Vol. 538 No. 3
I come to deal with Private Notice Questions to the Tánaiste and Minister for Enterprise, Trade and Employment, on the announced closure of the ISPAT steel plant in Cork.
I will call on the Deputies who tabled questions to the Tánaiste and Minister for Enterprise, Trade and Employment in the order in which they submitted their questions to my office.
asked the Tánaiste and Minister for Enterprise, Trade and Employment the steps she has taken, or intends to take, to avert the threatened closure of the Irish ISPAT steel plant at Haulbowline, County Cork; the further steps she intends to take to help provide replacement employment for the almost 400 workers who may lose their jobs; the implications of the reported debts of the company on creditors; and if she will make a statement on the matter.
On a point of order, a Leas-Cheann Comhairle, has the Tánaiste run away?
That is not a point of order, Deputy Quinn. I call Deputy Clune.
Has she gone to Boston? It is political cowardice.
asked the Tánaiste and Minister for Enterprise, Trade and Employment if she will make a statement on the announcement by ISPAT that it is to cease operation at its plant in Haulbowline, in Cork Harbour.
I call Deputy Rabbitte.
asked the Tánaiste and Minister for Enterprise, Trade and Employment what discussions she has had or plans to have with the management of ISPAT arising from their announcement on Friday last that the plant is to close with the loss of 400 jobs; what steps she intends to take to avert such a major loss of jobs having regard to the likely impact on the local economy; and if she will make a statement on the matter.
asked the Tánaiste and Minister for Enterprise, Trade and Employment her views on the potential loss of more than 400 permanent jobs in Irish ISPAT in County Cork; the actions she has taken to date to avert the closure of the plant; the actions she plans now to take to maximise the likelihood of a rescue package being agreed between workers and management.
I apologise for the absence of the Tánaiste. She had a prior engagement from which she could not be released. As Minister of State for Labour Affairs, I am answering these questions on behalf of the Government.
Irish Steel Limited was formerly owned by the State who sold it in 1996. It then became known as Irish ISPAT Limited. Irish Steel was in a loss making situation at that time and its further viability was in serious doubt. It had run up serious debts and the workforce at the time was facing a bleak future. The plant was sold for the nominal consideration of £1 and, in addition, the State agreed to write-off accumulated debts of £17 million and to inject a total of £20 million cash into the enterprise. In return, Irish ISPAT gave the following commitments: (1) to maintain the business of Irish Steel for a five year period at not less than the current level of production. This commitment was adhered to; (2) to invest £5 million for working capital which was completed in May 1996; (3) to employ an annual average of 300 permanent employees for a five year period up to 31 May 2001. There are over 400 employees in the workforce at present, a factor which in itself shows the commitment was adhered to; (4) a contribution of £2.36 million was included in the cash injection by the State for environmental works. I understand that up to last November, the company has spent £3.3 million on this work; (5) the company undertook to repay an outstanding loan of $14 million to the European Coal and Steel Community. That was repaid in 1999 and (6) the State had given a guarantee of £10 million of an ACC loan which had been taken out by Irish Steel. This loan is due for repayment in November 2003. My Department holds indemnities and a letter of credit in relation to this debt.
My Department is keeping in close touch with the situation and the Tánaiste is seeking a meeting with the management of the parent company. The trade unions have had meetings with the management of the company recently, under the chairmanship of the Labour Relations Commission. I understand that another such meeting is planned to take place tomorrow. As Irish ISPAT Limited is a private company, I have no information on its debts or the possible impact on creditors. I know that a creditors' meeting is planned to take place on Thursday, 28 June. In the meantime, my fervent hope for all concerned, the workforce of over 400 and their dependants, the management of the company and the industries and suppliers which are dependent on this business, is that a solution can be worked out which will save it from closure.
Will the Minister of State agree that it was known for some time that ISPAT was in some difficulty? When did he or his officials first become aware of these difficulties? Was he or any other Minister or Department contacted by ISPAT at any time regarding these difficulties? When did he or his Department first become aware of the decision to close? What kind of early warning system, if any, is in operation in the Department to alert Ministers and officials to potential problems in companies such as ISPAT? What action has been taken by the Department and Ministers to date to explore ways to keep the plant open?
I understand there was no direct contact from the company but there was contact in recent weeks with the unions concerned. Obviously the Government and everybody else would be aware that the cost of raw materials have increased considerably, that steel prices have decreased and that labour costs have increased recently. I have outlined in detail the history of this company which is a human tragedy for the area. Clearly the Government is conscious of that. It is a private company. A meeting of creditors will take place at which all these issues need to be addressed. The Tánaiste will seek a meeting with the parent company. I express the Government's deep concern for the workers, many of whom have given a lifetime of service to this company, their families, Cobh and the surrounding areas. Every effort will be made to help. I accept it is a difficult situation. A great deal of investment was made by the Government when the crisis was dealt with on the last occasion. I note from the press statements by the company that the creditors are owed £36 million. The company says it has sufficient assets and property to meet its obligations. It also states that the pension fund is over-funded by £9 million. It has put some of the facts on the table as they emerged. My earnest hope is that there will be some progress on the issue when the unions sit down with management at the Labour Relations Commission. Later on there will be a meeting with creditors.
My understanding is that the company contacted the Minister for Finance about the position in the past 12 months but there was no response. The Minister of State said there was no contact with the Government. There has been a great deal of media attention surrounding this plant both in terms of health and safety concerns and environmental issues. We were all aware of the necessary investment in the plant and that there were difficulties since the company's flotation in 1997.
I have some environmental concerns. I understand a hazardous waste landfill or dump is being used by the company and a great deal of investment will be required to right the situation there. It is possible that there has been a leak into Cork harbour and, if so, considerable investment will be required to make it safe irrespective of whether the company leaves the area. Will the Minister of State ask the Tánaiste to ensure when negotiating with the company that the necessary investment from an environmental point of view will be part of the equation? In regard to the sale of land to the Department of the Marine and Natural Resources in the area by Irish Steel for £14 million and lands to Indaver, a company which was planning to build a waste incinerator in Ringaskiddy for £75 million, what is the position with that money now? Is it with ISPAT or has the State some call on it, in terms of the liquidation of the plant?
I understand the site in question which was acquired in 1996 was sold for £3.5 million and that those funds were retained in the business to finance operations at Haulbowline. In regard to the waste, my understanding is that the Environmental Protection Agency was about to issue the company with a strict integrated pollution licence with regard to removing hazardous waste from the site. I give an undertaking that this matter will be pursued by the relevant Mini ster, either in my Department or some other Department.
The Deputy asked a specific question about contacts and I will be glad to pursue that matter further with other Ministers for the Deputy. I replied in respect of my own Department. My information is that the unions contacted my Department.
I had hoped the Tánaiste would be here as I had a few questions to put to her. I do not know whether the Minister of State can reply on her behalf. I will ask him one question only of those I had intended to put to the Tánaiste? It relates to her expression of optimism in Galway that this plant was not lost and that it could be kept open. What is the basis on which the Tánaiste made the assessment that the plant is viable and can be saved? That is a critically important issue for the region. Will the Minister of State agree it is not just a case of the 400 people directly employed in ISPAT but there may be more than 200 jobs involved in supply, ferry services etc. that are also at risk? Is he aware that the Tánaiste has also been trying to sell off IFI, the neighbouring plant, for some considerable time? It is a gloomy prognosis for the area. When the Minister of State said contact was made with his Department on behalf of the trade unions concerned, what action did he take arising from those representations? I presume contact was made with the company and it had a meeting with the company. Given the present situation the House wants to know exactly what actions the Minister took? Is that the basis of the optimism expressed by the Tánaiste?
In relation to contacts from the trade union movement, my understanding is that it expressed its fears about the situation. That would not be uncommon as the Deputy will be aware from his involvement in this Department. This is a private company. In some situations there is not a great deal that can be done except to monitor the situation. The Tánaiste has expressed the hope, as I am doing here, that the situation can be addressed. The bottom line for the Government in any of these traumatic issues is that it affects a local area. The Deputy is correct in identifying the fact that it is not just 400 jobs that are involved but that 1,500 people may be involved in indirect employment. In any of these issues one will try to resolve the problem and save the jobs. That is the Government's ambition and that is why the Tánaiste is endeavouring to meet the management of the parent company.
What is the basis for the optimism? Are things happening that we should know about?
The train of events is that the LRC is involved and it is important that that process be given every chance. The Tánaiste is endeavouring to meet the parent company, which is a strong international trading company. Everyone is clear about the loss making aspect that has presented itself, not just this year but on an annual basis. Up to £750,000 per month has been lost in each of the past few years. It is a loss making facility. That was the basis of the Tánaiste's comments and every effort will be made to help at this difficult time. There will be a creditors' meeting on, I think, 28 June. A series of meetings will take place in the coming days and we will try to save the plant. The facts as they are emerging make that look difficult. However, every effort will be made because of the needs of the workers and their commitment, as well as the impact on Cobh and the surrounding area.
The Minister of State has indicated that, in the time preceding the announcement last Friday that ISPAT would close, his Department was contacted by union representatives to express concern over the future of the plant. Why did the Department not seek to speak to management or the parent company at that time? Why have we waited until after the announcement of the closure before seeking such a meeting? Surely this is a classic case of closing the door after the horse has bolted.
We did not need union representatives to tell us that ISPAT was in difficulty. Because of his involvement in the plant, Deputy Dennehy knows better than most Deputies that ISPAT has been in difficulty, particularly in the past eight months, for environmental and financial reasons. It is unbelievable that the Department with responsibility for employment has not sought a meeting with management or the parent company to discuss the long-term future of ISPAT in Cork Harbour. That is unacceptable.
What has the Tánaiste been doing since the announcement and the very short notice that the workers were given? She was on Cork local radio this morning saying she was organising a meeting with the parent company for next Friday. We all understand the decisions are being made by the parent company. Has it responded yet? Will that meeting go ahead? I do not understand the time delay. If the Tánaiste was on local radio early this morning announcing her intention to have that meeting, why has she not got a response yet? Surely only a phone call is required. I would like to hear concrete proposals for the planned meeting on Friday. I am sure the Minister agrees we need to be somewhat restrained in what we say about the relationship between management and workers there because they are currently in very delicate negotiations. The workers have asked public representatives to refrain from making comments about that topic, so I will not pursue it.
Is there a contingency plan in place in the event of the closure of ISPAT? If there is not, one should be set up very quickly. There are 420 families relying on ISPAT for income. Many of the employees have worked in the plant for 30 years. I had lunch yesterday with somebody who has worked there for 39 years. It is essential that we look at a contingency plan. I would envisage something like a forum on employment and an assessment of skills of the 420 staff so that other companies in the area could avail of those skills and there could be at least a next stage following the closure. Many of the workers do not know where to turn if the plant does not re-open. Those who have worked in the plant for a long time and have no experience of working anywhere else will need assistance from the Department of Enterprise, Trade and Employment. The Minister of State needs to show leadership in this. If the news about ISPAT re-opening is pessimistic this time next week, there should be a seminar, a forum or an assessment of skills to reassure the employees of ISPAT and their families without delay.
I remind the House, that Deputies should confine their remarks to questions.
On the question of contact at an official level within my Department, there was contact and fears were expressed by the unions in question. Their concerns were taken on board, but this is a private company. The company claims it is looking for savings, such as a 10% cut in wages, no further wage increases under the Programme for Prosperity and Fairness, a 60% increase in production and they want to lay off 70 workers. It is a pretty tall order. On the other hand, clearly the unions are seeking information on the workers' future. As Deputy Coveney rightly acknowledges, there is a particular difficulty given the huge gap between both sides. The Department's role would be to help through the involvement of the Labour Relations Commission and that is happening.
I have no further update on the meeting planned between the Tánaiste and the parent company except to confirm that we hope this will take place on Friday. I will keep the Deputies informed of developments in that regard.
Deputy Coveney is correct in what he says about a contingency plan. We have to go through a number of stages first to try to find a resolution, but in the event of things going wrong with regard to the creditors' meeting etc., it is obvious that a major contingency plan would be required. I do not wish to envisage that now.
We have had a number of debates on Irish Steel in the past 20 years. Previous Governments were in a different position than the current one. As the Minister, Deputy Kitt, has outlined, ISPAT is a private company similar to Ford, Dunlop and Verolme Dockyard. The Government cannot do as much as it could in the case of a semi-state body. I commend the Minister, the unions and especially the workers for—
I remind the House that we are having questions on the issue and it is not a debate.
I commend the Minister, the unions and the management for continuing the debate because last Friday everybody thought it was a dead duck. I hope the outcome of that debate will be positive and that ISPAT will continue in existence.
That is not a question
I remind the Deputy to confine his remarks to questions.
In the event of a creditors' meeting taking place – which will only happen if discussions do not bring a positive result – an inter-company loan should not get precedence over local creditors. I ask the Minister to have the company law aspect checked. There is a large company loan on the balance sheet and that should not get preferential treatment over the local creditors.
With regard to setting up a task force, I ask the Minister of State to check the outcome of the task force which was set up five years ago, when Irish Steel was sold to ISPAT. If there were any positive recommendations from that task force, it might provide a basis for setting up a forum, if that is the appropriate term, in the event of a negative outcome to the current discussions.
I assure Deputy Ahern that any investigations required will take place. With regard to loans, as I stated in my reply, the State gave a guarantee for £10 million in respect of a loan which had been taken out by Irish Steel from ACC Bank. That is due for repayment in 2003. The other important State-guaranteed loan was for $40 million, which has been paid back to the European Coal and Steel Community. The company also lodged £5 million in an escrow account, which is linked to the ACC loan. That is the background to the loans situation. The ACC loan is due in 2003 and we have to wait until then to see that matter brought to a conclusion.
The law provides for behaviour by companies and for any appropriate requirements and investigations. That will be pursued where necessary by the Government and the Department. Any experience from the previous task force to which Deputy Ahern referred will be availed of.
We need to be cautious in our comments because the situation is still far from over and we must try to present a positive message. In his initial reply, the Minister of State outlined five or six commitments which had been entered into by the ISPAT company when pur chasing the facility from the State in 1996. Does he consider that those commitments have been fulfilled to the level which they should be? Hopefully, his answer is ‘Yes' and, if so, does he believe that the company has a commitment to the region, or at least did have such a commitment in 1996-97?
In advance of the Tánaiste's meeting with the company in the next few days, has the Minister of State a full assessment from ISPAT on what are the actual problems? Will the Tánaiste be in a position to respond to a series of queries and concerns from the company? Is the picture fully available to the Department at this stage? While I am glad that a meeting is to take place with the company, I hope it will not be simply a discussion and that, in advance of the meeting, the Tánaiste will be fully appraised of the situation and the list of problems which the company is facing, so that she may be able to discuss possible solutions.
With regard to the proposed task force, even if ISPAT is enabled to continue in operation, the task force should look at the harbour region. The closure of ISPAT would be the thin end of the wedge. The present heavy industry is of a very old traditional type. The task force should be geared towards looking at new technology and new industry for this area. An area like Cobh and Cork Harbour cannot be expected to live on one traditional industry alone. The task force is essential in any event and hopefully the Tánaiste will be in a position to make progress when she meets the company.
I would like to hear the Minister of State's assessment of the company's commitment to the region. This has been the subject of some debate but, from my own involvement in discussions in 1996, I feel there was a genuine commitment by the company to make a success of the former Irish Steel. It is unlikely that any company would invest in a facility simply in order to close it down five or six years later. Is there now a full picture of what has gone wrong and will the Tánaiste be in a position to discuss a solution, notwithstanding the fact that there is a difficulty with regard to EU prohibition on grant aid. We should look at all possible ways of assisting this company to remain in operation.
It is fair to say that commitments which were made have been honoured. In my extensive reply, I mentioned employment levels, production levels and the indemnities and undertakings which ISPAT gave in respect of Government-guaranteed debts. All of those commitments have been honoured so far and, as I said, we have to wait until 2003 for a final assessment. I suggest that the problems have arisen from the fall in the price of steel, which involves international factors. As to whether the company's was genuine, I believe it was, in the sense that there was a clear plan when ISPAT became involved. The Government of the day and the then Minister, Deputy Richard Bruton, obviously thought so too. The commitments by all concerned at the time were genuine. Our job now is to pick up the pieces. I accept the point that, whatever happens – and we must be as constructive as possible in our deliberations today – there is a need for a very focused approach to the area concerned. Whatever form it may take, we should let the unions and management deal with the next phase through the LRC. Regardless of the outcome, a very focused approach will be needed to help everybody through the situation.
I have just a few questions for the Minister. In the effort to keep the company in operation, we need as much information as possible. Can Deputies be briefed on the details of the agreement made five years ago with ISPAT? There are many rumours in circulation. In particular, can we be briefed on the conditions with regard to future use of the land, especially on the island of Haulbowline which has probably one of the best graving docks in Europe? Can we have details of the commitments entered into by the company, other than the five year guarantee of jobs and the commitments regarding other aspects of expansion? The Minister of State has already mentioned the loans aspect; could we be briefed more fully on that? Is the Minister of State aware of the similarities between the recent request put to the workers in the plant and the 1995 agreement? The only real difference that I can see is that, at that time, there was no cut-back in wages. There was a three year pay freeze and 117 redundancies. However, it was accepted and worked through. Does the Minister of State believe this may be a ploy to try to get the best possible deal for the company? Is he enthusiastic that we can work out of that?
I am sorry for being a bit long-winded but having spent 25 years building up the place as best I could, I would regret more than most the demise of this company. Some people seem to be anxious to see it close. Has any evaluation been done by the Department on the ancillary items that came up over the past couple of months, particularly in relation to the environmental difficulties the company faced and the claim in regard to the price of electricity, which is massive regardless of whether there were increases? I saw a bill 15 or more years ago which was for £0.25 million for one month's electricity. Has any evaluation been done by the Department on these other issues?
Deputy Dennehy has raised a number of relevant issues and I am conscious of his knowledge of the situation locally. I will arrange for a briefing for Deputies who are interested. Obviously, everybody here would be interested in being kept informed. That will be arranged for the local Deputies and for those who want an up to date briefing on all the issues referred to not only by Deputy Dennehy, but by others.
The question of loans was mentioned. I would be very happy if my officials briefed the Deputies in question on the loans. I mentioned the connec tion between the ACC loan and the lodgement of the £5 million in escrow. That ACC loan is due to be repaid by 2003. I would be happy to arrange a briefing for the local Deputies as to what will happen if the loan is not repaid. That is important.
I am conscious of the environmental difficulties and the cost of electricity. They are very much related matters. I cannot really question the motivation of the company. I have answered the question in regard to the situation when ISPAT and the Government of the day sat down to try to save the situation in 1996. What I have said is on the record. I hope we can try to help the local situation and save the jobs in question. I thank Deputies for their contributions and I will be glad to provide briefing and an update for Deputies in the days ahead.
Has the Minister of State any information on moneys owed to workers, holiday pay and overtime pay? What is his reaction to the notice the workers were given that their jobs were no longer in existence given these workers have mortgages and loans and families to rear? Is there any fund in the State that can assist these workers at this time? Can the Minister of State comment on the cost of ESB power to the plant which has been mentioned? Does the State have an allocation of a European or other such steel quota? If so, will the Minister of State make information about it available and state what will happen to it in the event of the plant closing? What will happen to the land on which the plant is located again in the unhappy event that the present talks do not succeed, although we all hope they do? What is the State's commitment? Are there any bonds or other guarantees? Are they held by the State in relation to the jobs and the continued operation of the steel plant? Were any such bonds or other guarantees held in the past?
It would appear we have established that no pre-emptive action was taken by Government in regard to the threat to a major employer in this region. I accept there is only so much any Government can do in the case of a private employer. However, does the Minister of State not agree that it is disappointing that no actions at all appear to have been taken either on foot of the trade union representations or from knowledge that over the past nine months the company was in some difficulties?
The Minister of State referred to one parcel of land being sold for £3.5 million. My understanding is that two parcels of land have been sold. What did the second parcel of land realise? What did the Minister of State mean by his reference to the pension scheme being oversubscribed? Why is it oversubscribed? Will it be a priority of the Minister of State and his officials to protect the pension entitlements of the workers, irrespective of the outcome? Is it the case that there is a separate deduction at source arrangement at the plant in terms of the payment of life assurance policies, that these moneys are paid over quarterly and that there may be a question about them not having been paid over more recently? Will the Minister of State ensure that is taken care of as well? Although it was a long time objective of the Department to see this company privatised, I sincerely hope it has not forgotten about it entirely since it was privatised. Some people might think that was the case.
In respect of the ACC loan, are the State and the bank indemnified, as the Minister of State said? Does that mean the ACC Bank is indemnified irrespective of what happens? As Deputy Stanton has said, we all hope the Tánaiste knew what she was talking about when she said in Galway that she was optimistic. However, is there an indemnity for the State in the event of it being needed? Is there a similar indemnity in respect of the $14 million loan to which the Minister adverted? Is it State guaranteed and, if it is, is there an indemnity?
Can I take it that the Department will ensure that every communication and information system is put at the disposal of the trade union representatives and the workers in terms of their rights and entitlements should the worst come to the worst, because the Minister of State seemed to accept the proposition that if loans outstanding on the balance sheet are all discharged, as they should be in accordance with company law, that a very difficult situation for a number of local creditors will be created?
In relation to the £40 million loan the State has guaranteed, do we have information on what that money was spent, that is, whether it was spent on capital investment or to repay loans in place under the former Irish Steel? The Minister of State did not really answer my question on why no contact was made before Friday with the management or the parent company. I accept this is a private company but it is one which has been propped up by the State as has been clearly pointed out today in relation to guaranteeing loans and so on.
The State would have been within its rights over the past six months to ask genuine questions. Why did that not happen? There was prior warning coming from all sources – from environmental and financial sectors and from the unions.
I do not want to address the complex issues concerning how the workers were treated at the weekend. That will have to be discussed at a later date. Where grounds for optimism are concerned, the question Deputy Rabbitte asked was very relevant. This morning on the radio, the Tánaiste—
Deputy Coveney, it is Question Time.
Yes, I am asking a question.
Please come to the point.
Has the Minister any grounds for optimism apart from a meeting in London on Friday that has yet to be confirmed?
I apologise for being late as there was a vote at one of the committees.
Will the Minister tell us if all the legal obligations have been fulfilled? The rainbow coalition negotiated this in 1996. Is the Minister aware that a lot of outstanding moneys are due to employees who are concerned about redundancy and holiday payments and the fact that they received only one hour's notice last Friday? Does the Minister know if the parent company will honour the debts due to the staff and the many hundreds of suppliers in the greater Cork city and harbour areas? A number of my constituents are concerned—
Will Deputy O'Flynn keep to the question?
—and that is why I am contributing to today's debate. Was there any promise of investment over the past five years? If so, was it carried out? Were the losses to which the company is referring caused by market forces rather than the performance of the staff, which has given a dedicated service over many decades, not only to ISPAT, but also to Irish Steel? Is the figure of £5 million in losses correct? Is the Minister aware that the staff offered in the order of £2.8 million in cuts in wages, overtime rates, bonuses, etc. to help reduce those losses? Is the Minister optimistic or convinced that the company will do all in its power to retract the statement it made on Friday that it was closing, and does he think there is any chance the company will remain open? We are all hopeful that the plant will be reopened and that negotiations will be successful. I know the IDA had no input into the 1996—
The Deputy has asked a number of questions.
Will the IDA be asked to get involved at this stage to see if the company will be sold? If the parent company decides to put it into liquidation – I hope it does not – will the IDA be asked to help find another buyer or will there be some other arrangement made to keep it open? The skills the employees have learned over the years do not easily lend themselves to being used in other kinds of industries because of the nature of the work.
A number of Deputies, including Deputy O'Flynn, asked about the State guaranteeing £10 million on the ACC loan, which was taken out by Irish Steel. The Deputies questioned what sort of indemnities were in place. Deputy Rabbitte raised this first. My Department holds indemnit ies and a letter of credit concerning the debt. In the event of that debt not being paid, the Department could immediately take the £5 million lodged in the escrow account. It is related to the loan due to be repaid in 2003. We are not in a position to know if it will, but I hope so. That money would be only a part of the moneys involved. The Department would have to take legal action to get the outstanding moneys.
Issues were raised by Deputy Stanton and others regarding the position of workers. The company is obliged to give notice of lay-offs or make payments in lieu. There is a fund in my Department to pay outstanding sick pay, wages or minimum notices etc. in the event of a liquidation or receivership.
Deputy Coveney referred to the contact between the Department and the unions. The only contact between the company, the Minister and the Tánaiste concerned the sale of a piece of land. This relates to what Deputy Rabbitte said. There are another 16 acres involved and the amount realised in that respect was £1.5 million.
I gladly accept the suggestion that Deputies be briefed on any outstanding issues in the coming days.
With regard to pensions—
Have we a steel quota?
