Dáil Éireann - Volume 452 - 04 May, 1995

Ceisteanna—Questions. Oral Answers. - Irish Steel Viability Plan.

5. Mrs. O'Rourke asked the Minister for Enterprise and Employment if he will consider giving a share in Irish Steel to the workforce in the event of a sale which has been sought by the Mandate [819] trade union; his views on worker participation, including participation through shareholdings; and if he will make a statement on the matter. [88201/95]

12. Mr. M. McDowell asked the Minister for Enterprise and Employment the present position in relation to the future viability of Irish Steel; and if he will make a statement on the matter. [8107/95]

Mr. R. Bruton: I propose to take Questions Nos. 5 and 12 together.

Irish Steel Limited is currently working to a viability plan which it adopted last summer. In accordance with that viability plan the company submitted an application for a £40 million equity injection and £10 million State guaranteed loan. That application was forwarded to the European Commission on 28 February 1995 for approval in the context of the State aid approval procedures under the European Coal and Steel Community Treaty. In line with normal procedure, the Commission has appointed independent consultants to examine the State aid application. I understand that those consultants' examination of the matter is at an advanced stage.

Notwithstanding the £50 million State aid application being considered by the Commission, I have put in train a process designed to enable the sale of shares in and control of Irish Steel Ltd. As I previously indicated to the House, I appointed IBI Corporate Finance Ltd. to advise the Government in this matter and satisfactory progress has been made on the issue to date. However, Deputies will appreciate that, because of the commercially sensitive nature of this process it would be inappropriate for me to make any further more detailed comment in relation to it.

The question of granting a percentage shareholding to the workforce is one of the issues raised with potential investors and they have indicated that they will consider it. IBI Corporate Finance Ltd., [820] will continue to explore this matter with potential investors.

In general the Government is supportive of greater financial participation by workers in their enterprises in circumstances where such participation is appropriate. This year's Finance Bill includes a provision to improve the tax incentive for employee profit-sharing by increasing the tax exemption limit from £2,000 to £10,000 for approved profit-sharing.

The Government commitment to encouraging employee participation in enterprise is also reflected in the establishment of a new unit — the Unit for Partnership in Enterprise — in my Department. The objective of this unit is to assist the social partners in the encouragement of greater involvement of employees in the development of the enterprises in which they work.

Mrs. O'Rourke: The Minister's reply was a repetition of what he had already told us whereas my question referred to the fact that MANDATE, at its Easter conference, called for a Government Commitment, in the arrangements for Irish Steel Limited, to give its employees a share holding in the company. Is the Minister prepared, on behalf of those employees, to follow-up on the call of MANDATE to Government to give them a share in Irish Steel Limited? Has the Minister met the MANDATE trade union on this question or does he intend doing so?

Mr. R. Bruton: This is one of the issues being examined by IBI Corporate Finance Ltd in consultation with those who have expressed an interest. The idea of granting a percentage shareholding to the workforce has been put to them as one of the issues to be discussed and the various parties that have submitted bids are considering it. The IBI Corporate Finance Ltd. will continue to press that proposal. At the end of the day, obviously, we will have to ascertain the different purchasers' reactions. I have met the unions but not in regard to any specific proposal.

[821] Mrs. O'Rourke: I know the Minister has met SIPTU but not MANDATE.

Mr. R. Bruton: No, I have not met MANDATE since they advanced that proposal.

Mrs. O'Rourke: The Minister was to have met others too but neither he nor the Minister of State turned up.

Mr. Rabbitte: I was not invited.

Miss Harney: Will the Minister confirm that the subsidy being proposed by the Government is in the region of £156,000 per job? Will he agree that is not justifiable or sustainable as there are better ways of spending that money? Second, will the Minister say whether the Government will modify the proposal put to the European Commission in relation to the viability of Irish Steel Limited?

Mr. R. Bruton: As I indicated to the House previously, if you divide the £50 million proposed investment in the company by its employee numbers, you reach a figure of the order of £150,000 as representing the investment involved in this viability plan. This is a viability proposal, not a subsidy. There are no proposals to introduce a new plan but, obviously in entering negotiations with potential partners there will be amendments to the original plan and they will be considered by the EU Commission in its examination of the issue. In other words, if we reach agreement with a partner who decides to reduce the number of products or to alter an element of the investment package, we have agreed with European Union officials that such modifications can be made under the plan. The plan will not be withdrawn. but new partners may have new proposals and money for investment. The £50 million proposal is an outer limit connected to the original viability plan: if a partner is brought in, such an amount of money would not be required.

[822] Mrs. O'Rourke: The Minister is like Aristotle Onassis, throwing millions around.

Mr. B. O'Keeffe: As the Minister suggested to IBI that the question of granting a percentage shareholding to the workers should be considered, does he agree that it would be difficult to attract investors? Would it not be more fitting for him to make shareholding and more meaningful participation for the workers a prerequisite for a partner buying into the company?

Mr. R. Bruton: I do not have reason to believe companies will reject the proposal out of hand. Serious consideration is being given to it by some, if not all, of the companies involved. At the end of the day an entire package will have to be assessed and we will have to decide whether the partnership agreement in total secures a future for the workforce in Cobh. I do not intend setting preconditions that might only serve the purpose of making a possibly good partnership more difficult to secure. I will assess this matter in the context of the proposals I receive, but it is not in the interests of the workforce of Cobh or the future of Irish Steel to set preconditions prior to detailed negotiations with partners. This is one of the issues on the table for discussion and it has been raised with potential partners.

Mr. E. O'Keeffe: Since the Minister took up office it is obvious there is no great commitment to the continuity of Irish Steel because when replying to questions he continues to waffle in the same vein. What are the losses per week in the company? What has been the downturn in production since January last? This is not the way to operate a business that is seeking a partner. There is a lack of commitment on the part of the Government and people in Cork know that only Cork Deputies are interested in the continuity of Irish Steel. Will the Minister confirm this is the attitude of the Cabinet?

[823] An Ceann Comhairle: We are having statements rather than questions and new matter is being injected into the debate.

Mr. R. Bruton: The matter of weekly losses is a separate question and is not information I would have with me when replying to a different question. My understanding is contrary to the Deputy's suggestion. There have not been huge downturns in production or great losses since January. The Deputy is misinformed on the position.

Mr. E. O'Keeffe: I am not misinformed.

Mr. B. O'Keeffe: The Minister is speaking in divers tongues.

An Ceann Comhairle: A brief and relevant question, please.

Mr. B. O'Keeffe: On the one hand, he is favourably disposed to granting a percentage shareholding to workers in the company, but on the other hand he stated this would make the position more difficult.

An Ceann Comhairle: I am awaiting a question, Deputy.

Mr. B. O'Keeffe: The Minister does not appear to favour this.

An Ceann Comhairle: I am still awaiting a question.

Mr. B. O'Keeffe: Why will the Minister not make this a condition of any partnership? The Minister appears to hold the view that, if a partner buys into the company to hell with the workers. That is not in the best interests of the company.

An Ceann Comhairle: The Deputy is flouting the rulings of the Chair. Deputy Harney is offering.

Miss Harney: Does the Minister believe the Commission will approve [824] the rescue plan and when does he expect a decision in that regard?

Mr. R. Bruton: I believe the Commission will approve the rescue plan, but obviously, there will be difficulties because members of the Council of Ministers may oppose it. The performance of Irish Steel will be crucial to the negotiations in that it must show it is meeting the targets set out in the viability plan. The convincing argument will be practical achievement of the targets set out in the plan.

The timing of the decision is not clear yet. The Commission's experts will shortly report back to the European Union, but there is agreement to await completion of our consultations with other partners. I expect it will be late summer or early autumn before final decisions are made.