Adjournment Debate. - Limerick Canning Plant Closure.

Tuesday, 8 March 1983

Dáil Eireann Debate
Vol. 340 No. 10

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Mr. Prendergast: Information on Frank Prendergast  Zoom on Frank Prendergast  I wish to convey to the House the very serious concern being experienced in Limerick at the announcement of the pending closure of Mattersons canning factory. This industry is the second oldest in the country, after Guinness's, Mattersons were founded in 1820. My purpose in raising the matter this evening is to ask the Minister to defer the closure date until all possible options have been considered.

Those of us who were involved in discussions and negotiations on this issue were taken aback to say the least that the announcement of closure was made without any communication with the unions or the public figures involved. During a deputation, we have been assured by Deputy Lenihan as Minister some months ago that the closure would not be announced without those directly interested being consulted first.

The underlying position in this whole situation is that the Irish Sugar Company did not want the Mattersons from day one. When the late Deputy Donogh O'Malley succeeded in having Mattersons factory taken over by the Sugar Company, the new arrangement was resisted from the beginning by the company. A deputation was informed by a Minister in the last Government that on the day Mattersons were taken aboard by the Sugar Company one of the senior executives of that company said he would see that the arrangement ceased in spite of the Minister. Against that kind of background the work force are deeply suspicious of the motives of the Sugar Company in this situation. From a position in which 172 people were employed in August last year, 28 jobs were lost as a result of the company losing the Dunnes Stores contract while 11 were lost as a result of a rationalisation programme and 50 will be lost as a result of the proposed closure of the cannery section. This is all the more tragic when one realises that this canning [2079] process is one of the most modern in Europe. Recently a modern canning machine was brought in and this has the capacity of producing 100,000 cans in eight hours. There are very few such effective production lines in canning anywhere else in Europe. We were all told that one of the major factors in the Ranks closure was the outmoded technology being used, but here we have the very opposite. If this cannery closes there will be a knock-on effect on those areas of employment within the Sugar Company that are responsible for the transport and distribution of Matterson's products. In addition the closure will have the effect of forcing the profitable meat section of the company to carry the overheads carried up to now by the canning section. This will result in an automatic weakening of confidence in or in the creation of difficulties for that section.

I understand that the figures on which the closure decision is being taken are outdated and that the real position is that the up-to-date figures for the company are in a much more healthy state. Before any decision is taken to close this plant I appeal to the Minister to ensure that the absolute up-to-date figures are available to the Government. All Matterson's are asking for is a share of the £30 million that has been given by the Government by way of a grant-in-aid to the company. They consider that their losses are so insignificant in relation to the figures that were announced this morning that it will be nothing short of a tragedy to allow such a valuable part of the food-processing sector to close.

This brings into question the whole philosophy of food processing in this country. Recently we were all heartened by the announcement of the setting up of the task force which include the Taoiseach, the Tánaiste and three of the senior Minister. One of the stated objectives of that task force is to examine areas in which useful and valuable work can be created. In the case in question we are witnessing the piecemeal destruction of the food processing industry. This must not be allowed happen at a time of [2080] depression, especially since food processing has a greater potential for employment than any other industry. What is happening is ridiculous in a situation in which there is no integration of agricultural output and food processing. Meat and dairy products, for example, come within the aegis of the Department of Agriculture whereas the secondary processing of sugar — confectionery and so on — comes under the Department of Industry and Energy. It is nothing short of a scandal that all this is due to the failure of successive Governments to bring in one overall and co-ordinated plan for the food processing industry, an industry that has jumped from seventh to second place in the Common Market. It is second only to the petro-chemical industry in its labour intensiveness. We are fortunate with all the raw materials we have at our disposal.

Talk of impending closure comes at a time when several factors would indicate that this should not happen. Some canning factories in the UK are closing because of the glut of beans and vegetables due to a very good crop. The price of the foodstuffs came down and also the price of the cans, which would give Matterson's a better competitive edge. Not alone are they among the foremost processing and production plants in these islands and Europe, but they have met the most exacting European hygienic standards. They have produced extensively for companies like Heinz International Corporation and there could be no higher recommendation.

If one advantage derives from the present recession it is that the law of economics is being borne in on people every day. We witness legitimate and understandable protests about increased taxation, but by a far less painful method we could solve our problems if we had the common sense and intelligence to concentrate on a Buy Irish campaign. It is estimated that a 3 per cent swing from foreign to Irish goods would create 10,000 jobs here. One can imagine what that would mean now to our economy. If unemployment continues at the present rate, it will bring down our economy, because it will be [2081] insupportable unless something is done. Support for Irish goods is absolutely imperative.

Our climate gives us an advantage over most countries of the world because our cattle can remain in the open for almost the full year, giving an in-built differential advantage over our competitors within the Common Market. We are, nevertheless, importing cabbage and onions from The Netherlands, potatoes from Cyprus, tomatoes from the Canary Islands and last year we imported lettuce, fruit, cheese, fish and canned vegetables, which is an absolute scandal. In 1982 alone, we imported 40,000 tonnes of potatoes and are told by the Department of Agriculture that that figure will double in 1983, at a time when more than one million acres lie undeveloped. In 1982 alone we spent £39 million on imported fruit, £12 million on imported vegetables, £604 million on frozen foods. That is a reflection on all of us and we will pay dearly for it.

I am asking for a public inquiry, if necessary, into the manner in which it is proposed to close down Matterson's. This unjustifiable decision warrants the deepest scrutiny, because, given the figures that we heard this morning in relation to our Sugar Company, if closure of Matterson's is justified the whole Sugar Company should go out of existence. It is wrong and unfairly selective to discriminate against Matterson's and the Minister for Agriculture must defer this closure. I am not happy — and neither are the people of Limerick — with the figures presented by the Sugar Company on this issue. We are not getting the real picture and the situation is far more healthy than we are given to understand. I am told that the decision to close the factory is based on outdated information.

The Matterson work force believe that, if they were given only a fraction of the £30 million which will go to wipe out old debts and the interest on the machinery purchased, it would give Matterson's a fair chance to turn about within a year or so. I appeal to the Minister and his colleagues, at a time when employment is at a premium, not to contribute to a scandalous situation in which native industries [2082] are being dismantled piecemeal. It would cost far more to keep the work force on the labour exchange than to keep them in their jobs. I urge the Minister very strongly to consider this course of action.

An Ceann Comhairle: Information on Thomas J. Fitzpatrick  Zoom on Thomas J. Fitzpatrick  Deputy Reynolds has only four minutes.

Mr. Reynolds: Information on Albert Reynolds  Zoom on Albert Reynolds  I take the opportunity of subscribing totally to the call from Deputy Prendergast for the postponement of this closure until all facts are known. This proposition came before the previous Government. As Minister for Industry and Energy at the time, I was not prepared to accept the figures put before me and asked the Government of the day to defer closure until I received answers to certain specific questions. The election intervened and I was never in a position to get the full story. There is something wrong with the philosophy of an Irish Government which, when unemployment is rife as at present, would think of closing down an industry which is processing native raw materials. The criticisms of our industrial policy as expounded by Telesis and the NESC demand priority in the development of native resource industry.

At a time of expanding demand for beans and other associated products, Batchelor's, who are in the same business, are expanding, investing more money and receiving assistance from the IDA to do so, and if we cannot improve the Matterson situation there is something totally wrong with our approach to and philosophy on Irish industry. I wish to ask the Minister a question which he may not now be in a position to answer. I understood, on the information available to me when this closure loomed previously, that outside auditors, in making their submission to the IDA for funds to make more investment in Matterson's, produced figures which showed that Matterson's were making a profit. On the other hand, the Sugar Company group were saying the direct opposite. This situation must be clarified for the benefit of the taxpayer and public representatives [2083] to ascertain where the truth lies in relation to the facts.

It should be within the competence of all the agencies available to the Government to separate Matterson's from the group, if necessary, and let them do the job for which they were set up. They have a future and the markets are there for their products. They have done, and can do, an excellent job and there is no reason why they should not succeed. For the little money entailed at this stage, surely, even in advance of a task force of Minister who will have protracted discussions, it would be criminal to close Matterson's now.

An Ceann Comhairle: Information on Thomas J. Fitzpatrick  Zoom on Thomas J. Fitzpatrick  The Minister of State at the Department of Agriculture to conclude.

Minister of State at the Department of Agriculture (Mr. Hegarty): Information on Patrick Hegarty  Zoom on Patrick Hegarty  The closure of Matterson's must be seen in the context of the overall affairs of the Sugar Company. Matterson's cannot be looked at in isolation.

For some time now the financial position of CSET has been deteriorating. Recently it has become critical. The company made a loss over £11 million in 1980 and in 1981 the loss was £12 million. The accounts for the company for the most recent year — laid before the House on 2 March — show that in 1982 the loss was £22 million.

In so far as the food division, of which Matterson's is a part, is concerned, its activities have consistently incurred losses since trading began in 1963. The continued drain on the company's finances is regarded as a major contributory factor to the present problems of the company. Since 1979 the food division has incurred a cumulative loss of about £29 million.

Because of their critical financial position the company sought an equity injection from the State of £75 million in March 1981. Before coming to a decision on that, the Government decided that a fundamental examination of the company's affairs should be carried out by an independent firm of consultants. The consultants, who submitted their report [2084] on the affairs of CSET in March 1982, recommended the disposal or closure of the entire Erin Foods division, as they concluded that it was inherently loss-making. Indeed, I might point out that this included a factory in my own town.

The consultants' recommendations bore out the views of the Oireachtas Joint Committee on State-Sponsored Bodies which had conducted an inquiry into the affairs of CSET in the summer of 1980. The committee's report was debated in the Seanad in February 1981. As many Members may be aware, the Oireachtas Joint Committee had serious doubts as to whether the food business could ever achieve an economic return. However, the committee recommended the provision by the Government of additional share capital to the company.

The Government decided in June 1982 to provide such additional capital subject to the submission by the company of a clear and specific programme for the rationalisation of their food processing activities and the beet growing and sugar industry. The capital was made available in October last.

The programme submitted by the company listed a number of steps towards rationalisation, including the closure of the canning operation at Matterson's. The company said they recommended this because they could not see any prospect of making this business profitable in the foreseeable future since the costs of production could not be brought down to those of competing products.

Matterson's are engaged in two distinct business — fresh meats and canning. The fresh meats division has been reasonably profitable and CSET plan to develop this business further. The canning side of the business is engaged mainly in the canning of peas and baked beans, imported from third countries. This operation has been making heavy losses in recent years — almost £1 million in 1980, over £1 million in 1981 and about £1.4 million in 1982. CSET have estimated that the closure of Matterson's will enable the company to avoid accumulated losses of nearly £4 million and reduce borrowing by £3 million at the end of five years.

[2085] In accepting the company's decision to terminate their activities at Matterson's the Government are conscious of the need to ensure that the public moneys being invested in CSET are not wasted. If losses continued to be incurred of the same size as in recent years then the whole future of the sugar industry would be set at risk. It is vital that the Sugar Company be able to produce sugar competitively, or else foreign sugar will come in here in increasing quantities. The Government are very concerned about the need to put this important national company back on their feet. Anybody reading today's papers would be very concerned about it too.

In this whole connection i would like to take this opportunity of emphasising to the House the Government's commitment to the development of the food processing industry. The criterion for any such development must, of course, be a real prospect of viability.

What must be developed is a food processing industry which is able to turn out products which the customer is willing to [2086] buy in preference to imported produce. The firms engaged in the industry must be strong and soundly structured to stand the blast of the though international competition facing them. Any failure to be fully competitive can be cruelly exposed in meeting the challenge from keen suppliers in the home and international arena.

The development of a thriving food processing industry, to which I look forward, would add greatly to job prospects and of course it would earn foreign currency. I cannot, however, over-emphasise the need to be competitive. To improve our competitiveness requires hard decisions. One of these was the decision to terminate the loss-making activities at Matterson's. I am sorry, indeed, that the decision had to be taken. It is a decision in the overall interest of one of the most vital of our national companies — Comhlucht Siúicre Éireann.

The Dáil adjourned at 9 p.m. until 10.30 a.m. on Wednesday, 9 March 1983. 1983.

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