Dáil Éireann díospóireacht -
Thursday, 17 May 2001

Vol. 536 No. 4

Written Answers. - Industrial Development.

Bernard J. Durkan

Ceist:

74 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the plans she has to encourage investment to replace jobs lost in the course of the past six months; and if she will make a statement on the matter. [14452/01]

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney)

The provision of jobs is a day to day matter for the industrial development agencies, and not one for which I, as Minister, would have a direct function.

The Government, through the enterprise development agencies, IDA Ireland, Enterprise Ireland and Shannon Development, is committed to ensuring the most equitable distribution of job opportunities and to encouraging the establishment of industry in the regions. My Department and the development agencies are seeking to ensure that the required investments in economic and social infrastructure to achieve balanced regional development are identified and put in place. The co-ordination of policy is continuously pursued and achieved through a number of mechanisms between my Department, Forfás and the development agencies.

Job losses are occurring 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 an Irish context. Unfortunately, the slowdown in the US economy is having a negative impact on the overseas-owned manufacturing sector in Ireland. In addition to job losses directly associated with this downturn, some of the major multinationals have temporarily halted recruitment or slowed the build up of planned expansions. Despite the scale of the downturn in the US economy over recent months, however, the impact to date on the Irish economy in terms of GNP growth, and employment/unemployment has been small. IDA Ireland hopes to create about 12,000 new jobs in 2001, which is high by historical standards.

A report which I recently commissioned from Forfás, the industrial policy advisory agency under my Department's aegis, concluded that, on the whole, the impact of a temporary downturn in the US economy should be manageable, and may even help reduce inflationary pressures. A deeper and more prolonged US slump would, of course, have more serious and long-term implications for the Irish economy. The recent job losses and the US downturn reinforce the need to maintain a cost-effective and competitive environment for foreign direct investment and business generally, to avoid wage increases that undermine competitiveness and to make progress on issues such as infrastructure, skills shortages and deregulation.

With regard to the indigenous sector, increasing competitiveness is essential for indigenous firms if they are to be successful in improving their positions in global markets. Enterprise Ireland, which works with indigenous industry, is mindful of the need to encourage its client companies to focus on maintaining competitiveness in an increasingly global economy, and against the background of perceived threats to the more traditional sectors of industry from low cost economies. The emphasis of Enterprise Ireland's financial interventions has moved from capacity-building to capability-building supports. Enterprise Ireland is addressing an imbalance in the venture capital market as a priority and is very close to finalising a number of public-private partnership venture capital funds in the regions. The new funds will focus on accelerating the rate of new technology start-ups with high growth potential. In addition, the agency has sought expressions of interest from private sector venture fund managers to participate in a new seed and venture fund initiative, which will be funded through the national development plan.

Shannon Development continues to manage and promote Shannon Free Zone as a location for inward investment. In particular, in recent years there has been a strong marketing effort around new internationally traded and high quality service jobs. There continues to be a well-diversified industry base on the Shannon Free Zone which, I believe, provides a sound basis for future growth in the region. I am confident that the industrial development agencies in implementing the various commitments contained in the national development plan will continue to play a crucial role in encouraging investment and in contributing high levels of job creation to our economy over the coming years.