Dáil Éireann díospóireacht -
Tuesday, 22 Feb 2000

Vol. 514 No. 6

Adjournment Debate. - Job Losses.

Mr. Daly

The Minister of State, Deputy Treacy, will be familiar with the company involved. Up to 14 February, when an official liquidator was appointed, Kel Electronics was a highly specialised sub-contracting company. It produced printed circuit boards for the Irish and European markets, with a highly skilled an professional workforce, some of whom had been with the company and its predecessor for more than 15 years. Some of the employees had only recently left school. All the workers were surprised and shocked when unexpectedly and without any prior notice the company was put into liquidation, with the result that 70 people were put out of work.

The company had been operating with a fully trained workforce. The research section was involved in a huge amount of work and the company's order books were full. A supply of orders was coming in on a regular basis and the firm's customers were very satisfied with its high quality products. In fact, the staff were working overtime to meet the demand for the company's products. They had also qualified for the ISO 9002 and a number of other certificates. At the start of this year the prospects for the company appeared to be very bright and it was looking forward to increasing its orders and taking on new employees.

Shannon Development, the agency for the area, had approved a plan for the company to take on additional workers and had approved grant aid of £5,000 per job for an additional 100 people. One can imagine, therefore, the anger, shock and frustration of the people in the company which has now closed down. The liquidator is in possession and I compliment him on the manner in which he has communicated with the employees and local representatives who went to see him about the situation. He has a job to do, however, and in light of these circumstances it will be a difficult one. We hope that at the earliest opportunity it may be possible to re-establish the company and complete some of the existing orders. I appeal for the liquidator to take back some of the staff in order to do this. The customers who supported the company up to now could thus be assured there would not be a loss of confidence in the personnel or products in the event of the company being restarted.

Up to 70 people were employed at Kel including quality controllers, assembly workers and machine operators. There was also a range of accountancy and other financial personnel employed, as well as production managers and stores people. The staff were bewildered when the closure announcement was made. I condemn the fashion in which workers learned of the company's closure in the newspapers. At a time when there has been great co-operation between employees and management, this operation left much to be desired.

People were shocked to find that the doors were closed and they were out of work. Most of them, who did not have long records of employment, received the bare minimum legal entitlement of one week's notice. They have been left in a very difficult financial situation and the sudden collapse of the company has left them angry. They are mystified about the reason for the closure. In most companies that experience difficulties there are indicators that orders are not going out or that there is a problem at management level or elsewhere. In this situation there were no such indications; the order books were full and people were working overtime. The staff want to know what happened and if the situation can be rectified. They want to know if the plant can be reopened or sold on to some new developer, thus enabling those who were employed there to be re-engaged.

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

On Monday, 14 February, the High Court appointed a liquidator to Kel Electronics on foot of a petition by one of its creditors to have the company wound up. The company was stated to have debts of more than £430,000 and all creditors supported the winding-up petition. As normal in a High Court liquidation, the legal position is that all contracts of employment in the company are terminated, following the appointment of the liquidator who is now assessing the statutory entitlements of the workforce. It is now the responsibility of the liquidator to assess the financial position of the company and its future prospects.

Regarding labour payments, the liquidator will have all of the appropriate documentation relating to employee statutory redundancy, arrears of wages and holiday pay, and minimum notice entitlements, with the appropriate sections of the Department of Enterprise, Trade and Employment, by close of business today. The average period required for processing these claims administratively is about four to six weeks for employee statutory redundancy, four to eight weeks in respect of arrears of wages and holiday pay, and it can take up to three months in respect of minimum notice entitlements.

Kel Electronics Limited, formerly known as Neltronic Manufacturing Limited, was established in Ennis in 1986 as a printed circuit board sub-contract assembly operation. In late 1998, Kel became part of the UK-based Karavale Enterprises Group which has other electronics manufacturing facilities in England and Wales. The project, which was announced by the Tánaiste in 1998, involved the relocation of the old Neltronic Manufacturing operations from Shannon Development's enterprise centre to a modern 26,000 sq. ft. advance factory in the new Ballymaley business park.

Kel Electronics' sister company, Karavale Enterprises, over-traded and ran into difficulties during the second half of last year. As a result, local financial institutions have been treating Kel with caution. With significant growth in Kel's sales occurring towards the end of last year and with a healthy order book going forward, Kel found itself with both capital investment and working capital funding problems.

Various attempts to attract outside investors have failed. A petition to wind up the company was made on Friday last by Ennis Industrial Properties Limited which claimed that Kel had failed to pay quarterly rent of £25,637. All creditors supported the winding-up petition. Shannon Development is currently working with the liquidator with the objective of securing the operation as a going concern. Already a number of prospective investors have been identified and have been made known to the liquidator. I am confident that a successful outcome can be achieved. I will bring the Deputy's interest in the matter to the notice both of the relevant officials in my Department and to Shannon Development, immediately.

Mr. U. Burke

I thank you, a Cheann Comhairle, for allowing me and my colleagues, Deputies Connaughton and Michael Kitt, to raise this matter of importance to the East Galway constituency. Last Friday saw the shock announcement of the decision by AT Cross to withdraw its manufacturing process from Ballinasloe back to the United States. The decision has had a devastating effect not only on the company's workforce and their families, but also on the economy of Ballinasloe and its hinterland. After 27 years of manufacturing in Ballinasloe, the decision came as a complete shock. AT Cross was a good employer. The workforce has the distinction of not having had one hour of industrial unrest over that period. Such loyalty has been badly rewarded by last Friday's decision.

I question the announcement of that decision. The Tánaiste is absent, even though she has connections with the region, but I ask the Minister of State when he learned of this decision. In normal practice he would have learned of this decision weeks or months ago. What has he done in the meantime? What have the Minister of State, who is from the constituency, and the Tánaiste, who has overall responsibility for job creation in the country, done? Have they sat on their hands and done nothing? Has the Tánaiste visited or requested a reprieve from the parent company? When she visited the United States recently did she visit the parent company in Rhode Island? If so, why has she not taken action to ensure a reprieve since? Those questions must be answered by the Minister of State tonight. He owes it not just to the employees and their families but to the industrial environment of Ballinasloe.

I am not sure the Minister of State and the Tánaiste alone should take the blame. I challenge the sincerity of the IDA. What has it done with regard to job creation in Ballinasloe in the last 26 years? Not been one job has been created in Ballinasloe with the assistance of the IDA – nor in many other towns in Galway apart from Galway city. Is there an industrial cartel in Galway city sucking practically every job created in the west into it at the expense of other towns, particularly Ballinasloe? The Minister's predecessor in the rainbow coalition saw the terrible injustice being done and wanted to level the playing field. I challenge the IDA to tell us what industrialists they brought to Ballinasloe to create jobs in the interim. I can find neither trace nor track of anyone who was encouraged by the IDA to come to Ballinasloe. There must be something wrong when IDA means Galway city growth.

I ask the Minister of State and the Tánaiste to assign importance to Ballinasloe and to give east Galway a fair crack of the whip regarding job creation. We need such job creation as it has not happened heretofore other than through private investment. I ask the Minister of State to come clean about when he knew of this decision and what he did when he discovered it. Will he find out if there is an opportunity for a reprieve? If not, will other jobs be created in Ballinasloe in the near future? It is important for all our sakes that this be addressed.

Mr. Connaughton

I am glad the Minister of State is here, although I am disappointed the Tánaiste is not. We know what everyone from east Galway wants, including the Minister of State, but the Tánaiste should be here.

It goes without saying that people in Ballinasloe are devastated by this. When they find out how bad the news is they will be even more devastated. It has come to notice that we are not talking about 100 jobs. There were 240 pay packets at AT Cross two weeks ago, but there will only be 60 after this, as 100 full time jobs and almost 80 part time jobs are affected. This is a disaster of the highest order. I am also told that manufacturing is to be stopped and the plant is to become a distribution centre. If so, it is the next step to closing the factory completely. There is no connection between a corporate body in the US and a distribution centre in Ballinasloe. We know what that means.

I do not know what the Minister of State knew, but the Tánaiste should have known about this. If so, we should have been told about this a long time ago. The Tánaiste and the Minister of State must now address two fundamental matters. One is the pursuit of AT Cross to maintain a manufacturing presence at Ballinasloe. I understand the vice-president of the company is in Ireland and I hope the Tánaiste, the Minister of State and the unions get the opportunity to talk to him tomorrow or the day after. I see nothing wrong with the four east Galway Deputies also meeting him. The other issue is that the IDA must now deliver a worthwhile industrial project which will form part of the strategic plan for Ballinasloe for the future. Everyone knows there were only three legs to Ballinasloe's industrial strategy, in three well known factories, but now one of them is gone.

We have never had greater inward investment into Ireland and the Minister of State knows that there are deals going on for industrial projects all over the country. It is our turn for a place in the sun. We have waited far too long and it is up to the Government to make sure the IDA's next industrial project goes to Ballinasloe. We have been side-stepped many times and for many reasons, but never for the right reason. Real regional development is needed and if the regional strategy is to have legs, Ballinasloe must get the next industrial project. I am not talking about a small project but a substantial one. We have many advantages – an excellent workforce, good infrastructure, an industrial park and good sewerage, water and schools. We also have easy access to Dublin, Galway and Shannon. We have everything, we know the inward investment is there and there is no reason for the Government, and the Tánaiste in particular, not to be able to deliver to Ballinasloe. I expect an announcement to be made in the next couple of days.

Mr. M. Kitt

I thank Deputies Ulick Burke and Connaughton for sharing their time with me. I also thank the Minster of State, Deputy Treacy, for addressing the matter. The loss of 100 jobs has left Ballinasloe reeling, although there have been rumours of lay-offs for some time. I find it amazing that SIPTU, which represents the majority of the 150 workers currently employed at AT Cross, was not informed of any difficulties at the company. I was also amazed that I could get more information from Mr. Harry Casey's report last week in The Connacht Tribune than from any other source. Mr. Casey could tell us some days before the loss of jobs was announced that the chief executive officer at the parent company was “reviewing total operations with a view to reducing costs and improving profitability.”

The company said the review would take a number of months and it assured employees and their representatives that they would be kept informed of the situation. However, the SIPTU branch secretary stated that she was not kept informed and the trades union was negotiating with the company on conditions for long-term temporary staff at the company. I pay tribute to AT Cross for its investment in Ballinasloe and to the employees. Every effort should be made in coming months to find alternative employment for them.

The Tánaiste and the IDA have been promoting Ballinasloe over the last 18 months and are developing a business park – the IDA has almost completed a new 25,000 square foot advance factory in Ballinasloe, so there are positive developments. However, in view of the fact that AT Cross once employed over 370 people and we are told that only 60 jobs will remain, there should be an assessment of the space that will be available at AT Cross for alternative industry, although of course we want those 60 jobs to remain.

I urge the Minister of State and the Tánaiste, who was born in Ballinasloe, to continue their work in promoting the town for new industry and I would like the Tánaiste to visit the town as soon as possible. She has visited the town on a number of occasions and was very positive in her remarks about the town when opening the Ballinasloe October fair. However, the sad situation is that Ballinasloe has had no new major industry in over 27 years. It has received urban renewal status, new urban council offices have been built in the town and a new marina has been sanctioned. Major investment has also been made in Portiuncula hospital, money has been provided for a local health centre and we have invested in our local schools.

The black spot in all of this has been unemployment and the lack of job opportunities. It is imperative that the Government takes action to provide alternative employment in Ballinasloe.

Mr. Treacy

I thank my three colleagues from Galway East for raising this serious matter on behalf of the constituency. AT Cross established its plant in Ballinasloe in 1972 to manufacture and market high quality writing instruments for the European and Asian markets. Its parent company, the AT Cross company of the USA, is a major international manufacturer of fine writing instruments and also manufactures pen-computing products.

On Friday last, 18 February, it was announced that as part of the recent restructuring of its worldwide operations, AT Cross is to consolidate its writing instruments manufacturing operations at its facility in Rhode Island, USA. This move will result in the loss of 100 full-time jobs and up to 90 temporary jobs at the company's Ballinasloe facility. The consolidation was necessitated by continuing severe losses over the past five years. As a result, the Irish facility will primarily be used as a European logistics and distribution centre for the European, Middle East and African markets. AT Cross proposes to retain 60 full-time staff in Ballinasloe who will continue to be employed in these activities. The transition is expected to be completed by the end of July.

By consolidating its Irish and US manufacturing operations, the AT Cross Corporation has stated that it will be able to operate a more efficient manufacturing operation and realise the commensurate cost benefits. It has also stated that it greatly regrets having to reduce its Irish workforce and that the decision to do so was a very difficult and painful one. However, in order to ensure the future success of AT Cross, the corporation has stated it has had to make these decisions across the globe.

I am personally deeply disappointed by this sad news. The company has been a very good employer and a keen supporter of local initiatives over many years. It is a severe blow to all of the excellent workers involved and my sincere sympathy is with them. AT Cross has stated that it appreciates everything which its employees and the Ballinasloe facility have done for the company and that, where possible, it will assist workers in the coming months to find alternative employment.

The main emphasis now is to find alternative employment opportunities for these dedicated workers who are to lose their jobs. IDA Ireland has been intensively promoting Ballinasloe over the past 18 months. It has worked closely with the local chamber of commerce and the two local authorities, Ballinasloe Urban District Council and Galway County Council. Over the past year, the IDA has acquired land to develop a high quality business park of circa 40 acres. The entrance to the business park has been completed and the various services to the park have been installed.

The IDA is also in the process of completing the building by a local developer of a new 27,000 square feet advance factory on this park which will be ready by the end of next month. In line with its strategy of intensifying the focus on the Objective One region, IDA Ireland is actively promoting these new units for activities such as health care, medical devices, engineering, electronics, customer services, shared services and e-commerce.

Mr. U. Burke

It has not provided us with a single job in 25 years.

Mr. Treacy

Over the past month, the IDA has arranged two official site visits to Ballinasloe for potential investors interested in finding suitable locations. IDA Ireland is totally committed to ensuring that the process of balanced regional dispersal is achieved in the western region. Securing a client for the advance factory in Ballinasloe will be a major focus of attention for the IDA over the coming year.

Mr. U. Burke

RIP for Cross.

Mr. Treacy

I refute Deputy Burke's and Deputy Connaughton's comments about the IDA. Deputy Burke stated that the IDA has not created any jobs in Ballinasloe since 1972 when the facts are the complete opposite.

Mr. Connaughton

We were referring to major manufacturing industries.

An Ceann Comhairle

The Minister, without interruption.

Mr. Treacy

The IDA assisted the AT Cross plant at all times and provided it with major grant aid, particularly five years ago when the plant was in serious difficulty. The IDA assisted the location and expansion of Square D and assisted the relocation of Dubarry Shoes.

Mr. Connaughton

Rightly so.

Mr. U. Burke

It did not create a single new job.

Mr. Treacy

It is totally unfair to say that the IDA did not create or sustain jobs.

I am very conscious of the effect which the job losses at the AT Cross plant will have on Ballinasloe.

Mr. U. Burke

The Minister should do something to save the jobs.

Mr. Treacy

I spent five years in secondary school at Garbally College, Ballinasloe, and some of my companions from those days are key members of the staff in the company. I spent 15 years in Ballinasloe Co-op Mart which is located down the road from the Cross company.

Mr. U. Burke

The Minister is reminiscing.

Mr. Treacy

During the past 18 years in this House and in various Departments, I have worked very closely with the company, particularly in the research and development area. To say that I was shocked on Friday last would be to put it mildly.

Mr. U. Burke

Yet the Minister issued a full statement to the local media.

An Ceann Comhairle

The Minister, without interruption.

Mr. Treacy

I was asked when I learned of this situation. Last Thursday night, I arrived home late and saw a front page article in The Connacht Tribune by local journalist, Harry Casey. I was shocked when I read it and the following morning at 9.30 a.m. I met members of company management at the AT Cross plant who informed me that the situation was extremely serious, that a board meeting had been held in the preceding days, that a new chief executive had been appointed and that he was taking drastic decisions about the company which were due to be announced later that evening.

Mr. U. Burke

Did the Minister speak to the Tánaiste?

Mr. Treacy

I drove straight to Dublin where I consulted with the Tánaiste, senior departmental officials and the IDA. We immediately contacted AT Cross to see what could be done to minimise the detrimental effects of the situation and retain as many of the jobs as possible. Those negotiations are ongoing. We are not accepting these jobs losses as a fait accompli.

Mr. Connaughton

Will the jobs be saved?

Mr. Treacy

The Tánaiste and I, on behalf of the Government, have been in constant communications with company management and the relevant State agencies, all of which will make Trojan efforts to find alternative employment for the wonderful workers in AT Cross and in the surrounding area.

Mr. U. Burke

The existing jobs should be saved.

Mr. Treacy

In consultation with the State agencies, the company and local organisations, we will take appropriate action as rapidly as possible.

Mr. Bell

I welcome the opportunity to raise the issue of the closure of the MKIR Panasonic plant in Dundalk. The loss of 360 jobs in the town is not just a body blow to the workers but is a tragedy for their families and communities. Today's newspaper reports of 115 new jobs in the plastics plant in Dundalk are welcome but the creation of 115 jobs over a five year period will not meet the need for 360 new jobs in the next six months.

During this period of economic boom, there has been a general consensus that job losses are a thing of the past. However, last week brought us back to reality with the announcement of the loss of 360 jobs in Dundalk, 130 jobs in Donegal and the threat of 190 job losses in Ballinasloe. We cannot take our jobs boom for granted.

County Louth is one of the few counties which has failed to reap the full benefits of the current boom and Friday's news further damaged morale in the county. While I appreciate the efforts of the IDA and others to bring new industry into Dundalk, there is much more to be done. Many of the workers who will be made redundant as a result of this plant closure are raising young families and attempting to repay high mortgages. Their financial commitments can only be met through employment and they will not be able to afford to survive on inadequate social welfare payments in June when the factory closes. The local SIPTU official, Jane Bushell, has stated that the workers' situation is bleak and that while they are highly skilled, their skills do not necessarily match those required in the expanding Xerox plant in the town. That is why I am calling for the establishment of a jobs task force which could assess the workers' skills levels and ensure they will receive any necessary up-skilling training required to make them job-ready by June.

It should be the remit of this task force, the Minister of Enterprise, Trade and Employment and the IDA to make concerted efforts to attract replacement jobs for workers who cannot be facilitated in existing factories. The loss of 360 jobs will have a negative impact on local businesses unless urgent action is taken to ensure the workers are not forced to sign on when they cease to be employed in five months. I hope that none of the 360 highly skilled workers will be forced to live on inadequate social welfare payments and that they will find alternative employment without delay.

I remind the Minister of State that Dundalk is fighting hard to reap the benefits of the peace process and our economic boom. I hope the Minister for Enterprise, Trade and Employment will establish a task force to ensure these job losses are only a temporary setback. There were over 3,000 job losses in the footwear, clothing and textile industries in Dundalk town when I was general secretary of the Irish Shoe and Leather Workers Union. I know the hardship the people have suffered. I ask the Minister of State to make an effort to redress that.

Mr. Treacy

I thank the Deputy for raising this matter on the Adjournment. I share fully his disappointment at the announcement of the closure of the MKIR Panasonic plant. MKIR is a wholly owned subsidiary of Matsushita Kotobuki Electronics, MKE, of Japan, one of the world's leading producers of electronic and electrical products. MKIR in Dundalk was established in 1992 to manufacture hard disk drives for the European computer industry. Due to severe over-capacity and pricing pressures in the marketplace, increased production costs and declining sales prices, the Matsushita Kotobuki division, which specialises in the manufacture of hard disk drives, is being reorganised.

The group's only European manufacturer of hard disk drives is based in Dundalk. The Irish operation has been trading at a loss. The group has examined a range of options to reverse this loss making trend, including further cost reduction, improving productivity etc. Despite this, however, the cost structure in Ireland is still substantially higher than other group companies, all Far East based. As a result, the parent company in Japan has decided that the Dundalk plant, which employs 360 people, will be closed and production transferred to other group companies in Singapore and Malaysia.

The company has stated that it is committed to giving every assistance and support to its employees to find alternative employment in the months ahead. The company will co-operate fully with IDA Ireland in meeting all its liabilities and in promoting its facility for a replacement industry. The loss of these jobs is a severe blow to the employees concerned and finding alternative employment must be a key priority. Fortunately, the Louth region has both shared in and contributed to economic growth and has seen tremendous development in recent times.

While the job loss announcement is clearly a major blow to the workforce affected, employment prospects generally are very positive in Dundalk at present. Xerox is in the process of developing a major technology park in Dundalk, the construction of which is well advanced, and has already recruited 285 people, with job numbers to increase to 2,100 by the end of 2003. The Xerox company has already had a major impact in Dundalk, both in terms of investment and increasing business confidence in the area, and has developed strong links with the Dundalk Institute of Technology and with the local chamber of commerce.

In another significant development, ICL, one of the world's leading IT companies, is to establish a 160 job software centre in Dundalk, which will specialise in the implementation and development of software applications, based on Oracle technology. This new centre will employ over 100 software developers within three years, consisting of highly skilled, high-tech third level graduates. Since its start-up last May, ICL has already recruited 30 people. Further good news emerged yesterday, with the announcement by Tessy Plastics that it is to set up in the IDA industrial park in Dundalk. An investment of £5 million is envisaged, which will lead to 115 jobs over the next five years. Its decision to locate in Dundalk, over other possible locations, is a major confidence boost for the town and augurs well for the future.

In view of the generally very positive situation in Dundalk, we do not propose to establish a task force at this time. However, I assure the Deputy and the House that the agencies will give every assistance to enable the employees at MKIR to find new employment. In that regard, FÁS has already been in touch with the general manager of the company. MKIR will contact FÁS to arrange registration and to discuss training needs. In addition, we have arranged for senior officials of the Department of Enterprise, Trade and Employment and the State agencies to meet with SIPTU and worker representatives to outline the actions being taken to assist the workforce affected by this disappointing closure.

I agree with Deputy Bell, especially as regards the footwear industry. My constituency has a traditional footwear industry and we are the last bastion of shoe manufacture in Ireland. While we want to ensure this continues, I realise that many of my colleagues have lost a wonderful industry which made a huge contribution to economic growth in dark and difficult times. I thank the Deputy for raising this matter and I will ensure his sentiments will be conveyed to the highest level of Government, our Department, the IDA and other State agencies to ensure we can find alternative employment for these unfortunate people as quickly as possible.

The Dáil adjourned at 9.05 p.m. until 10.30 a.m. on Wednesday, 23 February 2000.