Dáil Éireann - Volume 384 - 24 November, 1988
Adjournment Debate. - Company Development Programme.
An Ceann Comhairle Seán Treacy
An Ceann Comhairle: Deputy John Bruton gave me notice of his intention to raise on the Adjournment the subject matter of Question No. 30 which appeared on the Order Paper on 23 November 1988. The matter is in order.
Mr. J. Bruton Mr. J. Bruton
Mr. J. Bruton: The purpose of this question is to find how a particular approach to industrial development has worked out in practice. The approach involves selective help being given by the IDA and CTT to a certain number of individual companies which is not available, in the same fashion, to the rest of industry and I should like to know how it has worked out in practice. Have jobs been provided in the firms selected for this special help? Have more jobs been created as a result? This is known as the company development approach and was initiated in the White Paper on Industrial Policy published on 12 July 1984.
The approach was described then as one where particularly promising firms would be identified and would commit themselves to working on a more intensive basis with the appropriate State agencies than would otherwise be the case. They would receive extra help and time from the State agencies. It was clearly laid down in the White Paper that this would not, however, be allowed to  become a system in which certain selected firms would be able to draw repeatedly on State aid. It was also made clear that it would be the responsibility of the firms themselves to develop any proposals for new products and to ensure that there was not unfair selectivity in regard to firms who were well placed with the IDA compared to others. It was required in the White Paper that a list of the companies so selected would be submitted to the Department of Industry, Trade, Commerce and Tourism — now the Department of Industry and Commerce — on a six monthly basis with a statement of the reasons for those companies being selected.
That approach was initiated by the IDA following the publication of the White Paper and it was adopted by the incoming Government in 1987 in the Programme for National Recovery. Without the detail which was in the original White Paper, the Government said that there would be a market-oriented and technological development of the indigenous sector with, as a priority, the expansion and growth of selected Irish companies firmly rooted in the economy. The IDA referred to this in their annual report for 1986 as a programme which, in conjunction with these companies, would act as a catalyst to stimulate company mergers to identify and implement new, strategic development initiatives.
The whole idea is that certain companies are getting selective help. Deputies of my party wanted to find out at Question Time yesterday whether this new approach has worked and if new jobs have been created in the firms in question. Two questions were put down, one in the name of Deputy Griffin and the other in the name of Deputy Flanagan. Deputy Griffin asked the number employed in these selected firms — there are 200 — at present and the number employed at the time the programme commenced. A similar question was put by Deputy Flanagan who asked the number of jobs which had been created since the inception of the programme under the Programme for National Recovery in the firms selected for special  treatment and the number of jobs lost in the same firms. While the Minister gave quite an informative answer in some respects, he told us that 200 companies in all had been selected, that the IDA and State agencies were working on an intensive basis with about 40 of these at any given time, he failed to give any answer to Questions Nos. 21 and 30 which asked for specific details about the number of jobs that had been created and lost since the firms were selected.
It is important for the House to assess whether industrial policy is working and this company development approach was urged very forcibly by the IDA who regarded it as a particularly important industrial policy initiative. It was included by me in the then Government's White Paper because the IDA believed it would deliver the goods but I am very suspicious of the fact that although the Minister answered all the other questions he did not give any details about the number of jobs created in these firms. I can understand why he would not wish to identify the names of the firms, for confidential and commercial reasons, but I cannot understand why he does not know how many jobs have been created or lost in the firms in question, particularly in view of the fact that it was provided in the White Paper on Industrial Policy that a list of these firms would be submitted to the Department of Industry and Commerce. The Minister knows which firms are involved and the IDA should certainly know, if they are working intensively with the firms, whether they are creating or destroying jobs.
Deputy Reynolds, the then Minister for Industry and Commerce, answered all the questions yesterday about the selective programme for specially chosen firms but did not give any information about how many jobs had been created or lost in those firms. It indicated that this programme may not have been such a great success and that the IDA are perhaps using the Minister to gloss over the relative failure of the programme to create jobs. That may not be the case and  I would be very happy to discover from the Minister of State that he has information about the number of jobs in these firms before they were selected and the present number of jobs.
I sincerely hope the Minister will not say he does not have the information or that it is not the practice of the Department to look for that type of information. The question was put down, accepted as being in order and it should be answered. The IDA adopted this programme in order to create jobs. If the Minister cannot get information from the IDA on whether the programme is creating jobs, it is a very dubious programme. The IDA are not noted for their modesty in the matter of giving information about job creation. If the information is in line with their policy stance at a given time they are more than happy to make announcements about job creation. What I find rather odd is that in regard to the company development approach the Minister gave no information even though he had four day's notice of the two questions from Deputy Brendan Griffin and Deputy Charles Flanagan.
I hope this debate will allow the Minister, in addition to giving information on the number of jobs created and lost in the 200 selected firms, to give an indication as to whether in practice, in the light of those figures, the approach is working. If the Minister tells us that virtually no net jobs have been created in the firms in question it would be only right that he and his Department should question whether the company development approach is working at all and whether the IDA should not revert to a more arms length approach of simply dealing with all applications on their merits without getting involved in any selective arrangements with individual firms. I hope the Minister of State, Deputy Brennan, will have the information that the Minister, Deputy Reynolds, did not have yesterday. I will conclude by thanking you, a Cheann Comhairle, for giving me the opportunity of raising this matter.
Minister of State at the Department of Industry and Commerce (Mr. S. Brennan) Minister of State at the Department of Industry and Commerce (Mr. S. Brennan)
 Minister of State at the Department of Industry and Commerce (Mr. S. Brennan): The Company Development Programme was originally developed by the Industrial Development Authority in association with McKinsey & Co., acting as consultants to the IDA, in response to the clearly identified need to encourage indigenous firms to develop commercially viable, long-term strategic business plans. As Deputy Bruton knows, the essence of the company development approach is for staff from IDA and other agencies, using their sectoral and business knowledge, to stimulate, in a non-directive way, development initiatives by the company. The programme is not directly concerned with job creation, rather with assessing a company's strengths and weaknesses, its competitive position in the market and the means whereby that position can be strengthened. That is the initial focus of the programme.
Initiatives which have been introduced by companies participating in the programme include: changes in management structure; bringing in new management expertise, especially in the areas of marketing and product development; changes in marketing strategy; improved production systems and broadening the product range. While the programme by its very nature is concerned with a firm's long-term development, it has been found that companies which participated in the programme in the initial stages have performed consistently better than mainstream indigenous industry in terms of maintaining employment, sales growth and profitability.
The programme commenced in 1985 and by end 1987,200 companies of which three-quarters are Irish owned, had undertaken formal company development programmes. Up to 40 companies normally participate in the programme at any one time. Currently, because the programme is now being operated on a more selective basis, 30 companies are participating. The Deputy will appreciate that this number is not static as at any one time because some companies commence and some finish the programme. To quote  figures on the numbers employed in these 30 firms under the programme is not therefore particularly meaningful.
With the publication of the Government's Programme for National Recovery which highlighted the weaknesses of the indigenous manufacturing sector and the need to take more active measures to promote its development, the scope and content of the programme was substantially refined with effect from the beginning of 1988. It was found on examination that while companies participating in the programme had benefited from the opportunity provided to examine their company's operations, many of the companies chosen did not have a clear development potential. It was also found that too much attention had been given to the development of company plans and not enough to the implementation of these plans and that has been changed.
A completely new Irish industry directorate was set up to bring a more creative and specialist approach to the challenge of securing more investment, exports and jobs from mainstream Irish industry. Within the directorate a separate division was established to focus exclusively on the company development programme. The establishment of a separate company development division with specialist staff, resources and expertise will ensure that all of the development programmes are carried out to the highest professional standard. I would point out that this programme in its initial format was originally introduced by Deputy Bruton.
The incentive package has been restructured to provide support for the agreed strategic development needs of companies. The key changes introduced this year are: less support for fixed asset investment; a switch in grants from operation training to management development; greater emphasis on new product development/acquisition and in conjunction with CTT, greater support for strategic market-led initiatives by companies.
As I have already indicated, the initial phase of the programme was found to  have given rise to some very worthwhile initiatives but there was a lack of selectivity in the companies chosen to participate. With effect from this year the programme has been completely revamped, a new division has been established and new incentives have been introduced. It is too early at this stage to say how effective the revised programme will be in maintaining and creating jobs in indigenous firms.
I would expect, however, that with the greater selectivity that is now being operated and the vastly improved business environment, created by the Government's fiscal and economic policies, a much more positive outturn can be expected from the programme. Next year the Minister for Industry and Commerce will be carrying out a detailed review of industrial performance as required under the Industrial Development Act, 1986, during the course of which he will examine the outcome of the company development programme to-date. The results of this review will be laid before each House of the Oireachtas.
I would like to take the opportunity to comment on the press statement issued yesterday by Deputy John Bruton in relation to industrial job creation. No reference is made in Deputy Bruton's statement to the results of the labour force survey for mid-April 1988 which show a stabilisation in manufacturing employment with an increase of 10,000 jobs in services over the previous year. The labour force survey, by its nature, is more likely to pick up the impact of employment increases in small manufacturing firms which have been performing particularly well this year as evidenced by recent reports and surveys  from the State industrial development agencies and the Small Firms Association.
Sample surveys conducted by the State industrial development agencies show that close to 15,000 jobs were created in industry and international services in the first nine months of 1988, a figure which is running ahead of performance for the comparable period in recent years. The offsetting industrial job losses for the same period are not yet available but the major improvement in the economic climate should make existing jobs more secure.
I would also wish to point out that the reference in the report of the Central Bank used by Deputy Bruton was rather selective. The Central Bank's report, in fact, pointed to the improving performance in manufacturing employment anticipated for 1988 as a whole and forecast a modest increase in employment in manufacturing in 1989 as a result of the expected improvement in economic activity. Although this would be the first such increase since 1980, it was disappointing that Deputy Bruton overlooked this fact.
Mr. J. Bruton Mr. J. Bruton
Mr. J. Bruton: How many jobs were created in the 200 firms that were selected? Why can the Minister not answer that question? These firms are getting selective attention. Surely the Minister should know how many jobs have been created in those firms.
An Ceann Comhairle Seán Treacy
An Ceann Comhairle: The Minister has replied to the debate.
The Dáil adjourned at 5.20 p.m. until 2.30 p.m. on Tuesday, 29 November 1988.
Dáil Éireann 384 Adjournment Debate. Company Development Programme.