MIONTUAIRISC NA FIANAISE
(Minutes of Evidence)
Dé Céadaoin, 28 Bealtaine, 1980
Wednesday, 28 May, 1980
COMHLUCHT SIÚICRE ÉIREANN TEORANTA
Mr. Jim Powell, Chairman, Mr. Noel O’Brien, Secretary, Mr. John Broderick, Mr. Bennie O’Connor, Mr. Val Finnegan and Mr. Willie Brady of the Comhlucht Siúicre Eireann Teoranta Branch of the Association of Scientific, Technical and Managerial Staffs Trade Union, called and examined.
231. Chairman.—Would you like to make an opening statement or will we ask questions right away?
Mr. O’Brien.—I will make an opening statement. We have a written submission* which we would like to hand in for the record. We are delighted to have been invited here because we think we can bring a dimension to your examination of the company that will, perhaps, be useful. We are representatives of the management. We represent people from very senior management right down through the line of middle management to the various professional bodies in the company and clerical sections. In that way we represent the staff in the company—the people who, in fact, run the company—and for that reason we have a rather special view of the company’s operations. As a union which is not very long established in the company, we have a special view of the company. In the main our people are in responsible positions and, therefore, they will have to take the company view; at the same time we are a trade union and in that way we will have to operate in the traditional trade union manner in representing and protecting the interests of our members. Nevertheless, we are concerned with the present state of the company which is now going through a very difficult period, and we feel that we need some help from Government sources in the line of encouragement, in redefining our marketing situation and perhaps in the area of financial help in the difficulty we have suddenly to contend with. It is in our interest to see that the company gets the type of help that it now requires. We believe that if that is done and if the role of the company is redefined, the problems we now face can be dealt with in a more pragmatic and practical manner than otherwise might happen.
232. Deputy Kenneally.—What grades do your union represent?
Mr. O’Brien.—All grades. We represent probably the majority of the executives of the company and we represent after that practically every staff member in the company, with one or two small exceptions, for instance, those people who for reasons of conscience do not want to join unions and that type of thing. Basically we represent all the staff.
233. Senator Cooney.—You are not very long established in the company? How long actually?
Mr. O’Brien.—Since 1974.
234. Senator Cooney.—Had the grades you represent representation before that?
Mr. O’Brien.—No. In 1972 Erin Foods ran into very serious difficulties and there were very serious redundancies threatened and closure of many of the Erin Foods plants. Previously the staff of the company had no unified voice at all, and in that time of threat to a large number of the staff we formed a staff association in 1972. The natural progression from that was that we started negotiating with the various trade unions, and finally in 1974 joined this union.
235. Senator Cooney.—The approach was from you to the union rather than vice versa?
236. Senator Cooney.—How many unions are there in the sugar company?
Mr. O’Brien.—Seven. The main one is the Transport union which represents all the manual workers, it is by far the biggest union, with 2,000 members. We would be the next biggest with about 500 members. Then there are five craft unions, some of those are very small and their total membership is about 400.
237. Senator Cooney.—Are there any structures for meetings between the trade unions?
Mr. O’Brien.—No formal structures. In fact, up to two years ago certainly, our union never met the other unions at all. But in the past two years, through various matters such as pension schemes and so on, we have developed some kind of informal structure where we have meetings.
238. Senator Cooney.—Your union is in a somewhat different position within the company from other unions in so far as you represent the side that is very often negotiating with the other unions. Does this lead to any inter-union difficulties or has it contributed to the happy industrial relations in the sugar company?
Mr. O’Brien.—I would not say it has contributed to the happy industrial relations but neither has it taken from them. However, when I became involved in the union in its early days I always thought it was a very strange and almost impossible situation to have people in very senior management as members of the union. In fact, I was very much against it, but as it happened they had joined and we did not wish to ask them to leave. In fact, it has worked out quite well. When one of our members is on the other side of the table negotiating we understand he is wearing his management hat and that his job is to take the management view and that our job is to oppose him, and if he is on this side of the table the same applies. So in practice it has not caused any great problems.
239. Senator Cooney.—You are a branch of an English-based union. How much content with regard to policy or the general supervision of your union or your activities depends on an English input?
Mr. O’Brien.—Absolutely none.
240. Senator Cooney.—You are allowed to operate on a totally autonomous basis?
Mr. O’Brien.—Yes. We had problems, not the type of problems you are promulgating, but there were problems of organisation to do with handling funds and that sort of thing. They have been settled and now the Irish section of the union is almost totally autonomous. The only thing is that we pay the money to the central union in London and we get their financial backing if we need it. Apart from that, in a practical day-to-day fashion the Irish section of the union has total autonomy and there is absolutely no interference, ideologically or any other way, from England.
241. Deputy Deasy.—What made you request to come before the Committee?
Mr. O’Brien.—We did not request. We were invited to come before the Committee and we were delighted to be invited.
242. Deputy Deasy.—Have you any particular contribution to make with regard to our examination of the sugar company’s affairs?
Mr. O’Brien.—We have a written submission which will lay out our views of the company’s situation and our hopes that this Committee’s examination will be beneficial to the company. As I said earlier, we believe that as a company we need some help now from the Government, not necessarily in financial terms, though that would be desirable, but in other ways, particularly in the area of redefinition of our role which over 50 years of our existence has become obfuscated to some extent.
243. Chairman.—Is your statement more or less a summary of your submission? When we read the submission it may suggest things that we would like to ask, but it will be too late then. If the opening statement is not a summary of the submission, will the witness summarise what is the submission?
Senator Keating.—The more we have a chance to study this the better the meeting will be. It is difficult to have a good discussion now, not knowing what is in it. I would very much appreciate a summary of the contents so that we could have an interchange while the witnesses are here.
Chairman.—Could the witness go over it very quickly?
Mr. O’Brien.—In the foreword we say why we are pleased to be invited and so on and the attitude we adopt towards the invitation, which I hope is one of help both towards the committee and to the company. We talk then of the Irish Sugar Company branch. Next there is a brief history of our existence and of our attitudes towards union matters in the company. We then talk of the future of the sugar company, its role in the past and its present difficulties, the difficult financial situation and the trading situation, and we point out that the ultimate responsibility for future direction must come from Government sources outside our organisation, because we are in a very direct way subject to Government will. We then talk about the problems in the company, the historic problems which are endemic in the organisation, plus the added recent problems which all companies have had with inflation, energy costs and high interest rates which result in very severe financial problems. We talk then of the situation of a State company trying to work in a commercial way being influenced still by the State masters. The definition of the role of the sugar company towards the State has become somewhat unclear, because it was probably defined in the early days of the company, in a very social context. That social role has become somewhat lost and there is the feeling in our company that we should be far more commercial. We then have the problem of balancing that fact with the special responsibility we also feel we have. The make up and structure of our company is very much based on social interests, more so historically, and that very social structure which was formed in years gone by is now part of our present problems. We then refer to the new innovation of worker participation in board membership and how we feel that affects the future of the company. That is all that is in this very simple document.
Mr. Brady.—Our problem with CSET is that if they do have a social role, let it be identified, quantified and let it be paid for; but let us not have the situation that CSET has been saddled with, that on the one hand a sort of commercial criteria is used if it comes to closing down a potato plant in Tuam whereas, on the other hand when it comes to locating that potato plant it is the social side that is looked at. CSET has been burdened with this sort of situation for too long. While sugar was making a profit that was fine and we could carry on but now we are getting the worst of both worlds. It is about time that the political end of things was straightened out and CSET recognised for what it is and that we should get back to the reasons why it was started up in the first place.
244. Senator Cooney.—Would Mr. Brady like to see its reasons for existence being defined in commercial terms only or in commercial and social terms?
Mr. Brady.—The two are not incompatible.
245. Senator Cooney.—They are incompatible, are they not?
Mr. Brady.—They are not. It is the same as CIE. If CIE have to run a bus up to the top of a mountain, fine, but it is not CIE who have to decide that they must run it there; it is the Government and the politicians that decide. Let it be paid for, that is all I am saying.
246. Senator Cooney.—Let me put it another way. Tuam is mentioned and it was suggested to us that as a commercial enterprise Tuam has a very bleak future indeed. We do not have to be told that. For social reasons Tuam could have a very bright future. The submission asks for a clear political statement with regard to the role of the sugar company. Would you like to see the role being confined to a commercial role—which would involve pruning areas where there had to be a social input.
Mr. O’Brien.—No. That is the nub of our problem. This company was set up in 1933. It was established before that in 1926 by the previous Government as a commercial company. In 1933 it was turned into a State company by the then Fianna Fáil Government with certain specific objectives. Those objectives at that time were practically all for the same purpose. It was to help the farming community to build up a new industry with farming input and to produce sugar at home. We went through a difficult period then up to the time of the war. The economic war, and all that, produced a very difficult period. The war years were a great test of the company’s strength. Machinery was, even then, run down. The technology was not great, but the company managed to supply sugar to keep the country going during the war years. After the war we ran into a further difficult period of mass emigration from the land.
The beet crop at that time was a highly labour intensive crop. The labour became short and the company had then to face problems of trying to get farmers to grow beet. It did that by developing from its own resources technology and machinery for seeding and harvesting the crop. That was done very successfully, albeit at a fairly high cost to the company. We weathered those years then, until the sixties and the scene began to change again. We had the first plan of economic expansion. The Taoiseach, Deputy Lemass, asked State companies to contribute towards that economic programme. We did that by founding Erin Foods which was based on a social concept rather than any great hope of commercial success. From our resources we got Erin Foods launched which was a very expensive operation. A lot of mistakes were made, naturally, as it was a totally new industry. We weathered through that and got Erin Foods going with certain Government restrictions on their functions. It was set up as an export company. We were at the initial period of Erin Foods forbidden to sell on the home market at all. That, of course, changed but we, from our own resources within the company, kept Erin Foods going. It was a loss maker. It continued to be so in most of its years. It ran into enormous difficulties because we were competing in a very tight and difficult market against the major multinationals and companies like Unilever and that kind of people. We were again inhibited by the fact that for social reasons we had set up small factories in deprived areas such as Skibbereen, Tuam, Limerick and such places. Those small units were not very economic and we had to weather that storm, all the time from our own resources.
Then came the Common Market which presented immediate and severe difficulties to the sugar side of the business which traditionally had made money. It was that money we used to develop machinery, and Erin Foods and the various diversifications we had gone into. The margins on sugar in the EEC context became tighter and more difficult. The profit we were able to generate, was never great as we were never a high profit-making company but the profit that we had traditionally been able to generate tightened and our difficulties were exacerbated on all sides. In the last couple of years we have reached almost a crisis stage in so far as the increase in oil in particular—that is the worst feature which has happened to us because we are an extremely high oil user—has added an enormous burden on us, plus inflation and the high interest rates which happened at a time when we were fairly well launched on to a very large-scale modernisation programme of our fairly obsolete sugar factories at enormous cost. Those factors, on top of the commercial problems we have had, have now placed us in this very difficult situation we find ourselves in. In that time the company has been by any standards in any objective judgement, a highly successful State company.
We have had very good management over the years. We still have people who do their best. They make decisions, having considered all the factors, perhaps from a commercial view, but still bearing in mind our social responsiility. Our social responsibility in the management side has failed a bit because they are under pressure to be commercially successful. Nevertheless, the social responsibility is still fairly forward in their thinking. In that context they make, in their best judgement and in our view a good judgement, decisions to do certain things and then find that outside agencies frustrate those ambitions.
One example of that, which I have mentioned in the submission, is the Waterford project which we bought in perfectly good faith, for fertiliser blending. The facility was there. It was vacant because the previous owners had failed. It suited our operation ideally because we have to blend a fertiliser which is particular to the beet crop. We could have done that with the machinery and the facilities that were there. We had a deep sea dock to import raw materials. It was absolutely suitable to us. We bought that in good faith and as soon as we bought it outside pressure was applied and for whatever reasons, we were forbidden to proceed with that operation. That is very frustrating to the management of the company.
247. Senator Keating.—What date was that?
Mr. O’Brien.—It must be about three or four years ago.
Mr. Powell.—May I add to that the fact that in the development period in Erin Foods similar things happened when the product range being introduced by Erin Foods at the time had to be curtailed and we were not able to go into various areas because we were interfering with private enterprise. The social aspects of the Erin Foods business were very clearly defined at that stage. That is just to reinforce the argument Mr. O’Brien made.
248. Chairman.—When was that approximately?
Mr. Powell.—In the early years of Erin Foods, the first five or six years of Erin Foods.
Mr. O’Connor.—In the 1962-1965 period we certainly had restrictions on the Irish market. We were also restricted in that there were certain products which we were not allowed to manufacture.
249. Chairman.—Does that still exist?
Mr. O’Connor.—We have had freedom in the last three to four years. Despite the relation to the social objectives and the fact that the factories, as submitted by Mr. O’Brien, were located in possibly unsuitable areas, the day-to-day operations are run on a commercial basis. In other words, we have budgets which we must adhere to. We do not have a free hand, just in case we might give any impression on this side of the table that we have a free hand to take a totally social view. We have budgets to adhere to and the day-to-day operation is run as commercially viable as possible taking into consideration the original problems of location and social point of view.
250. Deputy Kenneally.—Do you think that Government Departments have too much say in relation to your freedom of action? Are you worried about that?
Mr. O’Brien.—No. This, again, is a very difficult area. There is no directive coming from the Government in our way but it is like all relationships, with due respect, with politicians. Politicians react and pressure groups build up. The master of our company is the Minister and in the final day if the Minister gives an edict we have to obey. Nobody is arguing with that. That is a perfectly acceptable situation. The Minister or the civil service or whoever are our masters—it is never really quite clear—may change in mid-stream. That is why we are laying such emphasis now on definition of role. If our role were defined then the management of the company would have freedom to carry out the running of the company within that brief. They could do that in the belief, hopefully, that their decisions would not be interfered with, watered down or changed in direction at any time.
251. Deputy Kenneally.—You say that there is not undue pressure from the Minister.
Mr. O’Brien.—Not directly but it is like all the political world in regard to pressure. Pressure changes from day to day. This year the pressure on us might be to take one path, next year for some political exigency the pressure might change and we might have to take a totally different path. In that way the role of a company like ours becomes confused and unclear. It is difficult for the board and the management of the company to lay out firm, direct objectives which we should be heading towards.
Nobody working in the company wants to see the company in a loss-making situation. We had a profit record over 50 years. There was one year perhaps in which we recorded a loss. Certainly up to this year we have never recorded a loss with, as I say, one possible exception. Nobody working in the company wishes to see that position changed. This year we will record, for the first time in our history, a very substantial loss. If no radical change takes place that loss-making situation will continue for the foreseeable future because we have borrowed so much money—which was absolutely necessary. If we are to be able to compete with our EEC partners, we must modernise the factories. We are half way through it, which is almost beyond the point of no return. We are faced with enormous borrowing. The interest alone we are paying is far more than we could ever hope to make in a trading way in any one year. Without some sort of help, obviously our position will deteriorate over the next few years. We could eventually get into a very seriious loss-making situation which would be very bad for the morale of the company, which is not great even at present. Our reputation in the State will go down because people, if they think at all of the company they own, would look upon the sugar company over the years as being a successful State enterprise. The Government are the masters and would, in a practical way eventually rescue us if we got into a really serious situation. Our contention is that it would be better if the Government faced this fact now and gave us whatever assistance in the realms of guaranteeing our borrowing or whatever else they might do to put us on a more sound footing. If that were done we could rectify our difficult position in the modern context, the social context and the commercial context which has changed radically in the last few years. We could rectify the faults which are in the company with the least pain to all parties including the people working in the company and the farming community we serve. While we would have a hiccough for a year or so we could get back on stream and continue to be a successful State company in this country. If we do not get either encouragement or financial help or both it is difficult to see how we can ride this storm that we are at present in the middle of in a practical and successful way.
252. Senator Keating.—I want to put a number of questions in a slightly amplified way with some indication of my own point of view so that people will know what I am driving at. The key words that I find on page 4 and in the whole submission is the current fundamental re-definition of the company’s role in the national context. On page 6 of your submission you state that you believe that a more enlightened and expansionist approach is necessary. Diversification then is mentioned.
I do not want to go over the things of the past, not because they are bad but because they are good, and the company have served the country well. We are faced with three alternatives. The situation has changed basically in regard to profitability particularly of sugar because of energy costs and the EEC situation. The assumption is always made that though politicians mess—of course politicians do mess in the long-term running of things—thereby reducing the efficiency day to day and year to year, they never have the guts to shut down the enterprise so that in a sense survival is guaranteed but inefficient survival is also guaranteed.
In regard to the fundamental re-definition of the company role I would like to hear more under a number of headings. I want to see a strengthening of the State sector but not under the auspices of companies working to individual Departments because, as Mr. O’Brien has said, it is the Minister who is the boss. It happens in this company’s case that it is the Minister for Finance and that is the reflection of an ancient argument It could just as well be the Minister for Agriculture or the Minister for Industry, Commerce and Tourism or a few others. Is the company satisfied with the structure where they work to a particular Minister? Would it not be better to have a State holding company so that they would be one remove away from the direct contact with a Government Department? The next question that arises is that there is day-to-day interference and knowledge that, while you can take benevolent decisions and employment-giving decisions, you would never be permitted to take a hard and job-losing decision. You can take the good ones and not the bad ones which I would have thought was an intensely inhibiting provision. Something which keeps coming up, with different companies saying the same thing month after month, is the inability to do financial planning longterm. This inhibition which is not filtered through another Minister but comes straight from the Minister for Finance to a company seems to me a very desperate inhibition, because there are good years and bad years. A company’s good and bad years do not necessarily correspond with the good and bad years of the economy. Furthermore, there is need to plan very long-term. Regarding the company’s reinvestment programme—with some of the companies closer to where I live towards the east there has been a bit of investment but I am absolutely amazed at the productivity which has been got out of ancient equipment even though they have been so starved of re-equipment investment down the decades. On the one hand it is marvellous and on the other it is appalling.
Is it not desirable to have a mechanism apart, what I am calling a State holding company or a national development corporation, which separates the company a little from direct control of a Department? Is it not necessary also to have State financial institutions within that State-holding company so that a company can, with those financial institutions, get on with long-term planning and long-term investment? Otherwise are they not condemned for ever to be behind, particularly in a low profit or middle level profit industry? They cannot generate the profits to re-invest unless they can make the correct long-term decisions, and with our current way of managing State companies they are never permitted to make those decisions. They are on a hiding to nothing because management in fact is restricted. I have spoken to managers in different companies and they know perfectly well that ought to be done. There is no way they can make those decisions in the short term or make the investments or, indeed, order the equipment. When you say “fundamental re-definition” I agree completely, not because I want to see the selling off or the weakening of the State sector. Are the company not saying too little if they accept that they must work to a particular Minister? If they are to get some possibility of serious financial planning and real independence then do they not have to have the State sector a much more structured thing? The state sector tumbled into existence, company by company, down the years without anybody ever thinking very much about it, so that we always have all this hassle about how much is social policy and how much is commercial policy.
On fundamental re-definition I wish the company would say more, get into this debate in Ireland because we will never have a State sector that can do itself credit and be an honour to us, apart from the admirable hard work, unless we can get serious management techniques and serious independence. When you say fundamental re-definition, I say “yes, great”, but tell us more about it.
Mr. O’Brien.—That document is based on that concept of fundamental re-definition and we believe that is of vital importance. It must be remembered that we are a trade union and in that sense a trade union’s traditional interest is somewhat narrow. As a trade union in the company, as a new one, and as people who are not traditionally trade union and have come new to the concept, we probably do not operate in a narrow trade union tradition. By re-definition of the company role I mean we do have a dual role. In so far as we are expected to be commercial, we would like to be commercial. At the same time, we were set up basically to provide a social service to the Irish community, which social obligation it is hardly for me to say we have met. In the changing world, there is a certain dichotomy between those two definitions now. We cannot serve two functions. We have to be either commercial or social, or we have to continue in a third way, as we do now, sort of juggling one against the other, probably rather unsuccessfully.
It would be a very backward step, indeed, for this company to shed our social responsibility. We meet a great social need of the country. There is no evidence that the need for that social role will diminish in the foreseeable future. All the employees of the company would wish to see us continue serving that purpose. Serving that purpose obviously will be at the cost of commerciality. We would like to make the money. We would like the balance sheet to come out at the end of the year showing a profit. That would give us all some encouragement to go on.
We would like to preserve both those roles in a meaningful way. We would like to see our social commitment, our social responsibility, defined. We would like the Government, or whoever our master is, to take cognisance of the structure of the company. We have factories in uneconomic places, in misplaced locations for markets from a commercial point of view. We have factories that are too small which, nevertheless, are very important in the local community they serve. We would like to see those continued. We would like to see the price and the cost of the social commitment quantified so that we could start out in 1980 from a new plateau having recognised and quantified our social responsibility.
Starting then from that plateau we would like then to be judged, perhaps even harshly, on the commercial running of the company. The performance of management could be judged in a realistic way from that day on on the commercial operations of both the management and the middle management, right down the line, to the salesmen and whoever else bring in money for the company. Their performance then could be vetted and measured, and those people made accountable for their performance, and our commercial success or failure could be judged from that plateau. That could be done. It is a difficult task, not an easy task. It could be done only by a Committee such as this, or by our ministerial masters.
Regarding the ministerial masterships Senator Keating referred to, it is not for us, as a trade union, to comment on that. My own view is that it is not really of any great importance, provided that those people understand our role and we understand what they believe our role to be, and, that we work within a certain brief, be it broad or narrow, as the case may be. If we then feel that outside influences are pressurising the management and the role of the company unduly, we can say: “There is our brief; we are working within it”. We can object in a realistic way to pressures that are not helpful to the company’s interests. We feel that the management of the company should be in a position to resist undue pressure and undue influence from outside, be it from Government Departments, the private sector or wherever else.
In preparing for this meeting we looked at other State companies and I agree totally with Senator Keating that it is absolutely impossible to make comparisons between one State company and another. Because they are practically all set up under different charters and different structural arrangements, it is very difficult to compare like with like.
253. Senator Keating.—Just to follow the point while we still have it, Mr. O’Brien argued for the quantification of the cost of the social aspect of the company’s work. He said he thought that was possible. Is there anybody on the accounting side of the company to say whether an actual accounting system could encompass that? Have attempts. been made at it either within the company or elsewhere that you know of? Reconciling the social and the economic aspect is a real problem. Without a system to measure it, you cannot come to terms with it. Would anyone comment on that?
Mr. O’Brien.—We do not have any financial experts here, but it could be done. It might be a sort of rough rule-of-thumb methodology which would be employed because it would be very difficult to pin it down to the last halfpenny. Certainly it could be done and it does not present any major problem.
254. Deputy B. Desmond.—The submission said we the politicians were very strong on analysis and very weak on solutions, and in a sense, I tend to throw that reaction back in terms of your submission. I would regard it as being strong on analysis and on entirely laudable sentiments as to what the outcome of that analysis should be. It does not contain solutions.
When one taks about historical structural deficiencies, the kind of question one has to ask straight away is: should there have been investment on a double-barrelled basis in the sixties whereby scarce capital resources of the Irish Sugar Company were not so much syphoned off but deliberately put into a food technology, marketing, production, diffusing it? Was that a wise decision? Would it have been better to have had the sugar company as a separate entity developing its own viability and marketing, serving a social need and, at the same time, having an entirely separate and distinct State-sponsored body developing the food processing side? I am throwing these questions at you in terms of the reaction one has here. Is it fair to say now that because of lack of investment in the sixties which was a deliberate decision apparently by the Board, at the time and which was supported by the trade unions in the company—at that time your union was not in the company—the viability and the capital programme of the sugar company in the eighties and for the next five years are practically nil? You talk, for example, in your submission of many small food production units which do not allow benefits to accrue to the economy, but we recall the proliferation, with great official openings and great determination, and so on, through the sixties, of small production units which were regarded as the great programme of the sugar company. By and large that sector seems to have cost millions of pounds in losses for one reason or another. Whether it was that the marketing strategy was wrong, or the technology used, or whether dehydration was wrong or right, it appears not to have been entirely successful. These questions now face us in the eighties.
I come to the final point. There is currently consultancy work being done in relation to the company. You say in your submission, that there is need for an outside body—“The company therefore needs an outside body to redefine our role, balancing our commercial and social obligations.” The question automatically arises, who is going to do that? Is it this committee? Do you think we should do it? For example, if the company is doing it I would like to have your final reaction to it. I am sorry for asking so many questions in one. The sugar company has undertaken a major consultancy project to recommend an appropriate organisation in relation to the eighties. The question does arise: are you involved in that? Have you insisted on your rights to be involved in that? I would like to have some response to those questions even to the extent that your union has apparently signed a productivity agreement with the sugar company. Where does that fit into the role of company development in terms of structural reorganisation in the companies that you represent at senior and middle management? I am interested in those questions. I see that we have Mr. Broderick and Mr. O’Connor here also as part of the delegation. I believe both of you were in Tuam. The kind of question we face is: what do we say or what should we say in a responsible manner, dealing with the social, employment and commercial implications of Tuam? What was your experience in Tuam?
Mr. O’Connor.—I was manager of the Tuam factory. On the point in relation to small factories in the early sixties, while the company may have suffered over the years in terms of profit that they might have made in other areas or the money they might have had available to recapture the sugar side, these areas as such gained immensely. For example, in Donegal, I was involved in the Glencolumbkille project which cost us a fair amount of money to set up. The spin-off from that has been phenomenal. There are at least seven or eight small industries there which would not have been there but for the fact that the sugar company in 1966 put the Donegal factory into operation. That was an area which had not a history at all of any kind of industrial development. These were social commitments in the rural or agricultural area of the country and I think it is vital to remember that. Some of these areas had no history of any kind of industrial development and while we as a company may not have succeeded to the extent we should have, the spin-off, because of the first industrialisation in those areas, has been phenomenal. We had the same situation in Midleton in County Cork. It is now a thriving town while our operations there are under stress, to put it mildly. Industrialisation in the town itself has benefited immensely. There is much the same situation in the West as a result of the hope that was given to the area by the company’s investments. The industrialisation there has been as a result of our operations to some extent. In answer to the question on the capital investment, whether the company should, in its wisdom have invested heavily in the sugar side, I just do not know. I do not know what the plans were.
Mr. O’Brien.—On that one, it is very hard —or easy perhaps in retrospect—to see the mistakes that were made, if they were mistakes. Looking back to the early sixties when we were asked as a State company to contribute to the programme for economic expansion, it was the decision of the people—General Costello—who ruled the company at the time. It was his decision to make the company contribution that way. It is hard to say whether that was a good decision or a bad one. Certainly the sugar side would have benefited if it had that money that was put into Erin at that time. Had it been invested in refurbishing the factories obviously we would be in a much stronger position now on the sugar side.
However, if Erin Foods was to be founded by either us or some other State agency, it is very difficult to say if it still would be in existence. The fact of the matter is that over the 16 to 20 years of its existence the sugar company, through its own generated resources have kept that industry going through extraordinarily difficult times with changing patterns in food, tight margins and extraordinarily difficult opposition from enormous markets. I do not believe that if Erin Foods had been founded as a separate company it would have survived. It is still under difficulty but nevertheless it is still a strong company in its own way. It has severe problems. It probably needs some rationalisation now.
There is no need to think that that rationalisation cannot be done, if it is done in the proper way. The episode of the Tuam potato plant which is well-known was a perfectly responsible thing for the management to do. It was done for purely commercial reasons. We were not able to get potatoes grown in the area to supply the factory and we had marketing difficulties with potato flake at the time. It was not a commercially viable operation. The management made the decision to close it down. That decision was endorsed by the Government. A serious mistake was made at the time that the work force was not properly consulted and it was for that reason that our union was very active in opposing the closure. Our main reason for doing so was that it had not been properly discussed with the workers involved in the industry. That is the main plank of our case: if we had been consulted and if it had been talked out properly we probably would have had to agree that the proper thing was to close the operation. That was not done; so we opposed it. Other elements came into it—the hunger strike and so on. The Government then, as governments do, changed their stance and when the pressure grew they then more or less reversed their decision.
255. Deputy B. Desmond.—How do you comment on the school of thought, which admittedly developed later in the sixties and early seventies, that had the State set up a separate State-sponsored food processing body which would have a clear aim of developing regional plants and which would have developed a far higher degree allegedly of marketing expertise and technological ability in the food sector, rather than have it under a sugar company board which was trying to do a multitude of product developments, even if it meant State subsidies to get it off the ground and to keep it going, the prospects of success would have been somewhat greater? I am thinking of unified projects such as a meat marketing board, a sugar marketing board, a food processing board, even if it was to concentrate exclusively at the time on dehydration, which is left behind. In fact, would the prospects of success have been greater? We all tend to be wise in retrospect but I would like your views on it.
Mr. O’Brien.—It is very difficult to answer but possibly if you took the meat board and various other State food operations, they could possibly have done it better but I think it is very doubtful. We had the means, the research and development capacity; we had the expertise in growing crops which was a very important element in view of the fact, that the initial concept was to encourage farmers to grow vegetables which was a thing never really organised or done properly in this country before that. It was probably a very strong motivating force in the whole concept at the time. We were probably very well suited for that at the time. I honestly find it hard to imagine that any other State agency or a totally new State agency could have done any better. The difficulties were enormous. Obviously mistakes were made, probably some very expensive mistakes. But one cannot form any new industry without making mistakes.
256. Deputy B. Desmond.—Is it fair to say that there never appeared to have been in the sixties—certainly in my experience, because I was a trade union official during that time—any national political commitment to the State-sponsored food processing sector, that rather it developed as an ad hoc fusion of ideas with enormous pressures and very forceful and powerful personality influences behind it which took on the Department of Finance, which got the money and proceeded to do the work, and the politicians and so on were chasing after what was going on, but consciously did not seem to be involved in it?
Mr. O’Brien.—I agree absolutely.
257. Deputy B. Desmond.—In your submission you say that the company needs an outside body to redefine its role. What had you in mind?
Mr. O’Brien.—The outside body I am referring to is this Committee. The Committee have the influence, in their final findings, to put on paper what should be done. That would have a strong, even morale-boosting effect on the company.
258. Chairman.—Should it be done in relation to each particular section of the Company?
Mr. O’Brien.—It should be towards the whole company.
259. Chairman.—You said earlier on that you acknowledge the right of the Minister to lay down guidelines, but you deplore the fact that these guidelines were changed rather haphazardly from time to time. Could you give an example of where a certain kind of guideline was in operation one year and then two years later something inconsistent with it had been laid down?
Mr. O’Brien.—It is very hard to describe. For instance, last year there was a big push for employment. We got a Ministerial directive to give as much employment as we could. That was adopted as a company policy and we did take on as many people as we could find jobs for. I am not quite sure if the Ministerial directive on that has changed. But it is now the policy of the company to put a freeze on employment and to try to reduce employment. I am not sure if that is the type of thing the Chairman is tallking about. It is never really articulated and one does not expect that it should be, but the political exigencies of the time do affect in a real way, the day-to-day working, the efforts of the management of a company like ours to plan ahead.
260. Deputy B. Desmond.—Could I draw another analogy on that? In respect of the Waterford blending plant, it was said to us on the last day that there was in fact outside trade union opposition to that plant going ahead. Did this emanate at the time from the Albatros side and a few other sides?
Mr. O’Brien.—It emanated from the Albatros side.
261. Deputy B. Desmond.—Are they members of the Irish Transport and General Workers Union?
Mr. O’Brien.—They are.
262. Deputy B. Desmond.—It does knock the Irish Transport and General Workers Union. I am interested in how people resolve problems.
Mr. O’Brien.—Every man looks after his own shop. Unfortunately that may not be the ideological theory of trade unionism but, in practice trade unions look after their own shop and certainly there was pressure from the trade unions, particularly in Albatros.
263. Deputy B. Desmond.—Were there private commercial fertiliser interests in the country involved also?
Mr. O’Brien.—That was the real pressure. The fact of the matter is that four other people have got into fertiliser blending since then. That was an ideal opportunity for us. I would contend that it was stopped principally by the private sector. Since then, four fertiliser blending plants have been set up in the country.
264. Deputy Kenneally.—You were talking about diversifying. What would the unions or the ASTMS feel about that? Do you think that the company should diversify further or should they divest themselves of some of the things they have?
Mr. O’Brien.—We would be totally opposed to divestment for the sake of divestment. In times of difficulty in any company, the easy solution is always to divest. I do not think a State company like ours, who have been and are a very large employer in the State, have the right to divest except for absolutely proper and worked out reasons. They certainly should not divest as an easy short-term solution of problems.
265. Deputy Kenneally.—Should the company expand further then?
Mr. O’Connor.—We would be talking about replacement and expansion into other areas.
266. Deputy Kenneally.—Let us suppose that this injection of capital to modernise the plant came in. Would there be redundancies? Would technology move in instead of a work force?
Mr. O’Brien.—That is another question. Of course the very meaning of advanced technology coming into any factory has the implication of reducing the labour content. We would go along with that. That is an absolutely respectable reason for reducing the labour content. In that situation, if the reduction in labour was high, a company like ours should be able to absorb surplus labour into some new enterprise. We would go along totally with the concept that technology implies a reduction in the work force.
267. Deputy B. Desmond.—Is your union directly consulted on the organisation review currently going on? Are you going to be in on it?
Mr. O’Brien.—No. The union has not been consulted. I am on the board of the company and have been consulted in that capacity but that is wearing a different hat. We know about it and we have seen the documentation but there has been no actual official consultation.
268. Deputy B. Desmond.—When the review is completed and when proposals emerge, if they emerge, presumably your union will then be consulted extensively.
Mr. O’Brien.—If not we will oppose the reorganisation absolutely.
269. Deputy B. Desmond.— Notwithstanding the fact that you are not being consulted for one reason or another—and this may well be by virtue of your relationship with the company—to what extent have you expressed views as to what the management restructuring of the company should be?
Mr. O’Brien.—Again it is not proper for the union or any other body to express views about something which they do not know about. In an official way we are not aware of reorganisation and we have not been consulted yet.
270. Deputy B. Desmond.—Would it not be a view of a union which represents senior and middle management and so on that they would say they were not happy about this aspect of the structure of the company and that they would suggest where it might be more effective to change that?
Mr. O’Brien.—I am not saying that we have not had some off-the-cuff discussions. Of course we have. You asked a direct question and the answer is no; we have not been consulted and we expect to be consulted and, as you say, we expect when we are consulted to have an input into, say, talking about the practicalities of the change and how it affects the people we represent.
271. Deputy B. Desmond.—It has been suggested, but it is a view that I do not necessarily share, though it may have been implied strongly in part of our previous meetings with the management side, that the Sugar Company are somewhat top heavy with administrative and clerical staff relative to the main production divisions. I presume you do not share that view.
Mr. O’Brien.—That is a very important matter to us. We have to put these things in context. In times of difficulty managements by their nature start looking at the small economies to ease the difficulties in the situation and the first thing people start thinking about is that there are too many staff, too many clerks and so on. The reality of the situation is that the administrative-clerical level of the company has not increased during the past ten years. In fact it has marginally decreased while at the same time with the advent of the EEC, the advent of extra demands from Government for statistics and all kinds of extra information that they need now, the demands on the staff of the company have risen enormously so that the people in head office and the staff people in the factories are fully occupied. If there is no work for them to do, fair enough, let them be made redundant or whatever. They are entitled to some other new diversification or something but there is no evidence of there not being work for them. The work is there to be done and people have to do it and rather than the work load diminishing the work load tends to increase enormously. The EEC alone put an enormous burden of work on a large sector of the staff. We may have a high ratio level of staff to production people but the nature of our company appears to demand that. When you are talking about staff you are talking about salesmen and we need a lot of salesmen. We would prefer if you would talk about agricultural advisers. While they are included in that ratio they are not administrative people in the sense that they do a professional job which is absolutely necessary. If we had not got them we would have to use the local government agricultural body which is not suitable to our needs. There are 120 of them. That is a very big sector of the staff and they do not do any administrative work as such in the sense you are talking about. They do a professional job outside but nevertheless they come under this.
272. Deputy B. Desmond.—They are members of your Union?
Mr. O’Brien.—Yes. Then we have a lot of engineers. We are a high technology industry. We have a lot of engineering people who are considered non-productive but it is hard to see how we could do without them. If you analyse our staff-to-production ratio it is nothing, though on paper it might be 6:1.
273. Deputy B. Desmond.—I am glad to get that on the record because we were interested particularly in that aspect.
Mr. Brady.—In the purely clerical end of it there has been quite substantial reduction. There have been two productivity deals over the last several years dealing with that. With the increased computerisation, the new technology, the silicon chip or whatever, that area will reduce even further. What has been said is a bit misleading regarding the company being top heavy. This is a universal problem because of new technologies. Perhaps, as a trade union we can deal with it in terms of a shorter working week and longer holidays and other such aspects, but it is not something that is peculiar or particular to our industry.
274. Deputy Kenneally.—The Sugar Company have had excellent industrial relations for thirty years now and there has been the development there of worker participation on the Board. Will this help industrial relations even further?
Mr. O’Brien.—Talking about our industrial relations, one of the fortunate things in our industry is that we have not had industrial problems over the years. You have to put that into context. Our factories have been in small towns with very few other industries in them so we had people beating at the gates to get even a temporary job in the company. They were not highly paid. I was recently quite amazed to discover how lowly paid our industrial workers were not all that long ago. It was a very autocratic company. The General was a very autocratic man. There was no question of strikes but if you analyse it you will see the reason for this. That situation is tending to change. Society has changed, social conditions have changed, people’s earning capacity has changed and their ability to get other jobs has changed. I would not be too optimistic that our great industrial relations record is going to continue as it has been in the past. It is now such a different world. We have young people coming into the company now. The pressure will be on from both sides. There is no reason to believe that our great industrial record will continue but I hope it will continue. Our staff have no wish to go on strike. It would be a very sad day for any of us if a strike situation arose in the company but it would be foolish to believe that it might not happen.
275. Deputy Kenneally.—Will workers on the Board be an advantage in relation to such matters?
Mr. O’Brien.—That is a different matter. I have been on the Board for almost a year. I believe the advent of workers on the Board will bring about some change. It is a very difficult job to serve on the Board of the company. It is a difficult job because you have to balance the interests. It is not the sinecure that some people might think it is. Any director has a responsibility to take a straight view in the interest of the company. On the other hand, the four of us who are on the Board were put there by the workers in the company and obviously we have an obligation and a responsibility to look after their interests. There is no great incompatibility between those two interests but it obviously poses difficulties. There are great difficulties in communication, difficulties in getting the right idea of what the people want. This is a problem that has not been solved yet, not only in our company but in any of the other State companies with workers on the board. It is a very difficult problem to solve. Nobody, not even the most advanced and intelligent trade union people, knows the answer to it. They all realise the importance of communication but nobody has been able to come up with a methodology to institute it.
276. Deputy B. Desmond.—Might I ask a general question? Perhaps it is a teasing question but one of importance, bearing in mind that your union at national level have adopted within the Congress a jaundiced view, at times with a directly opposing response to national understandings, and opposition to the principle of national understandings. How has the reality been in the Sugar Company vis-à-vis those national understandings?
Mr. O’Brien.—We are in favour of them always.
277. Deputy B. Desmond.—In the branch?
278. Deputy B. Desmond.—We are informed that, within the framework of the national understanding, as a branch of the union, negotiating with the Board it has been by and large, beneficial. Is that so?
Mr. O’Brien.—Yes. Regarding the ASTMS situation, the ASTMS represent a very large sector of insurers, banking people and people like that who in a real way would be better off outside the national understanding because their firms are making enormous sums of money and could well afford to pay well above the odds. In that sense, a lot of the membership of ASTMS would be opposed to national agreements; but again, it is perhaps, for selfish reasons, for want of a better word. On the other hand, quite a lot of the membership would be totally in favour of them. We, certainly, always have been consistently in favour.
279. Deputy B. Desmond.—And you have a degree of relative autonomy, as a branch?
Mr. O’Brien.—Yes, we have.
Deputy B. Desmond.—It is of some importance to put that on record.
Mr. Brady.—The union have an objection in principle to centralised bargaining. They would make the point that if the richer companies that save by national agreements could in some way channel what they would save to those companies that claim inability to pay, there might be some justification. But since that does not happen they feel—and this is said about the people in insurance—why should national understandings or agreements hold them back? That is why they do not favour them. It is quite a pragmatic viewpoint.
Deputy B. Desmond.—And that is quite an argument.
Mr. O’Connor.—The company, for years, have had consultation with the workers right from the floor level to the management through the works committees which were a formal grouping where management and workers could meet monthly and discuss problems in their factory areas. This certainly did help to alleviate a lot of problems, even though I agree with Mr. O’Brien that that does not mean that we will avoid all problems for the future. Certainly, over the years that has been a tremendous contributor to good relationships within the company.
280. Deputy B. Desmond.—These go back to the fifties?
Mr. O’Connor.—These go back to 1947 and were the first works committees. In fact, they are still in existence and it is a question of changing the role of the works committee now into some sort of a joint management-union council. That is what we are trying to do at the moment in the company.
281. Deputy B. Desmond.—Just a final question. On the level of your union organisation, as a matter of historic interest, how high up do you go?
Mr. O’Brien.—To Deputy Chief Executive.
282. Deputy B. Desmond.—From Deputy Chief Executive down?
Mr. Brady.—Not all the way down. In head office, the ASTMS have sole representation and we represent everybody there. The services staff, canteen staff, the whole lot are all members of the ASTMS. It is the only union in head office, whereas at the factory branches it represents a percentage.
283. Chairman.—I just want to get back to one comment you made there earlier on, that the company should not take the easy way out in difficult times by divesting themselves of some of the areas of activity. On the other hand, you said that over the years probably the food division had harmed the sugar division by taking funds from it. I think you certainly did say that the Sugar Company, its equipment and so on would have been better now if some of the money had not been syphoned off into the food division. Have you any objection in principle to the company syphoning off, or divesting themselves of, let us say, the food division if the Government decided to set it up as a separate entity, as a separate board and to fund it properly and see if it can make a go of itself? Would you object to that kind of a decision?
Mr. O’Brien.—In principle, no, we would not object. We do have, and all other unions have, responsibility for people who work in the Sugar Company. It is our contention, and indeed, the transport union think along exactly the same lines, that we as a group have 3,500 employees and that the company owes those employees to continue them in employment. Remember, people working in State industries do often work for less than the going rate outside. They have a certain protection that, perhaps, people working in commercial companies do not have. But, nevertheless, you balance the two factors against each other and there is a belief—and it has been a historic fact—that people working for the State, whether it be for the State directly or for the State in semi-State companies, have a kind of job protection which is certainly above the average. We believe that the people working in the company are entitled, if it is their wish, to continue to work for the company. We believe it is the company’s responsibility to provide suitable employment for them. Nevertheless, in the position we are in, if the State, in its wisdom, thought that Erin Foods could operate better as a totally separate company funded by the State and perhaps expand or enlarge their activities in that way as a sole food industry, that is something we would very openly and willingly consider; but obviously it would have to be a matter of consultation. I do not think any of us would have a deep objection, in principle, to that suggestion.
284. Chairman.—Does anybody want to say anything else?
Mr. Brady.—Going into what happened in the past, whether the right decisions were taken or were not taken, I believe that, by and large, the right decisions were taken and what happened was right. If things had been different, there is nothing to say that we still would not have the problem that we have now. I think that the CSET have managed very well and has looked after their responsibilities very well up to now. It is only now that we are giving out the cry for help. Deputy Desmond was asking if we did this or we did that or we did the other, but nobody knows and maybe he is right; but the fact is that we are not saying that anything was incorrectly carried out in the past. I believe we were right to go into these areas and we have contributed quite a lot to the country and to the development of the rural areas and it is now that we need the help and the support to continue on this work.
Mr. Powell.—May I just say one thing here? Specifically referring to the food industry and the financial problems that have hit it, this is not necessarily unique just with this particular food processing industry. In fact, a lot of small firms—and I would regard Erin Foods as a small firm—in England have been in extreme difficulties over the years and have been bought out holus-bolus by multinationals. The entire food processing industry in England is being controlled by fewer and fewer people all the time and the margins and the competition—the margins, in particular—have been very tight, so that a lot of firms in England losing money were bought over by multinationals. It does not necessarily mean indigenous problems in this country made Erin Foods lose money; the industry is not a high profit industry. Again, just briefly finishing on the social aspect of it, where are we going in the food processing industry? Multinationally at the moment, it is being controlled by fewer and fewer people all the time. Small people are being squeezed out.
Chairman.—I think it is not highly profitable because it is too competitive.
The witnesses withdrew.
* Appendix 6.