Written Answers. - Foreign Direct Investment.
Jim O'Keeffe
Ceist:
66
Mr. J. O'Keeffe
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
the number of US firms operating here; the total employment involved; the number of firms and employees affected to date by the slow down of the US economy; and the estimated number which she considers may be affected during the course of the year.
[17091/01]
Ivor Callely
Ceist:
112
Mr. Callely
asked the
Tánaiste and Minister for Enterprise, Trade and Employment
her views on whether the current economic downturn in the United States will have an effect on the economy; the number of jobs which have been reduced by US operators here or the number of US projects which have been cancelled or put on hold in recent times; and if she will make a statement on the matter.
[16981/01]
I propose to take Questions Nos. 66 and 112 together.
In the year 2000 there were 524 IDA Ireland supported US companies operating in Ireland employing a total of 94,100 people. The slowdown in the US economy is having a negative but limited impact on the overseas owned manufacturing sector in Ireland. The most vulnerable jobs in Ireland are those in relatively low skill areas, where Ireland is becoming an uncompetitive location for manufacturing. In this respect, a primary element of current IDA Ireland policy is to assist client companies to move up the value chain into higher tech jobs, requiring higher skilled and better paid employees which will help to secure employment levels into the future.
To date, IDA Ireland job losses directly associated with this downturn that have either already happened or have been announced total about 1,400, virtually all of which are in US companies. In addition, some of the major multinationals have temporarily halted recruitment or slowed the build up of planned expansions. Overall IDA Ireland still hopes to create about 12,000 new jobs in 2001, which is not as strong as in 2000 but still high by historical standards. However, further softening of the US and European economies could affect this outcome.
Given the scale of the downturn in the US economy over recent months, particularly in the manufacturing sector, the impact to date on the Irish economy in terms of GNP growth and employment-unemployment has been quite small. This is due to the following reasons: the downturn, while sharp, has not been in progress very long; the impact has been confined to the information technology related sectors to date and our base of companies in this sector is relatively young and focused on higher value products, often incorporating functions such as customer/technical support, software development and logistics, which make them less vulnerable than basic manufacturing plants; other sectors such as pharmaceuticals/healthcare and most international services and financial services sectors are to date largely unaffected; economic conditions within the EU are, in contrast to the US, still strong. Since, this is the main market for the output of US owned companies in Ireland, Irish operations are somewhat less likely to be affected by any slowdown than those in the US; the current buoyant labour market conditions in the economy as a whole mean that those losing jobs are unlikely to experience significant difficulty finding new positions.
However, it must be emphasised that a stronger and longer lived slowdown in the US economy than most commentators are predicting at this time would potentially have serious consequences for growth and employment in Ireland. This makes it more important than ever that those issues over which we actually have some control and which impact heavily on the competitiveness of Ireland as a base for foreign direct investment continue to be given priority. Among the key factors to maintain competitive advantage in the future will be a greater focus on education, skills and research and the roll out of infrastructure particularly into the regions.
I am satisfied that arising from positive Government actions the economy is now in a much more robust condition to weather the vagaries of the global economic cycle and that foreign direct investment will continue to play a key role in our economic success.
