Nora Owen
Ceist:39 Mrs. Owen asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans she has to address the problems facing manufacturing industry here; and if she will make a statement on the matter. [2007/01]
Other Questions. - Manufacturing Industry.
Bernard J. Durkan
Ceist:40 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment if she is concerned that a trend to relocate to low wage economies exists; if so, the measures she will take to identify the cause or causes therefor; and if she will make a statement on the matter. [3079/01]
Nora Owen
Ceist:88 Mrs. Owen asked the Tánaiste and Minister for Enterprise, Trade and Employment the action she is taking to support manufacturing industry in view of the recent announcements of job losses within that sector; and if she will make a statement on the matter. [2008/01]
Bernard J. Durkan
Ceist:105 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of enterprises or sections of enterprises which have relocated to other economies in the past 12 months; the measure or measures she has taken or proposes to take to combat the problem; and if she will make a statement on the matter. [3208/01]
I propose to take Questions Nos. 39, 40, 88 and 105 together.
As three of these are Oral Questions, they must conclude not later than 4.15 p.m.
The performance of manufacturing industry, like that of the economy in general, continues to be strong, as it has been in recent years. Permanent jobs in internationally trading companies which are clients of the development agencies IDA, Enterprise Ireland, Shannon Development and na Gaeltachta have increased by 27% in the four years 1997 to 2000; the increase for 2000 over 1999 was 8%. The total number of jobs in this category at the end of 2000 was 316,000 compared to 215,000 in 1991.
Underlying this national picture there have similarly been increases in employment in each of the eight regions. While the Government is pleased with this performance, we are determined to continue to focus on carrying through policies which will facilitate continued strong performance in industrial employment and in the economy in general. These policies for the period 2000 to 2006 are set out in the national development plan.
Our position relative to other countries, as shown in the most recent global competitiveness report, has now reached seventh in the world compared to 26th in 1996. A central element of our success in this regard in recent years has been the ongoing partnership approach. We will continue to use this approach to focus on factors such as the skills level of the population, the quality of our physical infrastructure, the costs facing business, the services needed by business, the regulatory environment and the effectiveness of public administration.
There will always be threats and challenges to be faced and we must continue to compete actively in the global marketplace. While I am concerned at any factors that might adversely affect industrial employment, there is no evidence available to my Department or the industrial development agencies of any increased tendency for firms to relocate to low-wage economies. It is not possible to determine the number of enterprises or sections of enterprises which have relocated to other economies in the past 12 months as statistics are not maintained in this format. The reasons for relocation are many and varied, and Ireland has on balance benefited from such movement in recent times due to the strength of our economy.
The job losses which are occurring are mainly as a result of the restructuring process which is going on in industry in Ireland whereby activities and, hence, jobs at the lower end of the value added scale are being phased out as these activities become uneconomic in the Irish context. The IDA's policy in this regard is, first, to focus a major part of its efforts on an embedding programme for the existing overseas owned companies in this country. It also seeks to ensure that, as jobs are lost at the lower end of the scale, they are more than compensated for by a greater numbers of jobs at the higher end. This process has been more than successful over the past decade and would not have occurred without the continued active promotion of Ireland as an investment location against competition from other destinations for foreign investment.
In her reply the Tánaiste indicated that the majority of relocated jobs are low-paid or low-technology ones. Will she confirm whether Motorola's proposed relocation comes within either category? Will she also outline the various other locations throughout the country which, in the past six months, have lost heavily to international competition? There seems to be no response on her part, or on the part of the Government, to replace them.
In the first instance, industries – not Governments – create jobs. As the Deputy is aware, unemployment in this economy is now down to 3.6%, and long-term unemployment is down to 1.5%. Ireland continues to do extremely well from foreign direct investment. We win about 27% of all mobile investment coming from the US into Europe, even though we have less than 1% of the European Union's population. Motorola is restructuring its operation world-wide. It has not done well vis-à-vis its competitors in relation to the manufacture and sale of mobile phones. That is what the company was engaged in here. It is fair to say, however, that the people losing their jobs in Motorola are being actively headhunted by other companies. There is no question about that and I doubt if there will be anybody who will not be able to find a job with other companies, if that is his or her wish. We need to emphasise that investment is mobile and will only come here and stay for as long as it is competitive to do so. Wage levels are important but so too are infrastructure, the level of education, the rate of tax that applies to the economy, and the state of our telecommunications network. Because we have made major changes in those areas we remain very attractive for investment, but we will always lose some industries when they become uncompetitive.
I thank the Tánaiste for the work that Enterprise Ireland is doing in providing assistance and advice for small and medium sized textile industries in Donegal. Does she accept, however, that Donegal still has a huge problem following the loss of the Fruit of the Loom plants? That matter remains to be addressed both in relation to stabilising the remaining manufacturing industries and addressing the need for alternative industries to ease the repercussions of the loss of that company to a third world market.
Will the Tánaiste confirm whether Enterprise Ireland or any other State body is giving aid to help companies set up or relocate overseas, as has been mooted by some individuals currently involved in manufacturing? Will the Tánaiste also comment on the IDA's figures for job creation in the Donegal area? Does she believe the goals of the Donegal task force will be met, given that the figures were quite well researched and thought out, and at the time we hoped they would be met?
It is not true that we pay companies through either Enterprise Ireland or the IDA to take jobs abroad. It may make sense for some companies to move manufacturing jobs abroad and increase the redesign or marketing element or the research and development element of their operation in Ireland. If that kind of restructuring was under way with a view to enhancing the competitiveness of a company or ensuring that it survives, then obviously restructuring moneys may be made available.
Fruit of the Loom is a case in point and this probably gives rise to Deputy Durkan's question. That was very basic manufacturing. The salary levels in Morocco are about one seventh of what they were in Ireland and, therefore, the company was not able to compete from an Irish location. Donegal has experienced a severe loss. It is probably one of the reasons we should never put such a huge concentration into such a relatively small area in the future. Virtually all of Inishowen and Buncrana, in particular, was very dependent on a single company.
How is it that the Tánaiste's advice from the agencies is that there is no trend towards relocation to low cost economies? It seems to me that the IDA, for example, which is a very professional organisation, is caught in the old paradigm and will not concede anything. Surely, what we have seen in Tullamore and in Ballina, where I met the workers in Henniges last Saturday week, are examples, several of which we have around the midlands, of jobs in the more traditional sector being lost. There is a disproportionate impact on provincial towns. Any agency not acknowledging that and advising the Tánaiste on it is turning a blind eye and pointing to the undoubted successes there are.
It is true we are losing jobs and that some of our traditional industries are in difficulty – in fact, some have closed. That is because they have not been able to compete with the competitors from elsewhere. There is no evidence, other than maybe one or two isolated cases, of companies closing operations in Ireland and moving operations to other countries.
Ballina is an example.
There are some examples but they are relatively few. They are no greater now than they were a number of years ago. This is a trend that has been under way for many years and it is certainly no greater now than it was four or five years ago. The challenge for us is to move other operations into Ireland and the policy in relation to many of the companies that are here, some of which are restructuring globally, is to get the more strategic elements of their operation into Ireland with a view to replacing some of the jobs that are falling out at the bottom. That happens all the time and it is continuing to happen.
One of the difficulties we have had is that there was an over concentration in the midlands, in particular, on low value added manufacturing. Portarlington in Laois, Tullamore in Offaly and Longford suffered from a number of closures in recent years, all in the same basic area.
The picture nationally looks rosy but is the Tánaiste aware that in the Border, midland and western region, the most disadvantaged area in the country, small manufacturing industries are closing down? Almost 9,000 jobs were lost in that region in the past 12 months. Generally, the people losing their jobs have been middle aged and they are finding it difficult to be re-employed. It is causing devastation for their families and communities. What action is being taken to retrain and to get alternative employment for these people? If the Tánaiste's Department is aware of this major difficulty—
Please, Deputy Boylan, we are running out of time. There are four Deputies offering and we will take a brief supplementary from each and a final reply from the Tánaiste.
Will the Tánaiste clarify the point she made on the restructuring of companies? Is it the case that State funding is being used in restructuring which could result in low skilled jobs being sent abroad rather than being maintained in Ireland? She made the point that we have to encourage hi-tech investment and research and development to the country. Does the Tánaiste not believe the PRSI changes in the budget inhibit that type of investment in this country?
What are the Tánaiste's views on the damage that could be caused to industry in this country by the improving value of the euro?
The Tánaiste referred to the fact there were no statistics in relation to job relocations. Surely, it should be the main plank in the platform of any Department to ensure strict tabulation of job losses, particularly job relocations?
There has not been an increase in the number of jobs being lost to Ireland over the past 12 months as against four or five years ago – in fact, the contrary is the case and we still gain a very high share of investment into Europe. The last disc drive facility in Europe was in Dundalk, County Louth, and that closed last year.
Obviously, the value of the euro will have a bearing on the indigenous sector, much of which only exports to the UK and much of which does not have margins such as 20% plus. It is a worry and that is why much of the strategy is devoted to making those companies more competitive, to encouraging and helping them to increase their productivity levels, to installing new equipment and to using modern technology, to embracing new technology and to diversifying in terms of markets. It would be a worry if the pound vis-à-vis sterling went anywhere over 90p. That would place enormous pressure on some Irish companies, particularly in the traditional sector, many of which are outside the larger population areas.
We are not assisting companies to move jobs offshore. Some companies, particularly in the textile sector, have closed altogether. Other companies, through very innovative approaches, have survived. Companies are helped if it is a survival package in which they are involved but nobody is helped or given assistance to move jobs from Ireland elsewhere. The strategy is to keep jobs in Ireland and to grow employment. It is the case that occasionally companies which are shedding jobs are helped financially to keep fewer jobs and to make them viable. That is very different to helping companies to move activities abroad. We are not in the business of doing that nor would we do that.