Seanad debates

Thursday, 7 July 2011

Schools Building Projects

Job Creation

7:00 pm

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I welcome the Minister of State. To give some background to tabling of this subject for discussion, in 2007 the former Oireachtas Joint Committee on Enterprise, Trade and Employment had a discussion about unemployment black spots, and a former member of the Lower House, Arthur Morgan, asked that a cross-party delegation of that committee travel to such areas. The areas chosen included west Waterford and east Cork, and the group visited the town of Dungarvan. The visit was made on 21 and 22 January 2008 and the group then published a report, which made a number of recommendations, including the provision of enterprise supports, incubation units to be supported by the IDA, and broadband infrastructure. One of the key points made in the report was about the need for a university in the south east and the requirement for Waterford IT to be elevated to university status to allow the region the opportunity to compete with other regions and countries. One of the critical aspects of this was the requirement for a greater emphasis on research and development and for Waterford IT to be in the top tier of research and development universities.

Dungarvan town has seen many job losses over the last number of years, including at Waterford Foods, Pfizer, the leather factory and Waterford Crystal. Today an announcement was made by GlaxoSmithKline in Dungarvan, a key plant in the town, that 130 jobs are to go. The number of jobs being lost is really 145 because 15 positions will be lost by what they call natural wastage. These jobs are of fundamental importance to the town of Dungarvan, as is the factory itself, socially and economically. We can add to this the cost of all of the other jobs that have been lost. I express my sympathies to the families who will be the victims. It is awful whenever a person loses his or her job.

What are the Minister's intentions on foot of the recommendations made by the all-party Oireachtas committee that the State and the Government should take action and give support to towns such as Dungarvan to prevent job losses and encourage enterprise development? We must make sure that those in towns such as Dungarvan or Youghal in Cork have the same opportunities as those in the bigger cities and are not left behind. When the all-party group travelled to Dungarvan in 2008, there were 170,000 people in this State out of work; there are now 460,000. In Dungarvan town alone there are 2,497 people currently out of work. If we add 130 more to this figure we can see how devastating this is for the town.

What action has been taken up to now on foot of the recommendations made in the report? What action does the Department intend to take to deliver on the recommendations? What action will the Government take to deal with the job losses at GlaxoSmithKline? Given that there are still 600 people working in the plant, we must ensure those jobs are protected. I ask the Minister to respond to the bad news that came from Waterford today about the 130 job losses.

Photo of Seán SherlockSeán Sherlock (Cork East, Labour)
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I thank the Senator for raising this matter. As the Senator has raised the issue of the job losses at GlaxoSmithKline, it is important for us to join with him in acknowledging the addition to the numbers unemployed in Dungarvan. I acknowledge what the Senator is saying in that regard and I join with him, although I do not want to give just platitudes, in extending our sympathy to those families. I have listened to his comments about the recommendations of the report of the Oireachtas Joint Committee on Enterprise, Trade and Employment. I must note for the record that the Senator's Oireachtas colleague Deputy Ciara Conway also contacted me today about the GlaxoSmithKline announcement. I was told that while the head count reduction is regrettable - there is no question about that - the company's aim is to remain focused on the long-term future of the site, ensuring that it remains competitive. Although the site remains strategic within the company's network, the company must continue to control its cost base and be more flexible because of global trends. That is the line coming from the company on this.

It is easy for us as Ministers to stand here and say this is down to a global phenomenon, but a foreign direct investment company is particularly subject to retrenchment in terms of its cost base, especially if it is competing against other aspects of its own structure, and it is appropriate for it to reduce its costs. The unfortunate thing about that is the resulting job losses. If it does have a programme of retrenchment, the important thing is that the company makes itself sustainable so it can preserve the remaining jobs. We must try our best to work with the State agencies in that regard.

I have noted the report referred to by the Senator, which was produced in 2008, a time when the country as a whole was facing immense challenges. We all know that job creation is central to our economic recovery and it will be clear from the programme for Government that job creation is at the core of the Government's policies. The role of my Department is to ensure we have the right policies in place to support and enlarge our enterprise base in order to facilitate job creation and job retention.

The jobs initiative announced on 10 May focuses our limited resources on measures that offer the greatest potential for expansion and employment creation. The initiative represents a positive intervention to support those entrepreneurs and business people who will create jobs and rebuild our economy. The key elements were the 12.5% corporation tax and its retention and the introduction of a new, temporary, second reduced rate of VAT to apply primarily to restaurants and catering services, hotel and holiday accommodation and various entertainment services. I hope these reductions were adhered to in Waterford especially in recent weeks with the visit of the tall ships and I hope that the hospitality sector there has done well out of it. Our hope is that this will continue. Other elements include the halving of the lower rate of employers PRSI on earnings of up to €356 per week; the focus of the State's capital expenditure towards more employment-intensive projects in the areas of education, local and regional roads and sustainable transport projects; and the provision of an extra 20,900 activation places for the unemployed. The jobs initiative is an important first step in this regard.

One announcement for the south-east region this year will create 50 new jobs in Waterford. Also, jobs announced for the region in recent years continue to come on-stream. As well as marketing the region for new green-field investment, IDA Ireland continues to work with existing clients to broaden their mandate in Ireland and also with existing clients to re-invest in sites in the region. While we are operating in difficult economic times, there are still investment opportunities in global markets. There are 31 IDA Ireland-supported companies in Waterford city and county employing approximately 5,300 people. Clear evidence of a transition towards more knowledge-based and higher value activity is apparent in the resilience of companies such as Bausch & Lomb, Honeywell, Citi Hedge Funds, Genzyme and Sun Life Financial.

I will be visiting Waterford Institute of Technology, WIT, because I have heard about the great work under way there in the life sciences, information and communications technology, international services and high technology engineering areas. WIT is one place earmarked for a visit by me as the Minister of State with responsibility for research and innovation. It is important to spin out as many companies as we can, locally if possible, from such institutes as WIT.

Photo of David CullinaneDavid Cullinane (Sinn Fein)
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I refer to the last point made by the Minister of State. This is precisely why we need a university for the region. Some people maintain that if a university were in place, there may be greater research and development opportunities and we might not have seen the job losses announced at GlaxoSmithKline. The Minister of State is correct to suggest this is about reducing costs in the company. The company wishes to reduce costs by €10 million. The costs of these job losses will be €3.3 million. However, the money being borrowed from the IMF and put into the banks, the cost of the bailout to the State and the profit which our European partners will make will be in the region of €9 billion. Yet, such companies are struggling and need support.

I thank the Minister of State for his response. I welcome that the Minister of State will visit Waterford Institute of Technology but I hope the Department of Jobs, Enterprise and Innovation will consider the town of Dungarvan. I do not share the Minister of State's view that IDA Ireland is doing its best for the town. There have been no major investments in the town in recent years. There have been major job losses but no new opportunities. I hope the Minister of State will take this on board.

The Seanad adjourned at 7.15 p.m. until 10.30 a.m. on Friday, 8 July 2011.