Vol. 573 No. 2
6 Mr. McGinley asked the Tánaiste and Minister for Enterprise, Trade and Employment the action she is taking to deal with the competitive threat posed by the offshore out-sourcing of manufacturing facilities to India; and if she will make a statement on the matter. [24410/03]
Maintaining Ireland's attractiveness as a profitable location from which to do business is a constant priority for both the Government and my Department. My Department, through the various agencies, is acutely aware of the changes taking place in the structure of the country's manufacturing base and how this is evolving in response to international market forces.
It has been apparent for some time that our strength and competitive advantages, vis-à-vis emerging economies such as India have changed as our economy has modernised rapidly in recent years. Competing in international markets with low value added services and basic manufacturing industrial activity no longer matches the competitive characteristics of modern enterprise in Ireland.
For example, under my Department, the Science Foundation Ireland programme has been set up to administer the €646 million technology foresight fund to support world-class research that will be the genesis of future innovation and new technologies. That, together with the development of third level education, the capacity to provide infrastructure for research and to transfer that research into companies and commercialise it, will be the future for Ireland. This also includes the upskilling and training of our workforce.
The answer is much the same as the previous question. I do want to repeat what I said earlier.
Additional InformationThis fund will help to drive long-term growth and competitiveness by helping to attract new high technology firms to Ireland while strengthening the capabilities of existing foreign and Irish-owned enterprises. In addition, IDA Ireland, Enterprise Ireland and Shannon Development are implementing a careful pro gression in the sophistication and breadth of higher value activities that companies carry out here. A critical feature of this type of activity is the development of strong partnerships and collaboration between business and universities, jointly undertaking substantial research and development activities. The IDA is placing considerable emphasis on encouraging foreign companies to add strategically important functions to their Irish operations while Enterprise Ireland is providing support for innovation in Irish companies.
I recently set up the enterprise strategy group under the chairmanship of Eoin O'Driscoll. I have asked the O'Driscoll group to recommend new strategies and policies that I, and the Government will need to take into account in charting a new course for enterprise in Ireland to the end of the decade. Among other issues, I have asked the group to specifically examine what Ireland needs to do to address the strengthening competition from Asian and EU accession states. Comments and views may be submitted to the group through its secretariat at Forfás, Wilton Place, Dublin 2 or to esg@forfas.ie.
I am sure the Minister for Enterprise, Trade and Employment is aware of the recent CSO report for County Donegal. It indicated that County Donegal has the highest unemployment rate in the State at 15.6%, twice the national average. Is the Minister aware that thousands of jobs have been lost in County Donegal in traditional type industries in recent years? The Fruit of the Loom company employed approximately 4,500 people a number of years ago, but now only employs 500. In my parish, 1,000 jobs have been lost. Most of these jobs have not been lost due to recession but have been transferred to north African, east European and Far East countries with low cost economies.
We were told high-tech jobs would offer a solution to unemployment, but they are being frittered away now. Call centres were to be established with broadband, but they are also being lost. The High Octane delegation met the Minister last week who informed her of these developments. What is her strategy to redress this imbalance and the serious loss of jobs in County Donegal and on a national basis?
I am aware of the statistics in the CSO report. However, as the head of the CSO said after their publication, the labour force survey is a much more accurate reflection of the unemployment level than the census returns. There is the other reality that a large number of applications for work permits from my Department come from County Donegal.
However, I am conscious that County Donegal has many jobs tied up in basic manufacturing, particularly on the textile side. Many of those jobs have been lost. Clubman Omega Limited announced today it was reducing its workforce there. It lost a substantial contract from the shirt company Mr. Pink Limited, which had a strong business at airport shops. Due to the slump in the airline industry after the events of 11 September 2001, that business has been dramatically affected. International events affect activities on the ground.
The key to the economic future of County Donegal lies in the development of the infrastructure. It is one of the most peripheral counties in the State. From an industrial development point of view, the development of the infrastructure, which the High Octane group emphasised last week, will be essential if we are to have more success in the future.
The question relates specifically to the threat the Indian economy poses for job creation in the Irish and western European economies. India is fast developing means by which it attracts much US foreign direct investment into its low cost economy that would have habitually gone to western European economies. The Irish strategy up to now has been to move from an investment-based to an innovation economy. This means that our economy moves up the value chain. However, moving up at a time when there is much out-sourcing to places like India is a serious threat to the economy. In the UK alone, a recent report indicated that 200,000 jobs could be lost from call centres alone to low cost places like India. This is the new challenge. Has the Minister for Enterprise, Trade and Employment new initiatives to meet that challenge?
I accept there is a challenge. I was in India some time ago and a software developer or engineer is paid about $5,000 per annum, which is a very low salary in comparison to the going rate in Ireland. The challenge must be faced by being more innovative, smarter, quicker and more flexible. This is why all the factors affecting competitiveness, including education, innovation and infrastructure must be taken seriously.
Many companies in Ireland have outsourced successfully and kept a substantial number of jobs here, including companies in the textile sector in which the more developed end of the business, such as marketing and design, is in Ireland. A company in Cork that does all the work for Cutter & Buck on the golf side has been expanding its employment as a result of outsourcing initiatives that allow it to reduce its costs and compete very successfully. We need a combination of measures and in particular we must not close our minds to outsourcing some manufacturing with a view to keeping some of the business in the country.
May I ask a brief question?
We have gone over time and I have already ruled other Deputies out.
