Dáil Éireann díospóireacht -
Tuesday, 8 Dec 1998

Vol. 498 No. 1

Adjournment Debate. - Job Losses.

Mr. Farrelly

I thank the Ceann Comhairle for the opportunity to raise this matter. CTM Southborough Limited has supplied Dell Computer Company in Limerick for a number of years. CTM bought into Southborough about ten weeks ago on the basis of assurances that the contract with Dell would continue, but unfortunately, that is not the case. LMS Beech, an American company, came to Tullamore some months ago, without grant assistance, and was welcomed there by the Tánaiste. It is now known that this company will take over the contract, with the consequent possible loss of 130 jobs at CTM Southborough.

I am asking the IDA and Enterprise Ireland, if they are not already involved, to become involved in seeking alternative contracts to avoid the loss of jobs in this company. CTM Southborough is one of only two major employers in Kells. Today the House heard about the serious effects of the problems at Fruit of the Loom in Donegal but the loss of the jobs in Kells will have a proportional effect on that town. Nobody likes to see jobs being lost in any area.

In the event of the company being unable to secure contracts, will the Minister support the county manager, who agreed yesterday to set up a task force, and ask the IDA and Enterprise Ireland to get involved with some business people to seek an alternative enterprise for Kells? I call on the Minister to give approval for such a course of action should the company be unable to secure the required number of contracts to keep these people employed.

These workers have given more than 22 years of excellent service to this company. It is unfortunate that Dell Computer Company should make a decision which could have the same reper- cussions for Kells as a similar decision had for Mullingar. I hope account will be taken of the work of the company in trying to establish a plastics subsidiary in order to provide a better product. On the last occasion the product produced by CTM Southborough for Dell was tested, not one fault was found in the 98,000 pieces of equipment produced. I cannot understand why Dell decided to disown a company which has given it such service.

Mr. J. Brady

I thank the Ceann Comhairle for facilitating a debate on this serious problem. I thank the Tánaiste, her officials and the State agencies for acceding to the request to meet last week with representatives from the management and the workers unions at CTM Southborough and public representatives for County Meath. It was a constructive meeting at which the Tánaiste and her party guaranteed us that they would do their best to resolve this unfortunate problem.

CTM Southborough is a substantial employer in Kells. Almost every family in the town would be affected by job losses in the company. This company, which was taken over by CTM in recent months, has been in Kells for 22 years and many of the workers have been there from the start.

Southborough always served the needs of Dell Computer Company to the highest standards and the news that Dell is transferring to another supplier is a huge shock. All the employees worked hard on the Dell project and to be left out now, before the project has reached the end of its life, is hard to accept. These decisions are made many miles away by people who have never heard of Kells or County Meath. Workers in the company are dedicated and are trained in top quality production. There has never been industrial problems at the plant.

Dell decided to move its contract to LMS Beech in Tullamore. While this is good news for Tullamore, it is a disaster for Kells. The same problem occurred in Mullingar recently and some of the workers affected were from north Meath. Is this the end or will there be more such occurrences? The loss of jobs is a huge shock to everybody, not only in the company but in the town. Kells benefited by almost £3 million per year from the company's presence and local business depends on the spending power of local employees. Being the largest employer in the town, CTM Southborough had a positive impact on the town's commercial life.

Every effort must be made to find an alternative business for the plant. On taking over Southborough, CTM understood that the contract with Dell was secure. If other suitable business cannot be found, it is imperative that another industry be found for Kells. The loss of 160 jobs in a town that size would be equivalent to the loss of up to 4,000 jobs in our larger cities.

At a meeting of Meath County Council yesterday, I requested that a task force be set up to seek alternative business or industry for the town. The county manager acceded to my request. I ask the Minister to ensure that the Department and State agencies will work with the county manager and the members of the task force to secure this alternative industry.

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

I share the concern of the Deputies for the future of the jobs at this plant. The company involved, CTM Southborough, was formerly known as Southborough International Limited. The company has been established in Kells for over 20 years and is a major employer in the locality, providing valuable employment for up to 220 people.

Southborough had, until September this year, been a wholly owned subsidiary of Unidare PLC and it specialised in the manufacture of sheet metal components to electronic and computer original equipment manufacturers, or OEMs. Dell Computer accounted for the bulk of the company's high volume business. Southborough was not involved in the manufacture of injection moulded parts and it was recognised for some time that this could be a factor in its longer term viability.

I should explain that many OEMs have for some time been moving away from in-house manufacturing to outsourcing of production activities which they do not see as core competencies. In doing this they are demanding a fully integrated contract manufacturing service on a globalised scale. In this way, OEMs can adopt a single product design for the world and give it to a select number of fully integrated contract manufacturers who have globalised facilities and can manufacture the product to a common standard for supply to world markets.

For the contract manufacturers or sub-suppliers, this globalisation means providing the OEMs with manufacturing facilities around the world. Inevitably, market forces will determine that single location contract manufacturers will lose out to the larger, globalised and fully integrated contract manufacturers.

In line with these developments, the major computer manufacturers in Ireland, as elsewhere, have strongly signalled for some time that they only wish to deal with suppliers who could both supply integrated components comprising both metal and injection moulded parts and supply all the OEM plants on a global basis. As I said earlier, the inability of Southborough to function as an integrated supplier of metal and plastic components and its lack of a global supply capability have long been recognised as factors which could put its future at risk. The company earlier this year identified as a potential partner Complex Tooling & Moulding Inc. — CTM. This is a 30 year old private company operating six facilities in the United States serving the computer, computer peripheral and telecommunications industries in the US. I understand the acquisition of Southborough by CTM was completed in September.

CTM indicated to Enterprise Ireland that its intention on acquiring Southborough was to invest in equipment to manufacture injection moulded components and to offer an integrated service to a number of companies in Ireland and elsewhere from Kells. Their plans would have preserved existing jobs and CTM signalled that investment in injection moulding equipment could create additional jobs.

However, Enterprise Ireland was advised on 20 November that CTM/Southborough had lost its Dell contracts to a rival supplier. This has given rise to a significant proportion of the jobs at the Kells plant being under serious threat.

As the Deputies are aware, on last Tuesday, 1 December, the Tánaiste and Minister for Enterprise Trade and Employment, Deputy Mary Harney, met with a deputation of public representatives and representatives of management and the workforce to discuss the serious situation arising at the company. She conveyed to them her serious concern at these developments and indicated that IDA Ireland was arranging an urgent meeting with the US parent company, CTM, to clarify its intentions on the plant.

A meeting between IDA Ireland and the president and chief executive of CTM took place in the United States in recent days. I understand the company has expressed a commitment to keeping the Kells plant open and is currently addressing the restructuring measures necessary to achieve the survival of the plant. However, notwithstanding such action, job losses of the order of 120 are expected early next year. Both the company and IDA Ireland are also in contact with the company's major customer in relation to existing business. Simultaneously, the industrial development agencies are working closely with the company to secure the future of the Kells plant and offer every assistance in the company's efforts to identify alternative markets and job opportunities.

I know this company has provided valuable employment in the Kells area over the years and I am aware of its importance as an employer in the local economy. Every effort will be made by the Government to minimise the job losses involved and maintain the plant as well to find alternative jobs for workers affected.

I pay special tribute to both of the Deputies and their Oireachtas colleagues in the county for their concern about this project and I assure them that their proposal for a task force has my full support. I would like to see a taskforce established involving the county enterprise board, the county council, Enterprise Ireland, the IDA and the various other State agencies, so there would be in position some alternative structure to direct sustainability for the company and alternative employment in the Kells area. I will recommend this to the Tánaiste and the Deputies can be assured that I, the Tánaiste, officials and the State agencies, including the IDA, Enterprise Ireland and the county enterprise board, will do what we can to ensure these jobs are sustained as far as is possible and that new investment is brought to the area as quickly as possible.