I thank the Chair for allowing me to raise this important issue of the sugar industry and the proposed changes that are about to take place there in the immediate future.
First of all, could I inquire as to my time limit in this debate?
Adjournment Matter. - Sugar Industry.
The Senator has 20 minutes and the Minister has ten minutes for winding up the debate. The Senator is at liberty to give some of his time to another Senator.
I propose to give some of my time to Senator Smith and Senator Ferris who also wish to speak on this issue.
I hope the Senators will not work on borrowed time.
No, we shall be brief and to the point. Once again the saga of the Tuam sugar factory is being brought to the fore. Since 1981, when the Coalition Government sanctioned the closure of the factory, a decision which was later rescinded, the community have watched the sugar factory operation being consistently scaled down. Over those five years the workers at the factory have tried hard to increase efficiency and productivity. There have been 130 jobs lost through early retirements and non-replacements. Productivity was dramatically improved and farmers grew more beet and one would imagine that with that kind of improvement the future of the Tuam plant would be assured but this was not to be so. The Sugar Company chiefs estimated that the Tuam plant was a £3 million cost penalty on the company. So no matter what employment cuts or productivity improvements were achieved by the workers that £3 million remained on every balance sheet.
The shock announcement in early January of the laying off of 121 permanent workers for a two-month period stunned the entire community. This is seen locally as a slow death for the Tuam plant. The manner in which this announcement was made without consultation with the workers or, I understand, with the board of directors, has shown a terrible disregard for the feelings of the workers. Workers have a right to consultation and negotiation but apparently the Sugar Company do not believe in those rights. Neither do they believe in the concept of worker directorships if they are not prepared to discuss lay-offs, redundancies et cetera with their board of directors and especially with their worker directors.
I would question the company's right to threaten the 45 workers at Tuam Engineering, the Irish Sugar Company subsidiary, with imminent lay-offs unless they accept a 10 per cent pay cut and forgo agreed pay increases. This seems very heavy-handed and is indeed a departure from normal trade union procedure. If the Sugar Company want to have a successful campaign in 1986 surely this is not the way to instil confidence in the farmers who are expected to produce the beet. There is an air of uncertainty about the future of the plants and farmers who normally rent land and grow beet are reluctant this year to commit themselves. The Government, as the major shareholders in the company, have a duty to allay any fears about the future of this plant and make sure that Tuam gets its fair share of capital expenditure allocated to the Sugar Company.
If an agri-related industry like this cannot be sustained in Tuam then the Government might as well forget about industrial promotion in the west of Ireland. Economics should not be the only consideration because if that were so the factory would not have been built in Tuam in the first instance. The overall saving to the Government will be nil because now those workers are forced on to the dole queue and there will be no return to the Exchequer from PRSI or PAYE. The Government commitment that the Tuam plant will remain open is useless if the factory is going to be gradually run down with a diminishing work force who do not know from day to day when they will be made redundant.
I wish to stress strongly the importance of sugar production and the industries and services with which it is linked in the factory towns where Comhlucht Siúicre Éireann operate. The closure of any of those factories would have a serious effect on the economy of these areas. The employment pattern is established and the way of life of many thousands is patterned on the industry. It provides a unique form of farmer-urban worker co-operation, linking town and country in what has been up to now one of the most successful Irish industries. As a State enterprise CSET was established to provide an additional source of revenue for Irish farmers, to improve the national balance of payments and to provide a vital base of rural employment and any reneging of those noble principles at the present time should be rejected out of hand.
That is the reason that I have asked to have this matter discussed here tonight. The communities in both Tuam and Thurles are very worried about the situation in their towns. I shall not dwell on the Thurles situation because my colleagues from Tipperary are quite capable of doing that. But, having watched the situation in Tuam over the years I can well understand the feelings and the frustrations that exist in both Tuam and Thurles at the present time and it is now up to the Government, once and for all, to stop the shilly shallying about the beet and sugar industry and particularly about the plant in Tuam.
If that commitment is given and if the Government accept responsibility for that commitment, they should tell the Sugar Company in no uncertain manner that they will not be allowed to run down those two factories. There is little point in having a factory if the work force are reduced and if it is kept open merely for the sake of being open. That is no good to the Tuam area or to the farmers in the surrounding area. I hope that the Minister tonight will be able to make a commitment on this very important issue. He represents the area and knows as well as I do the importance of the sugar factroy to the Tuam area. It is up to him to tell his colleagues in Government that we in the west of Ireland will not accept any reduction of the workforce in the Tuam plant, that we are not prepared to accept what the Sugar Company have now done, the laying off of 121 people for a two-month period.
Tuam is being victimised. The employees of the factory have proved themselves to be a good work force over the years, particularly since the warning bells started to ring in Tuam and since they were asked to improve efficiency and so on at the factory. The work force there have proved that they could do that and they are getting no recognition for what they did. I hope the Minister will be able to give us some commitment as to the future of this factory. I will leave the rest of my time to my colleagues.
It would be impossible to describe to the House the importance of the sugar industry to this country and how important the factory in Thurles is to all of Tipperary, Wexford and parts of Offaly. It would also be impossible to indicate the dismay and shock which prevailed in these areas when the announcement was made, without consultation with the board of directors, without consultation with the trade unions and without consultation with the work force in the factories.
I have no brief here for suggesting that the management of State or semi-State companies should be carried on in a manner which would leave something to be desired or for carrying on enterprises which are losing money. In the Thurles area over the past number of years the factory has been a profit-making enterprise and this year's campaign has been one of the best campaigns conducted at that factory for a long time. At the very end of that campaign the announcement was made. Various reasons were given after the announcement but there were no negotiations beforehand. One of the reasons given was that there was not as much need for the workers after the campaign had ended. The campaign had also ended in Mallow and Carlow. So, that reason would not stand up.
The cost of this exercise is a direct transfer to the taxpayer and we have estimated that the overall saving could not be more than £100,000. Why then did the company choose this exercise without consultation? The fear in Thurles is that this is the thin end of the wedge, that the long term goal for the company is to achieve a situation where there will be a two-factory regime, in Carlow and Mallow. We resist this on the basis of the need for that industry in Thurles, on the basis of its profitability, on its own proven record, and I would say to the management, as I would say to the work force, if there is wastage, if there are areas that can be improved, if there are cost-cutting exercises that can be implemented, negotiate. Sit around the table and do not have a situation where neither those who are let go nor those workers who remain have a happy position. I have been asked to go, you are asked to remain and do my job and we have worked together for years. The loyalty of a work force is put into question and difficulties can arise, even strike difficulties and whatever else can emanate from that kind of ad hoc decision.
We are asking the company to come clean and to come to the negotiating table with the workers and work out a solution to this problem and not add to the confrontation which is now developing between workers and management, because that is not going to serve either the company or anybody else. We are at the stage of the year now when fertilisers and chemicals are purchased, when farmers are laying down their plans for the campaign. I have had experience in recent weeks of doubt from farmers as to whether it is wise for them to proceed. As most people know, the sugar beet enterprise, with the exception of one or two years in the past seven or eight years, has been a very worthwhile and commercially viable enterprise for farmers. Raising doubts about it at this stage of the year is very serious.
For these reasons I want to support Senator Hussey in his motion. We arranged a brief meeting with the management of the Sugar Company in recent times but we have been unable so far to get any real answers to these problems. It is time that the Minister, on behalf of the company, would come to this House and say why this decision was taken. We have proved beyond all shadow of doubt that there is no saving to the company; in fact it is a transfer direct to the taxpayer. The amount of savings that are involved could be made, I am in no doubt, by the workers, provided negotiations and consultations were held with the workers and if there is wastage in certain areas it can be eliminated. I would also ask the Minister to put on the record of the House what the long term plans of the company are. Neither the farming community nor the workforce can develop in a climate of uncertainty. That uncertainty should be removed and let us return to a situation where we can move forward positively again in that industry.
I want to thank my colleague for allowing me a few minutes of his valuable time on this particularly important issue. There is an indication of the all-party co-operation that we have had in this area of the concern that we are expressing about the Sugar Company's attitude, first of all, to the problems that they have and the road they have gone to achieve the economies they say they need for the efficient running of the Sugar Company. Certainly, for a factory in Thurles with a profit margin of £800,000 in the first year, it comes as bombshell to the whole area of north and south Tipperary to discover that the board of management take it upon themselves to make a decision of this nature involving the livelihood in Thurles of 115 men plus the number involved in Tuam.
This management decision was later brought before the board of directors which was loaded against the worker — directors. This made it inevitable that the decision should be carried out against the workers' interest. In addition, those of us who have defended the public service for so long and defended the semi-State sector, view this attitude towards the principle of worker participation as disgraceful. Certainly from my point of view as a Labour Member of this House associated with worker participation in boards of semi-State bodies, I deplore this treatment of people elected by their own fellows in the work force to represent them at board level. In addition to all that, the trade unions who had bent over backwards with this company to try to achieve economies, who had agreed packages of rationalisation, agreed packages of redundancy, had all that effort discounted and thrown out by the company without a word of consultation. That is what has the company in the situation it is in today, in what the workers involved in it have taken a vote for strike action because the agreements that have been reached have been thrown out by management and their decision then brought to the board for confirmation.
I have requested the Chairman of the Oireachtas Joint Committee on Semi-State Bodies, Deputy Frank Prendergast, to raise this issue and to send for the Sugar Company. I hope that the Oireachtas Committee will treat them better than the Sugar Company treated us when we went on a deputation to them last week. I was allowed to be one of the members to address the board and I was allowed a certain number of minutes to address it without getting a response from the company as to what their reasoning was and what the economics were. In the end we are responsible for the provision of public money to ensure that the semi-State sector survives.
The economic consequences of their decision for the whole area have been outlined by my colleagues and I will not dwell on them. The Minister for Agriculture is a major shareholder in this semi-State body and as such must take a political decision. We want to know why this kind of economies are being effected without the normal consultative process. That is all we are asking for. If they can justify what they are doing economically to us, taking the overall picture into account we will have to consider it and probably go along with it but we will not be dictated to by people who sit in palatial offices in Dublin and do not know what the consequences of their decisions are.
I know that the Minister present has a commitment to his own area and his own factory and has a political commitment for the factory in Tuam. I am asking for that same political commitment for the factory in Thurles to ensure that one of the four which is in existence and has proved to be economic should be assured that there is a future for it within Comhlucht Siúicre Éireann Teoranta. That is needed by the workers; it is needed by the producers and the growers of the beet before the campaign starts again for reseeding and replanting and so on and also for the whole community which depends so much on an industry like this in the rural part of Ireland which is the backbone of this country. There would be no palatial offices in Dublin without that backbone.
This country is top heavy with people making decisions without regard to the consequences of their decisions. I hope the Minister will be political enough — God knows this Government at times need to be political in their decisions — to give a commitment and to inquire how this board can run their business when the management tell them what to do.
In view of some of the reactions to the decision of the Sugar Company to lay off some of their workers from the Tuam sugar factory for a period of two months and from Thurles for one month, I must say at the outset that I welcome this opportunity to set the record straight on this matter.
Senators will be aware that the financial position of the Sugar Company has been a source of concern for some years past. They will recall that the report of the Oireachtas Joint Committee on State-Sponsored Bodies dealing with the affairs of the company, which was debated in this House in March 1981, identified two major problems facing it — how to set their finances in order and how to tighten up the operation on a strengthened capital base so that losses would be a thing of the past. They will recall also that the board of the company subsequently decided that in so far as the Tuam factory was concerned, production of sugar should cease there. I am happy to say, however, that the Government decided that this proposal should not be proceeded with, but that a substantial saving in the cost of operating the factory would have to be achieved.
In 1982 the Oireachtas passed a Bill to enable the State shareholding in the company to be increased to £75 million. At that stage there was £7 million and now there is about £57 million of State money invested in the company. The conditions attaching to the injections of State funds, in effect the taxpayers' money, included the submission by the company of a programme showing how it was going to ensure that that money would not go to waste but would result in the company's return to financial health. It was a matter for the company to determine how the necessary savings and other changes were to be brought about.
The company produced the required programme for its future operation on the basis of commercial criteria and with the view to returning itself to profitability. This programme contained wideranging measures as part of its efforts to control and reduce costs in all areas of activity.
The decision to lay off staff is a direct follow-on to other cost-cutting measures applied to date. It must be clear to all that some of the actions required would be unpopular but equally it must be accepted that the measures taken by the board are in the company's best interest as they see them. The board has the responsibility of ensuring that the company is properly run for the benefit of the country as a whole.
Let me turn now to the current situation. At the end of December the company decided to implement a number of temporary lay-offs at the Thurles and Tuam sugar factories as part of its programme further to control costs. These lay-offs involve roughly 130 workers at each factory, for a period of four weeks in the case of Thurles and eight weeks in the case of Tuam. As Senators are, no doubt, aware the sugar production campaign has well ended in all four sugar factories. Consequently, these lay-offs will not pose any threat to sugar production as the terms of the motion seem to imply. However, their effect is estimated to achieve a saving by the company of some £350,000. That saving is quite significant in relation to the company's problems and given the difficulties of its financial position the company just cannot ignore the possibility of achieving it.
I now want to say a word about sugar production generally as it is mentioned in the motion. The position in regard to the sugar industry in Ireland is serious, very serious. The company's action is designed to protect sugar production. Indeed, if the company does not take action to safeguard this industry and make it more cost effective and competitive, the repercussions will inevitably, and in the short rather than the longer term, be far more serious than the temporary lay-offs which have led to our discussion here this evening. I regret these lay-offs — after all they are in my own constituency and Senator Hussey's. I know that the company also regrets them. However, the pressures on the sugar sector worldwide are quite severe at the present time. Most of the major third country competitors, like Australia which has had a strong sugar sector, have been forced to cut back and reorganise their native industries, in some cases with severe structural results. Within the EC, production has been almost completely reorganised in the past decade and competition is at the cut-throat level. If the Irish industry is to survive it, too, must remain competitive.
Before I conclude I think I should emphasise again that the lay-offs taking place are purely of a temporary nature. Staff affected in Thurles will return to work on 17 February while those in Tuam will restart on 18 March. I want to make it quite clear, therefore, that there will be a beet compaign in both factories this year. I will take this opportunity in the House to reiterate this because, for one reason or another, the confidence of farmers has been eroded on the basis that there would not be a campaign in either Thurles or Tuam. Further, the same catchment area that applied to the Tuam area will not, contrary to rumours in the Tuam area, go to Tuam on this occasion.
As Senator Smith pointed out it is very important to have confidence in this line of farming which is quite a lucrative one. Unfortunately, 1985 was the worst of three successive years to the degree that the yield of beet per acre was almost three tonnes per acre nationally down on the year before. Many farmers did not have a good year in beet. It is important to have as big a throughput in the factories as possible. I would hope that farmers' confidence will be restored. Once the contract is signed I believe it will, now that everybody knows there will be a beet campaign in Thurles and in Tuam. If we get a return to the type of yield that was there in 1984 and 1983 it will become a very profitable line of farming and, as such, the factories on a cost-analysis basis will produce for the same overhead cost a greater tonnage of beet.
One other thing is worth mentioning which was overlooked. In Tuam, in 1984, 16,500 tonnes of sugar were manufactured and at the end of 1985 it was down to 11,500 tonnes. There was a tremendous fall-off. Because of the various factors that influence beet production in the west, the reduction in the yield was greater in that area. In 1981, the Government saw fit to ensure that we had a four-factory regime and there will be a beet campaign in Tuam and Thurles as well as in the other factories. The company point out that these temporary lay-offs will bring about the savings they believe are needed and hopefully, with a better beet acreage against the cost involved, there may be a different type of balance sheet at the end of 1986.
I thank Senators for raising this matter. I hope I have allayed all fears, that I have restored confidence in the farming community and in the workers in Tuam and Thurles that there will be a beet campaign this year and that the time for signing the contract is just around the corner.
The Seanad adjourned at 8.30 p.m. until 10.30 a.m. on Thursday, 23 January 1986.