IFI proposes to close Cork plant for winter

 

Irish Fertiliser Industries (IFI) is proposing a three-month closure this winter of its Cork plant as part of its cost-cutting viablility plan.

Unions at the company, which had an input into the proposed viability plan, say workers are prepared to contribute to the cost cutting, although details on the mechanism have yet to be worked out.

In its plan, put to Government yesterday, the company isoffering significant cost savings in return for a cash injection. Further talks aimed at saving the 600 jobs at IFI are expected to take place this week.

The plant produces ammonia for its other operations in Arklow and Belfast.

The company is seeking cash from its two shareholders, the State and chemical company ICI, to get it through a crisis caused by a glut of fertiliser on the European market and consequent price drop.

A request by management for €25 million in July was rejected by the State and ICI, and a subsequent attempt to sell the company to a Finnish concern, Kemira, fell through earlier this month.

A renewed request, understood to be for a lesser amount, has been made in return for cost cuts of €30 million that the company believes can be made by next year.

Management believes that if the company can survive its present predicament, it has a viable future.

The belief is that the current depressed state of the market is likely to force an industry shake-out, with some European producers likely to close or dramatically reduce capacity.

Union leaders at the company claim temporary support from the State will ensure IFI is not one of the companies that goes to the wall.

The Tanáiste, Ms Harney, however, has pointed to the €34 million in State support given to the company over the past two years.

A new business plan will only be supported if it is shown to be viable, she says.

Industry observers say the company is the victim of the cyclical nature of the fertiliser market, which has always had a boom-and-bust element, and the reduced use of nitrogen by farmers in recent years.

The popularity of the REPS scheme, which provides financial incentives for farmers to take steps to protect the environment, has contributed to the decline in demand.

Teagasc figures for 2000 - the most recent available - show that nitrogen use by farmers declined by 5 per cent. Competition from Russia and eastern Europe, which has contributed to a price drop this year of 15 per cent in IFI products, is also a major part of the problem.

The idea behind the proposed winter closure of the Cork plant is that this is when the price of gas, which is used in the manufacture of ammonia, is at its highest. The ammonia is made in Cork and transferred to Arklow and Belfast for processing into a variety of IFI's leading fertiliser brands.

One of the company's biggest problems, however, is that ammonia is currently cheaper to buy on the open market than it is to produce in Cork.

Mr Noel Dowling, national industrial officer with SIPTU, said last night the price of gas transmission to the company should be addressed by the Government, as this was adding significantly to its cost base.