed that the Minister for Enterprise, Trade and Employment is not present. I am extremely disappointed that I have not yet received an interim response to a letter I sent to her on 23 October. That is disgraceful. The Minister visited Mullingar last week and I suppose she was welcomed by the people who met her. However, she chose not to inform myself or any of the other public representatives from parties other than those on her side of the House that she would be visiting the town. She is playing politics with an important issue which is a disgrace.
When did the Minister for Enterprise, Trade and Employment become aware of the difficulties experienced at Tarkett? When did IDA Ireland inform her of the possible closure of the plant? Did she inform the Minister for Public Enterprise, Deputy O'Rourke, about the situation and what action did that Minister take in respect of it? Did they attempt to fend off the closure? I was disappointed to hear the Minister of State indicate earlier that finding a replacement industry for the Krups plant in Limerick is the Government's top priority. Does that mean that finding a replacement industry for the Mullingar plant is of less importance to the Government?
I am disappointed by the Government's attitude to the Tarkett situation, particularly when one considers that a senior Minister lives in the area. It is surprising that she has not been able to persuade her colleagues in Cabinet to give top priority to finding a replacement industry for Mullingar.
I am grateful for the opportunity to raise for discussion in the House the catastrophe and devastation which has arisen in Mullingar and its environs following the recent announcement by Tarkett and Sommers AG to close its factory at Newbrook, Mullingar, resulting in the loss of 141 jobs. Friday, 23 October 1998, was "Black Friday" for Mullingar. It will be forever etched on the memories of those employees who had given tremendously loyal and dedicated service to the company and many of whom had worked for the company since it was first established in the town.
The announcement of the closure was one of seismic proportions, impacting as it did not only on the employees but also on the community and the economic environment. When we think of the 141 employees, we must reflect on the human dimension. Many are married and have families of varying ages. Four to five people per job are directly affected as a result of this closure. Up to 700 people are adversely affected by this unexpected, unwarranted announcement given the employees' contribution to the company's profitability.
A factory of this nature and size generates many ancillary downstream activities. There were numerous jobs in haulage contracting, contract cleaning, maintenance work, catering, painting and a huge number of suppliers locally and nationally. It is easy to understand how another 100-150 jobs can be at risk. It is known there is a real and substantial risk to some jobs in the services industry as a result of this shock announcement. An announcement of this nature in the run-up to Christmas is particularly poignant and painful and accentuates the harshness of this development.
I have spoken extensively within the past 48 hours with a large number of employees and their tales are representative of the stories of the workforce at large. Many have substantial original mortgage commitments, others have remortgaged for refurbishment or renewal, to finance their children through third level colleges or to finance the purchase of a motor vehicle to get to their place of employment. This factory has employees not only from Mullingar town, but from Delvin, Multyfarnham, Coole, Castlepollard, Collinstown, Raharney, The Downs, Milltownpass, Rochfortbridge, Ballynacarrigy and Miltown. Therefore, it was an important source of employment for Mullingar and north Westmeath.
The workers embarked upon these additional commitments, fortified by the knowledge that an agreement had been reached as late as April 1988, in which 40 workers were voluntarily made redundant. It was anticipated and widely expected that these rationalisation measures had placed the company in a position to grow and prosper. The agreement had been the subject of a Labour Court determination. Decisions were made by these families only six months ago on the legitimate expectation that they had made sacrifices and that the future of the company was secure. The employees had shown themselves to be flexible and adaptable and responsive to the changes required. Tarkett was one of the first companies in Ireland to adopt the world class manufacturing concept and to wholly embrace it.
It is abundantly clear the workers and their trade unions have played a positive and constructive role in embracing what were difficult decisions for all concerned and undermines the fallacious arguments often used to malign the trade union influence in industrial relations.
The average rate of pay for these workers was about £260 per week. Some of the workers earned more but, if so, it was because they worked overtime, premium shifts and generally worked the long hours required.
The workers have told me that what is required is not expressions of sympathy and regret but a focus on practical and helpful measures to help them deal with the harsh reality that by Christmas some of those who have worked continuously at the factory for up to 21 years will be unemployed.
The workers are particularly concerned about the following matters. The average age of the workers is 42 but some are approaching 50 years of age and obviously it will be more difficult for them to secure future employment. I understand FÁS will carry out a skills audit, with a view to providing the necessary courses to help in acquiring new skills or upgrading existing ones.
There is the huge facility available, with up to 400,000 square feet under one roof. This is one of the largest factory places in the country, located centrally, and with an excellent rail and road network available which means it is within one hour of Dublin and within easy reach of our airports and seaports. There are excellent infrastructural facilities in close proximity. The town is an excellent location with a well developed infrastructure, located on the Dublin corridor, and boasting a highly skilled and educated workforce, with a proven track record.
There is one important issue which is of major concern to the workforce and it revolves around the taxation of severance payments which will be negotiated. The first £10,000 of any lump sum is tax free and there is a further exemption of £500 per year of service, together with top slicing arrangements. In a practical way the Government can help these people by increasing the exemption limits significantly in the forthcoming budget. This is one of the most practical ways of helping workers whose jobs have been terminated.
Deputy Penrose had five minutes.
I will conclude, if the Minister will allow me. Many of the employees will use the lump sums negotiated to discharge mortgages, car loans and third level college commitments while others will embark on the road to self-employment which will necessitate the availability of seed capital so the amount of any negotiated severance payment available will be extremely important. Will the Minister ensure adjustments are made in the forthcoming budget in relation to the taxation of severance payments?
Like many people, I was delighted the Minister responded positively to our request to set up an inter-agency group or task force but shocked at the failure to include either a member of Westmeath county development team or a member of Westmeath County Council — the premier body in the county — which played a major development role in the provision of infrastructural facilities throughout the county.
The acting county manager at a special meeting of the council on Monday, 2 November 1998, showed how responsive the executive of the council can be and illustrated the folly of not including a member of the executive of the council on the inter-agency group.
The positive actions undertaken by Westmeath County Council, include the immediate commencement of development within the next week of 15-17 small sites on Clonmore industrial estate, which comprises approximately 12 acres, and a clear indication from the council executive that planning applications in respect of such sites which will provide employment, will be fast tracked.
The council has called a special meeting of the county development team for Friday next. I understand executives from the IDA will be invited to what we hope will be a positive discussion.
Westmeath County Council is prepared to explore the idea of the development of a business park in Mullingar.
Will Deputy Penrose bring his remarks to a close?
When a request for the necessary funds is made to the Minister's Department, it is assumed he will be generous in providing a substantial grant to help overcome this major hitch in the economic well being and progress of Mullingar and north Westmeath.
I draw the attention of Members to the fact each Member has five minutes only in which to make their contributions. Some Members continue to speak for six or seven minutes.
It is the pressure of the job.
Given that the order provides for five minutes, Members should confine their remarks to five minutes.
I appreciate what you have said and I hope I did not go over the limit. Tarkett Ireland Limited which has been based in Mullingar for more than 21 years, had been a valuable employer and had made an excellent contribution to the economic development of Mullingar and its environs. I regret Tarkett Sommer AG decided to close the Mullingar plant. However, the collapse of the Eastern European market for floor coverings and the company's decision to significantly restructure its operations, has regrettably resulted in the decision to close the Mullingar plant with the loss of 130 jobs.
The Tánaiste has established an inter-agency group to formulate an adequate response to the closure of the Tarkett plant in Mullingar. The purpose of the inter-agency group is to examine and respond to the needs of employees of Tarkett Ireland Limited and look at ways for priority action on job creation in Mullingar. The interagency group will be chaired by Mr. Frank Conlon, area director, IDA Ireland and comprise representatives of IDA Ireland, Enterprise Ireland, FÁS, Westmeath County Enterprise Board along with representatives of Tarkett Ireland Limited. It is clear from recent experience that speedy progress can be made by ensuring that agency representatives make face to face contact and identify their respective tasks in the follow-up to significant plant closures. The inter-agency group had its first meeting on 29 October 1998. The terms of reference for the group are: to secure alternative job creating enterprise both from overseas and indigenous investors to Mullingar, with particular regard to the location of a new industry in Tarkett's existing facility; to provide an immediate skills assessment and suitable training opportunities for the affected workers; and to provide the necessary information and assistance to any employees who may wish to establish their own enterprises.
The chairman of the inter-agency group will brief public representatives, public bodies, local business interests, the Westmeath partnership and other community bodies on the inter-agency group's approach to its work. It is important that the group and individual agencies co-operate with the appropriate trade unions representing the workforce and with the Department of Social, Community and Family Affairs and local business and community interests in providing advice and support to redundant workers and in promoting Mullingar as a location for new investment. The Tánaiste has asked the chairman of the interagency group to liaise with public, private sector and community bodies which can assist in promoting the area for investment and job creation.
Action will be facilitated by the designation of Westmeath as one of the four areas in the country covered by a territorial employment pact which ensures close co-ordination of all development agencies and community interests. During her recent visit to Mullingar, the Tánaiste met representatives of company management, SIPTU, and workers as well as members of the interagency group. The regional managers of the industrial development agencies have informed the Government of their plans to put in place a focused marketing programme to highlight the availability of Tarkett's existing facility and the attractiveness of Mullingar as an industrial base. I have arranged for FÁS, in conjunction with union representatives and Westmeath County Enterprise Board, to commence an immediate intervention programme to provide assistance to employees, i.e. job seeking skills, interview techniques, early retirement advice, investment opportunities, CV services and counselling, establish the skills pool which is available to new investment; and assess skills of workers to be laid off and assist employees with training and retraining, identification of job opportunities, job skills requirements and opportunities for self employment. The inter-agency group will have some immediate and more medium-term activities to oversee.
Neither the sourcing of a new replacement industry — or more practically the sourcing of a mix of new small industries to occupy the available facilities — nor the provision of a tailormade programme to address the retraining and alternative employment options for the Tarkett workforce can be delivered rapidly. On previous experience it takes 18 months to see this type of agenda to completion.
While the full delivery of the terms of reference of the group may take some time, the inter-agency group will keep the Tánaiste and her Department informed of progress and identify activity which can be delivered in phases. I expect an interim report on the organisation and delivery of the FÁS intervention programme will be submitted in early 1999.
I confidently anticipate the work of this inter-agency group will be concluded in a successful and satisfactory manner. I listened with great interest to the two Deputies and I will convey their sentiments and requests to the Minister. We will see what we can do to facilitate their requests because we want to avail of all available expertise to fill the vacuum created by this unfortunate closure. I can categorically state that the securing of a relevant replacement industry is a top priority for the Government and the relevant State agencies in the midlands region will work assiduously to achieve that goal as quickly as possible.
Has the Minister another script in regard to the matter I raised? The Minister's reply referred only to the matter raised by Deputy Penrose. It did not refer to the matter I raised.
To put the record straight, I thank Deputies Penrose and McGrath for raising this matter. It was an oversight if one Deputy was excluded.
The Minister of State should check his script.
The written word remains. There is no mention of Deputy McGrath in the script and that was an oversight. I do not know how that happened and I apologise. If the Deputy wishes to have the reply redrafted and forwarded to him, I can arrange that.
The Minister will appreciate the difficulty created with the publication of the matter in local newspapers. The reply when printed will give the impression that the matter was raised by one Deputy rather than two.
We have made a major investment in IT services in the House. If one were to press the relevant buttons in the system, the reply would be to the effect that Deputies Penrose and McGrath were given due credit for the effort they made on behalf of their constituents. Nevertheless, I will see what I can do to redraft the reply and forward it to the Deputy.
We cannot have a debate on the matter now, but would it be appropriate to request the Editor of Debates to ensure the matters raised by the two Deputies are included in the Official Report?
The Minister did not even answer my letter.
I will bring that matter to her attention.