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Joint Committee on Transport and Communications díospóireacht -
Tuesday, 9 Dec 2014

Dublin Port Company: Chairperson Designate

The purpose of the meeting is to engage with the chairperson designate of the Dublin Port Company, Ms Lucy McCaffrey, to discuss the approach she proposes to take if and when she is reappointed to the role and her views on the challenges facing Dublin Port. By this stage, members are well aware of the Government's decision in 2011 to put new arrangements in place for the appointment of persons to State boards and bodies.

The joint committee welcomes the opportunity to meet with the chairperson designate in public session to hear her views and we trust that this provides greater transparency in the process of appointments to State boards and bodies.

On behalf of the joint committee, I welcome Ms Lucy McCaffrey. I draw her attention to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they are to give this committee. If they are directed by the committee to cease giving evidence in relation to a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. In particular, I advise Ms McCaffrey that any submission or opening statement she makes to the committee will be published on the committee's website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

I call on Ms McCaffrey to make her opening remarks. She is very welcome.

Ms Lucy McCaffrey

I thank the Chairman and members of the Joint Committee on Transport and Communications for inviting me to meet them today. I begin, as I have been asked to do, by introducing myself and setting out my professional background. I am a management consultant by profession and an experienced company director. I have worked in both the public and the private sectors in Ireland and internationally. Having started my career in the public sector, I worked with the State training agency AnCO before taking a position with Synectics Inc., an international innovation consultancy based in Boston. In this role, I worked with clients throughout the world and in Ireland developing long-term strategies, facilitating the invention of new products and services and transforming organisational cultures to be more creative and collaborative.

Since 1992 I have been self-employed, running my own management consultancy company, Latitude. Working in sectors ranging from IT to food, fast-moving consumer goods, financial services, Government and State organisations and the arts, I have continued to help clients change to a more creative and innovative culture and continued to facilitate strategic planning and the development of new products and services. On foot of that experience, I found myself broadening what I do to include complex and varied assignments. Examples include acting as the bridge between the Irish Episcopal Conference and survivors of abuse; serving as chair of the Grow Dublin task force, on which all of those with a stake in Dublin's success as a tourist destination collaborated in an unprecedented way to set the course for major tourism growth in the Dublin region; undertaking a review of Temple Bar Cultural Trust with recommendations as to its future for Dublin City Council, and facilitating the transition task force on the establishment of the Child and Family Agency.

I have served on a number of boards of directors, including the board of the Project Arts Centre in the 1980s and Dublin Port Company, DPC, from 1997 to 2002. Since 2009, I have served on the board of DPC as chair based on my appointment by the former Minister for Transport, Noel Dempsey. I represent DPC on the board of the Dublin Docklands Development Authority. I also serve on the board of the National College of Art and Design. I am very pleased that the Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe, has proposed my appointment as chairperson of DPC for a second term and that the joint committee is considering that appointment today. It is a privilege and a significant responsibility to be the non-executive chairperson of this essential national infrastructural asset.

Dublin Port plays a vital part in the nation's economic well-being and is a major resource for the city, region and country. Dublin Port has in many senses shaped the development of Dublin as a maritime city and remains an important part of the fabric of the city today. Dublin Port's contribution to the national economy is significant. It is the largest commercial port in the State. In 2013, with throughput of 28.8 million tonnes, it handled 43% of total port throughput in the Republic, 80% of roll-on/roll-off traffic and 71% of load-on/load-off traffic. The company provides the infrastructure required by a range of private sector shipping lines, terminal operators and cargo handlers to meet market demand for efficient and cost-effective import and export of goods. This is in the service of economic well-being, jobs and quality of life.

The throughput of trade at the port is a bellwether for the broader economy. The pattern is that for every 1% change in GDP, port volumes change by 1.4%.

We have watched the economy improve since April 2013 and following 3% growth in throughput in 2013, this year sees further growth of 7% in throughput. Therefore, 2014 will be close to our best year, 2007, when throughput was 30.9 million tonnes.

The port is located at the heart of the Dublin region and at the core of a national road and rail hub, pointing to its regional and national significance. Some of the built infrastructure that Dublin Port is currently using was developed during the 19th century and is at the end of its operational life. It needs to be renewed and in some cases replaced. Dublin Port also has to take account of trends in mercantile and passenger transport, specifically developments in shipping which require increased channel depths and longer and deeper berths. Against this background, Dublin Port Company currently has a major strategic infrastructure project before An Bord Pleanála for the redevelopment of Alexandra Basin, the ABR project. We await the outcome of the ABR planning application and hope that we will soon be able to begin this €200 million project that will generate 375 construction jobs and support 320 additional jobs per year after that.

One of the key factors in getting to this stage is the constructive working relationships that we have with Dublin City Council, Dublin Docklands Development Authority, the National Roads Authority, the National Parks and Wildlife Service, the Sustainable Energy Authority of Ireland and other key statutory agencies.

When I was appointed chairperson of Dublin Port Company by the former Minister, Noel Dempsey, in 2009, I had a number of clear objectives I was keen for the company to achieve. In particular, I believed that Dublin Port Company needed to develop a longer-term vision of the operations of the port to guide its future plans. I also felt that the port needed to build and retain strong relationships with all the key stakeholders relevant to the port’s operations. These two priorities came together in the development of Dublin Port’s 30-year masterplan, which is grounded in extensive research, consultation and community engagement. Being associated with the development of a 30-year plan was most satisfying. The masterplan has given the board a really good framework on which to base its decisions on the current operations and future direction of the port so that we can continue to meet our customers’ requirements and plan for the future needs of the economy in a timely fashion.

I was also keen that Dublin Port should re-establish its close relationship with Dublin city. In years gone by, right up to the early 20th century, Dubliners were in no doubt that their city was a port city. Passengers departed from ferries on the quays and goods were loaded from the river quays. However, as part of a trend common to all river ports, port activity moved from the centre seaward and a run-down docklands acted as an unwelcome buffer between the port and the city. This pushed the port itself out of people’s consciousness.

Now that the docklands have been largely re-developed, Dublin Port Company is committed to achieving closer integration with the city and to allowing Dubliners to engage in a positive way with the life of the port. We are working hard to put life back on the river. The annual Riverfest at the June bank holiday weekend is one of a series of initiatives geared to this. We have a very active corporate social responsibility, CSR, programme that focuses on education, sport and community events in the local dock communities, and as part of the major redevelopment works, we will open up greater access to the port to Dubliners. The planned turning circle for ships, including the world’s largest cruise ships, close to the East Link Bridge will make the spectacle of ship movements visible to all.

We have committed to making sure that the economic activity of the port makes the least demands possible on the natural environment. Our first sustainability report, copies of which I have brought with me today, outlines a 95% reduction in water consumption in the 260 ha site by the systematic elimination of leakages, an increase in the waste recycling rate from 40% in 2009 to 96% in 2013 and the ongoing carbon reduction programme supported by a new wind turbine. In order to understand better the habitat of birds in the port area, we are co-operating with BirdWatch Ireland on the Dublin Bay birds project. The project brings to life for us the fact that the port area belongs to birds and marine life as well as to humans.

DPC is a strong business. I have provided a link to the latest annual report for members of the committee, which details the performance for the last financial year. The company is in public ownership and facilitates the competing operations of private companies active in the port. This has proven to be a very strong business model that works in the interests of the State and of port users. On a turnover of €68.4 million in 2013, we had profit after tax of €26 million. Consistent profit has enabled the company to pay a significant dividend to the shareholder, amounting to a total €69.8 million over the past eight years.

The company is debt free, putting it on a very sound footing as we embark on a significant period of capital expenditure, underpinned by the Alexandra Basin redevelopment, ABR, project. In this regard, the company is in the midst of positive discussions with the European Investment Bank with a view to borrowing €100 million of long-term project debt for the ABR project. This is a prudent approach to debt financing, matching long-term assets with long-term financing. Recently, the company received financial support from the EU under the TEN-T programme amounting to €2.5 million in respect of studies to bring the ABR project through planning to the point where we can tender for the required construction works. We will be following this up with a further application for grant funding in respect of the construction works for ABR under the newly-launched Connecting Europe facility.

The company's board is well constituted. Early in my time as chair, I advocated to the then Minister, Deputy Leo Varadkar, a competency matrix to inform board appointments in order to ensure that the board would contain the blend of skills necessary to serve our needs. This has served us well, as each appointment made by him and by the current Minister, Deputy Paschal Donohoe, has strengthened our collective capability across the areas of finance, marine operations, commercial law, planning and compliance. The board's performance was independently evaluated at my suggestion during the year and was judged to be an effective board. There is a high level of trust between the CEO and the other members of the board and between the board and the other members of the executive team. The company is fortunate to have a very loyal and dedicated staff who serve Dublin Port Company and our customers very well.

I would be pleased and honoured to serve a further term as chairperson of Dublin Port Company. I am happy to answer any questions the committee may have and to elaborate on any aspects of my submission.

Thank you. I can see why Ms McCaffrey has been very busy and why she will be very busy, with all her plans and other roles. She talked about a €200 million investment to redevelop a large section of Dublin Port and she might elaborate on how that will be financed. What are the other elements of Dublin Port's masterplan? I see Ms McCaffrey has a vision to double the throughput from 29 million tonnes to 60 million tonnes by 2040. What implications has this for Dublin as a city and for the rest of the ports throughout the country? Is it a case of taking business from other ports or developing more business for Dublin itself? There is the issue of the overdevelopment of the east coast, Dublin in particular. How does that fit in to Ms McCaffrey's vision? She might deal with those two questions.

Ms Lucy McCaffrey

I will start with the funding question. The Harbours Act allows Dublin Port Company to borrow up to 50% of its fixed asset base, which suggests we could borrow €150 million. We are debt free going into this planning permission. It is a tightly run company - it is profitable but it is very tightly run. One of our values is frugality and, although we are profitable, we are very frugal and that does not allow us to loosen the reins. We are now at an advanced stage in our talks with the European Investment Bank and the likelihood is that it will be willing to lend us long-term debt of €100 million. We will certainly be easily able to fund and manage that debt from the company's resources. Is that satisfactory?

That is well thought out. Obviously, Ms McCaffrey is saying there are no major issues.

Ms Lucy McCaffrey

No, we are in the fortunate position that we can fund it.

With regard to the masterplan, we felt very seriously we had stewardship to provide the necessary capacity for the economy. We set out, first, to project forward and forecast what the demand would be. We took a very conservative measure and we said we were going to plan for the next 30 years so, if growth were a conservative 2.5%, that would call for double the capacity.

We are not saying that we want to make the port twice as big. We are saying there will be a demand on the economy, and we are the people responsible to make sure it can be met.

The question of whether that overdevelops Dublin Port or ports on the east coast is understandable. Port activity tends to gravitate towards huge centres of population, and that is the case in Ireland. The biggest commercial port in the State gravitates to the Dublin region where 1.8 million people live and where the road and rail network is excellent. We believe it is our responsibility to meet that demand, and the last thing we want is insufficient capacity and trucks having to travel by road to Belfast or wherever.

Another aspect of the master plan was that we made a commitment that we would intensively use the land we have got and not think beyond our current footprint until we were sure that we were intensively using that land. We are working actively on that and reorganising the use of land to make the maximum use of it.

Is there more that needs to be said with regard to that?

No. That is fine. In terms of Ms McCaffrey's plans, there is the view that Ireland will mean Dublin and the east coast and that it would impact on other parts of the country.

Ms Lucy McCaffrey

I know.

I will allow my colleagues to develop some of those points if they wish.

Ms Lucy McCaffrey

We are in no way driving that demand. Port activity is a derived demand in itself.

I thank Ms McCaffrey.

I thank Ms McCaffrey for her presentation. In terms of what she just said, I would have thought her fiduciary duty is to Dublin Port. It is not macro-policy in terms of the Government's agenda with regard to other parts of the country. That is an issue for Government rather than for Ms McCaffrey so I wish her well.

Ms McCaffrey has done a very good job to date. I am pleased that she is giving of her time for another term at Dublin Port. The company will be well served by her doing that.

I welcome her master plan for increased capacity. I have some questions on that. First, Ms McCaffrey spoke about the funding and the European Investment Bank providing up to €100 million, and I think she said it was a €200 million project. How does she hope to make up the other €100 million? Does she intend taking in some private investment or will it be a public private partnership in terms of that development?

Second, does Ms McCaffrey anticipate any strong opposition to the master plan? Dublin Port has been bedevilled in the past with difficulties in advancing some of its developments, particularly the infill project that went on for quite some time. If I am not mistaken, a Member of this House was elected as a result of his opposition to that project when he changed his name by deed poll.

Ms Lucy McCaffrey

It is a long saga.

It was quite some time ago. Could we see an Independent in the next Dáil with a similar agenda?

Third, as well as dealing with transport matters this committee has a responsibility in the area of tourism, and Dublin Port has been successful in attracting cruise ships to Dublin Port. It is obviously a lucrative business. Ireland is not in the Caribbean but yet there is considerable attractiveness to this area. Does Ms McCaffrey have any plans to further increase that activity and, if so, she might share it with us?

Ms Lucy McCaffrey

Will I take the questions in the order in which the Deputy put them?

Whatever suits Ms McCaffrey.

Ms Lucy McCaffrey

At this point in time we are not planning to take investment or a partnership on board to fund the development. We will be able to fund it out of our current resources; it is a very strong business. We will also look for grant aid from various sources within the European Union, in particular the Connecting Europe facility. We are not looking to a joint venture of any sort in funding that.

In terms of objections to the master plan and future objections, the way in which the master plan was drawn up was very good in my view.

It was highly consultative and the consultation was genuine. Modifications were made on foot of all the feedback. When Dublin City Council was reviewing this planning application, which is now before An Bord Pleanála, the councillors unanimously supported it. That is a measure of the extent to which it had been worked through and their interests and those of their constituents had been taken on board. We are now at the point in the planning application for the Alexandra Basin, ABR, project where objections have come forward and have been heard by the planner. We do not anticipate any other forum for objections to our going ahead and implementing it.

There will be later phases in the implementation of the master plan. This is the first major project. We anticipate approaching them with the same rigour in terms of talking to those who have a stake and taking their concerns on board. Our obligation is talk to all of those who have a stake and meet their concerns to the best extent possible while fulfilling our remit.

It is true that the cruise business is lucrative, but it is not very lucrative for ports, because the vessel comes in and there are vessel dues but no goods dues. However, we greatly welcome and foster the cruise business. It is very good for the economy and for the hinterland of the greater Dublin region. The new development will allow the largest cruise ships in the world to travel right up to the East Link bridge. It will be quite a spectacle. We are planning a turning circle beside the East Link bridge so the cruise passengers will disembark in the city, which is a terrific prospect for them. In addition, Dublin city dwellers will have the spectacle of the life of the port being visible and accessible again.

I thank Ms McCaffrey for the very interesting presentation and congratulate her on the recommendation for another term as chairperson. It is clear from her presentation that it is based on merit. I wish her well and good luck in her next term.

There is a great deal happening in Dublin Port and it is clear from the figures in the presentation and in the 2013 annual report that it is in a very healthy position. What would Ms McCaffrey see as the port's competitors? The report shows that the port has quite a healthy margin. Sometimes a healthy margin can indicate the competitive nature of a port. She would probably mention the ports in Cork, Galway and Foynes in this country, but does the board of the company give consideration to international competitors? Also, how does she deal with or foster intra-port competition, in terms of keeping the charges for what is a very expensive business for the logistical operators as low as possible?

Historically, industrial relations and relationships between the port company and the stakeholders have been a huge issue. How would she describe the industrial relations environment within Dublin Port? The committee is always conscious of that. Any trouble or issues that might arise in Dublin Port could have a very serious effect on the Irish economy in terms of inhibiting the movement of goods.

I wish Ms McCaffrey the best of luck. I am a new Deputy in the House and not as experienced as the wily old people beside me. Do staff from Dublin Port work together with the various people in all the ports around Ireland? Do they meet up? Do they have a common vision for the ports of the country? Is Ms McCaffrey simply punching for her neck of the woods around Dublin, which seems to be getting much of the infrastructure and money? I am afraid that at the expense of other parts of Ireland, for example, the ports in Cork, Foynes, Galway and Greenore, we are pushing a focus on to one section, perhaps at the cost of jobs, infrastructure or a more balanced Ireland.

I am aware that there are designations around the area of Dublin Port. I have followed several cases in Germany. Ms McCaffrey referred to Dublin Port growing to twice its current size. Does she envisage the designations blocking the progress that Dublin Port envisages if it is to grow twice as big?

I have noticed another thing about Dublin Port. It does not seem to be grabbing the nettle in the line of wanting live shipping of cattle. Other places are doing it but there seems to be a reluctance in Dublin Port to facilitate this work.

Ms Lucy McCaffrey

I wish to clarify the second last point made by Deputy Fitzmaurice. I did not grasp it so well. He made a point before the point about live animal shipping.

I was on about designation. There are designations around Dublin Port. Is that correct? I am referring to special areas of conservation. Does Ms McCaffrey know anything about that?

Ms Lucy McCaffrey

Deputy Fitzmaurice is referring to environmental designation.

I have read of cases in Germany. I know at the moment in Galway Harbour this problem is causing tremendous difficulty. Considerable taxpayers' money is being spent on ludicrous legislation that has come through from Europe and it is costing jobs. Ms McCaffrey referred to Dublin Port growing to twice its current size. I have studied the issue around Ireland and I have seen what has happened in Germany. In Germany, if someone does something that could have an effect later on, progress has been stopped at certain ports. Does Ms McCaffrey see this as a problem in future?

Ms Lucy McCaffrey

Interestingly, our planning application for an infill of 21 ha was turned down six years ago. The principal reason related to disruption to bird habitats. We have come to the conclusion that the two things do not have to be in opposition. The bird habitat and the industrial use of the port need not necessarily be in opposition. It is for this reason that we are working closely with BirdWatch Ireland. We are getting to know in depth the migratory patterns of birds and the effects of human activity on the birds. We are optimistic that these two things need not be in opposition. Having said that, there is no choice but to abide by the European designations, but we do not see them as a barrier to doing what we need to do on behalf of the economy.

Deputy Fitzmaurice asked me about ports collaborating. Ports do collaborate. There is an organisation called the Irish Ports Association under which we collaborate. We do not have a masterplan for the ports of Ireland. However, a recent and excellent new national ports policy has been published which gives coherence to the development of ports. Of course, that is the level from which it should come; it should come from Government. It gives coherence and identifies three tiers of port. The policy places Dublin Port in the top tier, as it would. That is where the coherence comes from.

Do we compete? Yes, we compete for business.

The second thing is that market forces decide where they want to go.

Economies of scale are increasingly an issue in shipping so larger vessels are becoming the norm. The main reason for ABR development is that we must have the depths and the berths to accommodate 21st-century vessels. If we could not do so, Dublin Port would become obsolete. That speaks to the problem of ports that cannot provide longer and deeper berths. I can say more on this point if the members wish.

Can Ms McCaffrey address the live cattle situation? There seems to be a problem because Dublin does not do it. Rosslare and Cork do it but there does not seem to be an appetite for live cattle being brought on boats. I am not talking about roll-on roll-off lorries, I am talking about cattle being driven onto the vessels.

Ms Lucy McCaffrey

I will be honest and put my hands up and say I was not aware of the problem. It is not business we actively go after because, if we did, we would be cannibalising the business of relatively smaller ports, which might not be welcome. I can get more information for the Deputy on this point. I am not up to speed on live animal exports.

In respect of the cost of transport and the overall cost of making it efficient, live shipping out of other ports has worked but it may be more accessible for midland counties to use Dublin Port. It would be good if there was a facility for it.

Ms Lucy McCaffrey

I will certainly look into it.

I have covered some of Deputy Harrington's questions in replying to Deputy Fitzmaurice. He asked about the question of inter-port competition and whether ports outside the Republic are involved in that. Belfast is a competitor port, one with which we have a very good competitive relationship.

Intra-port competition is very active. We have four large strong roll-on roll-off terminal operators, three load-on load-off operators and another operator is a hybrid between the two. It is a company called CLdN, which operates to Zeebrugge and Rotterdam. Competition is active in the port. In its report, the Competition Authority acknowledged that intra-port competition was strong. We have recently issued a new stevedoring licence, which was a recommendation of the Competition Authority and something we regarded as being in the interests of competition in the port.

The industrial relations environment within Dublin Port Company is good. The HR function is very skilled and the industrial relations competence is skilled. There is no problem. We do not have industrial relations problems of any significance and we are very good at scanning the environment to make sure that is so. Some of the staff of the Dublin Port Company are generations working in the port. They are very hard-working and loyal staff, which is significant in the culture of the company.

How many staff are directly employed by the port company?

Ms Lucy McCaffrey

There are 187 members of staff.

Does Ms McCaffrey expect to grow that number by an additional 230 staff on foot of the new development?

Ms Lucy McCaffrey

We have 137 employees in the port staff and the port estate employs about 3,000 people. These are not the employees of Dublin Port Company but of the various operators in the port. The growth in job numbers as a result of the new development will not be Dublin Port Company employees but operators in the port.

Apparently, for every additional €1 million of throughput a further 200 jobs are generated.

The chairperson designate has mentioned that Dublin Port is competitive and competes with other ports. Is there a complementary environment for cruise ships? If a large vessel is attracted to Dublin, there is no reason Cork Harbour cannot be in the mix. Are efforts made to attract such business?

Ms Lucy McCaffrey

The Deputy is spot on. A viable cruise ship is one that sails to Galway, Cork, Waterford, Dublin and Belfast. There is an organisation, Cruise Ireland, which enables us to market together. The answer is yes, the business is complementary.

I have a few questions on job creation. Have advances in technology, including automation and so on, had a huge influence on the port? There are 137 port staff and 3,000 otherwise employed. Have these numbers varied much in the past ten to 15 years? Did the numbers employed drop, even though productivity had increased?

Ms Lucy McCaffrey

When the Dublin Port Company was corporatised in the late 1990s, it had 670 employees. That number has been reduced systematically and intentionally in the intervening years, but the jobs did not disappear; they moved instead to the port estate. We took the decision to concentrate on being an infrastructure rather than a services provider. The services are still provided and the jobs are still there in their provision.

Does Senator Terry Brennan wish to comment?

No, I simply wish to apologise for being late.

I sincerely thank the chairperson designate for coming and engaging with us and responding to our questions. The debate has been very informative. I propose that we send a copy of the transcript to the Minister for Transport, Tourism and Sport.

On behalf of the committee, I wish Ms McCaffrey well in her term of office. As I said at the beginning, she is very much on top of her brief and we wish her well in the extension of her appointment.

Ms Lucy McCaffrey

I thank the Chairman and members of the committee for such a positive hearing and engaging so much on what is happening in Dublin Port. It has been a privilege for me to meet the committee. Beforehand there was a slight trepidation about meeting it, but it has been a privilege to attend.

We were delighted to meet Ms McCaffrey who I again thank for her attendance. I inform members that the select sub-committee will meet later this evening to discuss the Supplementary Estimates.

The joint committee adjourned at 12.55 p.m. until 9.30 a.m. on Wednesday, 10 December 2014.
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