Wednesday, 24 October 2007
Question 75: To ask the Minister for Enterprise, Trade and Employment when his attention was drawn to the fact that a project (details supplied) in County Cork would not proceed; the action he took as a result; if he regards the project as being cancelled; the steps he will take to ensure that alternative industrial projects are secured for the Cork area to compensate for the cancellation of this project and other job losses in Cork; and if he will make a statement on the matter. [25678/07]
On the morning of 3 October 2007, I was very disappointed to be informed by way of a conference call with the Irish general manager and the executive vice president of operations of Amgen Inc. that the project had been postponed indefinitely due to a downturn and difficulties within the American market for the company's products.
During the week commencing 8 October 2007 various discussions took place between IDA Ireland officials and both Irish and US-based corporate executives from Amgen at which the position regarding the indefinite postponement of the project was reiterated. On 15 October 2007 I met senior corporate executives from the company, including the executive vice president of operations, in California. The Secretary General of my Department and senior IDA Ireland personnel were also in attendance.
The decision was made as a result of a review of the company's operations and is based purely on developments related to the company's global business. The business difficulties being experienced by the company will result in the reduction of staff numbers by up to 2,600 people worldwide, the closing of two plants in the US, and a reduction of its planned capital expenditure. I have been assured by the company that the decision does not reflect on the business environment here. Amgen has praised the responsive, pro-business approach of the Government and its agencies and the level of co-operation of all the public authorities in Ireland.
Amgen made its original investment decision to locate in Ireland after a careful and calculated due diligence exercise, and this decision was won against intense international competition. The conditions which attracted the company to Ireland in the first instance have not changed.
The Cork gateway is still vibrant in what it can offer potential investors, particularly in sectors such as pharmaceuticals, medical technologies and internationally traded services. East Cork has been one of the country's strongest performers in recent times in attracting investment from these sectors. A total of nine foreign direct investment projects have been announced for Cork city and county since the start of this year, with an estimated 1,000 jobs to be created at full operation. In the past three years IDA Ireland has approved new projects for the Cork area with the potential to create over 3,100 jobs at full operation. There are currently 133 IDA Ireland-assisted companies in County Cork employing in excess of 20,000 people. The agency remains committed to securing additional new projects for east Cork and promotes the area to potential investors on an ongoing basis.
My question was carefully framed to elicit a detailed reply. The decision by Amgen not to proceed with the project in question was the equivalent of what happened at Intel. Everyone is sympathetic because 1,100 jobs were due to be created directly as a result of the project and a further 100 would have come about in ancillary and spin-off industries.
Does the Minister agree the signs in respect of this project were ominous? The early warning system in his Department relates to job losses but did no one associated with it happen to read a detailed article in the Los Angeles Times on 16 February this year which referred to the fact that Amgen's top selling drug was under scrutiny, that negative results had been associated with it, that there was going to be a fall in the share price and that analysts were advising investors that the company's shares would come under pressure? Were the Minister and his Department the only ones unaware of what was happening? Deputy Ned O'Keeffe was in a position to state the Government and its Ministers had painted a rosy picture until the general election had been negotiated.
I visited Amgen with my colleagues Councillor John Mulvihill and Deputy Sherlock, whose late father kept me informed in respect of this issue. Why did people not know what was going to happen in respect of the project in question? Is there any way the Minister could establish an early warning system in respect of promised employment that would be similar to the existing system relating to job losses? What has occurred is a significant blow. I accept the Minister's assurance that it was global rather than local or national considerations which led to the project not proceeding.
How much money was spent by Cork County Council with regard to putting in place infrastructure such as roads, sewerage systems, etc? Will that money be recouped from Amgen? What beneficial interest does IDA Ireland hold in the site and what efforts will be made to remarket it in the context of attracting alternative industry?
On the Deputy's latter queries, those matters will be dealt with in reply to a later question. In order to save time, I will deal with them when the said question is taken.
It is important not to play politics with this issue.
There is an element of playing politics. The Government does not represent Amgen. I do not sit in on meetings at the corporate headquarters of global companies. Those who run such companies, not the Los Angeles Times or any other newspaper, make decisions. The executive vice-president of the company put it very well last week when he asked if I honestly thought that if the management previously knew what it knows now, the company would have proceeded with the decision it took in April to carry out the project on a staggered basis to 2012. He also inquired if I thought the company would have pumped more funding into the project, which it did. Up to the day on which the closure was announced, up to 80 people were employed on the project.
The project was the subject of two comprehensive planning applications. Given the scale and detail involved, these were expensive. One need only visit Wyeth's operations at Grange Castle to obtain some insight into the scale of the project. Such a project cannot be done under cover; it would not be a case of someone shouting "Hey presto" and a major biopharma operation suddenly appearing without anybody noticing. It has been suggested we should have announced the project differently. The planning application which was substantial in nature had to be made.
The company is extremely unhappy about the position in which it now finds itself. The decision not to proceed clearly has a great deal to do with the situation that obtains in respect of two of its major drugs, particularly in the context of reimbursement policies within the United States. However, companies in the pharmaceuticals and biopharma sector experience rough periods and then emerge from them. The terminology used by the company in respect of the project is "indefinitely postponed". It made clear to us last week that it wanted to retain the site. Our strategy, therefore, is to work with the company to see if it can overcome the difficulties it is experiencing. We will then see what emerges.