Seanad Éireann - Volume 119 - 26 May, 1988
Adjournment Matter. - Kilkenny Design Workshops.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: On the  motion for the Adjournment I have notice from Senator Philip Hogan that he proposes to raise the following matter:
The need for the Minister for Industry and Commerce to recognise the important contribution that Kilkenny Design Workshop has made to industrial and economic development in Ireland, and ask the Minister to confirm his support for the continuation of the Kilkenny Design Workshop.
Mr. Hogan Mr. Hogan
Mr. Hogan: I want to thank the Minister of State for joining us in the Seanad this evening to listen to what I have to say in relation to this very important motion.
Kilkenny Design Workshops, as the Minister will be aware, were established in 1965 by the Government of Ireland to raise standards of design in industry and increase consumer awareness. At that time there were few designers in the country and the quality of goods was poor. Individual workshops, which included textiles, ceramics, woodware, goldsmithing, graphics and packaging were established in 1965, each with their own designers, technicians and trainees. Those workshops developed designs and prototypes in response to market intelligence and their production was licensed to industry. Kilkenny Design Workshops co-ordinated and assisted the development of all those workshops.
The Kilkenny Design Workshops were charged with primary responsibility for the advancement of good design in industry and among consumers. They were also responsible for advising the Minister for Industry and Commerce in matters relating to design and for conveying the design needs of industry to the relevant education authorities.
The basic objectives of Kilkenny Design could be divided into three parts. First, it assisted manufacturers in auditing their design requirements and in planning their corporate design development. In other words, it gave design advice to manufacturing industry. Second, it was to provide industry with practical design and technical support and services of a high international standard, and to  extend designer training so that a wide base of talent was established in Ireland in design. Third, it was to raise the level of design awareness in Ireland by exhibitions, awards, retailing and other means and thus to increase the demand and acceptance for good product design among traders and consumers.
As a result of the work of Kilkenny Design over the years there has been a considerable improvement in design quality in Irish industry. Independent private design consultancies and retail outlets have sprung up indirectly from the work of Kilkenny Design Workshops. Many small craft industries have mushroomed throughout the south-east region as a direct result of the presence of Kilkenny Design Workshops. While the presence of so many craft industries is attributed to the work of Kilkenny Design Workshops the organisation has undergone reassessment over the past few years and is now performing a very important role in small indigenous and multinational industry, in assisting them to gain more market share by appropriate design and presentation of product. In fact, 26 per cent of this total operation is concentrated on overseas business.
It is absolutely necessary for the Irish economy that Irish industry continues to have the back-up service of KDW to assist it through the difficult and challenging process of adapting to the EC internal market by 1992. This should be under the direct responsibility of the Minister for Industry and Commerce so that Ireland can take full advantage of the many new consumer opportunities that will be available to our country in a wider European market. Certainly, when one considers a recent statement made by the Taoiseach, that he intends to appoint a Minister of State to co-ordinate an information and media campaign to highlight to business the important advantages that will accrue to Irish industry from participating fully in the internal market, it is appropriate that the readymade vehicle for industrial promotion and design through Kilkenny Design Workshops would provide it with an opportunity to adapt itself and to assist  in that process of preparing Irish industry for that ominous year of 1992.
It is not unreasonable at any time that the Government should reassess the role of the State in any area of activity. I would not come here to the House this evening to suggest otherwise. However, I appeal to the Minister to provide reasonable assurance to those small businesses which have been supplying goods to the Kilkenny Design Workshops of their continued ability to have access to the consumers. That assurance is urgently being sought in view of recent, correctly stated media reports to the local provincial paper, The Kilkenny People, that the Government and the board of Kilkenny Design Workshops were seeking to sell off the entire organisation of KDW. We are told that financial difficulties have arisen. The Government should remember that the small suppliers I speak about are in no way responsible for any trading difficulties KDW may be experiencing. I regret to say that the 1986 annual report of KDW was only available from 5 February 1988, which may be a contributory cause of the financial difficulties of KDW and of the fact that it took so long to have these difficulties detected.
Kilkenny Design Workshops took on a new direction under the then Minister for Industry and Commerce, Deputy O'Malley, in 1979 when it was charged, like other semi-State organisations, with becoming more financially independent and self-supporting by diversification into business which would generate a means of finance to assist the financing of the entire organisation. That policy was put in train in 1979 and expanded on in 1986 by the Minister of the day, Deputy Bruton, who gave permission to the board of Kilkenny Design to borrow sufficient capital in order to get into the English market, in a premises based in New Bond Street in London. That was not a satisfactory experience for Kilkenny Design Workshops. History, and the recent past, have shown us that the losses incurred in that operation alone bear substantially on the financial difficulties  the organisation are experiencing today. It was an experiment which cost Kilkenny Design dearly, in so far as the entire organisation has been brought under scrutiny to such an extent that the very future of the organisation has been cast in doubt by the fact that the chief executive has not been reappointed. There is an acting chief executive there at present, but no chief executive was appointed recently.
The statements issued by the local media were not commented on by chairman of the board of directors in Kilkenny Design. This added fuel to the view that the rumours that were circulating about Kilkenny Design had some foundation. The suppliers and creditors of Kilkenny Design Workshops certainly found that the manner in which the news of financial difficulties was conveyed to those individuals left a very great cloud of secrecy and uncertainty in relation to their future employment, or the possibility of ever being paid for the goods they supplied as bona fide small business, for the benefit of the economy and themselves. These goods were displayed by Kilkenny Design Workshops in their shop windows.
I referred earlier to the importance of the craft industry that built up over the years, particularly in the earlier part of Kilkenny Design Workshops development. Many of those people who were taught the design and the presentation of products through the good offices of Kilkenny Design and worked as employees in Kilkenny Design have now set up on their own in many small businesses, providing employment for up to 500 people, because of the direct contribution of Kilkenny Design Workshops. Those people owe an enormous debt of gratitude for the assistance they received through the State organisation at that time. Names like Mosses, Stoneware Jackson, Jerpoint Glass, Hiltze and Cushendale are now internationally known on the export market and are establishing and helping to establish Ireland as a very lucrative market for craft material and craft products to such an extent that we have developed a very  reputable location through our craft fairs each year for products with the internationally recognised names which I have just mentioned.
I appeal to the Minister to remove this evening the cloud of uncertainty that has arisen in relation to Kilkenny Design Workshops. I was glad to be part of a deputation who met the Minister for Industry and Commerce, Deputy Reynolds, last week. We impressed upon him the seriousness with which this situation was being viewed by the local authorities in Kilkenny. It is essential, in the course of any review that will be taking place, that a shop window for the promotion of Irish goods should remain, so that Irish firms can continue to benefit from the display of Irish manufactured goods by Kilkenny Design Workshops.
It is important to note that many overseas buyers have purchased goods directly from Irish manufacturers as a result of this display outlet. The Government should also be aware that Kilkenny Design contributed enormously, directly and indirectly, to the economy of Kilkenny city and county. The very name of the organisation alone has brought considerable stature to the city. The location of the high quality design work makes a very important contribution to tourism. The Minister of State will be very interested to know that Kilkenny Design by their location are a tremendous source of attraction for many visitors from abroad when they visit Kilkenny city. I know the Minister of State will be more than pleased about that. I hope it will continue.
Kilkenny Design Workshops are internationally recognised for high quality. The State cannot afford to throw away the investment it has already made in building up the very name of Kilkenny Design Workshops, which is synonymous with high quality Irish goods. Tourism policy also emphasises the need to redirect State resources away from generalised promotion and towards the support for specific tourist products.
I wish to take this opportunity to appeal to the Minister of State to outline  the decision of the Government regarding the future of Kilkenny Design Workshops, so that the worries of the outstanding creditors and suppliers can be allayed, as well as the worries of the employees, and that their future careers, whether it be in Kilkenny Design Workshops or otherwise, is brought into focus. I appeal to the Minister of State to recognise the value to the economy of high quality, well-presented products and the contribution that Kilkenny Design can make to this process. It is imperative that the State should continue to provide design advice and support services to Irish industry. I am confident that, through the medium of Kilkenny Design Workshops, based in Kilkenny, we can meet that challenge with confidence. I took forward very much to the Minister's reply. I hope he will be able to assist in the information I am seeking by making a very frank and detailed statement in answer to some of my questions.
Minister of State at the Department of Tourism and Transport (Mr. Lyons) Denis Lyons
Minister of State at the Department of Tourism and Transport (Mr. Lyons): I am glad to avail of the opportunity presented by Senator Hogan in his request for an adjournment debate on this matter. I agree that the overall position with regard to Kilkenny Design Workshops needs to be clarified. We are availing of the opportunity to do so now. I thank the Seanad for this opportunity.
The importance of the contribution Kilkenny Design Workshops have made over the past 25 years to the development of good design practice in industry and, through that development, to industry itself is without question. Established by CTT in 1963 to provide a design resource for the improvement of industrial design in Ireland, they were the first industrial design practice set up, even indirectly, by the Government concentrating on craft based industries. At this point I should like to say that I, too, was a craftsman before I entered this profession and hence my interest in the crafts. I am also aware of the importance of Kilkenny Design Workshops from the tourism aspect.
The craft-based industries developed  in non-craft industrial design in the Seventies. In 1974 the direct link with CTT was ended and Kilkenny Design Workshops came under the direct control of the Minister for Industry and Commerce. During the early Seventies Kilkenny had also adopted their craft-based manufacturing activities but, as the growth of other Kilkenny Design Workshops activities continued to demand more space and resources, many of these small manufacturing activities were turned over to private enterprise. By 1980 the transition was complete when Kilkenny Design Workshops design capabilities and work for the non-craft industries became the more dominant. In more recent years the activities of Kilkenny Design Workshops have fallen into four main programmes. Their design services provide both consultancy assistance to business organisations in auditing their design requirements and planning corporate design development, as well as practical design and technical support services, to meet the specific needs of industry through their design development. On-the-job training to recently qualified designers is provided at the Kilkenny workshop. Their design promotion programme is aimed at promoting the concept of good design by way of seminars, exhibitions and awards such as the designer of the year awards.
The KDW retail trading shops at Kilkenny, Dublin and London were conceived to be the show pieces of what is best in Irish design, while operating as commercial units. The current benefits from KDW's efforts in the past years are self-evident. Considerable progress has been achieved in improving the standard of design in Irish indigenous industry. A self-sufficient and independent private sector design industry has been established, owned and staffed in many instances by former employees and trainees of KDW.
In recent times Kilkenny Design Workshops have been making more and more use of their specialist agencies by subcontracting design work out to other people. Consumer awareness of good  design is now much better developed while our crafts and craft-based industries have expanded considerably, with over 700 studio skilled workers producing a diverse range of well designed products for sale at home and abroad.
During the 1970s Kilkenny Design Workshops was largely dependent on State assistance by way of annual grant-in-aid to support its activities, but in the early 1980s the move to achieve full commerciality by the early 1990s began. To facilitate this, Kilkenny Design Workshops were provided with a proper capital structure in 1982. The Kilkenny Design Workshops Act, passed by the Oireachtas in December 1982 set the authorised share capital of the company at £1 million, of which £500,000 was put into the company before the end of that year. The company then achieved surpluses on its overall activities in 1983 and 1984, mainly due to the profits from its retail shops.
In mid-1985 the board of Kilkenny Design Workshops presented a commercialisation programme to the Minister which was agreed at that time. This programme envisaged that in the period 1984-1987 the design practice would be developed and become self-supporting, while growing profits from the design shops would facilitate new product development and the provision of market information to manufacturers. The grant aid would be concentrated on fulfilling Kilkenny Design Workshops primary responsibility for design promotion. In the period 1988-1990 it was envisaged that Kilkenny Design Workshops would move towards total commerciality, when profits on design retail activities would be sufficient to replace the grant-in-aid. In line with that plan, further capital of £262,000 was put into the company by the end of 1985.
For some time past Kilkenny Design Workshops had been considering opening a design shop in London. After detailed research, including a consultancy study which indicated good commercial prospects, the decision of the board of Kilkenny Design Workshops to open the shop at London was taken in  mid-1985. Arrangements were finalised in May 1986 and the shop commenced business in November 1986. In March 1987, a further capital injection of £250,000 was provided for the company. In January 1987 the then Government had approved the phasing out of Exchequer grant-in-aid to Kilkenny Design Workshops over three years, commencing in 1988.
In fixing the Estimates for 1988 the Government decided to implement this in three stages. The allocation for 1988 was fixed at £536,000, a reduction of £178,000 over that allocated for 1987. This decision reflected the realities of the budgetary situation facing the Government and the options available to it. There is simply no justification for the continuing high levels of State support for commercial activities and services which are becoming increasingly available from the private sector at no cost to the State.
It is now clear that the Kilkenny Design Workshops commercialisation plan has failed. In 1986, despite the provision of a grant-in-aid of £740,000 the company had a deficit of £376,000, largely due to losses on retail trading in Ireland. The final deficit in 1987 is expected to have even been larger, this being due primarily to the losses incurred in the London retail operation, an operation which I visited recently when I was in Ireland House.
In response to these setbacks, since 1987 Kilkenny Design Workshops have had to implement staff rationalisation measures, the effect of which has been to reduce staff numbers in Ireland from 124 at the beginning of 1987 to a current level of about 85, of which only 13 are employed in the design services activity. This illustrates the extent to which the resources of Kilkenny Design Workshops have been diverted away from the core design activities to supporting the retail operations.
A more serious outcome of the retail losses in the past two years has been the very serious financial situation that Kilkenny Design Workshops has now reached. It was never the intention that the retail activities of Kilkenny Design  Workshops should be subject to Government subsidy by way of grant-in-aid, nor could such a subsidy be justified. In the light of the serious losses incurred on retail in the past two years and the difficult financial situation that was emerging, the Government asked the board of Kilkenny Design Workshops to prepare rationalisation proposals. These proposals were recently considered by the Government. I would like to take this opportunity to inform the House that Kilkenny Design Workshops will be making arrangements for the sale of its shops in Dublin and Kilkenny as going concerns. The shops will be placed on the market shortly.
I believe that this decision will allay any concerns which suppliers to Kilkenny Design Workshops have had in recent weeks about the future of the shops as outlets for their products. The suppliers in many cases are small producers who are dependent on quality outlets for their goods. The decision to sell the shops follows recommendations in the report by the board to the Government in relation to the position of the company, following its losses in its London shop. The Government have decided that the design function, which was the original core business of Kilkenny Design Workshops, will continue. Suitable arrangements will be made in the course of the restructuring of Kilkenny Design Workshops. The craft centre in Kilkenny city will be retained.
I am sure the Senators will understand from all I have said that the importance of the design function, which Kilkenny Design has performed so well over the years, will not be overlooked or lost. Equally, the special significance of the workshops in the life of Kilkenny city cannot be disregarded. The Government will have particular regard to these aspects in considering the arrangements for the restructuring of the company. Mr. Michael McNulty of Ernst and Whinney, Chartered Accountants, has been appointed as acting chief executive of the company to assist the board in carrying through its rationalisation.
I hope that in the time available to me I have answered the queries posed by  Senator Hogan and that some of the fears expressed by him are taken care of in what I have just said.
Mr. Hogan Mr. Hogan
Mr. Hogan: Could the Minister inform me if the finance owed by Kilkenny Design Workshops to creditors and to people who have been supplying material to them and the liabilities of Kilkenny  Design Workshops will be discharged to those people in due course?
Mr. Lyons Mr. Lyons
Mr. Lyons: At this point I suggest that the question raised by the Senator would be best dealt with by the board of Kilkenny Design Workshops, and Kilkenny Design Workshops themselves.
The Seanad adjourned at 5 p.m. until 1.30 p.m. on Wednesday, 1 June 1988.
Seanad Éireann 119 Adjournment Matter. Kilkenny Design Workshops.