Comerford on Tuam's Future

The Connacht Tribune, Friday, October 18, 1985

By John Cunningham

Irish Sugar Managing Director, Mr. Chris Comerford last week, for the second time, met a delegation representing the town of Tuam where there are fears about the future of the sugar Factory, now employing about 180, but where 120 jobs have already gone and other job losses are planned.

The Tuam plant plays a vital part in the economy of the area. Two years ago in a public message the Archbishop of Tuam, Most Rev. Dr Joseph Cunnane estimated that it directly affected 1,000 households in the North Galway area and indirectly had a £3 million effect on the economy of the region, exclusive of its direct wage inputs.

The factory will this year take in about 7,700 acres of beet in the traditional western growing area (4,560 acres of it west of the Shannon), it will pay directly about £3.3 millions in wages, and pay over 12.5 millions to farmers west of the Shannon for their beet.

But its future has been in doubt for over five years now. When Sean Lemass announced its setting originally in the 1930's, he conceded that its setting in Tuam was for social rather than economic reasons, but until the 'heat' has been on Tuam since a decision some years ago by the Board of Irish Sugar that it should close. That was taken after an all—party Oireachtas Committee advised strongly that it should close.

Successive Governments ordered that it should remain open, and Irish Sugar is now under instructions to keep it open for social and political reasons. It has also insisted that the plant, opened first in 1934, should be run as economically as possible and that costs are to be cut.

It is in this cost cutting that the 'crunch' has come for Tuam — so far 120 jobs have gone with worker co—operation, but still Irish Sugar demand more economies (apparently under instructions from Finance and Agriculture), and now Tuam is afraid that if office staff is cut from 22 to 8, it will mean a fall in service to customers and growers and the beginning of the end for Tuam.

The fear is hardly surprising — grower loyalty to Tuam which is not in doubt in more recent years following a massive campaign to grow more beet in the west and a very substantial success by same, is a sensitive business, say people in Tuam, and must not be tampered with. They fear that if farmers go into a factory without a direct customer/farmer service, then Tuam may go downhill rapidly.

Tuam also sees other threats — a pulp subsidy that farmers have had cut off which was worth £35 per acre grown (a sore blow in a year of shortage of fodder), and a halving of the special western beet transport subsidy, the western beet transport subsidy to go entirely next year. The western transport subsidy in effect meant transport was free.

There is also deep frustration in Tuam at the plant being persistently referred to in Irish Sugar reports as a £3 million 'cost penalty' on Irish Sugar, a 'figure, that has not diminished despite 120 agreed job losses and productivity increases and a best—ever processing season last year.

The conference between Mr. Comerford and the Tuam delegation last week took place in the atmosphere of all this background. No statement was issued afterwards, but Mr. Comerford did agree to speak to The Connacht Tribune in a special interview about the Irish Sugar industry in general and with special reference to Tuam.

Mr. Comerford said that the Irish Sugar situation in general had to be understood in the context of an Irish industry that went into the E.E.C. and a sugar industry that was extremely modern, was producing for an over—supplied market, and our level of sugar production had been limited by the previous Anglo—Irish Sugar Agreement, which resulted in a low sugar quota for Ireland.

Our sugar quota from the E.E.C. was 182,000 tons of "A" quota (carrying a two per cent EEC levy), 18,000 tons of "B" Sugar (carrying a 37 per cent levy), and there was a case to be made that while we had a "B" quota of only about 10% of our "A" quota, other countries like France and Germany had up to thirty per cent "B" quota (quotas mean guaranteed EEC prices).

When we entered the Common Market, said Mr. Comerford, our factories were run down and were not modern. Irish Sugar had to borrow expensive money to develop them — this was because the capital invested by the successive Governments was not sufficient (total state investment from 1933 to 1982 was £5.6 millions), and the company had also been involved at Government instigation in the very expensive business of investing in the food industry where a lot of research had to be done and various conditions (like only being allowed to sell ten per cent of Erin Food produce in Ireland) had made trading difficult.

Mr. Comerford said that effectively in the 1950's under the development programmes, Irish Sugar was essentially given a role in industrious development, it was told to site plants in areas for social reasons (Glencolmcille and Skibberreen were cases).

Said Mr. Comerford:

The brief from Governments for many years was that they did not want to know if we were getting profits. Companies within our Group were not singled out specifically to see if they were making profits, we were expected to play a social and economic and job creation role.

Our brief from Government now is to operate on the basis of commerical criteria. We have all the companies broken down on their trading and business because we have to show that each of them operates on commerical criteria and is commercially viable. The one exception to that is Tuam Sugar Factory.

"Effectively the Government has said to us as the shareholder in Irish Sugar 'we are aware of the fact that Tuam factory cannot be made commercially viable, but we still want to keep it open for social and political and economic reasons'. The government has decided that Tuam should stay open, has said that it knows that it cannot be made viable, but run it as economically as possible and that is what we are doing. We are living to the letter and spirit of the Government's instructions."

I asked Mr. Comerford weren't Irish Sugar in effect running Tuam down to the point where it would be a mere 'ghost' plant, to a point where it would have to close anyway. Mr. Comerford:

That just is not true. There is a limit below which a factory cannot be run for safety and efficiency reasons. We are proud of never having a major breakdown in any of our plants and it is part of this industry that when a processing campaign begins, it must be run continuously and efficiently. People who say we are closing it by stealth just do not know that you either run a sugar factory or you don't, you can't run it at half production.

Mr. Comerford, the workers have taken a loss of 120 jobs, they have improved their productivity despite that, and they have had a very successful last processing campaign, yet they don't seem to be able to knock any 'hole' in the Irish Sugar figure of '£3 million cost penalty'. That figure is intensely annoying to them. How is it arrived at?

The cost penalty is the cost to us of processing beet for sugar production in four plants instead of three in which we could process it. It's like a man having four lorries to do particular work, but he has to keep the four on the road; it is the cost of producing sugar in four when we could do it in three.

So the workers are banging their heads off a stone wall in this? No matter what they do they can't get rid of this figure on Irish Sugar books?

Mr. Comerford: "The workers have co—operated splendidly, they are among the best in our entire group and I must pay tribute to them here and they have cut down on that figure. If they hadn't done what they have and been so co—operative the figure could be £4.5 millions now because the other plants are becoming more modern and more productive each year." He said the Irish Sugar had quantified the cost of producing a tonne of sugar in Tuam as £130 more that in the other plants.

Would the company then welcome a direct subvention to run Tuam rather hat constantly identifying it as a drag on the industry — in other words did they want a 'deontas' to run it?

Mr. Comerford:

"We cannot afford the 'brake' which Tuam is on the industry and if it continues it is on the industry an if it continues it is as a direct danger to the rest of the industry. We are quite prepared to carry out the wishes of the shareholder and we do not feel that there should be a direct subvention to us to do so. The argument is put forward that under EEC rules we could not do this, but maybe where there is a will there is a way. I can assure you we do not like the constant hassle and wrangle caused by this expression 'cost penalty'".

He said the Company wanted to be able to show it was viable and economic as a whole operation in the minds of the general public while establishing also recognition for the shareholder's request that one plant should be run for social reasons.

If Tuam is uneconomic maybe one of the reasons is that it hasn't had enough capital investment, certainly it hasn't had anything like the other plants?

Mr. Comerford:

The answer to that is that Tuam has never run to capacity, that factory could do a ninety—day campaign, it has never come near that and has in fact done a lot less, the factory does not need capital, it is quite adequate to process the beet that is going into it now.

What of jobs... isn't Tuam taking the brunt of job losses and won't these office staff jobs going to Carlow mean the beginning of the end?

Mr. Comerford:

I believe the factory can run effectively this way and can be run more than adequately. You can go into London Airport and get information about flights all over Europe, so why couldn't you go into Tuam Sugar Factory and get information about growers and customers while having the information stored elsewhere. We must be competitive with an industry in Europe that is overproducing and which has closed almost eighty factories for sugar production out of less than three hundred. As regards the job losses, the figure for job losses in Carlow, Tuam, Mallow and Thurles and in head office has been exactly thirty—one per cent in every area so Tuam cannot be said to be taking the brunt of job losses unfairly.

I fully appreciate that the Sugar Factory is the industrial heart of Tuam and that the workers have done an enormous amount to improve the situation

said Mr. Comerford, who added that with the increasing competitiveness of the sugar industry internationally, Tuam would become less and less viable over the coming years and in the long term people must think of replacement.

Mr. Comerford was one of the main instigators of the sugar factory's related engineering industry in Tuam and recently the company's forestry section, which is involved in research into tree—growing as an industry, was also moved to Tuam.

He said that the changes in techniques of forestry in recent years were being used in Tuam through a link up with a Swedish concern, Hillshog, and there were now two million seedlings growing in Tuam, with plans to increase that to four or five million next year.

Using the planting techniques which were being developed in Tuam, planting seasons could be extended the whole year through and planting could be twice as quick and it had been proven that Ireland was much more suitable for growing timber than any other European country. Irish Sugar, through its subsidiary in this area, could have an important role to play in future development of the west.

Irish Sugar had built up a large fund of information and capabilities in areas like horticulture also and he felt that it did not have a role to play in future development in western countries. In the past it had played a major role and its commitment to development in the west, still stood.