Written Answers. - Electronics Sector.
Richard Bruton
Ceist:
116
Mr. R. Bruton
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
if she or any of the agencies under her authority have conducted an assessment of the risk status of companies in the electronics sector, both software and hardware; the number of companies and jobs which fall into the high, medium or low risk category; and if she is assessing actions which could be taken to prepare for any difficulties precipitated by the present economic turmoil in the Far East and elsewhere which are inevitably having significant impact on these sectors.
[21016/98]
Given the rapidly changing nature of the electronics sector and its increasing importance to industrial development and employment creation in Ireland, all segments of the sector are kept under review both by my Department and the industrial development agencies.
In its latest review of its client electronics companies, the IDA formed the opinion that some 11 per cent of them could be considered as high risk, 34 per cent as medium risk and the remaining 55 per cent as low risk. While these reviews help give an indicative view of the sector they are augmented by close liaison between the IDA and its client companies. I would point out that the categorisation of "high risk" does not mean that a company is in imminent risk of closure or loss of jobs but that the commercial risks to the business are higher than the normal level of risk which is a part of commercial reality.
It is an assessment that some adjustment or improvement may be required in order to make the company more competitive. In general companies subject to a higher than average risk do make adjustments and improvements with a view to increasing competitiveness. The IDA's latest assessment of the number of high risk companies is similar to previous IDA reviews, notwithstanding the economic difficulties referred to by the Deputy.
In addition, an early warning system is in place to identify potential threats to jobs in both indigenous and foreign companies in all sectors, including the electronics sector and to faciltate an appropriate response.
IDA Ireland is endeavouring to persuade companies which it has identified as being at risk, to add a range of business functions, in order to enhance the strength and depth of its Irish operations. In addition, IDA Ireland regularly reviews progress in individual companies which it has helped establish in Ireland.
Enterprise Ireland has been working for some years with Irish sub-supply companies in order to address cost competitive issues through a world class manufacturing programme and will continue to emphasise the need for all companies to improve their competitiveness through such programmes.
A feature of the electronics sector is the pace of change in the industry. Such an environment requires flexibility and speedy response capability from companies.
The number of Far Eastern companies established in Ireland is quite low. Nevertheless the crisis in the Far East could impact on some companies in the electronics sector and could result in a scaling back, at least temporarily, of plans for capacity expansion. However, the diversified nature of the electronics sector in Ireland provides protection against economic downturn. Over half of the companies based here engage in some subsidiary activity, in addition to manufacturing. These aspects commonly include product development, back office support, sales and marketing. I am confident that the sector in Ireland will continue its impressive growth record despite experiencing fluctuations in individual company fortunes and specific segments over time. However, it should be recognised that, despite the best endeavours of my Department and the industrial development agencies, in the final analysis individual companies themselves must react to market situations and take the action which they consider necessary to remain competitive and to develop their operations.
