We will now deal with Private Notice Questions to the Minister for Enterprise, Trade and Employment in relation to the job losses at the Apple computer manufacturing plant. I will call the Deputies who tabled questions to the Minister for Enterprise, Trade and Employment in the order in which they submitted their questions to my office.
Private Notice Questions. - Job Losses.
asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement on the imminent closure of the iMac manufacturing unit at the Apple computer manufacturing plant, County Cork, with a loss of 450 jobs.
(Dublin West) asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement on the loss of 450 jobs at Apple computers in Cork in view of assurances given to the workers by her and the company last year.
I call Deputy Howlin to put his question to the Minister. The Deputy is absent. I call Deputy O'Flynn to put his question to the Minister.
asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement on the loss of jobs at Apple computers, County Cork, in view of the grave concern expressed by staff at the announcement by Apple to further reduce staff levels at the Cork plant this week; and the steps, if any, which will be taken to provide alternative jobs for the affected staff.
The Government very much regrets that the Apple computer company has decided to cease production of its iMac computer at its Cork facility with the loss of 450 jobs. It is a severe blow to the workers involved and to the Cork community. I assure them that the full machinery of the State will be brought to bear on assisting those who are losing their jobs to find alternative employment.
Apple was established in Cork in 1980 to manufacture personal computers. In July 1988 Apple Cork employed more than 1,900 people. However, notwithstanding the Tánaiste's visit to the company in the US in June last, the workforce has since then been reduced as a result of the closure of the printed circuit boards manufacturing operation and a reduction of its research and development and software activities.
Production of Apple's new personal computer, the iMac, commenced in Cork shortly after its launch in August 1998. Apple has sold 800,000 iMacs since August 1998. It has been a very successful product. Apple's results from the first quarter of its 1999 fiscal year showed revenues up 8 per cent to US $1.7 billion from the same quarter last year. Profits were also up from US $47 million to US $152 million.
The Tánaiste and the IDA have made every effort to retain maximum employment in Apple, Cork. The IDA has had ongoing contact with key decision makers at Apple headquarters in California. This involved detailed discussions at a meeting between IDA's chief executive and senior Apple personnel at the company's headquarters in the US last week. I am convinced everything possible was done to change the company's decision.
Unfortunately, Apple has decided to subcontract the manufacture of its iMac product to LG Electronics, located in Wales. This is part of a worldwide interlinked process in the Apple Com pany to reduce costs. However, it should be noted that the Cork operation will retain the manufacture of the G3 desktop products. In addition, Apple are reviewing other functions that could be added to Cork. Possible new functions include investing in the assets to convert Cork to a "configure-to-order" plant and introducing finance and operations functions to support Apple's European operations and call centre activities.
In considering investment locations, multinational corporations are strongly influenced by a range of competitiveness factors which a particular location may present and which are perceived by the multinational companies concerned to be critical success factors for any venture there. Locations must provide companies with the key factors which will allow them to continually create competitive advantage. These key factors can include, among others, good road, rail, air and sea communications; an advanced telecommunications infrastructure; a multi-skilled and eager workforce capable of flexibility and innovation; fair and rational regulatory regimes in the area of taxation; labour law and environmental standards and, sources of specialised training, education, information, research and technical support.
Competition and a demanding sophisticated consumer base are also vital components in shaping, driving and sustaining companies' competitive advantage in the longer term. If companies are to prosper, be they indigenous or foreign owned, they must be underpinned by these key competitive factor advantages.
Clearly Cork has many, if not all, of these factors in abundance, as evidenced by the success of the inward investment drive in the area. Nevertheless, it must be clearly acknowledged and accepted that in advancing economies, not every project can or will succeed. Projects can fail when they lose a particular and vital part of their competitive edge. This appears to be the case with Apple's current restructuring, which involves relocation to a lower cost production regime. According to the company, the main reasons for transferring the iMac production are transport costs, relatively high direct labour rates and the plant overhead cost structures. From Apple's point of view, LG Electronics, located in Wales, is best placed to undertake the manufacture because of its involvement in the design of the new computer and the fact that it supplies the translucent enclosure for the product.
The skills profile of the people being let go varies, with the temporary workforce of approximately 400 being mainly semi-skilled operators. The others are from a cross section of support areas, such as management, finance and engineering.
Every support will be given to employees at Apple to find new jobs. In this respect, employment prospects in Cork are positive at present. FÁS will immediately meet management and employees to undertake detailed skills profiles and plan training. Everything possible will be done by FÁS to enhance employees' prospects for re-employment.
Between 1992-7, the computer industry grew at an annual compound growth rate of 12 per cent per annum to reach revenues of IR £402 billion in 1997. Overseas information technology companies in Ireland employ approximately 47,000 people and account for 38 per cent of total exports. Twenty of the top 25 computer companies worldwide have operations in Ireland. Given the strong competition in the industry, it is inevitable that some companies will fare better than others and from time to time will be forced through market conditions to revise their manufacturing strategy.
IDA Ireland will continue to promote Cork aggressively for overseas mobile investment. The skills and experience of the Apple workforce should prove an attractive base for the new emerging jobs in Cork arising from recent announcements or potential new investment to the city. The years 1997 and 1998 were successful for overseas investment in Cork with 27 projects announced with a potential to create approximately 7,000 jobs. More than 1,000 of these jobs are to be filled this year.
Yesterday, the Tánaiste announced a £10 million IDA supported expansion plan for the health care company, Nycomed Ireland based at Carrigtuohill, County Cork and the creation of an additional 150 jobs. This is a very significant new project. In the southwest region overall, full time employment numbers have increased by more than 25 per cent in the past nine years and by more than 10 per cent in the past three years. The numbers unemployed in Cork city have declined by almost one third in the past three years.
This announcement is clearly a major blow to the workforce. I hope the generally positive situation of the Irish economy and the prospects for Cork in particular will lead to early re-employment of the people concerned.
The Minister indicated that the jobs in question would be relocated in Wales and went on to outline the necessary requirements for investment. Will the Minister outline whether low labour costs, telecommunications infrastructure, a skilled and eager workforce etc. are all available in Wales, but not in Cork? What does he propose to do if this is the case?
A number of factors are involved here according to the IDA. The company referred to issues such as transport costs, overhead costs, relative wage costs and so on. The decision was clearly made in the context of restructuring. Ireland has benefited from the same process of restructuring with other companies in the past. For example, Rank Xerox decided to locate in Dundalk with the potential of providing 1,500 jobs. There are other factors involved in this situation such as the fact that the product was being half made in Wales already but the decision is a cost based one.
The product was also being half made in Cork.
Is the Minister saying the cost of labour is cheaper in Wales? What is the Department of Enterprise, Trade and Employment doing to ensure that the remaining 500 jobs stay in Cork?
The cost of wages is obviously a factor. The Department is determined to ensure that the 500 jobs referred to by the Deputy remain in Cork. In view of the company's production of a business type computer which would have a larger profit margin, the IDA has assured us that those jobs are secure.
(Dublin West): Does the Minister of State agree that workers at the Apple plant in Cork have every reason to be outraged at his remarks here today which amount to an apology for the Apple Corporation? Does he agree that savaging 450 jobs represents corporate treachery at its worst whereby the profits of a multinational are put before the well-being of workers and the community? Would he agree that the loyalty and hard work of the workers in Apple, Cork, has been rewarded by a kick in the teeth? Why were those workers left twisting in the wind over the weekend while media reports had it that this announcement was coming? The Tánaiste clearly knew it was coming but left the workers to the mercy of the media. Would the Minister of State agree, in view of what this company said last July in guaranteeing jobs for the future, that any more promises from them are worth nothing and it is time workers and their trade unions stood up and fought those job losses rather than letting these companies slip away quietly?
It is undesirable that employees should hear through the media that their jobs have been lost, and I share the Deputy's concern that this happened. The Tánaiste has fought this issue all the way. She visited Apple headquarters in California last year in relation to the PCB situation. Mr. Seán Dorgan, the chief executive of the IDA, was there in the past week. There was an early warning before Christmas. What has happened is undesirable but it is our responsibility now to try to maintain existing jobs, to help the company to expand and increase the number of jobs, and to ensure that the workers are employed elsewhere and have the necessary skills. The IDA, and FÁS in particular, are putting plans in place as we speak to deal with those workers to ensure that they get an opportunity to work.
Having regard to the comments made by the Tánaiste on her return last June from the meetings to which the Minister of State has referred, to the effect that she was pleased with the assurances given to her by senior management that Apple, Cork would continue to be, in the words of the Tánaiste, the core of Apple Computer—
The Tánaiste is easily pleased these days.
—can the Minister of State accept now that either the Tánaiste was seriously misled in her discussions with senior management at that time or that she herself misled the public on her return?
I do not accept that the Tánaiste misled anybody. The electronics business is very volatile. Those involved in the sector deal with it in a global way. Decisions are made that affect people's lives. We, as politicians and as a Government, have to deal with that and try to ensure that these people are re-employed. Statements made in the past about the future of iMac are on the record. The response of the Government at the time was one of appreciation and delight. It now falls on us to deal with a new situation. My net point is that the electronics sector is volatile. However, we have gained in other areas from the restructuring that takes place globally. We have to deal with the matter head on to help those who now need to be re-employed and to ensure that existing jobs are maintained.
I wish to follow through on a point before it is lost
I prefer that each Member should submit a question.
Is the Minister of State aware that at a meeting last year, which I attended, the company promised politicians from every party a future for the Cork plant if iMac was successful? Based on the information the Minister of State has from his officials, is he convinced that there is a future for the manufacturing facility, in particular for the G3 product line which is currently manufactured in Cork? I am not convinced. Would the Minister of State agree that the company intends to move towards R & D and move its manufacturing facility to low cost locations? Is the Minister of State aware of the low morale of the workforce in Cork? Is the IDA taking steps to match the skills of the 60 permanent and 393 temporary workers with the 1,000 job vacancies which have still not been filled by overseas investment companies about to locate in Cork in the next few months? If the company decides to close its manufacturing facility – the Minister of State mentioned a number of things they are planning in Cork which, as far as I can see, do not have much to do with manufacturing – will there be any sums repayable to the IDA? Will the Minister of State make a statement on the tax incentives currently enjoyed by the company? Will those be coming to an end or will there be advantages to the company in staying in Cork for the foreseeable future?
We expect the same latitude on this side of the House.
I was not even allowed a second supplementary.
With regard to the future of the existing jobs, talks have been taking place between the company and the IDA. The IDA is satisfied at the highest level that the company's remaining operation, in particular in relation to the G3 desktop computer, will be staying. Other possible areas of new job potential relate to configure to order plants, the introduction of finance in operation functions and to support Apple's European operation and call centre activities. There are very valuable jobs there that can be added to the existing jobs that we want to save.
On IDA grants, in any situation like this there would be a discussion about the grants that were given. However, the focus here is on maintaining jobs and creating new jobs. One has to take that into account in the context of moneys. It is for the company and the IDA to have discussions, which will take place in the coming weeks.
How much credence does the Minister of State give to the assurances he has received as to the remaining jobs if, less than 12 months after the previous assurance about the iMac plant, that assurance counted for nought and jobs are being lost? Is the Minister of State aware of any grants or special inducements the Welsh authorities might have offered to Apple to bring this manufacturing sector of their work to Wales? If so, what was the nature of those inducements? Did we get an opportunity to discuss with the company anything that we might do to maintain those jobs? Is the Minister of State aware that in addition to the loss of those 450 jobs there will be many downstream and subsidiary jobs lost in the Cork region? Can he put an estimate on that? What is the Department going to do to ensure that those jobs are replaced? The Minister of State may find he can announce a replacement for the 450 jobs but he may not be able to assure the other firms and suppliers who will also lose jobs as a result of the departure of Apple.
I can only relate what the IDA has told me about the future of jobs, especially in relation to the G3 desktop computers. I have to accept what the IDA has told me. On the question of the Welsh development authority, there were no inducements of which I am aware. It is a Korean company in Wales.
That is the height of naivety.
Did the Minister of State ask Apple what it would take to keep the company in Ireland?
I gave a very detailed assessment of the type of economic arguments which can be made for these decisions, unpleasant though they are.
Is the Minister of State saying we do not have an advanced telecommunications infrastructure or a skilled workforce here?
I wish to pursue the point I previously tried to pursue about the remarks made by the Tánaiste on her return from meeting senior management last June. One firm commitment she gave on foot of that meeting was the assurance from executives at Apple that there would be further discussions with the workforce and their representatives before there would be any change at the plant in Cork. Will the Minister of State explain why that commitment to discuss the matter in full with the workforce, so that they would not have to hear about the loss of their jobs on public radio but through normal dialogue and industrial relations procedures, was not honoured? Will a task force, drawing on experience gained from, for example, the task force in Tallaght following the closure of the Packard plant, be established to facilitate those people being displaced in Cork to help them find alternative employment? We are being checked right, left and centre by external trade boards and job agencies. In this context, will the Minister of State instruct his agencies to ensure any inducements offered by the authorities in Wales are compatible with EU law?
If Deputies Howlin or Dukes have evidence of the precise inducements, I ask them to please let me know about them.
The Minister of State is the person responsible for the agency.
I am not aware of any inducements.
Ask about them.
If the Deputy knows more than me, I ask him to give me the details.
Has the Minister of State asked about inducements?
I had not concluded my response to some of Deputy Owen's questions. Obviously, we are conscious of the potential job losses in supply companies, clearly the agencies involved the IDA and FÁS, are very much aware of that matter.
How many jobs are involved?
I do not have precise figures, but I will endeavour to find out for the Deputy, although it may take some time. Regarding a task force, the position as we speak is that the IDA and FÁS are actively doing all they can. If a task force is necessary, it will be considered. Company discussions with the workforce would have been ideal, I would have preferred a better level of communications.
Does the Minister of State accept it is a breach of faith with the Tánaiste?
I am not here to speak for the company. In normal situations such as this, there should be good communication which is an essential element in the context of these very traumatic experiences for workers.
Does the Minister of State accept it is a breach of faith with the Tánaiste?
And the workers.
I am speaking in terms of the assurances given by the company.
I ask Deputy Howlin to allow the Minister of State to answer the question. I would prefer if the Minister of State did not answer questions which come by way of interruption.
(Dublin West): Is the Minister of State aware that there is a strong feeling in Cork that the Apple plant will be closed entirely in the future? Will he comment on this matter? Is he aware that last July the company's senior vice-president for world operations said the i-Mac computer could mean future growth at the Cork plant, describing it as the saviour of the plant? In view of these assurances, given only seven or eight months ago, why should the workers in the Cork plant have confidence in the word of this company regarding its future? Why should the workers have confidence in the Minister for Enterprise, Trade and Employment and the Government when a multinational company such as Apple obviously believes it can walk all over her, treat the Government with contempt and, worse still, treat the workers with contempt—
I ask the Deputy to put a question to the Minister.
(Dublin West):—as, like Fruit of the Loom, it chases more profits? It is not the case that in front of multinationals and their threats and methods of operation, the Government is as paralysed as the last one, when Packard Electric did the same thing and went chasing profits at the expense of Irish workers?
The Deputy is missing the point in that Ireland, thanks to a very successful economy, is dealing very healthily in a global context in relation to electronics. In terms of investment by electronics industries, many of the top players are located here. This is a reflection of our strength. We are in a confident position in terms of that. I appreciate the feelings of workers today and in the aftermath of this announcement. The Government is conscious of their position and will do everything possible to support them through the IDA and FÁS. It is wrong for the Deputy to almost talk us into a gloomy situation.
(Dublin West): It is Apple that is closing the plant, not me. Such talk is outrageous.
Deputy Higgins is out of order and I ask him to resume his seat.
There are jobs which have thankfully remained in place. In the IDA's assessment those jobs are secure and our job is not only to maintain them but to help the company expand into other areas as best we can through the agencies I mentioned. Frankly, we will not see the previous high level of jobs again. However, we will do everything possible to secure the jobs and expand the employment potential of the company. I also remind the Deputy of the type of job announcements which have been made in the past two years. The potential for job creation in the Cork area as a result of those announcements is 7,000 new jobs. Therefore, I ask the Deputy not to wrongly accuse the Government of doing nothing regarding job creation in Cork city and county.
Is the Minister aware that Apple proposes to invite the five Deputies from Cork North Central and the five from Cork South Central to a meeting next Friday at 11 o'clock to outline the future plans of the company?
I warmly welcome that and thank Deputy O'Flynn, Deputy Kelleher and the Minister of State at the Department of the Environment and Local Government, Deputy Wallace, who have been keeping me informed of developments.
We know Galway recovered from the loss of Digital. How confident is the Minister that Cork can recover from this loss? How can we trust Apple in relation to their promises regarding G3 production?
I am as confident about Cork's resilience in this matter as I am about that of Galway or any other part of the country, thanks to the type of investment made by successive Governments, particularly in the context of providing the necessary skills for our workforce over many years. The evidence exists to show that new investment has been established for Cork during the lifetime of this and the previous Government. The opportunities for the workforce and the potential workforce in Cork are very good. The Government's job is to ensure the agencies do their job and I am confident they will do their utmost not just to maintain jobs but to create new ones in the Cork area.
Written Answers follow Adjournment Debate.