I wish to inform the House that the Senator has been informed that the issue of asset stripping of Kepak/Leitrim Foods is not within the Minister's area of responsibility and it is out of order to raise the issue.
Adjournment Matter. - Kepak/Leitrim Foods.
Acting Chairman
I apologise to Members and to the Minister for being late. I wish to share my time with Senator Connor and Senator Mooney, if he arrives.
Acting Chairman
Is that agreed? Agreed.
My concern relates to the long suffering of the people of Leitrim. All other counties have been increasing in population but Leitrim is declining not only in population but also in industrial development. This commenced at the beginning of the decade with the closure of the Arigna Mines, followed by the closures of Ballinamore Textiles and Lairds in Drumshanbo. While the task force was established to try to undo some of the damage and to replace some of the employment, we are talking about hundreds of jobs being lost in a county as depleted as Leitrim, with a population of approximately 28,000 people. If thousands of jobs were lost in a large urban city such as Dublin it would have made massive, traumatic news. Nevertheless, the closure of an industrial plant has even greater impact in a small county with a small population. In the case of Kepak/Leitrim Foods – formerly the Lairds operation and then Greencore – originally about 100 jobs were lost and between 50 and 60 jobs jobs were lost this summer.
I am concerned about what is being done to try to ensure that the plant, which is owned by Kepak/Leitrim Foods, is maintained as a productive enterprise and to ensure that those who have lost their jobs can be re-employed. The original transfer of the plant to Kepak was for a sum in the region of £175,000 but is now valued at between £800,000 and £1 million. Kepak is looking for £1.75 million to dispose of the plant, which is out of the reach of alternative operations and entrepreneurial enterprises. I would like to establish if that is the major difficulty in re-opening the plant because I understand there are one or two serious alternative employers in the area with an interest in restoring the plant, particularly for jam-making and for the production of other foods.
Approximately £1 million was provided to Kepak/Leitrim Foods by Enterprise Ireland and An Bord Bia. There has already been quite an amount of State investment in this company. It is important for the State to protect this investment. I would like the Minister for Enterprise, Trade and Employment to take an active role in ensuring this investment is protected and that there are no obstacles to the transfer of the plant into productive use. The Minister should smooth out any difficulties so that the plant can get up and running and provide employment. I understand that at least one of the people who has applied to purchase the plant is prepared to put up in the region of £1 million and guarantee 75 jobs.
These are matters of great concern. A task force is in place which was set up when Ballinamore Textiles closed. No one knows what is happening and whether there is a proactive approach by the Minister for Enterprise, Trade and Employment, Enterprise Ireland and the IDA in seeking to resolve this issue.
Fifty to 60 jobs may seem a small number, but in the context of the numbers of other jobs lost in the area it is huge. We owe it to the people of County Leitrim to ensure that every effort is made to get the plant up and running and to guarantee the maximum number of jobs.
I endorse everything Senator Costello said. The main reason we are on our feet is the unemployment in County Leitrim and in north Roscommon. Drumshanbo is in the Arigna catchment area which was badly affected some years ago when the power station and the last coal mine in Ireland ceased to operate. C.S. Laird & Company were traditional jam makers in Drumshanbo for over 100 years but folded approximately ten years ago. The company was taken over by the Goodman group and then by Greencore, who divested themselves of it. It then fell into the hands of Kepak/Leitrim Foods. These companies got substantial State assistance. If my information is correct, Kepak/Leitrim Foods received in the region of £1 million from State agencies such as Enterprise Ireland and the IDA to recommence production of sauces and pastas. If this is so, it was the beneficiary of £1,000 per day for every day it was in operation in Drumshanbo.
The point was made that there is no ministerial responsibility on this issue. There is ministerial responsibility to the public in relation to protecting public funds. Yesterday, one local businessman offered Kepak/Leitrim Foods one million and one pounds to purchase the plant.
This is not true.
The Senator must allow me to give the information available to me.
The Senator is giving inaccurate information.
I want to put on record the information available to me. The Senator will have an opportunity afterwards to make his point.
(Interruptions).
Acting Chairman
As this is an Adjournment debate, if there is not order, the House will be adjourned.
As the Chair will be aware, I am a paragon of good order in this House. I am certainly a paragon of good order on this debate.
This matter, which is about stopping the taking away of the equipment in the factory, needs to be investigated. That equipment was placed in the plant with the assistance of large public investment. There is a clear responsibility on the owners—
Acting Chairman
I must intervene. I made it very clear that the issue of asset-stripping of the company is not the responsibility of the Minister, therefore it is out of order to raise the matter here. I ask the Senator to abide by the Chair's ruling.
I will abide by the Chair's ruling. Nevertheless, the Chair will appreciate that there are very strong feelings locally about this matter. The issue is about the provision of employment in a town and region which has been badly stricken by unemployment and plant closures in the past. Local people believe they have a solution to this problem but they need the assistance of Government in their quest to reopen the factory. I concur with Senator Costello and I hope I will be followed by Senator Mooney in the call for the Government to intervene to ensure the factory's equipment is kept in place and that a new entrepreneur will begin production in the factory.
I am sorry for interrupting my friend and colleague, Senator Connor, but, as he correctly identified, this issue has become rather emotive in the Drumshanbo area. It is unfortunate, as happens in all emotional situations where jobs are at stake, that a lot of misinformation and inaccuracies have arisen. I am not here to defend Kepak because I am not responsible for the activities of anyone in the corporate sector. However, it should be put on the record of the House that Kepak Limited moved into that plant at a time when jobs were badly needed in the town of Drumshanbo. It provided jobs at a time when no one else was prepared to provide them. The initial investors in Leitrim Foods invited Kepak in as a key investor because they themselves did not have the capital to develop the plant as they wished. Kepak put its money where its mouth was and invested significantly in the plant over the past four years. Its closure has to do with the prevailing economic conditions, competitive elements in the food industry generally and the need for substantial financial investment in order to compete with the multinationals, coupled with the arrival of Tesco, which has taken over much of the indigenous food retailing sector. As my colleagues and the Minister will be aware, it has been a matter of public controversy that Tesco has not sourced sufficient products in this country. The main product marketed by Leitrim Foods, Cuchina Foods, lost the contract to Tesco because it supplied a competitor.
Kepak closed for economic reasons and it is important to put on the record of the House that it contributed to the economy of Drumshanbo. I met with Liam McHale, the chief executive officer of Kepak, on two occasions. The most recent meeting with him took place yesterday, together with my parliamentary colleagues, Deputies Reynolds and Ellis, and members of the local action committee. Irrespective of the outcome, Kepak has give firm commitments. Its most important commitment is to the future of Drumshanbo. If it can sell the plant as a going concern, it will do so; if not, it intends to continue to operate the plant under different conditions with the help of the State agencies.
Great play has been made of the State grants. The breakdown of the £900,000 grant is that £500,000 of it is called a preferential loan share. Kepak, or any other company who received such a State grant, would have to pay this back within five years, irrespective of the trading conditions at the time. Therefore, to suggest that upwards of £1 million of State money was given to a major company which is now walking away is unfair to Kepak and to the State agencies.
At least five interested parties are looking at the Kepak plant in Drumshanbo. Perhaps the Minister will have something to say on that matter and good will come of it. I do not wish in any way to devalue the motives behind the raising of this matter. I compliment Senators Costello and Connor on taking the time to show an interest in what is an economically difficult region. Hopefully the contributions made to this debate will result in the creation of jobs for the Drumshanbo area. I thank Senator Costello for allowing me the time to contribute to this debate. I hope the Minister will have good news not only for Drumshanbo but for the region in general.
I thank Senators Costello, Connor and Mooney for raising this matter and for the clarification given by Senator Mooney on a number of the issues raised.
Leitrim Foods, with Kepak as a silent partner, was founded in 1993. After a poor performance Kepak took control of the company and attempted to move into higher value added products. This did not succeed and in the year to December 1998 Leitrim Foods incurred losses. In June 1999 Kepak decided that it could no longer continue to support the operation and decided to cease production, resulting in the entire workforce being made redundant between June and September this year. Enterprise Ireland is actively working with Kepak to secure an alternative industry for Drumshanbo. A number of potential investors have viewed the factory since its closure. However, no sale has yet been agreed.
I am aware that growth in industrial development in Leitrim and the north west region has not taken place at the same rate as in other parts of the country, particularly Dublin and the eastern region. I assure the House that the Government is committed to achieving greater regionalisation of industrial development. It was for these reasons that the Government negotiated with the EU Commission for the retention of Objective One status in respect of the 13 most under-developed counties, among which Leitrim is included. Location and infrastructure such as access to rail, road and air networks, electricity, telecommunications and education are key factors in attracting investment into an area. The Government will take a co-ordinated approach to these issues in considering regional development needs in the National Development Plan 2000-2006.
The Leitrim Project Group established in the wake of the closure of Ballinamore Textiles to respond to the employment needs of County Leitrim submitted its final report to the Tánaiste earlier this year. The group has now disbanded. Its final report and a very substantive interim report which the group previously produced set out more than 50 wide-ranging recommendations which it saw as essential to the development of the county. This plan provides a useful framework for devising policy on the development of County Leitrim in the coming years. Considerable attention is being given by IDA Ireland to the need to achieve a more equitable distribution of inward investment and Leitrim continues to be a high priority area. As part of its marketing efforts, IDA Ireland encourages investment in locations such as Leitrim with significant grant differentials. It is also striving to increase the Objective One region's share of new jobs in greenfield projects from 25 per cent to 50 per cent. Among the steps taken by IDA Ireland on behalf of the Department of Enterprise, Trade and Employment to encourage investors to the Leitrim area are the following.
Planning permission has now been approved for a 25,000 square foot advance building in Carrick-on-Shannon. The establishment of this advance factory was one of the recommendations of the Leitrim Project Group's report. The next stage in the process will be to commence discussions with private sector on the funding and provision of the building.
IDA Ireland has reviewed staff levels in the north west region in response to a greater marketing focus on the region and an additional member of staff has now been appointed.
IDA has restructured its organisation to place increased emphasis on regional development. Two area directors with responsibility for the Objective One region have been appointed and one of these has responsibility for the Border region.
Two Enterprise Ireland supported projects have been facilitated by IDA Ireland in securing the vacant advance buildings in Rooskey and Drumshanbo.
An expansion of Elastometal in Manorhamilton involving the sale of 10,000 square feet in three units to the company is ongoing.
Enterprise Ireland is working closely with Irish companies in Leitrim helping them to develop and expand their business. During 1998 employment in Enterprise Ireland assisted companies grew by 75 which, after accounting for job losses, resulted in an increase of 34 to 1045 jobs. A further 116 people were employed on a part time basis in 1998. Among Enterprise Ireland new development projects are:
Vistamed Limited, a new start-up company based in Roosky. The company will assemble medical devices for the health care industry and expects to create 32 new jobs with total investment amounting to £1 million.
Merenda Limited, based in Manorhamilton recently announced details of major expansion. The company manufactures a range of edge bandings for the Irish, UK, Middle East and Canadian markets and is now Ireland's leading manufacture of edging projects. Total investment amounting to £1.5 million will create an additional 32 jobs bringing the total number employed in the company to 70.
Jetwash Limited in Carrigallen recently announced an investment by Enterprise Ireland of £270,000 with the creation of 11 jobs.
To stimulate business opportunities in the north west and in partnership with IFI and INTERREG, Enterprise Ireland established a graduate business programme for new enterpreneurs to support them while preparing their business plans. The programme is based in the Institute of Technology, Sligo and the Institute of Technology, Letterkenny.
In addition to the above, the Leitrim County Enterprise Board, one of the 35 city and county enterprise boards established in 1993 to assist small and micro-enterprises, created 265 full-time and 25 part-time jobs in the period up to the end of 1998. The agencies have developed a promotional brochure and information pack on the county. It is being used by the agencies as part of their marketing efforts to attract potential inward investment to the county.
I am pleased to say that the number of people on the live register in Leitrim has decreased from 1,772 in September 1998 to 1,531 in September of this year. Senators can rest assured that the Government, through its development agencies, will make every effort to ensure industrial development in County Leitrim. Senator Mooney has answered many of the queries raised about Kepak and its relationship with the local action group and its assets etc. Senators can rest assured that there is no asset-stripping.
The Seanad adjourned at 2.50 p.m. until Tuesday, 16 November 1999 at 2.30 p.m.