Mr. Brendan McKenna:

Innovation takes many forms. Primarily, there is innovation in the way we run our forests more efficiently, in how we harvest them and in how we identify the value within the forests. There is significant innovation within our manufacturing plants with regard to new products that will meet the environmental and regulatory issues coming down the road. Mr. Gunning and Mr. Egan were before the committee some time ago. They pointed out to the committee where our products end up but that is simply the tip of the iceberg with regard to the type of product that we can produce. However, to get to that stage our Kilkenny plant needs a significant investment. When it was built we were a minority shareholder and then we bought out the majority shareholder some years ago. It was built for one purpose and one product, mass-produced. The cost structures in Ireland and the needs of our markets in Europe no longer require that type of product. It is a commodity product. We cannot compete with the Eastern Europeans at the same level. Therefore, we must shift our focus from commodity-type products to specialty-type products.

We were working in joint ventures with many institutions and organisations in the United Kingdom, which will guide us to the type of product that will deal with the regulatory and environmental issues that are coming down the road.

Within four years we have developed new products that are contributing about €12.5 million. I can give the committee a simple demonstration of what the board has said to the company. In seven years' time we want to double the sales out of the company, but in seven years' time 50% of the company's current products will be obsolete. So, if sales are to increase from €200 million to €400 million, then €300 million will have to come from new products, so the company needs to be primarily focused on that. Otherwise it will be dead in the water and the market will not take its products.