Ballybofey (Donegal) Job Losses.

Tuesday, 28 April 1998

Seanad Éireann Debate
Vol. 155 No. 6

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Mr. McGowan: Information on Paddy McGowan Zoom on Paddy McGowan I thank the Minister of State for dealing with this matter of serious concern in Ballybofey, County Donegal, and I hope he can offer some assistance.

Herdmans (Ireland) Limited have been in business for more than 100 years in Sion Mills in County Tyrone and it is nearly 50 years since the company set up a yarn spinning mill at Ballybofey. Those of us concerned about job creation welcomed Herdmans to Ballybofey and I worked closely with the late Joe Brennan when he enlisted Government support for the establishment of Herdmans there.

Herdmans have been good employers and have helped the economy of the area substantially. Very few jobs have been created in the Finn Valley, which stretches from Lifford to Glenties, in the past 50 years. There was some relocation of jobs from Castlefin to Ballybofey. The news that Herdmans will make 42 people redundant is a serious shock. If 500 jobs were lost in Galway and Limerick it would be serious, and this loss in Donegal is equivalent to that in terms of the number of people employed, many of whom are male.

The Minister of State served in the Department of Foreign Affairs previously and knows that Donegal suffered seriously because of its close proximity to the Border. We suffered in silence, as did all the southern Border counties. We had to keep our heads down for 25 years because people were losing their lives in the North and while we were suffering economically we could not complain. All elected public representatives [353] in the six southern Border counties kept quiet and we were seriously disadvantaged by the allocation of European and international funding of which 80 per cent went to the North and 20 per cent to the South.

The southern Border counties could not compete and that is why we gained little new industry. If we complained about this, we were told Donegal was doing well because it had the Fruit of the Loom factory. However, Fruit of the Loom is based in Inishowen, which is as big as County Louth, and has had little impact on the valuable employment in County Donegal. Ballybofey, in particular, suffered because of the Troubles as it is within four of five miles of the Border. It would not have been the choice in normal circumstances for an industrialist.

For example, there has a tradition of shirt manufacturing in Buncrana, Castlefin, Lifford and Letterkenny which employed many female workers and was very valuable to the economy. This has been largely lost and there are only two factories doing well in Buncrana and Lifford. Recently, a small manufacturer who set up in a store in Newtowncunningham tried hard to obtain funding to get a better premises for his workers. Despite his best efforts and representations being made to all the agencies on his behalf, he was not able to get £1 in assistance from any source to employ people. A funding agency in the North approached him and told him to wise up and look at what was available in the North. He needed to buy a derelict building and get it assessed and this would act as collateral for his new business. He was told he would be set up and totally funded without any effort on the basis of the valuation of the derelict building. How can anyone compete?

A major mistake was made when public representatives, such as myself, did not speak out during the height of the Troubles. It never should have been 80 per cent funding for the North against 20 per cent for the South. The North has been awash with money. The British Government compensated substantially and generously for the deprivation in the North and that was not taken into account. This made it more difficult for industrialists to survive in Donegal and Herdmans is an example of this. It has a substantial plant in Sion Mills, County Tyrone, where it rebuilt its factory. It had an old five storey building and walked away from it. The company moved to a green field site and built a brand new plant. Ten years ago, it modernised its Ballybofey plant using new technology; but the writing is on the wall as we cannot compete with the amount of funding available.

Herdmans is doing what every other international company will do. They will choose where they can obtain support and funding and there will no difficulty for Herdmans in extending its factory at Sion Mills. It transferred staff from the Ballybofey plant to Sion Mills six months ago. There has been relocation, retraining and reprogramming of workers. Will the Minister of State [354] recognise the fact we did not get jobs and suffered serious deprivation because we were close to the Border? Will the Minister receive a deputation from the Ballybofey/Stranorlar Development Company Limited? A task force was established whenever there were job losses elsewhere. An effort was made to compensate by providing extra jobs, etc. and we are looking for nothing more and nothing less. Our disadvantage should be recognised as well as the fact that we kept our heads down and paid a price. This must be looked at in some form, either through a task force or ministerial visit to Ballybofey or a deputation to Dublin from the development association in Ballybofey. The Minister of State must be seen to be doing something in response to these job losses, which will have serious consequences for the small towns of Ballybofey and Stranorlar.

Minister of State at the Department of Enterprise, Trade and Employment (Mr. T. Kitt): Information on Tom Kitt Zoom on Tom Kitt I thank the Senator for raising this important employment issue. It is important that the Minister or I, who are involved in employment policy, listen to people such as Senator McGowan and respond as best we can. I am naturally disappointed at the announcement by Herdmans (Ireland) Limited that it intends making up to 35 of its 100 strong workforce in Ballybofey redundant. The loss of these jobs will be a great disappointment to the people in Ballybofey and the surrounding area.

The company is currently in the process of an overall restructuring programme which will not alone affect the Ballybofey factory, but also the company's operations across the Border, where it plans to close two mills at Killyleagh Yarns in County Down and Henry Campbell Yarns in Mossley, County Antrim, resulting in a further 200 job losses in those plants.

The Herdmans operation is a long established business. The Ballybofey factory was set up in 1964 to manufacture grey linen yarn for the linen industry. The Herdmans group sells its products world-wide. While the linen industry can be very cyclical, the company has in the past been able to cope with this. However, Herdmans has recently been experiencing serious marketing problems, due to the high value of sterling and the financial crisis in Asia. It is against this background that the group is being forced to radically restructure its operations. Accordingly, Herdmans proposes concentrating its manufacturing operations solely in the north west at Ballybofey and Sion Mills, where the head office and largest manufacturing plant is located.

I am aware that the group did not easily arrive at the decision to close two of its mills in Northern Ireland and to reduce numbers at Ballybofey. In fact, the company considered a number of alternatives. However, as more than 80 per cent of Herdmans output is manufactured in Northern Ireland, the high exchange rate of sterling has had a critical effect on export volumes, leading to very high stock levels. These factors have led to an [355] erosion of the company's export prices by 25 per cent. European competitors, on the other hand, have been able to offer lower prices in the UK and other markets. For these reasons, the company said it was left with no alternative but to restructure its business to ensure that production levels are brought into line with realistic market forecasts.

While the decision to implement cutbacks both in Northern Ireland and Ballybofey is very disappointing, I understand why the Herdmans group have taken the necessary remedial measures to ensure the long-term viability of the operation thereby helping to safeguard the remaining 70 jobs at Ballybofey. In saying that I am taking account of the information available to my Department on the matter. I assure Senator McGowan that the State agencies are doing everything possible to maximise job opportunities in County Donegal. Donegal is a target location for new inward investment by IDA Ireland. The [356] agency has put in place a number of new measures, including higher grant levels and improved marketing material, to assist in the marketing of the county.

The Senator made some very significant points in regard to the special position of County Donegal and has asked that my Department do everything possible to safeguard that. As regards his suggestion that I would receive a deputation on this matter, I would be more than happy to facilitate him.

Mr. McGowan: Information on Paddy McGowan Zoom on Paddy McGowan I appreciate the Minister's positive response and we will take up his offer to arrange a meeting.

Difficulties have arisen in recent years and no reply was received to any of the four letters to Forbairt's regional manager in Sligo. That is not very satisfactory. I hope the Minister is not pinning his hopes on any future assistance from the regional office in Sligo.

The Seanad adjourned at 8.15 p.m. until 10.30 a.m. on Wednesday, 29 April 1998.

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