Dáil Éireann díospóireacht -
Tuesday, 22 Oct 1996

Vol. 470 No. 4

Written Answers. - Companies Survival Rate.

Seamus Kirk

Ceist:

38 Mr. Kirk asked the Minister for Enterprise and Employment if his Department will confirm the recent figures on the survival rates of start-up companies mentioned in the survey from Dublin City University; and if he will make a statement on the matter. [18039/96]

Minister for Enterprise and Employment (Mr. R. Bruton)

The survey mentioned in the question refers to a recent report entitled Survival and Growth of High Potential Firms in Ireland by Teresa Hogan and Anthony Foley of Dublin City University. The survey reviewed 239 companies approved under Forbairt's Enterprise Development Programme (EDP) over the period 1978-92.

The review concluded, inter alia that 54 per cent of these firms did not survive over the 15 year period and 9.2 per cent of the companies in question grew to employ more than 50 people. This group, which made up the 9.2 per cent fell into the category of fast growth firms and accounted for 62 per cent of the surviving firms' employment. These fast growth firms (22) grew from 242 jobs at start-up to 2,888 jobs in 1994.

The DCU report has been examined by Forbairt and, consistent with other internal reviews carried out on the programme, not only do the overall results reflect well on the programme but there is a significant improvement in the effectiveness of the programme over recent years. Some of the more important points to note are that failure rates of companies approved under the programme have significantly reduced since the early years of the programme. Thirty four per cent of companies approved under the programme in 1987 failed within three years as compared with 56 per cent of the companies started in 1984 closing within three years. The failure rate of companies approved over the past five years, 1991-1995 has fallen to 14 per cent; the programme support for the significant number of companies that now employ 50+ people i.e. 9.2 per cent compares favourably with 1 per cent of all start-up manufacturing companies started between 1973 and 1989 growing to employ over 50 employees or more by the end of 1989; the improved performance of the programme in recent years is the result of action taken on foot of reviews of the programme carried out in 1987 and 1990. Among the measures taken were a greater level of external equity investment being required in companies; a greater focus on encouraging management teams in companies as opposed to companies involving a single promotor; encouraging greater use of specialist external advisers by companies; encouraging a larger number of companies to form strategic alliances and joint ventures with other companies in their industry; the average survival rates quoted in the report are in line with international experience. Ireland is second best in survival rates of companies after five years in the SME range.