Oireachtas Joint and Select Committees
Thursday, 27 September 2012
Joint Oireachtas Committee on Transport and Communications
New Ross Port Company: Discussion with Chairman Designate
The purpose of this part of the meeting is to discuss with Mr. Ray Lawlor, chairman designate of New Ross Port Company, the approach he will take in his new role and his views on the challenges facing the company. Members will be aware of the Government's decision of May 2011 that put new arrangements in place for the appointment of persons to State boards and bodies. The joint committee welcomes the opportunity to meet the chairman designate to hear his views. We trust this will provide greater transparency in the process of making appointments to State boards and bodies.
I draw to Mr. Lawlor's attention the fact that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a person, persons or an entity by name or in such a way as to make him, her or it identifiable. I also advise Mr. Lawlor that the opening statements he has submitted to the committee will be published on its website after the meeting. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I invite Mr. Lawlor to make his opening statement.
Mr. Ray Lawlor:
I thank members for giving me the opportunity to address the joint committee on where I envisage New Ross Port Company progressing in the next three to five years. I was born and raised in New Ross. After a number of years working in Dublin and a spell abroad, I returned to New Ross in 1986 and have been in business there ever since. Throughout my business career, I have been involved in the local business community. I have been a committee member of New Ross Traders Association and was chairperson for two years, from 2002 to 2004. As a member of the board of directors of New Ross Chamber of Commerce, I was involved at all levels of chamber activity. This included chamber of commerce policy, local and national promotions, retail and tourism marketing and lobbying. I am a board of management member of St. Canice’s national school and a director of New Ross Credit Union. I have served previously on the board of New Ross Port Company from 1997 to 2002 and from 2004 to 2009, when I was also a member of New Ross Town Council. During this time, I was highly involved at board level and committees of which I was a member ranged from the board audit committee to the pension review committee and the company interview panel. Because of my experience on the audit committee, I can review and appraise financial statements, I understand accounting procedures and controls and know how to measure operating performance and liquidity.
I am honoured to be asked to chair the board of New Ross Port Company and, if approved, look forward to meeting the other board members and working with them. I will ensure a high standard of corporate governance and board reporting and that existing practices comply with governance best practices. I will provide leadership for the board. The core objective of national ports and shipping policy is to facilitate a competitive and effective market for maritime transport services. In the current economic downturn this objective is more important than ever. However, the same economic downturn means that achieving this objective is now more difficult than ever. New Ross Port is unique, as it is tidal and 14 miles inland. It straddles two counties and three local authority areas, namely, those of Wexford County Council, Kilkenny County Council and New Ross Town Council. The majority of the jetties in the port are in private ownership.
All ports have been affected by the recession and tonnage, throughput, margins and revenues have suffered. New Ross Port is no exception and, in fact, owing to the loss of liquid fuel imports from the customer base, the decrease in turnover is much more stark than the national average. The incoming board of New Ross Port Company face challenges on a number of fronts. The need to increase throughput and revenues will be highest on the agenda. As a small port with low tonnage, the loss of one major customer has a hugely detrimental effect but, consequently, any new business has a large beneficial effect on revenues and cash flow. It will be the highest priority to look for new business. It also will be necessary to look at other areas where revenue can be generated for the company. New Ross Port has always supported marine tourism initiatives but has not been involved in generating income from this source. This is an area the board should examine further.
I look forward to publication of the port policy review and working with the board on its implications for New Ross Port. The corporate structures and reporting requirements for a small port such as New Ross may come in for mention and there may be changes. I will work with the board and staff to ensure New Ross Port Company meets all of its governance requirements. In spite of the challenges facing New Ross Port, I am confident about its future. While there certainly will be changes, the board and I will make sure these changes improve New Ross Port.
I look forward to hearing the views and comments of members and thank them again for giving me this opportunity.
I thank Mr. Lawlor for his opening statement and will throw open the floor to members to ask whatever questions they wish. As they get their thoughts together, Mr. Lawlor should indicate whether he sees a future for smaller ports such as New Ross. I note Rosslare is not too distant from it. While I acknowledge he awaits publication of a report, what level of activity does Mr. Lawlor envisage in the future?
Mr. Ray Lawlor:
The downturn in New Ross has been particularly exacerbated by the complete cessation of liquid fuel imports. However, before liquid fuel imports arrived at New Ross Port, there always had been a good trade in dry bulk cargo of various types, ranging from fertiliser to animal feed. Moreover, the port has always had an ability to adapt and seek niche imports or exports. While I have not been on the board since 2009, during my previous time on it, we were doing everything from scrap metal to the timber poles the ESB is replacing nationwide. Consequently, while it will be difficult and the challenge facing the incoming board is stark, it is the job of the board to seek out that type of business. I do not believe the point will ever be reached at which there will not be a port in New Ross.
Mr. Ray Lawlor:
Not necessarily. The shipping sector is a movable feast. When the Chairman refers to taking business from other ports, I note the zinc exports that arrived at New Ross during my first stint on the board were as a result of the mining activity at Galmoy. New Ross was the obvious port from which to export them. It was not that the exports were being taken from anywhere else but that the port company worked with the stevedores, the owners of the private jetties and the Galmoy mining company with a view to getting that kind of business. Both the stevedores and the chief executive and incoming board can work towards getting that kind of business to sustain the port.
I thank Mr. Lawlor for his presentation and have a couple of questions. What are his views on the potential selling off of New Ross Port which is State-owned? Does he agree with selling it off? On reviewing the figures supplied, I acknowledge huge profits are not made, but does Mr. Lawlor think doing so would be detrimental to the port? Does he think that were it to enter private hands, it would deteriorate further?
One challenge concerns the expansion of the tourism industry. Does Mr. Lawlor consider there to be room for further growth in this area in drawing in more tourists, greater numbers of leisure boats and so on? Does he see merit in the plans to merge the different ports, as recommended, as far as I recall in the McCarthy report? I ask him to elaborate on these points.
Mr. Ray Lawlor:
I thank the Deputy. The first issue he has raised pertains to the possible sale of the port. While I was not on the board when the McCarthy report was published, I was aware the possible sale of ports was mentioned therein. I note that during my first stint as a director of the port from 1997, this issue was also raised in a port review document. I believe the forthcoming port policy review will revert to addressing this issue again. As to whether a sale would affect throughput or the port itself, as someone who has been involved in business, if it was Government policy to sell off a State asset, I cannot envisage that whosoever would seek to buy it would so do without a view towards increasing business.
It is dependent on the Government’s policy and the incoming board will have to wait for the policy review to see the implications for New Ross Port.
New Ross Port Company has always been supportive of marine-leisure tourism initiatives in its catchment area on the Barrow and on the estuary. There is a galley cruising restaurant in New Ross, the only one in the country. New Ross also has the Dunbrody famine ship which expanded earlier this year and its visitor numbers are up. Both of these facilities, as well as the marina owned by the local authority, are supported in all ways by the port company. To my knowledge, the port company has not, to date, been involved in generating any income from these supports. In the current difficult economic circumstances, the port company is not in a position to support an initiative unless there is a possibility of generating income.
Regarding the merger of ports, in the original ports policy in 2005 mergers were seen as a possibility. The New Ross Port Company examined it at the time but it was not seen as a viable option. I would have to wait for the forthcoming review to see if anything has changed in the interim. In certain instances, port mergers have worked very well.
I thank Mr. Lawlor for his presentation to the committee. I have to admit I am not very familiar with New Ross Port. However, I understand the port company board may have to make some difficult decisions about the future of the port, whether it is privatised or merged. Is Mr. Lawlor confident he would be able to bring the board with him in the event of such moves? Does the port have any capital requirements to continue being viable? Mr. Lawlor pointed out that, as the port is 14 miles inland, dredging and capital works to quays are necessary. From where are the funds for these works coming, considering capital funding nationally is scarce? Mr. Lawlor stated the decrease in liquid fuel imports has had a detrimental effect on New Ross Port. Shipping will come to a port if it is competitive and its cost base is low. Is Mr. Lawlor confident that the port company, the shipping agents and the stevedores will ensure the port will remain competitive and attract business? In that respect, does Mr. Lawlor seeing the port forming a strategic alliance with Rosslare or even Dublin or Cork Ports?
Mr. Ray Lawlor:
I believe I have the capability to bring the board with me on decisions concerning the sale of or the merger of the port. In my time involved in various business organisations, I have always been capable of getting consensus among members of committees or councils to take what I believed was the right decision at the time. This would not be the first instance the company has had to make difficult decisions and neither would it be the first instance since I have been on the board. At the New Ross Port Company’s request several years ago, the Department was requested to have our directors’ fees reduced because company revenues had dropped. It was the board, with the co-operation of the staff, which introduced the last redundancy scheme and which reduced the company’s cost base drastically. I do believe I have the capability to bring the board with me on similar decisions.
There are no major dredging requirements. There is ongoing maintenance dredging that is funded out of cash flow. Any company that uses the heavy infrastructure that ports do would always have a capital requirement for expansion and maintenance. The majority of jetties in New Ross Port are in private ownership so their maintenance is the responsibility of the private owners. The New Ross Port Company jetty was in good condition in 2009, so I believe there should be no problems with it.
I believe the new board will be examining strategic alliances with other ports. It would be of a major advantage on a national basis.
To a certain extent, I have always found in business, particularly in niche markets, that those alliances will happen because it is advantageous to the customer. Deputy Harrington is correct in stating that the customer will go to the port offering the best value. It may not necessarily be the lowest price but it will be to the best advantage of that particular customer. In bringing in a particular type of dry bulk such as fertilisers, coal, animal feed, one will always look for where one will get the best advantage for one's business.
As I mentioned, New Ross Port Company has a low cost base because of the last redundancy scheme. It has been well managed to date. I pay tribute to the outgoing board, particularly the outgoing chairman, Mr. Mark Minihan, whom I know well. From what I have seen, they have done an excellent job to date.
If there is one area sticking out in which the cost base could be improved, it is that the River Barrow estuary still has a dual pilotage authority, with the New Ross pilotage authority and the Waterford pilotage authority. It is one area on which, if appointed chair, I would very much like to work with the board. Having two pilots on the one river for one ship movement is difficult to sell to customers.
Mr. Lawlor is making a comeback to the board. Is it fair to ask why he broke his service on the board?
Being 14 miles inland must be a disadvantage for an importer. As he stated that New Ross is tidal, does that mean a ship can come and go at any time and need not wait three or six hours for the tide to come and go? Am I correct in assuming this tidal port has advantages in terms of unloading onto trucks for delivery to Dublin in a hour and a half? What are the advantages of a port being tidal?
I apologise for being late. I thank Mr. Lawlor for coming in this morning to speak to the committee. Perhaps some of these questions have been answered already. If they have, Mr. Lawlor can ignore them.
In terms of the company and its financial performance, I note Mr. Lawlor is a member of the audit committee and he is well equipped to manage that side of matters. Is the company profitable? What turnover has it achieved in recent years and is it increasing or diminishing? What sources of income has the company other than port activity? Are there property rentals? For example, Galway Port is heavily reliant on car parking. Has the company returned a dividend to the State at any stage in recent years?
In terms of the new ports policy being adopted, there are suggestions that some ports may be downgraded and that some of the larger ports will be seen as strategically important and referred to in that context in the new ports policy. Where would Mr. Lawlor like to see New Ross being positioned in that ports policy? How would he like to see it being described? Obviously, it will not be competing with Foynes, Cork or Dublin. What will be the port's future role in terms of contribution to the wider economy?
Mr. Ray Lawlor:
On Senator Brennan's question on a comeback, my sporting career would never have needed such a description. It fizzled out without so much as a whimper. I was appointed to the board in 1997 and when that term of office came to a conclusion in 2002, a new board was appointed and I was not one of the members who were reappointed. In 2004, I was appointed to the board from New Ross Town Council and I sat on the board until 2009. My term of office, as a town councillor and as a board member, came to an end in 2009.
The advantages and disadvantages of a tidal river relate back to what I described earlier in terms of niche product that a particular ship owner or stevedore wants to move. The two stevedores in New Ross Port Company have always used the fact that they are 14 miles inland to their advantage, particularly with animal feed and coal imports. They can get their product that much further inland and the recepients, be they wholesalers or, in case of animal feeds and fertilisers, the agricultural co-operatives, would appear to want to get that product as close to their warehousing and storage as possible. The disadvantages of a tidal river, as the Senator described, are that heavily laden ships must come and go on the tide. Again, I pay compliment to both the chief executive and the pilots of New Ross Port Company because in the past they have always been more than co-operative in ensuring those ships can move with the tides and get their loading done to their best advantage.
Mr. Ray Lawlor:
I will give a maximum tonnage in the view of a lay chairman. A shipping CEO or harbourmaster would say that it may vary from my figure and one must bear in mind that I have not been seated on the board since 2009. It is 4,500 tonnes.
I thank Deputy Walsh for his questions. He asked about the company's turnover, profitability and rental income. In 2009, when I finished my previous term, the company was not profitable and I do not believe the situation has improved since. For a number of years, it was breaking even. Turnover has declined since, largely due to fuel imports. There were two major fuel importers using the port and both have since moved their operations to Dublin Port.
The port has a number of sources of income - rental property, car parking income and income from services it provides to ships that enter the port. Deputy Walsh asked whether that situation would change. We discussed the fact we have always supported marine tourism initiatives in the estuary, but to date we have not entered into any marine tourism or leisure facility which generates income for the port, and it is something that, if appointed, I would like to look into. I do not believe a dividend has been paid, given the financial situation in the company.
On the role of New Ross Port following the port policy review, the board will have to look at the implications for it of that review and to work with staff and the Department on the future role of New Ross Port.
That concludes our consideration of this topic. Is it agreed that the committee will inform the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, that we have concluded our discussions with Mr. Lawlor and will forward a copy of the transcript of this meeting to him for information? Agreed. I thank Mr. Lawlor for being so forthcoming in assisting the committee in its deliberations.