Dáil debates

Wednesday, 21 May 2008

8:00 pm

Photo of Brian O'SheaBrian O'Shea (Waterford, Labour)
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The decision of the Government to reject Waterford Wedgwood's request for State guarantees on loans of €39 million is unimaginative and potentially devastating to the Waterford area. The live register for the Waterford area stood at 6,586 in April 2008, an increase of 1,288 on the figure of 5,298 in April 2007. The restructuring package for Waterford Crystal in Kilbarry includes a redundancy programme to eliminate 490 jobs. The short-time working arrangements which will operate at the Kilbarry plant for three weeks in the next two months is a further negative development.

Without loan guarantees, the future of the remaining 550 jobs must be a matter of serious concern. UNITE has given its full support to the company's request for loan guarantees, which it made because it is unable to raise finance of its own accord. Reports suggest that the European Commission would not veto State aid in response to the company's request. I ask the Minister of State at the Department of Enterprise, Trade and Employment to clarify whether the rejection of the application was purely a Government decision.

The decision to reject guaranteeing loans of up to €39 million is incredible in the context of the 550 jobs that are at stake. It would cost the IDA multiples of that figure to develop a similar number of jobs in Waterford. The Government is displaying unimaginative conservatism, given that Waterford Wedgwood could trade out of difficulties, in which case it would not draw upon the loan guarantees.

The US is Waterford Crystal's main market, but because the dollar is extremely weak there has been a significant reduction in earnings from the company's products. Americans tend not to travel in years when there is a presidential election in their country. This is affecting the Irish market. A new US president will be elected in the autumn and this gives strong grounds for optimism that confidence in the American economy will be boosted and that consumer spending will increase. This would be a basis for Waterford Crystal to trade its way out of difficulty. If, however, the Government does not review this awful decision, the knock-on effects for the Waterford area will be unthinkable.

The Government continues to refuse to process Waterford Institute of Technology's application to upgrade in order that it might become the university of the south east so that Waterford and the surrounding region could obtain their fair share of jobs and development in the knowledge economy and enhance the region's capacity for research and development. The Government is effectively turning its back on the future development and prosperity of the south-east region, where the traditional industrial base is being eroded and where alternative job creation is not being promoted to anywhere near an adequate level.

The argument is advanced that if the Waterford Wedgwood application is granted, many similar applications will emerge. This is just a cover for inaction and a lack of courage and initiative. The Government's offer to assist the company in ways other than the loan guarantees is a pathetic and meaningless gesture. The reported Government belief that Waterford Crystal has a sound future rings hollow against the rejection of the loan guarantees application. Surely a company which has a sound future but which is experiencing short-term difficulties more than merits loan guarantees to the extent of €39 million in order that 550 jobs can be protected.

The job losses are the first and major issue but the consequent and significant negative spin-off affects for the local economy must also be factored in. A blinkered approach without flair or imagination, as represented in the Government's rejection, isinappropriate and unacceptable. Job protection and retention in this growing economic recession requires a Government capable of thinking outside the box and dealing with today's problem immediately.

Applications for aid on the part of industrial concerns that may or may not be made in the future must be dealt with on their merits. The Waterford Crystal case has unanswerable merit and logic to it. I call on the Minister to encourage the Government to engage in a positive review of this decision in order to avoid a potential unemployment and economic catastrophe for the Waterford area.

Photo of Billy KelleherBilly Kelleher (Minister of State with special responsibility for Labour Affairs, Department of Enterprise, Trade and Employment; Cork North Central, Fianna Fail)
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I thank Deputy O'Shea for raising this important matter. For some months the Government has engaged with the management of Waterford Wedgwood plc, following a request from the company for support to assist in the implementation of its restructuring plan. The support sought was to fund planned restructuring in Waterford Crystal, which would involve approximately 500 redundancies.

Owing to the fact that Waterford Crystal is a major Irish employer, with an internationally recognised brand and a solid history of exporting achievement, particularly in the US market, the Government was most anxious to ensure that its request for assistance received the fullest consideration. Accordingly, detailed discussions were held with the company with a view to identifying possible interventions that would assist it in successfully completing the planned restructuring in Waterford, while not undermining the policy position that has underpinned our enterprise development strategies in the past two decades. It was not possible to accede to the company's request.

The thrust of enterprise strategy, adhered to by all Governments during the past 20 years or so, is to concentrate State support to firms for investments that will help them to compete successfully in an increasingly globalised economy. The Government sees its role as helping to create an economic environment where business can prosper and focus on interventions that are related to developmental investment by companies, such as research and development grants, support for upskilling, etc. Such a policy does not extend to providing the type of support sought by the company in this case.

The effects of globalisation are felt in even the smallest markets and global competition will intensify and extend its reach. The Government has recognised the inevitable changes taking place across world markets for both trade and investment. Enterprise policies aimed at equipping companies with the ability to compete better in world markets, capture the opportunities from globalisation and build competitive advantage in innovation and knowledge have been central to policy development. The best response to globalisation is to ensure that Ireland remains attractive for investment and enterprise growth. Our attractions include a competitive tax and regulatory environment, a well-educated workforce, a rapidly improving infrastructure and a commitment to world-class standards of research, development and innovation. Maintaining and improving upon these standards is vital to sustaining Ireland's competitiveness.

While it has not been possible to accede to the company's request for support in this case, the Government believes that there is a solid future for a restructured Waterford Crystal operation in Ireland and asks that the board of Waterford Wedgwood, its management and staff work together to agree such financial and other measures as are necessary for the successful implementation of the restructuring plan. Any request or proposal from the company for aid for new investment will be considered sympathetically by the enterprise development agencies as appropriate. I am confident the strategies and policies being pursued by the State development agencies will continue to support enterprise development and job creation in the Waterford area.