Vol. 465 No. 5
3 Miss Harney asked the Minister for Enterprise and Employment his views on whether the high taxes on work and the high cost of employment, vis-à-vis the United Kingdom, were the reason for Ireland's failure to secure the investment of Korean company, Lucky Goldstar, with a potential for the creation of 4,000 manufacturing jobs. [10023/96]
While I am aware of press reports on the project in question, I understand that a formal announcement as to the location of the project has not yet been made. During my recent visit to Korea with the chief executive of IDA Ireland, I met senior officials of the Lucky Goldstar Group. I can assure the Deputy that I took this opportunity to support IDA's efforts to promote Ireland as a location for the company's overseas investments and also to endorse the benefits of the Government's ongoing pro business policies. However, the Deputy should appreciate that contacts between IDA Ireland and the promoters of potential projects are conducted on a confidential basis and, as such, it would be inappropriate for me to comment on any aspects of negotiations with the company.
A variety of factors come into play in the decisions of foreign companies as to where to locate projects. Incentive packages, the quality of the labour force, particularly in the electronics area, access to markets and the location of sub-suppliers are some of the many factors which influence this choice in addition to tax and labour cost issues.
In the final analysis decisions as to where to locate overseas manufacturing operations rest with the owners of companies and are beyond the control of IDA Ireland. The attraction of inward investment is a very competitive business. Ireland has been extremely successful in attracting new projects. In 1995, a total of 22 electronic-software projects, with an employment potential of almost 7,000 jobs, were approved by IDA Ireland. I am confident Ireland remains competitive and will continue to win high tech projects against very strong competition from many sources.
Is Ireland still in the running to have this company locate here?
It was announced for Wales on Welsh television.
There were newspaper reports in the UK suggesting that a decision had been made. Decisions have not been made as yet. There were speculative reports as to where it might go. Ireland remains a competitive location that will be considered by Lucky Goldstar but I am not in a position to say how the company will make its decision in this issue.
It is the fifth prime electronics company in the world.
The Deputy may not intervene at this stage.
It was announced on Welsh television.
I ask the Deputy to desist.
If the Minister is suggesting that this company may still come to Ireland, it is in conflict with what the IDA has told a number of people. Will he clarify the matter?
The company has not yet taken a formal decision. Ireland would be more competitive than others for certain parts of a project. This project spans a number of elements.
In some areas it would have disadvantages in terms of sources of raw materials. The issue for Lucky Goldstar is whether it would consider Ireland's benefits, particularly for part of the project, whether it would perhaps deal with parts of the project in one location and parts in another. My information from the IDA is that the position has not changed since we met the company, that a final decision has not been made by the company and is not expected for some weeks.
My information is that the labour costs in Cardiff would be £20 per week cheaper per employee than in Korea and that is why the company is interested in going there. I understand the company made a decision not to locate in Ireland, but obviously the Minister knows better than I do. Has the Department done research, or what is the Minister's view on the attractiveness of Ireland for foreign investment? Will he accept that in the case of manufacturing industry and financial services, the 10 per cent manufacturing tax and tax on financial services profits is the key factor rather than grant aid?
On electronic projects the key factor is the availability of qualified people, whether there are sufficient qualified engineers available to ensure the company gets a quick ramping up into production so that its product goes to market on time. This is a very fast moving business and the key is to move in time with the product development cycle and get to market when profits are high from a new product. Naturally the profitability of a product declines in time and if a company hits the cycle late it will not be effective. Other factors are also taken into account such as our tax regime, which is attractive to companies. The primary factor at present is the availability of skilled people at competitive labour costs compared to other parts of Europe in particular. The Deputy will be aware that in recent times Scotland has been successful, as has Ireland, in attracting very significant electronic projects.
Hi-tech projects, as against low-tech projects here.
Ireland's record is exceptionally strong. We attract many of the major electronic projects to Ireland and there is a good spread of those companies here, such as Intel in chip manufacturing, Gateway in PC manufacturing and Microsoft in software manufacturing. There is a very good spread across all features of the electronics sector.
