Seanad Éireann - Volume 181 - 29 September, 2005

Company Closures.

[142]   Mr. Kenneally: I thank the Cathaoirleach for allowing me to raise this matter on the Adjournment. I welcome the Minister of State at the Department of Agriculture and Food, Deputy Brendan Smith, to the House. The matter I wish to raise concerns the decision made by Glanbia to close the cheese factory at Kilmeaden in County Waterford. This is a very short-sighted decision on Glanbia’s part. Although time will tell, I believe it will not benefit the company at all. The cheese factory is in a rural area. We are all doing what we can to keep people in rural areas and provide them with employment, yet the factory, which is a rural-based company, is closing down.

The factory has an excellent workforce and the employees work on a seasonal basis, for six or seven months per year. They have acquired considerable expertise over many years. The milk coming in from local farmers is of the highest quality. To a certain extent, this market will be lost.

By and large, most organisations do what their members want them to do. Unfortunately that is not the case in respect of the Kilmeaden plant. On 17 May, the annual general meeting of the Glanbia co-operative society was held and a motion of no confidence in the board of directors was tabled and carried. In most organisations the board would get the message in such circumstances. I believe a similar motion was carried in Dairygold and the board resigned. However, the directors in the case in question have decided to hang on. They have their own agenda and are not doing what their members want them to do.

The 23 million gallons of milk which have been going to the factory in Kilmeaden for many years will be transported by road to Ballyragget in County Kilkenny, a distance of approximately 50 miles over some of the worst roads in Ireland. The journey will take the tankers through both Kilkenny and Waterford cities and the road between Waterford and Kilkenny is the worst stretch of national primary road in the country. This long journey will have an effect on the milk and will also have long-term effects for farmers who are not currently charged for the collection of their milk and its delivery to the local creamery. They will not be charged for their milk to be taken to Ballyragget but I question how long this will be the case. It would seem inevitable that bigger tankers will be required and these may be forced to travel outside working hours and collect milk at unsociable hours.

[143] The reasons for the sale seem to be the existence of a large debt and the value of the site. The cheese factory is on a large site and I suggest the cheese factory be retained while the land could be sold.

The cheese manufactured in Kilmeaden is a unique product which has won many awards, including awards at the Norwich international show, the Royal Bath and West County show, Ireland International cheese awards, the Royal Dublin Society Spring Show, British cheese awards, London international cheese and dairy competition and a gold and bronze medal at the world cheese awards.

We are in danger of losing this unique product. Milk varies according to the quality of the grass. This cheese cannot be produced to the same standard at another location. Milk is churned about when it is being transported long distances and its quality will suffer. I fear the new plant will not be properly regulated and not have adequate quality control for the large volume of milk. Kilmeaden has up-to-date laboratory facilities and expertise.

The management has stated that a saving of €2 million will accrue from this measure but it also states that the costs for transporting the milk to Ballyragget will be an extra €1.6 million, meaning this decision will result in a saving of €400,000. It is sacrificing a world-renowned brand for the sake of €400,000. I contend the company will be unable to reproduce this product with a resultant drop in sales and profits.

Transport costs will be greater than has been estimated by the company. The tankers are currently undertaking four daily runs. It will take approximately two hours to travel each way to north Kilkenny and allowance must be made for the tankers to be cleaned, giving a total of five or six hours. The tanker drivers will be required to use a tachograph and will not be permitted to drive beyond a certain length of time. This will be an additional cost. The company believes it can do the job with an extra four tankers on the road but I contend this is not possible. The costs to the company will be greater than any savings and it is jeopardising a world-renowned brand because of a short-sighted attitude to debt reduction. I suggest it could reduce the debt by selling part of the landbank at Kilmeaden. I ask the company to reconsider the decision to close the cheese factory.

  Mr. B. Smith: I thank Senator Kenneally for raising this matter. I note he has taken every opportunity available to him to address this issue and to highlight the concerns of the local community. It is clear from the Senator’s [144] contribution that he knows this subject exceptionally well.

On 5 September 2005 the board of Glanbia plc announced that its Kilmeaden cheese plant would close with the loss of 45 jobs, of which 41 were seasonal jobs. I understand that most of the workers generally worked for four or five months of each year. Glanbia intends to produce the Kilmeaden cheddar output at its larger Ballyragget facility and also at Dairygold’s Mitchelstown site, where it has a milk processing agreement in place. I am assured that Glanbia will continue to evaluate alternative production options for the Kilmeaden site. While this is a commercial decision made by Glanbia our thoughts are foremost with those who will lose their jobs as a result of the decision.

The Kilmeaden brand will, however, continue to be made by Glanbia with the Kilmeaden cheese-making expertise and grading being retained and the award winning cheese-makers will use the same recipe as heretofore. Local farmers will continue to supply the same volume of milk in the same way with no additional cost or inconvenience.

The Irish food industry operates in a very dynamic and challenging global environment. If a company is to grow and thrive it must anticipate and react to the needs of its customers and consumers. Against this background it should be remembered that Glanbia, which is an international food company based primarily in Ireland with a turnover in 2004 in excess of €1.8 billion employing nearly 4,000 staff worldwide, is one of the world’s top five cheesemakers. It is also the top dairy processor in Ireland accounting for over 1.3 billion litres of milk, which represents over 25% of the total allocated milk pool in the country.

The closure of the Kilmeaden cheese factory is due primarily to increasing cost pressures and the need for greater capacity utilisation within Glanbia’s cheddar cheese manufacturing process. Glanbia continues to make considerable investments in research, development and innovation. In February it announced a €15 million investment in an innovation centre in Kilkenny to focus on developing products with a health based functional foods and nutritional emphasis. The centre will develop a range of nutritional solutions and functional ingredients and Glanbia is to be commended on taking the lead in investing in this high value added research facility. Innovation is at the heart of Glanbia’s growth strategy and such an approach is very much in keeping with the Government’s strategy for the development of the dairy industry.

In the challenging marketplace we must continue to build on Ireland’s reputation as a quality food island and selectively market our products [145] in the most appropriate locations. Consumers are demanding new products, new tastes, a focus on health and well being and convenience and all without compromising on quality or cost. The industry needs to match product mix with emerging market and consumer demands and Glanbia has been to the forefront in doing this, especially with regard to the development of new products.

I am happy to report that the interagency group, set up under the chairmanship of the Waterford county manager, in response to the announcement of job losses in Waterford Crystal, has undertaken to include the workers at Kilmeaden in its deliberations. The workers from Kilmeaden will be offered supports and guidance for their future. In addition, Waterford County Enterprise Board will provide training and mentoring to any Kilmeaden workers interested in setting up their own business.

The Government’s strategy for Waterford is to promote the development of Waterford city as a gateway location with which to attract industry to the city and county. The industrial development agencies, including the Waterford County Enterprise Board, will be making every effort to secure alternative employment for the area. The county development board is also involved in overseeing and co-ordinating the industrial needs of the area.

There has been success in attracting new knowledge-based industries with the locating in Waterford of Sun Life Corporation, AOL and Genzyme and there is a strong indigenous presence with companies such as Dawn Meats and Radley Engineering.

In addition, on 22 August last, my Government colleague, the Minister for Enterprise, Trade and Employment, Deputy Martin, announced that the US financial services company Bisys Hedge Fund Services was establishing a new operation in IDA Ireland’s Business and Technology Park in Waterford and this will create 250 new jobs over five years.

As part of its support for start-up companies, Enterprise Ireland has provided €2.54 million for the construction of an incubation centre at the Waterford Institute of Technology and, in addition, Enterprise Ireland has approved €155,000 towards the management of the centre. The centre has now been completed, and it is expected that the first tenants will take up residence by the end of the year. Enterprise Ireland has also provided funding for the development of a number of community enterprise centres in Waterford. The aim of these centres is to promote the development of commercial enterprises in local areas.

I am satisfied that the combined efforts of the industrial development agencies and the interagency group will promote and drive positive [146] future employment opportunities in Waterford. I reiterate my thanks to Senator Kenneally for this opportunity to address this important issue.

  Mr. Kenneally: I thank the Minister of State for coming to the House to reply the matter I raised. I ask Glanbia to reconsider its decision, as it will not be ranked among the top five cheesemakers worldwide if it proceeds with it.