Dáil Éireann - Volume 464 - 24 April, 1996
Irish Steel Limited Bill, 1996 (Seanad): Second Stage (resumed).
Question again proposed: “That the Bill be now read a Second Time”.
Mr. M. Ahern Mr. M. Ahern
Mr. M. Ahern: When I last spoke to the Bill, I wanted to set the record straight, particularly for the people in my constituency, in regard to the misinformation and misleading reporting in the local paper by a reporter who has since left the staff of that paper and attempted to gain a place on the Labour ticket in North Tipperary. That puts into perspective his “balanced” reporting.
In September 1994, it was claimed that the Tánaiste, Deputy Spring, and the Minister for Finance, Deputy Quinn, were responsible for keeping Irish Steel open. I have no doubt they worked extremely hard to ensure Irish Steel did not close but I am aware also that they caused a great deal of concern  and dissension among the workforce because of their attitude towards the redundancy payments and the timing of same. If they had been the people ultimately responsible for the decision on the payment of those redundancies, the workforce in Irish Steel would have voted against the package. Deputy Bertie Ahern, the Leader of our party, entered the fray and decided that the redundancy payments were to be made within a reasonable time. His word was welcomed and accepted by the members of the unions when I gave them the news. That decision by Deputy Ahern paved the way for acceptance of the package. Since then there has been a culture shock for many people in the Irish Steel area as they realise that if they had not changed many of the work practices which had been in operation for many years future prospects were nil. Many of the workers say it is different now but they realise there was a need for change in work practices to meet the changed world economy, especially in the steel business.
The management and staff work well together. I hope they will continue to do so and that when the final deal is signed and Irish Steel is taken over by ISPAT new markets will be found in niche areas because the commodity market is overloaded. When we consider the cost of production in eastern Europe, in the Far East and so on, it is clear that any western European country will have great difficulty in fighting in the commodity market. My hope for the future is that there will be a place for Irish Steel in view of the amounts of money that have been put into that industry during the past 20 or 30 years.
I wish to raise two points that are a cause of concern in the area, one of which we are all familiar with. Everybody from the Minister and the civil servants to the public representatives in the constituency are aware of queries regarding the re-adaptation aid. I am aware of the negotiations that have been taken place over a protracted period. The people who are waiting are getting more concerned day by day that  they will not receive the re-adaptation aid. Perhaps the Minister will give an indication of what is happening and if it will be paid in the near future.
The final paragraph of a letter I received from the Minister dated 14 June 1995, in reply to my letter to him related to the Cobh and harbour area response group task force which was set up with a view to off setting the economic and employment effects of the restructuring of Irish Steel. It stated: “I have recently received the recommendation of the task force and I will be examining these recommendations in the near future”. I will be most interested to hear the findings of the task force. Will the Minister be in a position to publish these recommendations in the near future? As I said the last day, the one disappointment I had with the task force, which was supposed to cover the Cobh and harbour area response group — I had no objection to the people who were appointed — was that not one person was appointed from the Cobh area and the east Cork section of the harbour which spreads from Cork city to Roches Point and takes in Midleton, Whitegate and Aghada, except an RTE reporter from Cork. However, there were no business people from the whole east Cork area. Has the task force report been shelved and, if so, will the Minister tell us and let us get on with it rather than keeping us in suspense by saying he is reviewing the matter?
I am pleased Irish Steel has not been closed and, because of the restructuring and the deal with ISPAT, I hope it will continue for many years.
Kathleen Lynch Kathleen Lynch
Kathleen Lynch: I listened with interest to Deputy Michael Ahern's contribution, despite the fact that there has been almost a two week gap in the debate. Having lived through the uncertainty of Irish Steel — before I was elected to this House — and the successful conclusion of the deal — after being elected — it is incredible that during his contribution he found it impossible to say a good deal was done. To hear somebody cast further doubts on a good  deal which is now almost 12 months old will cause further worry and fears for the people in Cobh and Irish Steel. They should not have to endure those unnecessary fears because they had an incredibly bad time while arriving at the solution. I assure them as I am sure Deputies from Cork city and county wish to assure them, that all the negotiations and co-operation were not in vain. We are now merely discussing the finality of putting in place the deal which was arrived at in relation to ISPAT. When people speak in the House they forget that those directly concerned are listening and will worry if they hear any note of caution.
It was a good deal and was arrived at with the co-operation of the workforce. The management package was the result of enormous effort by Government Departments, Pat Dineen and the unions involved. At the end of the day they came to an agreement which was turned down by the UK Government and had again to be fought for. The announcement last year and the deal concluded with ISPAT marked the beginning of a new era for Irish Steel and the region. Deputies from Cork city will rightly say that many people will benefit apart from those working in Irish Steel and in the Cobh area. Representations came from all areas and the unions were extremely concerned. This was the first sign of modern thinking I had witnessed in relation to co-operation in how to solve an industrial problem which was outside our control. It was done very efficiently.
The uncertainty which has hung over the future of Irish Steel since the early 1980s has had an adverse effect on the economic confidence and activity not only in Cobh but in the region. From time to time the anxiety lessened and Cobh came on in leaps and bounds. It had its heritage centre and environmental schemes. Everyone admits Cobh is a beautiful, thriving town. The Cork area has had to contend with multiple job losses in the past decade. However, with the welcome development of 200 dockside jobs, this Government is having  some success in reversing the trend. Cobh has always had a thriving harbour industry as well as Irish Steel, the loss of which would have been the final straw for the area.
ISPAT, with a reputation that is second to none, will be able to make Irish Steel a viable industry. It will harness the commitment of the workers which is no longer in doubt and find a niche market for its products. There are already indications that the company is heading into a new era. Great credit is due to this Government, in particular to the Minister, Deputy Bruton, and the Minister of State, Deputy Rabbitte, who with their officials worked tirelessly not only to secure the ISPAT deal but also to secure UK agreement for the aid package.
The decline in employment in Irish Steel from 1,000 two decades ago mirrors a similar decline in other European plants. It was obvious for some time that cost reductions and restructuring measures would have to be implemented if the company's long-term future were to be guaranteed. It was also obvious to Democratic Left that the price for this would have to be a guarantee for the future of the workforce who bent over backwards to put together this deal. This was the first time I witnessed successful modern union/management co-operation. Other industries should learn from this.
Democratic Left is not prepared to accept a US style down-sizing ethos which views workers as expendable and merely incidental to the business of making money. The Government has overseen the transfer to Irish Steel from State to private ownership in a manner that will ensure the protection of the workforce. The ISPAT deal heralds a new era of constructive partnership between the semi-State sector and overseas companies which have the ethos and track record to make a significant contribution to Irish industrial development. We should not be fearful of this. We did not know a great deal about  ISPAT before it became involved in the Irish steel industry but we now know that companies with good international records are prepared to work as efficiently here as in their own countries.
In seeking to secure agreement for the aid package that would guarantee the future of Irish Steel, the Government had to overcome persistent objections from the UK, which put forward the strongest, most persistent and arrogant objection I have ever witnessed from one EU country opposing a package in another. The restrictions on production and export imposed by the EU are due mainly to UK fears that a rejuvenated Irish Steel might pose a threat to British Steel. That marks the respect with which ISPAT is held in the steel industry. British Steel and the UK Government are well aware of ISPAT's reputation and know it can and will make Irish Steel a viable industry. This was a peculiar decision of the Tories who continually promote free competition, deregulation and non-interference in the market. They sought to impose conditions designed to render Irish Steel uncompetitive, but I have no doubt the company will overcome those restrictions and carve out a distinctive and profitable niche for itself in European and world markets, where ISPAT has a good track record and the right connections.
We should not lose sight of the fact that the problems encountered by Irish Steel in recent years are part of a wider difficulty confronting the European steel industry in general. Democratic Left has long argued for the formulation of a common European industrial policy which would control State aids to the richer central regions of the European Union. This has been the case for the agriculture industry since the end of the Second World War and, despite what we would like to believe, agriculture is a minority industry. Many jobs are under threat because of the current difficulties in the agricultural industry and the entire EU thinking process is concentrated on solving those problems and  bailing farmers out of their present difficulties. Solutions will be found. However, there is not a similar level of concentration in the EU on creating, supporting and protecting jobs in the industrial sector. We should readjust our thinking and concentrate on areas in which jobs can be created. We should adopt policies that provide equal protection, support and resources for the agricultural and industrial sectors. This is a rational and logical argument, not an urban versus rural one.
How do we propose to solve the major unemployment problem of, for example, Cork North-Central? There is an 80 per cent unemployment rate in six areas in the country and, apart from some Government measures, the EU does not have a centralised plan to deal with such problems. However, it can plough vast amounts of money into other areas. How can I explain to the unemployed, low waged or those earning a reasonably good wage in Cork North-Central that on average they pay £20 per week to support farmers? Agriculture is a minority industry, and argument regularly made by the IFA who continually inform us about the number of people leaving the land. Why have we not listened? Why is the agricultural sector still getting more attention and funding than other sectors?
Despite the fact that it no longer employs 1,000 people, Irish Steel is vital to the Cork region and the deal that has been secured will guarantee jobs for the workers. The collapse of Irish Steel would have wreaked havoc on the lives of many families. Now that we have a problem in the beef industry, which is not of the PAYE workers' making but which they need to be concerned about because it involves a consumer product, there is total co-operation within the EU. In regard to Irish Steel, further barriers were put up. Why is there never such co-operation when it comes to industrial policy and the industrial sector? Why do politicians not realise that the major sector in this country is the sector seeking to provide employment in industry? When are we going to put  the type of thinking, resources and concentrated effort into the industrial sector that is now being put into agriculture? We will have it when the industrial sector gets its act together and starts employing people to make its arguments in the same way as farmers do.
The development of a common industrial policy is vital to regional development and to ensuring that jobs are created and maintained on the periphery rather than concentrated in the centre. We should not lose sight of the fact that the European Union has its origins in the formation of the European Coal and Steel Community after World War II. Nearly half a century ago the founding fathers of modern Europe recognised the centrality of coal and steel in securing the Continent's economic development. That has not greatly changed. Our problem is that we are on the periphery and it is necessary to discriminate in favour of peripheral countries like Ireland who need extra help and who are at present being represented by groups in Europe who keep telling the commissioners and the parliament that our major industry is agriculture. It is not. Urban unemployment is the problem. It is a problem of neglect, of deliberate inaction, and we need to start talking about that.
Competition and intervention are not mutually exclusive. The challenge facing us is to develop a common policy which will ensure that location is not a bar to competition and which enables all industries to compete on a level playing pitch. That is not what happened regarding Irish Steel. Irish Steel, from now on, will not be playing on a level pitch. It will be playing with a handicap imposed by the EU at the behest of Britain. We only just got that deal through. Were it not for two of the more capable Ministers in this House we probably would not have done so. It appeared, from time to time, that there were people who, because they were on the Opposition Benches, would have preferred Irish Steel to close rather than save jobs.
Mr. E. O'Keeffe Mr. E. O'Keeffe
 Mr. E. O'Keeffe: I object to that remark. It was uncalled for and irresponsible.
Kathleen Lynch Kathleen Lynch
Kathleen Lynch: The deal that was done for Irish Steel was of benefit to the workers, to the management and to the region. It is a deal that will secure their future inasmuch as anything can be secured today. It is the best deal that could have been done, and it was done quietly, with great force, with great passion and with a dedication that I have seldom seen in relation to the Cork region. It is hoped that that kind of dedication and concern in relation to the Cork region will continue because we need to have commitment to a region that has been much neglected over the past few years. For whatever reason, when companies were closing there was no urgency to save them and secure jobs. Sometimes there was just a headline in the paper. What we should be looking at is the misery of people's lives. No effort should be spared to ensure that jobs are protected. This was a good deal. It would have been better had we not had restrictions imposed. Nevertheless, it was the best in the circumstances. I wish Irish Steel, ISPAT and the people of the Cork region the best of luck in the future. I am sure that with our support they will do extremely well.
Minister of State at the Department of Enterprise and Employment (Mr. Rabbitte) Minister of State at the Department of Enterprise and Employment (Mr. Rabbitte)
Minister of State at the Department of Enterprise and Employment (Mr. Rabbitte): I thank Deputies from all sides of the House for their contributions to the Second Stage debate on the Irish Steel Limited Bill, 1996. The Government's plan to sell off the shares of Irish Steel Limited to ISPAT has the support of all parties in the House, which is an indication of the good will towards the Irish Steel and its future development under the control of ISPAT. During the Second Stage debate on 3 April and again today a number of Deputies raised some important points which I would like to respond to.
 Deputy Ned O'Keeffe referred to the explanatory and financial memorandum accompanying the Bill which states that the shares of Irish Steel Limited will be sold to ISPAT Mexicana. Deputy O'Keeffe has been under the impression, from previous statements and publicity, that Irish Steel shares would be sold to ISPAT International. An explanation of the relationship between ISPAT International and ISPAT Mexicana is therefore called for and should allay any fears the Deputy might have on this point.
Following a restructuring of the ISPAT Group in recent years, ISPAT International was formed to represent the non-Indian ISPAT companies under the direction of Mr. Lakshmi Mittal. ISPAT International is owned and controlled by Mr. Mittal who runs it from Jakarta in Indonesia with a 30-strong head office team with a strong financial control mandate. There are five major companies within ISPAT International — ISPAT Mexicana of Mexico, PT ISPAT Indo of Indonesia, Sidbec Dosco (ISPAT) Limited of Canada, Caribbean ISPAT of Trinidad and Hamburger Stahlwerke of Germany. ISPAT International co-ordinates and integrates the activities of all the units in steel making, research and development, human resource development, centralised purchasing, global marketing, integrated finance etc. ISPAT Mexicana is the largest company within ISPAT International in terms of assets and turnover. In 1995 the assets of ISPAT Mexicana represented approximately 70 per cent of all the assets of the ISPAT International Group and its turnover in 1995 represented approximately 30 per cent of the turnover of the group. In the light of the above information, Deputy O'Keeffe will appreciate that ISPAT Mexicana was the appreciate vehicle for the purchase of the Irish Steel shares and I can confirm that it was Mr. Mittal who signed the agreement for the sale of all the Irish Steel shares on 6 September last on behalf of ISPAT Mexicana.
 Deputy Ned O'Keeffe also referred to the fact that the guarantees by ISPAT in relation to employment and production relate to a five year period only and wondered what will happen thereafter. As the Minister for Enterprise and Employment made clear in his Second Stage speech on 3 April, the future of the Irish Steel/ISPAT project should be bright but future success cannot be taken for granted and will have to be worked for. The international steel industry is extremely competitive and the Irish Steel/ISPAT project will have to compete vigorously in that environment. There will be difficult years ahead mainly because of the cyclical nature of the steel industry, to which Deputy Ned O'Keeffe referred at some length in his contribution. However, if all the elements of Irish Steel pull together towards established objectives, the probability of success will be increased. It will be up to the ISPAT organisation, the new management of Irish Steel, the workforce of the company and the unions to ensure that Irish Steel continues to play an important part in the economy of the local Cork area. It follows that, in future, Irish Steel will have to survive by itself and develop outside the State sector.
The position concerning the penalty clause is that, under the contract signed on 6 September last, which will be the subject of a supplemental agreement to be signed on or about 30 April — mainly to take account of the restrictions on production and sales necessary to overcome United Kingdom objections at European level — ISPAT will give a contractual commitment to employ a minimum of 300 full-time workers in Irish Steel for the first five years of its ownership of the company. The contractual commitment with ISPAT also provides that it will pay the State specified liquidated damages in the event of the number of full-time workers falling below 300. The original figure was 331 but, because of the restrictions imposed on the Irish Steel/ISPAT project to overcome  United Kingdom objections, that figure had to be revised downward.
In both Houses the Minister for Enterprise and Employment stated that of the five parties identified as being interested in purchasing Irish Steel, all save one were interested in purchasing 100 per cent of the shares only. All the options in relation to the sale of the shares of Irish Steel Limited to private concern were considered by my Department, the Department of Finance, IBI Corporate Finance Ltd., as the State advisers and by the Cabinet subcommittee formed to oversee the sale process. All recommended that negotiations be opened with ISPAT for the purchase of all Irish Steel shares.
When the sale of the Irish Steel shares to ISPAT is finalised, the new company will operate as a commercial entity. Its activities will not be monitored by my Department except as provided for in the agreement, for example, details of permanent employment at the plant for the five year period to which I referred will be obtained in the context of the penalty clause; details concerning the implementation of the investment programme by ISPAT of £20 million over a six year period will be monitored and, as long as the Government guarantees in relation to loans provided to Irish Steel by ACC Bank plc and the European Coal and Steel Community remains in place, the Irish Steel/ISPAT project will be obliged to submit detailed financial accounts to my Department.
Deputy Ned O'Keeffe also referred to the Minister's reply to a parliamentary question on 25 January 1996 when he mentioned a potential further Exchequer cash contribution of £2.445 million in respect of possible residual costs and financial claims arising from the activities of Irish Steel in the past. I confirm that the matter was discussed by the State negotiators with Irish Steel/ISPAT when it was agreed to provide Irish Steel/ISPAT with an up-front cash payment in lieu of indemnities in respect of possible residual taxation and other costs and financial claims arising  from the past. The Minister gave this information to both Houses in the debates on the Irish Steel Limited Bill and the amount of £2.445 million is incorporated in the State's contribution of £20,273,500. The amount of £2.360 million provided in the latter figure for the funding of necessary environmental and other remedial work by Irish Steel/ISPAT relates to the installation of a metal recovery plant in connection with the management of the tiphead, to the construction of a retaining wall for the tiphead, to the treatment of sewage and scale water discharge and other remedial matters for the protection of the environment.
Deputies Mulvihill and Michael Ahern raised the issue of re-adaptation aid from the EU Commission for certain workers of Irish Steel made redundant in 1994-95. As the Minister for Enterprise and Employment mentioned in the House on 27 February and 26 March last, his Department received a communication from the European Union Commission in Brussels confirming that the Commission had approved grant aid — under Article 56 (2) (b) of the ECSC Treaty — amounting to ecu 376,806 for 194 workers made redundant in 1994-95. A number of aspects of the Commission's decision, and the conditions attached thereto, have to be clarified by my Department before any payment can be made by the European Union Commission. My Department has been in touch with the Commission but it will be some months before all such matters are clarified.
Deputies Mulvihill, Bradford and Michael Ahern also raised the matter of the publication of the Cobh and Harbour Area Response Group. As the Minister mentioned to the House on 28 February last, he has received its report and recommendations. As not all its recommendations could be implemented solely by the Department of Enterprise and Employment, it was necessary to consult the Ministers for Finance, the Environment, Defence, the Marine and Transport, Energy and  Communications on their possible implementation. In recent months progress has been made in establishing the position of various Departments on the recommendations of that response group on which the Minister for Enterprise and Employment expects to make an announcement early next month.
I hope Deputy Lynch will forgive me if I do not now follow her down the road of a major discussion on industrial policy. The objective is to conclude discussion on this Bill. I want to thank especially Deputies Ned O'Keeffe and Quill and their parties for their co-operation in facilitating its passage today.
Question put and agreed to.
An Ceann Comhairle Seán Treacy
An Ceann Comhairle: I understand there is agreement to take all Stages today. Therefore, with the approval of the House, I will proceed to deal with Committee Stage.
Mr. E. O'Keeffe Mr. E. O'Keeffe
Mr. E. O'Keeffe: Deputy Lynch implied that this side of the House were engaging in obstructive or delaying tactics on this Bill. I want to quote from a speech made in the House by my——
An Ceann Comhairle Seán Treacy
An Ceann Comhairle: Perhaps the Deputy will get an opportunity on Committee or Report Stage but it would seem to be inappropriate now.
Mr. E. O'Keeffe Mr. E. O'Keeffe
Mr. E. O'Keeffe: Her remarks concern me because at all times this side of the House were really concerned about Irish Steel and wanted this Bill passed as expeditiously as possible.
An Ceann Comhairle Seán Treacy
An Ceann Comhairle: I am now proceeding to deal with Committee Stage.
Dáil Éireann 464 Irish Steel Limited Bill, 1996 (Seanad): Second Stage (resumed).