asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement on the temporary closure of Fruit of the Loom, which threatens 2,300 jobs in Donegal, and the plans, if any, she has to replace the jobs already lost in the company.
Private Notice Questions. - Threatened Factory Closure.
asked the Tánaiste and Minister for Enterprise, Trade and Employment in view of the announcement by Fruit of the Loom that it is to lay off the majority of its 2,700 workforce in Donegal over the Christmas period, what information she has on the long-term plans of the company in regard to its future operations in Ireland; the steps she is taking to ensure that any job losses are minimised; the discussions she has had with the company management; the steps being taken to provide alternative employment for any workers who lost their jobs; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment the future of the 2,300 jobs in Fruit of the Loom, County Donegal; the information, if any, she has on the temporary closure; the number of jobs threatened in 1999; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment to provide details of the discussions, if any, she has had in recent days with the management of Fruit of the Loom given the recent decision of this company to close its plants in Donegal for several weeks over Christmas; if she has made any significant efforts in recent days to secure a commitment from the company that it will continue operations in Ireland and that the maximum number of jobs will be retained; and if she will make a statement on the matter.
I propose to take the four questions together.
I have already expressed my concern at the manner in which Fruit of the Loom has announced the temporary lay-off of the majority of its staff at its plants in Donegal this week. The company's announcement yesterday regarding a temporary lay-off to take effect before the Christmas break from Friday, 11 December until full-time work resumes in early January 1999 came as a major surprise to both me and the IDA. Neither the IDA or I had been consulted in the matter. However, I understand rumours were circulating in Donegal last weekend about such an announcement.
Since I took up office I have been concerned about the threat to the maintenance of the tee-shirt sewing jobs in Donegal. I met the chairman of the company on five occasions to discuss its future plans. The company made me aware of the international market pressure its tee-shirt sewing operations were under and its options to transfer production from Donegal to Morocco where labour costs are 15 per cent of those in Ireland. The company consistently maintained that, with the exception of the position in Dungloe, there would be no redundancies before the end of 1998.
Since September, the IDA has been engaged in protracted discussions with the company in an effort to safeguard jobs and resolve all issues relating to grant liabilities arising from prospective job reductions. The IDA board will review the outcome of the negotiations with the company at its monthly meeting tomorrow. I hope that after the meeting the company will make a statement on both its short-term and long-term plans for its future operations in Donegal. On 16 September I established the Donegal initiative which it is intended will focus the efforts of the development agencies upon improving the county's capacity to generate jobs and attract foreign investment. Over the past three months the IDA has conducted more than eight promotional itineraries to Donegal. I have kept in close touch with the progress of the work of the initiative and I met the chairman in Letterkenny during the past fortnight to discuss developments.
I look forward to an announcement from the company following the outcome of the negotiations involving the IDA tomorrow. Through such an announcement the company can begin to deal in an open and frank manner with its workforce. It should also help to trigger the range of support services which have been held in waiting pending clarification of the company's intentions. I will meet a delegation from the trade unions this evening to discuss the situation.
Given the early warning system within the IDA and the Minister's Department regarding possible job losses, will she explain why she is so surprised about this information and why she did not have it before she heard it yesterday afternoon, when rumours were circulating? Will she make an unequivocal and clear statement as to the number of jobs threatened in this company and how many will be lost in the first quarter of next year? Will she confirm what the Minister for Tourism, Sport and Recreation, Deputy McDaid, said on a radio programme this morning, which was that there will be only 1,200 jobs in the future life of the company?
When I entered the Department at the end of June 1997, Fruit of the Loom was on early warning notice and that is why I have given it so much attention. The tee-shirt operation has been under pressure, in particular, since the company began to face stiff competition from low cost economies such as MorocCo. I do not know why the company did not tell me, the IDA or my Department that it was going to announce lay offs yesterday. I understand a member of management in Donegal informed one of the unions over the weekend but the IDA and the Department were not told. I only became aware of it, notwithstanding what has been said, yesterday morning.
With regard to the company's operations in Donegal, all my efforts, and those of the IDA and my predecessor, have been directed to maintaining as many jobs as possible in Donegal. We remain extremely concerned about the tee-shirt jobs. If tee-shirts can be made for 15 per cent of the cost in Morocco, then it is obvious what are the consequences of that.
However, I am also concerned about the other jobs and that is what we have been discussing since last September. There are issues involving grant liability. The more jobs maintained by Fruit of the Loom, the less grant money it will have to repay while the more jobs it takes out of Donegal, the more grant money it will have to repay. That is why the grant issue in addition to the responsibilities to the taxpayer and the Exchequer is crucial.
The IDA will report tomorrow at its board meeting and I hope after the meeting the company will, as is usual in these situations, discuss the matter with its workforce and the trade union movement. If that is not the case, we intend to make the workers and their representatives aware of the agreement that has been reached with the IDA.
What numbers are involved?
I do not know.
Deputy McDaid knows something.
The tee-shirt jobs in Fruit of the Loom post-Christmas are very vulnerable. That amounts to between 700 and 800 indirect and direct jobs. However, there are many other jobs. In addition to this closure, the company is also closing its operations in Northern Ireland and Morocco, where 850 people will be let go on Friday for three weeks. This does not just involve Donegal. All of the company's operations in Northern Ireland and Morocco will be closed for three months because it has told us it is at over capacity currently.
I wish to communicate my understanding to the many families affected in Donegal. Does the Minister accept that the uncertainty about the future of this company in Ireland is seriously aggravating the plight of the workers concerned? Surely I can presume she knows the elements of the IDA package at this stage. Is she or any of her agents talking directly to the rapacious senior management of this company? In particular is she talking to that awful fellow, Farrelly? If she is, can she tell the workers what are the elements of the IDA package and how many people are confronted with the inevitability of redundancy in the new year? In so far as she can foresee, how many workers will be retained in employment? What infrastructure is she preparing to put in place to support the workers who face the prospect of redundancy? Is the IDA giving her any advice in terms of the adaptability of that plant for other types of employment in future?
I have not had any discussions with Mr. Farrelly since meeting him at the end of September. The outcome of that meeting is well known — we sought to bring clarity to the matter because there were major differences between both sides about grant liability. After that meeting the IDA went into discussions and we offered independent legal advice to both sides but the company did not avail of it. In any event there is now clarity about these matters and they are no longer at issue. At the September meeting I felt it incumbent on me, on behalf of the workers and the Exchequer, to make the company aware of its obligations, which are underpinned legally.
I know the elements of the package going before the IDA board tomorrow but I do not feel at liberty to reveal them. I am not involved in negotiating these packages, nor am I involved in the exit. Given the position last September and all the circumstances, I believe the IDA has negotiated a successful package from the point of view of many of the workers. I hope the elements of the package can be in the public domain late tomorrow afternoon. It would be my intention in any event — because I believe it to be my responsibility to do so — to make the workers, Deputies and the public aware of what the future holds for the workers in Donegal.
As to alternatives, FÁS has carried out a skills assessment of the Dungloe workers who have been made redundant. About 56 per cent of them want to attend a return to work course, and we will establish a customised course in the area. We intend to do that for all the other workers who might be made redundant, but clearly we cannot do so until after they are let go.
As to alternative investment, the IDA has brought eight groups on promotional trips to Donegal and in the present buoyant circumstances for inward investment we are optimistic that we will succeed in finding alternatives. I cannot be certain that the skills of the Fruit of the Loom workforce would be suitable to all the new investment but the aim would be to get investment to match the skills or to get the workers to meet the needs of any inward investment which may arise.
Does the Minister agree this company has acted disgracefully in relation to this problem since mid-summer, and has acted cruelly towards its workers in Donegal? It has been like Chinese water torture, administered on a drip by drip basis since last summer, and the company has not come clean with the workers yet. Does she agree the company has not done properly by the people who gave it such loyal and dedicated service?
We are told there may be 700 to 800 redundancies shortly. Could the Minister guarantee this will be the extent of the redundancies, or is it merely the tip of the iceberg, and before the end of 1999 Fruit of the Loom could have fewer than 1,000 workers in Donegal — in other words, up to 1,500 jobs could be lost?
What is to happen to the satellite factories outside Buncrana, in Milford, Malin Head and Raphoe? Will they open their doors in 1999, bearing in mind that Dungloe is already closed? Though that factory has been shut for a fortnight, redundancy terms have not yet been agreed with the workers who have lost their jobs.
Given that the vast majority of Fruit of the Loom workers are young people in their twenties and thirties, many of whom went straight from school to industry and have no other training or work experience, what programme of retraining is envisaged or is being established? When will it commence, to whom will it be available, who will administer it, and who will be called to it, so that these workers can be retrained to take up a position in another industry which may be located in Donegal in the near future?
The Deputy is right about the Dungloe facility. Redundancy terms have not been arranged with the trade union movement and the matter is currently before the Labour Court. Retraining will be done by FÁS under the auspices of the Donegal Initiative; FÁS will need outside assistance but that will be made available. It will follow the same course as the operation for the Dungloe redundancies. People will not be interviewed by FÁS until we are certain who will be made redundant.
It would be better if things had been dealt with differently. This is a loyal workforce, many of whom have not worked anywhere other than in Fruit of the Loom. Some are young, others are middle aged, and many wonder whether they will get another job; they are deeply worried and very angry. Last September we hoped clarity could be brought to the matter. There have been changes to the company since I became Minister 18 months ago — the current manager of the Donegal operation is the third in that time. Mr. Willie McCarter and his successor, Mr. Andy McCarter, no longer manage the operation. Until yesterday morning, some of the local management in Donegal were not aware of what was to happen on Friday, which is highly unusual to say the least and not helpful in present circumstances. I hope a new position will emerge tomorrow and the company will be more open and frank with its workforce.
As to redundancies, there is no question Fruit of the Loom is in big trouble — last year it lost $488 million, it has shed thousands of jobs in the USA and moved to low cost countries in the Caribbean and to MexiCo. It is under intense pressure in Europe because demand for its products, and products in that market generally, has declined. However, I believe that during 1999 there will be in excess of the number of workers mentioned by the Deputy in Fruit of the Loom in Donegal. The nature of the agreement, if approved by the IDA board, ensures there are guarantees——
The Minister said "in excess of"— could she be more specific?
Deputy McGinley asked if I agreed there would not be more than 1,000 people working there in 1999 but I would not agree — there will be more than 1,000.
The Minister knows how many will be working there?
I know the nature of the package, as I said earlier. I would like to be more helpful but we are involved in negotiations and the package must be approved by the board of the IDA, which has sole discretion in this matter to negotiate agreements and exits of this kind with companies. I believe in all the circumstances it has negotiated a satisfactory package from the point of view of the workers, Donegal and the taxpayer, although we wish it was a different package. It is the intention that the elements will be clear from tomorrow.
The House is again surprised, and it is clear that the developments of the last few days are also a major surprise to the Minister and IDA Ireland. My colleague, the former Senator, Mr. Seán Maloney was in contact with me last week about these developments——
Could we have a question, please?
I am coming to it, a Leas-Cheann Comhairle. Mr. Maloney contacted the Minister about the fears of these 2,000 people and the dire future they now face. In relation to the Donegal Initiative and the moves to find successor industries, will the Minister be visiting the workforce in the coming days? Will there be a variety of replacement industries for the region? Given that the chief executive of the company was a difficult operator, as Deputy Rabbitte said, it was the Minister's job to keep in close contact with senior management in Fruit of the Loom. When was the last time she had such contact?
A number of years ago the Minister for the Environment provided £25 million for a water supply system specifically for the company. How will that investment be used in the future? Can the Minister assure the House it will be used for successor jobs?
I was not involved in the events in recent weeks because they were tied down in negotiations. Ministers do not negotiate these deals or exits from them with companies. It is also very much related to legal interpretation. It would not have been appropriate for me to be involved.
When I met Mr. Farrelly last, I made it clear to him that I would not ask the IDA to renege on the money taxpayers invested in the company through grant aid. I said I expected all legal obligations to be met and that I would not put any pressure on the IDA because that would be inappropriate. Enormous amounts of money were provided to support this operation. By and large, we have received good value for the money through good employment in Donegal. At its peak, 2,700 people were employed. When Fruit of the Loom took over the McCarter operation in 1986, it involved a total investment of £130 million, which was the biggest ever investment in such a region. For many years, it generated much employment and I hope it will continue to give good employment in future.
In relation to alternative uses of the facilities, many of them will be very marketable in the current circumstances. The IDA is optimistic that once it knows the exact situation, it will be in a position to market any facilities which might be vacated by Fruit of the Loom. However, one does not begin to market facilities unless they become vacant.
Nobody has visited workers who are being made redundant more often than me. I understand one of my predecessors as Minister for Industry and Commerce, Deputy O'Malley, said last night on "Questions and Answers" that he often told me how foolish I was to do so.
Hands off.
However, I was right to do it. I have visited the workers three times and I intend to visit the workers in Atlantic Mills in Longford on Thursday. I will talk to the unions this evening and if it would be helpful, I am more than willing to meet the workers or any of their representatives. I was in County Donegal ten days ago and I met the Donegal initiative. Every effort on my part and that of the IDA and Enterprise Ireland will be made on behalf of the initiative to try to find alternative employment for the workers and others in County Donegal.
Given the rumours circulating since September, does the Tánaiste agree that the hardworking and loyal workforce of Fruit of the Loom has been badly treated by its employer? For example, the shocking announcement yesterday was debated in the media while senior management figures were kept in the dark. I was in contact with a senior management person during the day and senior management did not have any information on the exact position until a late stage.
The Tánaiste understands the serious consequences of any job losses in the unemployment blackspot in which I live. Will she give an assurance that she will continue to give every assistance to the task force which has been established and encourage its work? I understand it is doing tremendous work behind the scenes and I congratulate the Tánaiste and Minister for Enterprise, Trade and Employment on establishing it.
Given that most of the workers will go on enforced early Christmas leave, will the Tánaiste and Minister for Enterprise, Trade and Employment confirm that they will be given concrete information on their futures before they go? In the event of job losses, will she confirm that the affected areas of Inishowen and north Donegal will be considered as a priority one job creation zone by Government and State agencies? This has not been apparent in statistics to date.
I thank the Tánaiste for her ongoing efforts.
A question please, Deputy.
May I thank the Tánaiste——
No.
There is nothing for which to thank her.
Questions and answers.
I thank her on behalf of the people of County Donegal and ask for her continued support in dealing with whatever situation presents itself on the conclusion of the IDA-Fruit of the Loom talks. This problem is affecting many people in the area. It is on a bigger scale than if it had happened in an urban area.
I wish the workers had not heard about the situation in the way in which they heard it. There have been constant rumours and innuendo. Virtually every week there has been a new rumour about Fruit of the Loom. At this stage, the workers wonder what to believe. I hope tomorrow they will know their future with certainty. It would be unsatisfactory when the lay offs occur on Friday if people did not know what their future entailed.
In relation to alternative industry, we are concerned to ensure that all the Fruit of the Loom facilities which might be made available are marketed. Deputy Keaveney is particularly concerned about the Malin Head facilities which will be among the most difficult to market because of their location. However, every effort will be made to market the Malin Head facilities and all the other facilities which become available.
Does the Tánaiste accept that despite this debate the workers are still as much in the dark as they have been in recent months? Can she give them further information? I remind her that on 10 May 1995 she sought the type of assurances from the former Minister, Deputy Richard Bruton, and the former Minister of State, Deputy Rabbitte, about Packard Electric which she is not prepared to give to the House now.
Will she outline the full amount of grant aid given to the company by the IDA to date? If the 700 to 800 jobs go — she admitted may be lost — what amount of money will be sought in repayments from the company?
I heard Deputy Owen say on the radio that I was very unsupportive of the former Minister, Deputy Richard Bruton, and the former Minister of State, Deputy Rabbitte, when Packard Electric closed. However, as Deputy Rabbitte acknowledged in the House recently, that was not the case.
I have the Tánaiste's quotes.
I read them myself today.
I bet she did.
I was extremely supportive. Deputies on all sides, including Deputy McGinley, have been extremely supportive on this matter also. This is not a partisan issue. It is an effort on everybody's part to get the best deal for these workers.
The Tánaiste should take note that there is a very responsible Opposition at present.
In relation to grant aid, various packages were negotiated at different times. Different amounts will be repayable, depending on the number of jobs which go and when they go. Some of the grant liability runs out at the end of 1999 while more does not run out until later.
How much?
I said in September that if the entire operation went the amount which would have to be repaid would be almost £12 million. I do not have to hand the figure regarding the total amount of money the company received, but it was in the region of £20 million. It received approval for much more on the basis that 4,000 jobs would be created. However, due to changes in the market and the company's position, that did not become a reality. It only received money as jobs were created. These jobs must be sustained for a period, otherwise the grant must be repaid. This is tied down legally. The legal agreements will be honoured.
I confirm that the main mischief maker with regard to Packard Electric was a different Mary.
Does the Tánaiste have a figure on file regarding the total grant aid investment over approximately ten years in this group of companies? Has the difficulty which she experienced in extracting information from the company, even up to the last minute, changed her attitude and that of her Department towards the directive on consultation and the European social model in general?
Will she tell the House about the composition of the Donegal initiative? Does she accept, for example, in the cases of Digital and Packard Electric that the models operated were successful? Has she noticed that more recent versions of the task force idea have been deprived of outside persons as the driving force? Does she agree with my humble opinion that the Packard Electric task force was successful because outside persons were the driving force and the agencies provided expert and conscientious back up? I am not reflecting on any of the people around the Tánaiste or the expertise in the agencies, but there is a wish to ringfence it in the family. The result will be — Deputy Keaveney should note this — when recommendations are agreed to regenerate the situation in Donegal there will not be the capacity to go to Cabinet to find the wherewithal to support those recommendations. It is not a good idea that it ought to be ringfenced to the family, which is the pattern in any area one wishes to choose with the Government. For example, the National Crime Forum report was published today by members of the permanent Government.
I do not have the grant aid figures with me but if my memory serves me correctly, in the region of £20 million to £21 million was drawn down by the company during the past decade or so. The nature and make-up of task forces vary. In the Seagate task force many outside business people were involved, as in the Tallaght task force established by the Deputy when Minister of State. The same applies in Donegal. For some of the smaller operations it is not always practicable to have outside people. We have a number of these throughout the country and they put enormous pressure on the agencies. The IDA has a staff of only 240 worldwide and is a relatively small organisation, albeit an efficient one. The Donegal task force, which is chaired by Michael McLoone, the county manager, comprises several local business people, a member of IFI, the former director general of the Department of Enterprise, Trade and Employment, Mr. Kevin Bonner, an assistant secretary from the Department and many other representatives from the workers and the various agencies. It is similar to the Tallaght model.
It may be that Fruit of the Loom would not be here if the directive on consultation was in force. Neither would it have influenced the decision whether to go or stay. Even if it were in force it may not necessarily have changed the manner in which this company, or one particular person in it, might have handled the matter. The manner in which workers learned about their future is unusual. That has not happened with any of the other companies we have dealt with recently.
Will the Minister adopt a hands-on approach to this matter in the days and weeks ahead and maintain continuous contact with the IDA which appears to be the only organisation that has any communication with Fruit of the Loom? What is the immediate future for the 2,300 Donegal people who will be without a job from next Monday and what arrangements are being made to ensure they and their families will be able to get through the Christmas season in a comfortable and reasonable way?
I give the Deputy an assurance I will adopt a hands-on approach in so far as I can to the matters surrounding Fruit of the Loom. No company has taken up more of my time in the past year than this company. Clearly those workers who will be laid off on Friday are entitled to whatever welfare services are available in the normal way. Given that they are not being made redundant we cannot get involved in training programmes until the new year. As soon as it becomes clear who is being made redundant and when, the facilities being made available to the Dungloe workers will be made available as quickly as possible to these workers also.