Wednesday, 23 March 1988
Seanad Eireann Debate
Mr. G. Reynolds: I thank the Minister for taking the time to come in and listen to my proposal for a woodpulp factory to be sited in County Leitrim. I wish to refer to recent statements and decisions of the Minister for Finance on decentralisation and, in particular, I welcome the location of a section of the Department of Social Welfare in Sligo. It is long recognised that decentralisation boosts local economies, provides local job opportunities and revitalises local communities which have suffered social imbalances caused by migration to the East coast and emigration. Even a cursory examination of the demographic distribution of population in Ireland will reveal instantly that one of the black spots is undoubtedly County Leitrim. Constant migration, and in the recent past accelerated emigration, if allowed to continue, will result in a dwindling, ageing and eventually totally dependent population.
Thank God, we now have an opportunity to halt this enervating trend. With one bold and imaginative stroke, this disastrous degeneration of a mainly rural population can be halted. All that is required is a breadth of vision and political will. I refer, of course, to the development of the timber industry. My reference to the policy of decentralisation in this context may appear slightly irrelevant, but my point is that all of the advantages of the philosophy are even  more enhanced by the location of an industry and its regulating body in the correct place from day one. No social upheaval is necessary. Nobody need feel any compulsion to move.
In short, my submission is that the new forestry body and the proposed woodpulp industry should be located in County Leitrim. I will endeavour to show that this is no mere call for an industrial development based merely on the premise that we should get what is going regardless of good economic criteria. This call is based on sound and true principles of political economy which apply to the location of the industry. A brief regression to our school days will remind us of those principles. One principle is the availability of raw materials. County Leitrim is 7 per cent planted, produces 50,000 cubic metres of timber per year which, when projected forward, rises to 60,000 cubic metres by 1990 and 100,000 cubic metres by 1995. Furthermore, Leitrim has been designated by An Foras Forbartha as probably the finest timber growing area in Europe. It already gives a yield of 28 per cent above the national average. Another powerful point in Leitrim's favour is that it is the epicentre of an area comprising parts of counties Donegal, Sligo, Roscommon, Cavan, Fermanagh and Tyrone which posses the same drumlin soil on which we are providing vast quantities of timber.
In relation to the viability of any industry there is the vital ingredient of added value. At present when the commercial saw log timber has been processed there is a residue of about 30 per cent. This resource is generally turned into fencing posts and firewood, giving a low added value of £43 per cubic metre. If this was processed as woodpulp and turned into tissue, it would give us a figure of up to £315 per cubic metre. Therefore, the location of such an industry in Leitrim, the centre of the region, makes irrefutable sense.
Infrastructure is rightly regarded as an essential ingredient in determining the location of industry and, in the case of  Leitrim, a reasonable investment in roads, which will be necessary in any event, would provide ease of access to all forest areas. Our communications system is second to none. We have thousands of square feet of empty advance factory space in every town in the county. Conversion to a plant and office would be relatively simple. Furthermore, judicious allocation of the regional and structural funds, to which we are entitled, would very quickly extend our regional water and sewerage schemes to the whole county. Availability of labour is another sine qua non for a viable industrial location. In this respect Leitrim and its surrounding areas have a plentiful supply of highly skilled and highly educated labour. No employer need fear any shortage of willing and adaptable workers.
From a social point of view we can offer serviced sites for housing in scenic locations on uncrowded roads — albeit there are loads of potholes — a healthy environment, total absence of the more nasty aspects of the rat race, friendly people, excellent schools and, of course, boating, hunting, shooting and fishing, although the latter is sadly no longer free. The County Leitrim Development Team and the county council for many years were involved in the promotion of afforestation. The establishment of a wood processing industry has been a priority for some considerable time. In October, 1985 the County Development Team made a submission to the then Minister for Fisheries and Forestry, Mr. Paddy O'Toole, in relation to the establishment of a major wood processing plant in County Leitrim.
A certain amount of urgency is now attached to this matter. Consequently the team came to the conclusion after many deputations and consultations with interests and local industry, the IDA and some financial institutions that, (1) the most suitable process of the pulpwood processing giving the maximum added value would be the manufacture of tissue, (2) that this type of project is best provided by a multinational corporation which would have finance, machinery,  management, structure and marketing capacity, (3) that the IDA should be encouraged to promote with enterprises known to them the setting up of this project in County Leitrim as recommended by An Foras Talúntais.
May I sum up by reiterating that what I propose is a viable economic proposition which stands on its own feet and will bear any examination on any criteria. If we add the social dimension of desirability there can be no argument. For far too long we in Leitrim and the West generally have seen our hopes dashed on one pretext or another and it is time we had our fair share of development. Here we have all the conditions necessary to set up an indigenous industry. It is not just that we want the industry, we need it. The future of the county depends on it.
Minister of State at the Department of Energy (Mr. Smith): First, I want to thank the Senator for the case he has made for County Leitrim and say how much I enjoyed listening to a contribution from that part of the country which certainly needs more development. In a particular way I welcome the Senator's contribution because of my previous association with this House and with his father who was the esteemed Cathaoirleach of the House at that time.
There is another side to the equation, and I refer of course to demand for pulpwood. Developments on the demand side will decide whether the nett availability of pulpwood will be sufficient to accommodate a new industry. Those elements on the demand side which impinge on net availability include sawmilling of pulpwood, exports, fuel wood, stake and pole sales. A liaison committee comprising my Department, the Department of Industry and Commerce and the IDA are reviewing the possibilities first on the demand side, to try to maximise the amount of material that can be truly said to be available for new industry. The ideal would, of course, be to be able to accommodate a new industry and also expansion by the existing processors.
 Secondly, the committee have identified a number of pulpwood based products and have assessed these in a preliminary way, in terms of timber volumes required, level of capital investment required, potential employment and added-value to the economy. Should it be clearly established that sufficient supplies of raw material will be available, more detailed feasibility work will need to be undertaken in respect of any possible potential new industry. The ground-work to enable the IDA to solicit inquiries from overseas industries in the pulpwood using sector — necessarily foreign, because of the scale of investment required — has been more or less completed and the timing for such a new industry will depend on the results of examination of those elements to which I have already referred, on the demand side. All in all, the future prospects for the domestic pulpwood industry look very healthy indeed.
Some of the difficulties which constrained, of late, the development of our pulpwood processing sector are going to ease considerably in the near future. Chief among these is the supply of raw materials. The forest planting policies pursued in the early years of the State's existence are about to pay dividends in the near future in the form of increasing amounts of pulpwood, as well as sawlog, from our forests. It is for this reason that the Government's Programme for National Recovery has targeted timber processing and especially pulpwood processing, as a future provider of new employment and wealth for our economy.
Because of the crucial importance of being able to estimate with reasonable accuracy the amounts of raw material which will be available to processors, my Department have been working to obtain such data. I am pleased to be able to announce that pulpwood supplies will increase substantially over the next few years which opens up the possibility of expanding the domestic pulpwood industry as soon as a suitable new industry can be identified by the State industrial development agencies. A recent study  carried out by the internationally renowned forestry consultants Jaako Poyry confirmed these predictions.
In 1987, total availability of pulpwood and residues — a by-product of the saw milling industry and, depending on the end products, a raw material for pulpwood processing — was in the region of 900,000 cubic metres. From 1988 to 1992, it is estimated that this figure will increase to 1.2 million and from 1993 to 1997 the average annual figure is expected to be nearly 1.6 million cubic metres. While the supply of pulpwood is clearly going to increase quite substantially, determining the optimum utilisation of the increasing volumes coming on-stream is not as simple a matter as might appear to be the case.
For the purpose of development, the Irish timber processing industry can be divided into two sub-sectors, saw milling and pulpwood processing. It is the pulpwood processing sector which concerns us here.
The Irish pulpwood processing sector comprises mainly of two producers i.e., Medite of Ireland Ltd., Clonmel, manufacturers of Medium Density Fibreboard and Finsa Forest Products, Scariff, manufacturers of chipboard. Both companies are now well established on selling on foreign markets as was originally intended.
The Irish pulpwood industry has gone through a period of considerable upheaval since the late seventies. The board manufacturing plants in Waterford and Athy, and the pulp manufacturing mill at Clondalkin Paper Mills, are now gone, victims of recessionary conditions in the seventies which witnessed all over Europe in this particular sector a reduction in demand and consequent over-capacity. A joint study by the IDA and the Forest and Wildlife Service in 1979-80 identified medium density fibreboard as a product with real prospects and potential benefits to the national economy and the Medite plant in Clonmel, County Tipperary was a consequence. The Finsa operation in Scariff, County Clare followed from a takeover by the Spanish Finsa Forest Product  Group of the Chipboard Products Ltd., factory in 1984. Some 330 are currently employed in both companies.
The motion under discussion calls for the establishment of a woodpulp factory in County Leitrim. It gives me some pleasure to be able to talk in a positive way about the future prospects for developing the pulpwood industry in Ireland. It was not too many years ago that the prospects looked very bleak, indeed, for any such development on the domestic front. May I say straight away that the decision on where to locate any project is ultimately a matter for the promoters involved who are in the best position to decide in the light of such factors as logistics of raw material supply — an extremely important factor in this case — access to main transport routes and other related matters. Section 13 (2) of the Industrial Development Act, 1986, specifically prevents a direction being given to the IDA in respect of any individual industrial undertaking, or to giving preference to one area over others in relation to the location of an industrial undertaking, otherwise than as part of a general review of industrial policy for the country as a whole.
The Senator is correct to say that County Leitrim is a possible location for any new pulpwood processing industry that might arise but we cannot at this stage be too specific. It would be more correct to say that the north-west region is going to be considered seriously by the promoters of any such industry. The promoters, for example, could decide to  locate new capacity alongside an existing industry elsewhere in the country.
Mr. G. Reynolds: I would like to know if there will be a Government decision on where to site the wood processing plant and is it envisaged that it will be a private enterprise project rather than State-funded?
Mr. Smith: First, it will not be the Government who will determine the location of the new industry. It is mainly up to the promoters to decide the exact location where they wish to site the new industry. The concentration, however, by the Government on the north-west would be right because of the fact that it is in that area that surpluses to our present requirements of pulpwood now stand. Therefore, the likelihood of a new industry going elsewhere, further away from the supplies, is extremely unlikely. As to whether it will be a privately-owned industry or Government-sponsored I think is beyond doubt. It will be a private consortium. However, I am making provision in the new forest company for the opportunity for the new company to go into joint ventures if such are necessary. I envisage in this case that probably that would not be the type of one which would interest the new company.
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