Thursday, 9 June 1988
Seanad Eireann Debate
An Leas-Chathaoirleach: I have notice from Senator McCormack that on the Motion for the Adjournment he proposes to raise the following matter: “The need for the Minister for Industry and Commerce to comment on job losses in the industrial sector as a result of the laying-off of staff in Thermo King and if he will take action to alleviate the situation and ensure the maintenance of expansion of the workforce there.”
Mr. McCormack: I thank the House for giving me an opportunity to raise this very vital matter. It is a matter that is causing grave concern in Galway that any factory should be laying off workers. There is a total workforce of 620 people in the Galway plant and the people of Galway city and county appreciate and are very thankful that Thermo King Europe came to Galway to establish their base in October 1976, just over eleven and a half years ago. They have given very valuable employment in Galway and have been part and parcel of the development of our industrial base in Galway city and I want to go on record as thanking the company for that.
However, the situation now needs clarification. The situation at Thermo King at the moment is that on 3 June 19 workers were laid off, 30 more are on one week's contract to expire tomorrow, 10 June, and from what I understand, about 54 more are on a seven-week contract. This is a desperate situation for those people and their families. They now  face unemployment or in some cases even emigration like many more people in Galway and other areas. They are people who have entered into house mortgages and other commitments as regards their families and now they find themselves in this very sad situation. They formed a vital part of our community and their loss to Galway and the spending power they generated in the area will be greatly felt. I sympathise with those people on the loss of their jobs.
Thermo King Europe officially opened in Galway eleven and a half years ago and they have played a very vital and essential role in the industrial development of our city. I am confident that they have and will continue to play a vital role in the future of Galway. A job in Thermo King Europe, Galway was a much sought after and prized possession. To acquire a job there was considered as security for life. The present lay-offs and future threatened lay-offs have caused great concern among the staff of Thermo King and their families and in the community in general. About two years ago, approximately, 104 workers were taken on in a temporary capacity, as is now the norm in such situations.
Everything seemed to be going well in Galway and there was great confidence in the future expansion of the Thermo King plant in Galway. People entered into commitments on the natural expectation of the continuation of their employment. About a year ago also — and this may be relevant, as I will try to establish later — a new departure for Thermo King took place when they took over the Hyster factory in Blanchardstown in County Dublin where they now employ about 60 people. Before Thermo King took over in Dublin the managing director gave assurances that this factory would have no bearing on the situation in Galway. While I cannot conclusively prove that the opening of the Blanchardstown factory is causing the lay-offs in Galway I have enough evidence in what I see to cause me grave concern in this matter. I am concerned that there may be a link between the two events.
Before Blanchardstown opened, the facts are that staff were being taken on in the Galway plant and, now that Blanchardstown  is in production, staff are being laid off in Galway. When I contacted Thermo King Europe in Galway, personnel did acknowledge to me that the company plant does supply parts to Dublin for further work. As we know, Thermo King make and assemble fridge units. I know that over the past year two units which were made in the Galway factory are now being made in Blanchardstown. The making of the MD unit and the KD unit has been discontinued in Galway. These are now being made in Dublin, from the information I have.
Despite all the assurances I have been given by personnel in Galway I am not convinced that this transfer of work has no bearing on the employment situation in Galway. Can anybody explain to me how you can transfer work from one place to another without affecting the people working in the place from where the work is being transferred? It just does not add up. I know it is causing tension and anxiety amont the staff in Galway. Even when I contacted the Galway factory I detected a reluctance on behalf of anybody to speak on the matter. I was seeking to speak to the manager. I had been seeking to contact him since Tuesday but he was not available then nor was he available today. I was put from one person to another and back again and I was even referred to a public relations firm in Dublin for information. The referral of a public representative to a public relations firm did not help to allay my fears in the matter. However, I must acknowledge that I finally got a call back from the personnel department who were most helpful to me in my inquiries.
The question I now pose to the Minister is this: Thermo King Europe in Galway is now over 11 years in existence and Thermo King Blanchardstown are about a year in existence. Has the Dublin plant tax concessions and incentives which make it more attractive to operate there than in Galway? Has the Galway operation now lost the ten-year incentive? Does the Dublin plant qualify for this?
When this present Fianna Fáil Government succeeded in having Thermo King acquire the Hyster plant there was great jubilation and a lot of political capital  was made out of it. I remember quite well at the time that the present Minister for Foreign Affairs, Deputy Brian Lenihan, who is a representative for that area in west County Dublin blowing a trumpet about succeeding in getting Thermo King to acquire this Hyster factory. I will not stand for the building up of a factory in Dublin at the expense of the running down of a factory in Galway. I will not stand for the loss of jobs in Galway if there is a better incentive available through the efforts of the Government in getting Thermo King into Blanchardstown than there is in Galway.
The silence of the Fianna Fáil Ministers of State on this matter in the West Galway constituency — where I come from — is very strange. We had a highly publicised case recently where the Minister for Industry and Commerce, Deputy Reynolds, stayed up for 24 hours talking about the threatened closure of a factory in his constituency of Longford. I do not see any action like that from the Ministers in Galway concerning this very serious matter which is affecting the lives of people in Galway. It is strange that not one voice has been raised in defence of the protection of jobs in Galway. I will not be silenced in my call on the Minister to take the necessary steps to protect the jobs in Galway, especially vis-á-vis the difference which now may be in the Dublin plant versus the Galway plant. I would welcome the Minister's comments on this.
Minister of State at the Department of Industry and Commerce (Mr. S. Brennan): I am glad to have an opportunity to respond to this debate in order to outline to the House some of the progress made by the Government in improving our economic fortunes, more particularly in restoring business confidence to this country. The action which we have taken as a Government has led already to an improved environment for business and the restoration of some competitiveness. One cannot deny that. I believe this is the way to create new jobs and to stem the incidence of job losses experienced in recent years.
Let me point to some of the concrete achievements which have been made. Interest rates are down by about 6 per  cent; inflation had come to less than 2 per cent by mid-February moving Ireland into the low-band inflation countries within the EC, and investment in machinery, equipment, exports and manufacturing output have all increased substantially in real terms. As a result of all these measures overall growth in 1987 was over 4 per cent. If you cast your mind back to 1986 there was a 1½ per cent decline. Despite earlier pessimistic predictions by economists, current estimates indicate positive growth again in 1988. That is major progress.
In each of the past six months the live register has been lower than the total in the corresponding month a year earlier. A pattern of decline has not occurred since the late seventies. Confidence in economic management and a stable economic environment are essential ingredients for an increase in investment, in growth, in output and employment, but development measures are also necessary. In that regard, I want to say that the Programme for National Recovery, negotiated with the social partners and published last October, sets out a comprehensive programme to regenerate all sectors of the economy. Very specific and very demanding targets are being set and are being met.
In the area for which the Minister for Industry and Commerce has direct responsibility, manufacturing and international services, the objective of policy involves creating approximately 20,000 extra jobs on average per year over the next ten years, the actual provision accelerating as the programme policies take effect. So far as job losses are concerned, the programme says very clearly that the offsetting trend in job losses cannot be foreseen accurately. It would be unreasonable to do that but the more competitive economic climate and the greater attention given to the development of the indigenous sector will make existing jobs more secure.
In a joint Government-ICTU statement on developments under the programme released on 27 May, details of the actual progress in 1988 in realising the objectives of that programme for extra jobs and the major strategy developments were all set out. As regards manufacturing and international services,  the principal State industrial promotion agencies are satisfied, on the basis of sample surveys conducted by them, that a total of over 4,000 new jobs were created during the first quarter of 1988. The agencies tell me they are confident that the overall job targets for the programme can be met for the year. Some 240 project start-ups have been recorded across the overseas and indigenous small industry sectors during the first quarter of 1988. There was a strong build-up in the overseas companies pipeline in the latter part of 1987 and this momentum has been maintained into 1988. The State agencies have targeted a 20 per cent increase in new job creations by overseas firms over the period of that programme.
Senators will know that the Minister, Deputy Reynolds announced earlier this year important policy changes as regards the activities of the State industrial agencies and our industrial incentive programme, to bring them into line with the overall strategy set out in the Programme for National Recovery. These changes will act in a very positive way to safeguard employment in existing industry.
I will give an example of those; greater attention to the development of the indigenous sector, greater emphasis on State aid to upgrade marketing, management and technological expertise and a positive enterprise-based approach to developing small business, the establishment in my own area of trading houses to promote exports by Irish industry and the preparation of sectoral strategies for specific industrial sectors. That is not to say that job losses will not occur from time to time within industries as part of the normal industrial process. If such changes did not take place industry would not survive so it is important to see them in context.
Thermo King is a case in point. It is in the process of laying off up to 50 temporary employees at its Galway facility. It is a fact of commercial life that most high technological companies have to cope with fluctuations in their business. The only cost-effective way to do this is to utilise temporary employees to handle peaks in demand.
Thermo King Corporation has an excellent track record and has become a leader in its industry. Its Irish operations  have played a strong role in this success. This led to the company's decision in 1987 to further expand its presence in Ireland. I am informed that this expansion involves the long-term development of Thermo King, Galway, as well as the establishment of a second plant in Dublin and that the company remains committed to those plans. The Galway operation, which is operating at close to capacity levels, now employs something like 560 permanent staff. The original target was to achieve some 560 jobs in Galway and this has been achieved. The present lay-offs in Galway consist of 50 temporary employees. One has to take account of the peaks and valleys any company of that size would naturally have. I understand that there is no question of retrenchment or retreat by Thermo King from Galway. They are fully and totally committed to Galway and to the whole region. Their track record in Galway is absolutely impeccable. I visited the plant and I have seen at first hand the very professional approach to industry and management in that plant. I understand that there is no question of retrenchment. These are normal peaks and valleys one has in employment and the company is as committed to Galway as it ever was.
It would be unrealistic and unfair to any company to insist that it can only operate in any one particular region. Commercial common sense indicates that companies have to have freedom to spread their operations, depending on operational pressures which they may have. I should point out strongly that Thermo King will invest over £4 million in the Galway plant this year and approximately the same again over the next three years. I can rightly claim, as a Minister, to have an interest in the views of both the people of Dublin and the people of Galway.
In relation to the maintenance and expansion of the workforce in particular companies, this is a matter for the day-to-day administration of the industrial development agencies, an area in which the Minister for Industry and Commerce has no function. This reflects the rationale behind the establishment of such  bodies, that is, to give them a greater degree of flexibility and freedom than is normally available in the Civil Service and to free Ministers from responsibility for the decisions which the boards and staff of these bodies take in the day-to-day administration of their responsibilities. In this regard the Minister, Deputy Reynolds, in answer to a Dáil question last year, indicated that he is answerable for the overall policy, including the legislation under which the bodies operate and also for the Exchequer allocations provided to them.
Finally, it may be as well to emphasise here that the Minister for Industry and Commerce has no function in relation to the commercial affairs of individual companies in respect of his industrial policy role.
Mr. McCormack: I am very pleased with the commitment from Thermo King and I wish to acknowledge the £4 million to be invested in Galway this year and another £4 million to be invested over the next number of years. I would also like to put on record that I got an assurance, not from Thermo King but from a public relations firm on behalf of Thermo King that the 50 people laid off would likely be taken back again. The Minister did not refer to the situation vis-á-vis the disadvantages of a factory that has now passed its ten years tax incentive scheme and the advantages of a factory that has set up in Blanchardstown which will be in the 10 per cent manufacturing incentive scheme from 1981 to the year 1990.
Mr. S. Brennan: The Senator is a little confused because the taxation arrangement is a company arrangement. It is not a matter of location. It is not given to a factory in one town as opposed to a factory in another town. It is given to a company wherever it is located. That is the corporate taxation arrangement.
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