Dáil Éireann díospóireacht -
Tuesday, 18 May 2010

Vol. 709 No. 2

Leaders’ Questions

Deputy Enda Kenny

I know that the Tánaiste is standing in for the Taoiseach, who is in Madrid today.

The Pfizer company announced the loss of 785 jobs this afternoon in a number of locations throughout the country, 300 of which are in Cork, 275 in Newbridge and 210 in Dún Laoghaire. This is devastating news for the workers and families involved. While the job losses are not being introduced immediately, it is a matter of the most serious concern for those workers and for other corporations with investments in Ireland.

In his address to the American Chamber of Commerce Ireland last November, the thenpresident Dr. Paul Duffy, who is also vice-president of operations for Pfizer Ireland, highlighted the challenges facing the multinational sector in this country. On 1 May 2010, he stated that Ireland should adopt a single issue of protecting jobs in the country. This was a major flagging issue by a big investor in Ireland. Last November, Dr. Duffy said that we needed to face up to the repositioning of Ireland as a country to be fit for purpose under the new global reality. He called for measures to be put in the budget which would retain jobs, encourage competitiveness and innovation, and which would prepare the foundations for new investment and newjobs.

The Tánaiste was the Minister for Enterprise and Employment at that stage. She would have had contact with Dr. Duffy in his role as the vice-president of operations for Pfizer Ireland. Given that the Government set aside €36 million in the December budget for a PRSI holiday for employers taking on new employees who had been six months or more on the dole, why has that scheme, which was referred to by Dr. Duffy, not been implemented? He specifically made the point that in view of the costs and charges that apply to multinationals in Ireland they should be allowed to offset research and development tax credit against other corporate or payroll taxes. He specifically asked for that in the presence of the Minister for Finance who was the guest of honour at that dinner. This proposal was supported by the Commission on Taxation and by the Fine Gael Party. Why was that not included in the budget given that a very major player in our country was sending out a signal about global repositioning that would affect not just Pfizer and Wyeth, but also every other multinational with particular reference to American companies here? Why were these two measures that Dr. Duffy as vice president of this company called for not dealt with in the budget? Why has the PRSI holiday not been implemented yet?

The Tánaiste

The announcement made by Pfizer and the implications this has on an individual are very difficult. I empathise with that. The issue has arisen as a consequence of the purchase of Wyeth by Pfizer and the present overcapacity. This afternoon Pfizer indicated to the stock exchange that 6,000 jobs would go from Pfizer global manufacturing on the basis of that overcapacity. Arising from that decision, more than 780 jobs will be lost as a consequence. There is a timeframe in which we can work towards supporting those people. IDA Ireland is of the view that the three facilities can be sold. Equally it is important to say that we will continue to have in excess of 4,000 people working within Pfizer.

I know Dr. Duffy and have met him. I have listened and continue to listen to what people have to say about foreign direct investment being established and continuing to be established here. It is important to put on the record the role of IDA Ireland, which has been in a position to establish a number of foreign direct investments last year and this year despite the challenges within the economy. One of the issues that is very important to FDI in this country is that we constantly reassure — as the Minister for Finance did in the last budget — that we will continue to have a 12.5% corporation tax rate. The Deputy and his party did harm in this regard last week. Investment in research and development has been enormous and will continue to be on the basis of the development of the smart economy and the innovation island.

The Deputy raised the specific issue of the PRSI holiday. As he knows, we are awaiting that discussion here in the House under the social welfare Bill. That entitlement will be backdated to the beginning of the year. A number of very important issues have been raised by the FDI community and IDA Ireland in the context of last year's budget, when a number of research and development tax credits were proposed. Some have been included in the taxation package which has been accepted by the FDI community as greatly beneficial in its sustainability and stabilisation here. We are not in a position to provide a tax credit to offset something where no profit is created. In the context of stabilising the FDI community we also included them in two initiatives that were both available to Enterprise Ireland clients, city and county development board clients, and FDI clients.

We are very cognisant of the role of FDI. Horizon 2020, the new framework set down by IDA Ireland in the context of sustaining and encouraging new foreign direct investment here is a plan that can be implemented and will see not just the sustainability of a number of existing clients, but also the attraction of new clients to this country. That does not take away from the issues that have arisen for those working for Pfizer at present.

Deputy Enda Kenny

A number of matters arise from the Tánaiste's reply. Dr. Duffy is not an ordinary worker, but is the vice-president of operations for Pfizer Ireland. His contribution on 26 November was very timely. He was speaking about Ireland preparing itself to be repositioned and be fit for purpose, as he described it, in a global sense. Clearly the flare was going up that repositioning was under way by this company and others. The Tánaiste referred to excess capacity. Is she aware of other vulnerable corporations here owing to that excess capacity and if so is anybody in Government talking to the chief executives of those companies to deal with the issues to which Dr. Duffy referred, which are competitiveness, investment in innovation, and the allowance for the capacity in research and development? The Tánaiste said that research and development is a major issue — and so it is. He specifically referred to the capacity to allow research and development to be offset against corporate or other taxes. The Tánaiste did not answer that question. Given that the Commission on Taxation recommended this and it was supported by my party, why did the Government not consider that that allowance be extended beyond mere profits? If we want to be fit for purpose for international investment in the country, surely the Government should be really focused on research and development, and innovation, which will be key to the next ten years. In the words of Dr. Duffy it should be focused on the single issue of retaining jobs. Following the request of the vice-president of operations of Pfizer Ireland and the president of the American Chamber of Commerce Ireland, why did the Government not listen to that encouragement for the Government to respond given that it claims to be responsive?

In his contribution Dr. Duffy also stated that Ireland's energy costs were considerably higher than those of the rest of the European Union. On numerous occasions Deputy Coveney has pointed out the extent of the liability we have as an exceptionally high cost country in the area of energy. He made the point that the Government should speak to the National Competitiveness Council before implementing its carbon strategy, which has given rise to excessive costs in energy here. Did the Government speak to the National Competitiveness Council in that regard?

Given that the Fine Gael Party has made a series of recommendations to reduce costs and make the country more competitive, has the Government considered the reduction of Government-regulated prices, including those for telecoms and energy? If so what message does it send to American companies in particular, which are exceptionally agitated and concerned about the rising cost of doing business here? This is an issue of serious concern across the country. Is it the intention of the Government to speak to the chief executives of the American corporations that have invested here to follow through and demonstrate that the plea made by the president of the American Chamber of Commerce Ireland last November would be implemented by Government and that we should focus on the issue of retention of jobs and not have announcements like the loss of 275 jobs in Newbridge, 210 in Dún Laoghaire and 300 in Cork, where the Tánaiste advises me there is an overcapacity in this sector? Will the Government call in those chief executives, listen to them and follow through with Government action to reinforce that call, which was not made lightly, that we reposition ourselves against a global reality of repositioning by these multinational companies?

The Tánaiste

First, it is important to say that the decision made by Pfizer has nothing to do with the Irish economy. It has to do with the fact that Pfizer has purchased Wyeth and there is global over-capacity. That is the reason.

Deputy Enda Kenny

These words were spoken last November.

The Tánaiste

That is the reason Pfizer finds itself in the position where it is downsizing globally——

Deputy Enda Kenny

It was a warning.

The Tánaiste

——which is having an impact on 785 people in this country. That is the first point.

Second, Ministers for Enterprise, Trade and Employment, taoisigh, tánaistí and all Members of the Cabinet engage fully with our foreign direct investment, FDI, clients. In particular, the Minister for Enterprise, Trade and Innovation works locally, nationally and internationally with all clients, as do all members of the IDA team. The Deputy is acutely aware of that. That is a constant conversation, dialogue and support mechanism between the relevant Minister, the line Minister and Ministers of State and the IDA. We work with our FDI clients in the context of their sustainability in this country and in attracting FDI clients to this country.

Deputy Enda Kenny

The Tánaiste did not meet this person.

The Tánaiste

Why do we have foreign direct investment in this country? The first thing we should not forget about is the talent pool. One will hear that ad infinitum, the talent pool we have at present. Second, it is on the basis of our taxation policy. Third, it is the fact that there is a connectivity and a reputation in this country——

Deputy James Reilly

Disconnected.

The Tánaiste

——that we are business-like, flexible——

Deputy Simon Coveney

Has the Tánaiste any news for those people who have lost their jobs?

The Tánaiste

——and very supportive of our FDI clients in this country.

Deputy James Reilly

There is no third generation broadband, to add insult to injury.

The Tánaiste

It is also important to say——

An Ceann Comhairle

Please, let us have the Tánaiste without interruption.

The Tánaiste

——we have dealt with our competitiveness issue. Work is in progress. It has not been completed. We have reduced the costs of doing business. We have set a target of reducing administrative costs by 25% over the term to 2012.

Deputy Simon Coveney

What is the Government doing to find a buyer for these three sites that will now be empty?

The Tánaiste

That is being done at present. We have reduced the cost of energy.

An Ceann Comhairle

Deputy Coveney.

The Tánaiste

We have reduced the cost of labour. We are much more competitive than we were heretofore and are more competitive now——

Deputy James Reilly

What about the speech?

The Tánaiste

——in comparison to our eurozone neighbours. It is important to say that this work has been done.

We are also working towards huge investment in research, development and innovation.

Deputy Enda Kenny

There is the allowance of the research and development claims.

The Tánaiste

It is also important to say is that the majority of those people who have come to this country, where we sustained and created greater employment last year and this year, have come on the basis of research, development and innovation. Therefore, it is clearly the view that we work very closely with our FDI clients in dealing with the issues pertaining to their concerns.

Deputy Enda Kenny

I asked specifically about research and development.

An Ceann Comhairle

Deputy Kenny, please.

The Tánaiste

It is also important to say that a huge amount of work has been done involving huge interaction with the National Competitiveness Council. Discussions have taken place with the NCC and the other independent adviser to the Government and the Minister for Enterprise, Trade and Innovation at looking at exactly how we can be more competitive, how we can address those issues even though we have a considerable amount of work done and have achieved a good deal. It is important to reiterate that the pronouncements made in that speech are not the reason Pfizer has decided to downsize globally on the basis of an over-capacity it currently has within the biopharm industry in this country.

Deputy Simon Coveney

Has the Tánaiste any encouragement for those out of work?

The Tánaiste

I have one thing to say, namely, we will continue to be cognisant of the needs of our FDI community. We will continue to have tax stability——

Deputy Terence Flanagan

The Tánaiste is in denial.

The Tánaiste

——unlike the floundering ways which the Opposition had to adopt last week. God help us if it was in charge.

(Interruptions).

The Tánaiste

It could not reassure anybody. We will continue to deal with the fiscal——

Deputy Bernard J. Durkan

I have one thing to say to the Tánaiste. Look around.

An Ceann Comhairle

The Tánaiste, without interruption. Please, Deputy Durkan.

The Tánaiste

——policies and will continue to have an international reputation,——

Deputy Enda Kenny

What about the excess capacity?

The Tánaiste

——a can-do one in which we will achieve the targets that have been set down.

Deputy Enda Kenny

What about the excess capacity?

The Tánaiste

As a consequence we will continue to reflect on the needs of the FDI community and we also have under Horizon 2020, a new vision, a framework and a plan to allow that to happen.

An Ceann Comhairle

We move to the second question which comes from Deputy Gilmore.

Deputy Eamon Gilmore

I wish to stay on the same topic but to focus on the plight, in particular, of the 785 people who have been told this evening they are to lose their jobs at locations in Cork, Kildare and Dún Laoghaire, and on the worries of suppliers to Pfizer and those contracted to it. There are probably another 1,500 to 2,000 jobs in the wider economy that will be at risk as a result of this decision.

When did the Government become aware these jobs were to go? Can the Tánaiste tell us what the Government did to try to save these jobs? She said the reason the jobs are being lost is because of the purchase between Pfizer and Wyeth. What meetings took place between Ministers and Pfizer following that purchase? What discussions took place between the State agencies and Pfizer-Wyeth? When did the Government become aware there might be jobs at risk in this country as a result of that purchase? Will the Tánaiste outline for the House what steps were taken by Government to try to save the jobs?

Do I understand from the Tánaiste's reply to Deputy Kenny the Government is now throwing in the towel on these jobs or will any action be taken, even at this late stage, to try to retrieve at least some of them? What plans does any Minister — or the Government — have to have discussions with Pfizer about this decision in order to see if something can be done to try to rescue at least part of the employment?

What did the Tánaiste mean when she said the plants can be sold? What does that mean in employment terms? To whom can they be sold? Is the Tánaiste aware of a potential purchaser? What are the implications of that for the people who are worried this evening that they will lose their jobs?

The Tánaiste

The IDA has had a working relationship with Wyeth and Pfizer and their presence in this country has been substantial. The IDA will continue to work with those two companies. At the time a takeover bid took place and during that takeover bid I happened to be in the United States, where I had the opportunity of being facilitated by a meeting with the chief executive officer of Pfizer. Naturally, this was during the period of the takeover and the chief executive was precluded from making any pronouncements on the matter. However, I articulated, as did the chief executive of the IDA who was with me, that we wanted, first, to work with the new company, Pfizer. Second, we wanted to articulate the sustainability of the maximum number of positions in this country. Third, we said we would work with the Pfizer team when they were appointed. Therefore, the Deputy can appreciate the chief executive was not in a position to make a final pronouncement on that matter but we articulated our concerns and he agreed he would follow through with the relevant personnel once they were appointed and the final takeover was accepted and finalised.

I know from my workings with the IDA there was a constant dialogue between the IDA executives at chief executive and director level with the relevant personnel during visits that took place when Pfizer came to Ireland to appreciate the decisions that were finalised by the company in the takeover of Wyeth. It is important to say that that conversation and dialogue will continue.

It is important to say that the IDA has advised that concerning the three plants which are modern and have had huge investment it is very confident that a buyer can be found for the facilities and it will work very closely with Pfizer in that regard.

I cannot say when the present Minister met the company as I did not have an opportunity to ask him that but I am aware that constant dialogue has been taking place. The assurances given by the IDA are forthright and it will work vehemently to ensure that we sustain as many jobs as possible. A timeframe is set down which will allow State agencies to interact with the individual people to support them either with the provision of a skill or in the facilitation of other opportunities. It is important to say there was a considerable amount of interaction and work done by the IDA on behalf of the State in the context of the Pfizer takeover and on the basis that there was a global capacity problem. We articulated that we had invested significantly in supporting the presence of Pfizer and Wyeth in this country and wanted it to continue. The IDA is hopeful that following from the final decisions made by Pfizer today, it will continue to work with Pfizer for further future developments and investments by the company in Ireland. We were advised at the time that approximately 6,000 jobs from a company total of 33,000 would have been at risk as a consequence of the announcement of the takeover of Wyeth by Pfizer.

Deputy Eamon Gilmore

I take it from the reply that the Tánaiste was aware at the time of the Pfizer takeover of Wyeth that there was a risk to jobs in Ireland. She said the chief executive of Pfizer promised to follow through on this but I would like to know the follow-through undertaken by the Tánaiste. Following her conversation with the chief executive of Pfizer around the time of the purchase, did she have any further meetings with representatives of Pfizer? What steps did the Government take at the time, when it was clearly aware that there was a risk to these jobs? What actions were taken by the Government to try to save the jobs?

I appreciate the Tánaiste's comments that there was ongoing dialogue between the IDA, Pfizer and other companies. What initiatives and actions were taken by the Government and when did it specifically become aware that these 785 jobs would go today in Dún Laoghaire, Cork and Kildare? The Tánaiste did not answer my question about whether she accepts that the jobs are gone. Has the Government given up on these 785 jobs or is there any prospect of hope for the people who have those jobs for the employment to be saved?

It is clear from the Tánaiste's reply that the Government was aware at the time of the Pfizer purchase of Wyeth that employment was at risk. We need to know what steps were taken by the Government to protect Irish workers' interests and jobs in the plants. Other than the general conversations described to us by the Tánaiste, it is not clear that any specific action was taken by the Government to try to save the jobs.

The Tánaiste

Anybody who has read about or familiarised themselves with what is happening in the drug and biopharmaceutical industry would be acutely aware that many drugs were going off patent and research and development investment was difficult for many large corporations. It was quite obvious that when Pfizer purchased Wyeth there would be a global overcapacity. That was public knowledge and I recall reading about it in the Financial Times while these discussions were taking place based on the sustainability of a number of wonder drugs that would soon go off patent.

That information was circulating and officials, particularly the chief executive of the IDA and those in the United States who service those clients, would have worked very closely with Pfizer and Wyeth for a considerable number of years. I took the opportunity, prior to the finalisation of the Pfizer takeover, to speak to the chief executive of the company. It was important to address a number of concerns we had in Ireland on how to sustain the maximum number of employees here, while we knew a decision on global numbers would be made at some stage. No definite timeframe was given. Following the takeover by Pfizer, a team was put together by the company and I recall meeting some of the team when they came to Ireland to see the Wyeth and Pfizer facilities.

The board decision was made by Pfizer at the end of the day. As I indicated, the IDA advised that 6,000 positions were to be lost from 33,000 at risk and warned of the impact this would have on Ireland. Despite the reorganisation of the company, Pfizer will continue to be a significant strategic employer in Ireland, with more than 4,000 people working in the company.

On the specific issue of the steps taken to save those jobs, during the takeover discussions and since, the IDA, the Minister and officials from the Department have been engaging in discussions and supports for the overall presence of Pfizer in this country. We will continue to engage and support the company in this country. In the context of the sale of the three facilities, the IDA is of the view that in working closely with Pfizer it is confident of finding a buyer over the period, which is 2012 to 2014. We will continue to support those people working in Pfizer and we will work with the company to alleviate the impact of the global decision coming as a consequence of overcapacity in the industry because of so many drugs coming off patent and the investment needs of the companies in research and development.

We will continue to work for the constituents of the Deputy and all the people affected by this global decision. The IDA and other support services will look to support them.