Tim O'Malley (Limerick East, Progressive Democrats)

I thank Deputies Neville and Cregan for raising this matter on the Adjournment.

The Kerry Group acquired Kantoher Chickens in 1992. The company operated successfully up to five years ago when it began to sustain losses. These losses have grown in the interim and, despite the best efforts of the excellent local workforce, the company was unable to reverse this trend due to its size and the very competitive nature of the chicken processing sector. I understand the Kerry Group tried unsuccessfully to sell the operation as a going concern. As a result, it has decided to close its chicken processing plant in Kileedy, Newcastle West, County Limerick, on 4 March 2005 with the loss of 138 jobs.

The reason for the closure is the very competitive nature of the market and that there is over-capacity in the chicken processing sector. The trend in this sector, as with other sectors in the agri-food industry, is for consolidation into larger processing units of scale. The company view is that the plant is small by industry standards and it was not willing to contemplate further investment.

The Kerry Group has indicated that it plans to offer the employees an opportunity to take up alternative positions in either its food ingredient operations in Charleville on the Limerick-Cork border, where a major expansion is taking place, or Listowel, County Kerry, where demand for workers is also increasing. An out-placement consultant has been put on site in Kileedy to assist those employees who are not interested in this offer of alternative employment. A redundancy package is being negotiated for members of the workforce who do not wish to transfer. The employees at Kantoher Chickens are drawn from a wide geographic area in west Limerick and the offer of redeployment by the Kerry Group to the other plants in Charleville and Listowel will allow Kantoher based employees to continue to live in the area, preserve their incomes and commute to work in an activity they know well, if they so wish.

The Kantoher plant accounts for about 8% of chickens slaughtered in this country. I understand that the poultry producers who supplied this operator will now be taken on by Western Brand Poultry. This is good news because poultry growing makes a useful contribution to the income of farmers in the Limerick area and I am glad that this activity can continue. Western Brand Chickens, which is located in County Mayo, is one of Kantoher's bigger competitors and, fortunately, will take on the supply contracts of the 40 local farmers that supply Kantoher.

I understand from the Department of Agriculture and Food that there is excess capacity in the poultry slaughter sector which is hampering the competitiveness of the indigenous poultry industry. The agri-food 2010 committee established by the Minister for Agriculture and Food recommended a reduction in capacity in the order of 20%. This is a very competitive sector due, in particular, to the increased volumes of poultry meat being imported from low-cost countries outside the EU. Nevertheless the volumes of poultry produced in this country have remained at satisfactory levels and an increase of 4.5% was experienced last year.

West Limerick in general is well serviced with industry, with major companies such as Wyeth, Aughinish Alumina, Kostal, Ballygowan and Pallas Foods being the major employers in the vicinity of Kantoher. However, the closure of the plant is, of course, a significant setback to a predominantly very rural area and the chances of getting a replacement industry into a disused chicken plant would not be too good. To achieve this would require the decommissioning of the plant and the fumigation of the building. It would also need to be made available as a vacant unit. If that were to happen, there would be a possibility of attracting industrial activity to the building.

As in all such cases, Shannon Development is ready and willing to explore and consider eligible business proposals for the Kantoher area, whether from employees taking the redundancy option or other parties. It is also an active member of local groups such as West Limerick Resources Limited, a local Leader-ADM group which met last week to discuss this issue. West Limerick Resources Limited will shortly write to the Kerry Group to offer its services with local initiatives such as a jobs club, training and start your own business courses. Similarly, Shannon Development is actively involved with the Newcastle West Chamber of Commerce and will work closely with it to ensure that its resources are brought to bear in regenerating the Kantoher-Kileedy area.

When these efforts are combined with the arrangements the Kerry Group is putting in place for both employees and suppliers, it is intended that the effects of the closure on the community will be minimised. I trust there will be a satisfactory outcome to the proceedings for all concerned.

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