I move:
That Seanad Éireann takes note of the Seventh Report of the Joint Committee on Small Businesses — New Technology and the Small Business."
Seventh Report of the Joint Committee on Small Businesses — New Technology and the Small Business: Motion.
This report — the Seventh Report of the Joint Committee on Small Businesses — is a truly excellent report and, in many ways, its message is music to my ears. I would most sincerely like to compliment Deputy Yates, the chairman of this committee, and his colleagues for a very thorough and well researched report.
This report is one of the clearest explanatory statements I have seen on the importance of new technology for the small business and the development of industry generally. The introductory chapters set the context for the development of technology from the industrial revolution to the present day. These chapters explain clearly, and in a manner comprehensible to all, the meaning of the new terminology bandied about these days, i.e. computer hardware, software, peripherals, biotechnology, and so on.
The report also analyses the technological capacity of Irish industry and looks at how it compares internationally. Some of the opportunities in new developing technologies are touched upon, and the role of the various State agencies relating to technology development is briefly but correctly explained.
Since becoming Minister for Science and Technology, I have found that the terminology used in this area of work frequently frightens people. Yet this area is so crucially important to the development of our economy that it is imperative that people lose this fear of new technology. I would recommend that this report be placed in the library of every secondary school in this country.
Some of the core messages of this report are that although technology is an issue of fundamental importance to the Irish economy, it still tends to be treated as a marginal topic; that there are major technological gaps, particularly in those technologies with the greatest rate of change such as engineering technologies resulting from electronic developments and that there are major skilled deficiencies in our indigenous firms, particularly with regard to the newer technologies but also in design, quality assurance and knowledge of material.
I agree with this assessment, and indeed my objective since taking up office has been to tackle these deficiencies and seek to put matters right. In dealing with the specific recommendations in the report I will make reference to some of the steps taken by this Government in the past 12 months.
Turning now to the specific recommendations made in the report, I would make the following comments. As regards the opening recommendation, 8.1.1, the Government created the Office of Minister for Science and Technology last March in order to provide the central focus recommended in the report. This single response has already been instrumental in securing progress across the wide front reflected in the other recommendations here. In particular, and despite the difficult budgetary situation, a special science and technology development programme was initiated in 1987 with a budget of £2.5 million. This will be a permanent feature from now on and further provision of £3.1 million has been made for the science and technology programme in 1988.
The next recommendation, 8.1.2, relates to the establishment of an Oireachtas committee on science and technology. I consider that this proposal has merit. If acted upon, it would help to create a broader and clearer conception among all political parties and the public at large of the importance of science and technology.
Recommendation 8.1.3: With reference to the recommendation that a national technology forum representing Government, business organisations and trade unions should be established, I feel that the concern behind this recommendation has been met in the context of the talks between the social partners and Government. As this particular forum deals, inter alia, with technology-related matters, there would be a certain element of duplication in creating a further forum.
Recommendation 8.1.4: This recommendation relates to the central role of the National Board for Science and Technology as independent adviser to Government on policy for science and technology. Since this report was written, this Government have initiated a number of significant developments affecting many of the recommendations in the report. The Government decision to combine the functions of the National Board for Science and Technology and of the Institute for Industrial Research and Standards, in order to form EOLAS — the Irish Science and Technology Agency — is one of those initiatives. This new agency is continuing the former NBST role of advising me on national policy for science and technology.
Recommendation 8.2.1: I fully endorse the principle outlined in this recommendation on switching public support for industry away from fixed assets towards "soft" assets. It has been Government policy since 1984 to make the switch. The 1986 review of industrial progress points out that actual progress made over the proceeding three years towards achieving that objective has been limited. I believe that certain actions taken by this Government — such as the establishment of the Science and Technology Development Fund — represent steps towards achieving this objective. While the present situation is not satisfactory, I intend to make every effort to change it in the direction supported by the report.
Recommendations 8.2.2 and 8.2.3: These recommendations have been overtaken by the merger of the NBST and IIRS. EOLAS is now the agency with particular and central responsibility for co-ordinating the direction of State support for technology in industry. The intention is indeed, as this report recommends, to streamline in as far as practicable the activities of the State agencies and to avoid duplications. EOLAS has been asked to produce an annual national programme for science and technology. The new agency will place increased emphasis on assisting firms to be aware of the importance of and the role technology will play in the future development of the firm and will intensify its activities in consultancy, industrial education and the dissemination of information. In addition, the new agency will concentrate some of its resources in assisting the development of industrial sectors that are important to future economic growth.
Recommendation 8.2.4: This recommendation advocates the extension of the Teaching Companies Programme. This has already been done as part of the Science and Technology Development Programme started last year. In 1987, 30 highly qualified graduates were placed in selective companies for a period of three years for the purpose of upgrading the technology knowledge within these companies. This programme is continuing in 1988 and further placements will be made.
Recommendation 8.2.5: This recommendation relates to industrial design, an area in which EOLAS will use the capabilities of other State agencies to assist firms.
Recommendation 8.2.6: This recommendation is that as part of any grant aid package for a company there should be provision for technological assessment within the company. This recommendation has also been made in the context of a recent NBST review of the industrial R & D grants scheme. In future this technological assessment will be provided by EOLAS.
Recommendation 8.2.7: In 1987 the advanced manufacturing technology programme was put in place in four university centres. This programme will be extended during 1988. The centres are at UCG, NIHE Limerick, TCD and UCD.
Recommendation 8.2.8: This recommendation is that Ireland should achieve and maintain a competitive position in the emerging biotechnology race. I am very happy to say that Government have already accepted the biotechnology programme and during 1987 three national centres in biotechnology have been established. These are: diagnostics at UCD, cell and tissue culture at NIHE Dublin and food biotechnology at UCC. The programme is being extended during 1988 and it is my intention to bring further university centres into the programme as soon as funding permits.
Recommendation 8.2.9: Again, I have no difficulty with the thrust of this recommendation which is to make an annual allocation of £1 million to stimulate specific research projects. To some extent, this recommendation is being met through the Science and Technology Development Programme. I cannot pretend that I would not wish to increase the funds available to this programme and I will be pressing the case for this. With regard to the recommendation that an annual prize for a national competition in product innovation be established, this is already the case and the scheme will in future be operated by EOLAS. Our experience shows that the actual level of the prize fund is not the most important factor to competing industries. The prestige of winning a product innovation award is far more valuable to them.
Recommendation 8.2.10 and 8.2.11: These recommendations are related to EC-funded research. The thrust of these recommendations is, as I understand, that we should, at a national level, be trying to get the ground rules in Brussels changed so that small firms in the peripheral regions would be eligible to participate more fully in Community Research Programmes. This is something that my Department are fully conscious of and our national representatives continually stress this point in the appropriate committees in Brussels. In certain programmes we have succeeded in inserting at the outset, and against the opposition of the larger member states, certain stipulations that the programmes should benefit countries with a weaker technological infrastructure.
Recommendation 8.2.12: I fully endorse this recommendation that the non-specialist staff of all State agencies dealing with small manufacturing firms need to have a grasp of what new technology means for manufacture. I will see that this report, and my response to its recommendations are circulated to all appropriate State agencies.
Recommendation 8.2.13: I agree with and fully support the next recommendation which is to encourage a greater awareness amongst young people of manufacture as a career — particularly in an entrepreneurial or managerial capacity. I have had a number of discussions with the Minister for Education along these lines. As I said earlier, I will be asking the Minister for Education to see that this report is available in all second level schools.
Recommendation 8.2.14: This recommendation relates to product testing at point of entry, the introduction of which will be considered in the context of a product safety Bill which is in the course of preparation.
Recommendation 8.3: Most of the recommendations under this section are for the private sector to implement. Work is already on hand relating to getting public service data bases "on line" to manufacturers, retailers and professional firms.
I have tried to respond to each of the many recommendations in this report. Again, I would like to say that the body of this report provides an excellent up-to-date overview of the effects and responses to new technology at home and abroad over recent years. Its conclusions and recommendations, in particular, identify most of the major concerns of the present Government and of my Department in this area. I am very happy indeed to be able to say that positive action has been taken on so many of the recommendations made during the short term of one year since this Government created the Office of Science and Technology.
In conclusion, therefore, I would once again like to compliment the joint committee in its choice of topic for their Seventh Report. I believe that their contribution will be very significant towards raising awareness in Ireland of the importance of new technology not only to small businesses but indeed to all businesses.
As a member of the Oireachtas joint committee that produced this Seventh Report on New Technology and the Small Business I would like to take the opportunity to ask the Minister, as I did last autumn in the case of the Minister of State, Deputy Seamus Brennan, when we debated in this House the Sixth Report which dealt with the development and management of small business co-ops if he can use any influence to persuade the Government to set up an Oireachtas joint committee to deal with small businesses but with even wider terms of reference than the previous committee which everyone has admitted did excellent work. In my opinion it is a disgrace that Joint Committee on Small Businesses was not reappointed, particularly when everyone acknowledges that small business is the cornerstone of industrial survival today.
If one looks back over the several reports that were produced during the past four or five years one will see there were quite a number of very useful ideas put forward by this committee under the various headings. Some of them were taken on board by the previous Government and implemented for the betterment of this country. I am asking the Minister to be specific in his reply as to whether there will be a new committee for small busineses set up under this Government and I would urge that the reply be positive if at all possible. The last committee under the chairmanship of Deputy Ivan Yates and vice-chairman Deputy Michael Lynch worked extremely hard and achieved a lot. I would appreciate it if the Minister could use his good offices to try to have a new committee established.
In relation to this report, the committee feels that the implications for our economy arising from new technology are such that it should have a central part in our economic policy formulation. However, all the evidence suggests that we are still well behind the more developed European countries in this regard. While there are positive developments such as our modern telecommunications system, there is no central focus bringing together all the public education and business interests involved to develop a co-ordinated policy for technology in a way that will fully benefit the economy.
In order to survive in this tough, competive, business world in which we live one would need to make use of the most modern technological devices and run a very streamlined organisation. This, however, leads to loss of jobs as the more technology you employ the less need there is for people on the ground. With the introduction of the computer and the micro-processor into small business you obtain a high level of efficiency and information with the minimum of staff. Automation in the factory and office means that less skilled and repetitive industrial and clerical jobs become much fewer in number. To some extent, these jobs would be replaced in the new technological areas themselves, such as computer services and software. However, these jobs require a high degree of skill and high levels of education.
We need to invest substantially in research and development in order to keep abreast of the ever-changing situation in technology today. Sweden and Switzerland have been quoted as two countries who are among the most committed to research and development. Both of these countries have virtually full employment. Other small European countries with a heavy commitment to investment in new technology have unemployment rates of between five and 10 per cent, including Austria, Denmark and Finland. Ireland has 18.3 per cent unemployment and it is rising.
Although new technology has resulted in millions of new jobs in computer and computer-related industries and services, the net effect of technological innovation on industrial employment is firmly downwards. The following figures for manufacturing employment in Japan, West Germany and US which are three major market economies show the trend. In respect of employment in manufacturing industry and as a percentage of labour force, Japan in 1973 had 14.4 million employed or 27 per cent: in 1985 it was reduced to 14 million or 23.8 per cent. West Germany in 1973 had 9.7 million or 35.8 per cent: in 1985, it was 8 million or 29 per cent. In the US in 1973, you had 21 million or 22.9 per cent and this fell to 19.9 million in 1985 or 17.5 per cent. It must also be remembered that these three countries have enjoyed the fastest rates of growth among developed economies but that this growth has been insufficient to prevent a sharp decline in their labour force employed in manufacturing industries.
There are factors other than automation behind job losses in manufacturing industry, such as changing trade patterns, growth rates lower than in the past and a tendency for labour-intensive industries to locate in newly developed countries. However, automated production due to the newer computer technologies is the major reason.
If you were to trace the history of computers you would find that the first computer was developed in Pennsylvania University in 1946 covering 3,000 cubic feet, weighing approximately 30 tonnes and containing 18,000 valves. The next step in computers was the development of the transistor and its progressive application in the 1950s. Transistors were smaller and more durable than values and by 1964 some 18,000 computer systems were installed in the US compared with 244 in the mid-1950s. The development of micro-electronics and the miniaturisation of the transistor to the extent that thousands of them could fit on one tiny integrated circuit has brought about the greatest revolution in computer technology, known as the micro-processors or the silicon chip. The development of the chip resulted in the first commercial micro-computer in 1971. Throughout the 1970s the cost of computer hardware fell by 40 per cent annually. Computers became an option for small businesses.
There are three main types of computers. You have the mainframe, the mini-computer and the micro-computer. You now have enormous computer power available to small business at a relatively low cost. Developments in computer hardware have been matched by the growth of computer software to the extent that software has become a major services industry in its own right. Falling hardware costs and the development of the chip, together with a variety of new software packages, have greatly widened the possibility of computer application. These go right across all functional areas of business and would include for example, marketing, financial and personnel sectors.
Being involved in the running of a company myself I purchased a desk top computer a few years ago. This was specifically used for the production of monthly accounts, for forecasting, budgeting, payroll purposes, etc. In order to survive in business one nowadays needs instant information at one's fingertips. The old days of getting information at the annual, end-of-year accounts or audit is no longer of any use. Many companies are collapsing, in my view, because they do not have up-to-date information as to how they are doing. It is much easier to take the necessary corrective action if you know in time that something is wrong.
For anyone to survive in business today it is imperative that they have a computer to give them the information they require. Not being technologically minded myself, I sometimes have great difficulty in understanding how these machines work. The automatic teller machine — or the hole in the wall bank — has intrigued me from the beginning. It is in itself a computer terminal. It is an unbelievable advancement in modern technology when one can insert a card with a personal identification number in one of these machines in any part of the country and obtain cash, make a lodgment, request the sending of a cheque book and get up-to-date information on one's present bank balance. It makes life easier and reduces the need for carrying large amounts of cash on one's person, thus reducing the risk of cash loss due to robbery, as money can be obtained at any time, day or night. This development has been achieved through the integration of telecommunications with computer technology.
While this may be seen as a major advance they have of course gone one step further in other European countries. In Britain home banking services are being introduced. One such service already exists in Nottingham. Since last year customers of the Clydesdale Bank in Scotland are able to get information about their accounts; they can pay bills and make inter-account transactions using a terminal connected to their television and telephone. It takes only 15 seconds to get information on any account. The availability of this technology has led to the development of data-base services which will allow subscribers access to information of a general or specialised nature.
In France the telephone authorities have distributed microprocessor-based terminals free to telephone subscribers. To date some 2.6 million terminals have been distributed and there are 800 different services, including home banking, news and retail. In Ireland we are slowly moving in this direction. Output from electronics and computer-related products in Ireland is now valued at £2,500 million annually, most of which is exported and accounts for 35 per cent of our total manufactured exports. There are about 300 electronic companies in Ireland, employing 20,000 people. This sector of manufacture is almost entirely foreign owned. We also have the indigenous sector which is heavily involved in traditional product areas. Profitability is low and sufficient funds for re-investment are not being generated.
All available material on the technological capabilities of indigenous Irish manufacturing firms points towards deficiencies on a scale barely compatible with a developed economy. In 1985 the Sectoral Development Committee published a report entitled "The Technological Capacity of Indigenous Irish Industry", which paints a pessimistic scenario. On page 21 the report concluded:
(i) even in the growth areas such as electronics, plastics, chemicals and pharmaceuticals, and mechanical and electrical engineering, the indigenous component mainly comprises small firms producing low value added products, and with a medium to low technological capacity. Growth is confined to companies of overseas origin and there is no sign of improvement in favour of indigenous firms;
(ii) traditional sectors such as clothing, textiles, printing and packaging are dominated by indigenous manufacturers and these sectors are in decline. The technological capacity of these firms is low to medium and the inidications are that their decline will continue;
(iii) the innovative capacity of indigenous firms is low with a consequential negative outlook for future expansion;
(iv) there are major technological gaps, particularly in those technologies with the greatest rate of change such as engineering technologies resulting from electronic developments e.g. computer aided design and manufacture;
(v) there are major skill deficiencies in our indigenous firms, particularly with regard to the newer technologies but also in design, quality assurance and knowledge of materials;
(vi) the lack of skills in the technological and technical areas is mirrored by similar deficiencies in market intelligence and information systems, poor marketing performance, lack of equity capital and lack of strategic planning.
Some 90 per cent of all Irish manufacturing firms employ less than 100 people. Fewer than 5 per cent of indigenous firms carry out any Research and Development work. In addition the skills within many of these firms are so limited that it is extremely difficult for them to assimilate New Technology or to develop new products.
The report tells us that the level of research and development by Irish industry is low when compared with most developed countries. In 1985 industrial research and development in Ireland accounted for £62 million or 0.4 per cent of GDP, compared with 1.9 per cent in the US, 1.8 per cent in Germany and 1 per cent in the Netherlands. Roughly half of the Irish research and development expenditure is on process development and improvement, rather than product development.
The State assists development of technology in industry by incentive in two ways, first, direct grants from State agencies and second, tax incentives. Direct incentives are provided by the IDA, by SFADCo — which is in Clare — and Údarás na Gaeltachta. These incentives relate to equipment grants, feasibility study grants, research and development grants etc. The taxation incentives relate to the extension of business expansion schemes, to research and development, which was brought in under the 1986 Finance Act. An individual investing in a qualifying research company may claim tax relief at the marginal rate subject to a maximum annual investment of £25,000. The company must be engaged solely in carrying out research and development.
Another area of tax incentive is patent income, which is exempt from income tax to the extent that research leading to the invention is carried out in this country. The European Management Forum Report published in August 1986 which dealt with competitiveness in the 22 OECD countries ranked Ireland as a low 17th in terms of overall competitiveness. Several smaller European countries were in the first ten. Switzerland was third; Denmark, fifth; Sweden, seventh; the Netherlands, eighth; Norway, ninth; and Finland, tenth. In the crucial areas of technology, management, marketing and finance Ireland ranks near the end in the company of Portugal and Greece.
The failure of Europe to keep pace with Japan and the US in the field of technological innovations and its market application has become a major cause for concern at European Community level. This led to the adoption by the Community in 1985 of a policy memorandum entitled "Towards a European Technology Community"— an indication of the relative decline of Europe, in that European chip manufacturers supply only about 38 per cent of the total European requirements. The rest are imported from the US and Japan. The report tells us that Ireland, as an investor in new technology and R and D, is very poor at 0.4 per cent of GDP. As I have said, Europe, as a whole, is failing to keep pace with the US and Japan. This will lead to severe difficulties in the future if this trend is not reversed.
As I said in my opening remarks, the Oireachtas Joint Committee on Small Businesses did excellent work and made a number of positive recommendations, many of which were implemented by the last Government. I would like to draw the attention of the House to one of these recommendations on page 93 of this report. It states:
We recommend that a Minister of State with responsibility for Science and Technology be appointed within the Department of Industry and Commerce. This Minister of State would have a co-ordinating role in ensuring that Science and Technology activities of different Departments and State Bodies would be in harmony with overall economic objectives.
A primary objective would be to ensure that Irish manufacturing and service firms would be fully aware of the likely future impact of Technology on Business and that State policies would be geared towards gaining the maximum benefit from the opportunities provided.
This recommendation included in the report was signed by the Chairman on 7 January 1987, approximately two months before the change of Government. I was glad that the present Government accepted our recommendation and I have no doubt that the Minister was also pleased. For this reason I again appeal to the Minister to use his office to have another Joint Committee on Small Businesses established as I believe it was a major role to play in the development of our economy.
I would like to congratulate the committee on their work on small businesses in general and in particular on this their seventh report on new technology and small businesses. It is a very comprehensive and significant study at this stage in the country's industrial development. This committee have been very active and productive since their inception in June 1983. During 1984 and 1985 the committee published four sectoral reports as the fourth phase of their work. The first four of these reports dealt with, (1) the manufacturing industry, (2) retail and distribution, (3) tourism, catering and leisure, and (4) construction. The committee published further reports on the following topics: the insurance problems of small businesses, the development and management of small business co-operatives and the latest report on new technology and the small business.
I agree with the previous speaker that they were a very progressive and productive committee. The latest report is particularly significant at this time and it clearly identifies that for the future survival and prosperity of small manufacturing firms in both manufacturing and the service sectors, they need to be aware that they must adopt and introduce new technology into their companies. Failure to do this will result in a reduction in competitiveness and the possibility of companies just going out of business.
The development in technology, particularly information technology, will make a wide range of Irish firms open to international competition. Of course, in turn, these changes will give small Irish firms a wider range of opportunities than was previously available. The ratification of the Single European Act will give Ireland access to European markets consisting of 320 million people. This means that firms must adapt and become more competitive because the Single European Act will abolish over 300 non-tariff barriers which at the moment inhibit trade within the Community. In 1992 when this comes into focus it will expose the weaker Irish companies to competition which we never before experienced. The report suggests that changes need to be made to enable these small firms to make effective use of new technology to ensure their competitiveness into the 21st century and that they must adapt and realise that they have got to take on this new technology.
The report states that in some instances the expression "science and technology" is used in this report as they are often interlinked. However, the primary concern of the committee is with technology, which is defined by the dictionary as "the systematic knowledge of industrial arts." This report goes a long way and will be of great benefit to small industry.
Chapter 1 traces the development of industry from the industrial revolution up to the present day and to the use of the computer. It also explains in great detail how the computer has developed over the years. The report has identified that, until the 18th century, all economies were based on agriculture. Such manufacturing activities as existed were largely rural, often cottage based, and were geared towards very basic standards. From 1750 onwards the means of modern industrial production came about gradually through a series of technological innovations such as advances in spinning and weaving equipment, improvements in iron and steel technology and the development of steam power.
International trade expanded, developing both new markets and sources of raw materials. The development of canals and railways made possible the mass transportation of fuel, raw materials and finished goods. This, in itself, borught about a gradual displacement of people from agricultural based industries into the manufacturing sector. Through the 19th century technological advances continued. Electricity was developed. New processes were developed which resulted in higher quality steels and more flexible application of those steels.
The report goes on to trace the development of the telephone, the typewriter, the motor car, all of which were invented before 1900. The growth of the industrial base and of industrial employment saw a massive expansion in urban development. The report goes on to deal with the advances in the social field, including health, education, housing and the increase in the standards of living for the majority of the workforce. With the advent of mass production, motor cars and other consumer products became available to the public at large at an acceptable price. At that time the conveyor belts system was introduced and also the specialisation of labour was developed.
The report deals with the development of a vast range of consumer products which were developed in the 20th century which included radios, telephones, vacuum cleaners, washing machines and other household commodities. The introduction of mass production led to major reductions in costs and brought the price range of these products within the reach of the average person which provided the continuing impetus for the new product development. The major changes were brought about by multinational companies such as Ford, General Motors and other large firms. This also led to the development of small manufacturing and service firms as component suppliers and producers of specialty products to service these multinational companies.
The trend is the same today particularly in the computer industry. Many of the large computer manufacturers are sourcing and using small efficient Irish firms — and there is a great opportunity for small efficient Irish firms — to take advantage of this new development, just as in the old days small companies were able to take advantage of the development of the much larger and more traditional companies such as car manufactures.
In the early part of the century the invention of the aeroplane assisted in the development of the tourist industry which was to become the biggest international service industry and also facilitated the enormous growth in business travel. All of these developments were clearly the result of, and could not have come about without, the technological advances and developments which were made at that time.
The report states that the term "new technology", which at the moment is a buzz word, refers to none of the developments of the earlier industrial revolution. The use of the term "new technology" is mainly linked to applications of micro-electronics and computer related telecommunications technology. This is a recognition that computer technology has a revolutionary effect in this and the manufacturing service sectors. This term "new technology" also covers areas of manufacturing activities, particularly in biotechnology and new materials which are dealt with elsewhere in this report. I will refer to it later because I have a particular interest in the use of biotechnology and genetic engineering for the propagation of plant life.
The report goes on to give a detailed description of the computer and the various components which go to make up the workings of the computer. The computer is referred to as hardware and the programme is referred to as software.
It is interesting also that five or six years ago it was not an economic proposition for a small firm to buy a computer because while they might have been able to afford to purchase one the software packages were too expensive, costing £2,000 or £3,000. It is very significant that in a very short space of time one can buy similar programmes today for less than £100.
The report also gives a very interesting account of the development of the computer. As the previous speaker stated — and it certainly caught my imagination when I read through the report — the first computer actually covered an area of 3,000 cubic feet, weighed 30 tonnes, contained massive amounts of valves and tubes and used substantial amounts of electricity.
The report goes on to explain that with the development of microelectronics and the miniaturisation of the transistor to the extent that thousands of them can fit in something the size of the head of a pin. It is very difficult to comprehend how this science has developed over the years.
The development and the mass production of computers and the reduction in costs in recent years have made them not only an option but an essential for small businesses. They are so inexpensive at present that I would say every household has one, be it a very small type that children use or perhaps one to manage the household budget. The computer business has been revolutionised and computers are available at a cost where anyone can go out and buy them. They are now part of the school curriculum; every modern school has computer studies. The computer can also be used in the manufacturing process.
When people referred to CAM-CAD applications I used to say: "Yes, that is very interesting, very essential", but I have to admit that until I read this important and comprehensive report I did not realise that CAD means computer aided design and CAM means computer aided manufacture. CIM means computer integrated manufacture. These aids to manufacture have revolutionised the small industry who have had the experience, the knowhow and the money to avail of them.
I am aware of one company who five years ago were manufacturing products by the traditional method whereby trained technicians would actually carry out the function in a very painstaking and laborious way. That company after a lot of research invested in a computer-based laser cutting machine to do the work using this new technology. This has transformed the company. When I read through the report I wondered if the people in this company had prior knowledge of what went into this report or if the people who compiled the report got the experience of these very clever entrepreneurs who had the experience and intelligence to adapt their business to the state of the art technology. Five years ago that company employed eight people. They now employ 40 people. They have taken over a company in the UK employing an additional 40 people and they have geared themselves up to take advantage of the Single European Act and the market of 320 million people.
It is interesting also, and this aspect is covered in the report, that this company can take a very technical call from anywhere in the world using this new technology, using the telephone they can send this information through a modem attached to the computer. The computer will analyse the design and details of the order and it goes straight into the computer based laser cutting machine. They actually have a turn around of 48 hours. They take in orders from France, Germany or elsewhere. I am very pleased that this company have shown such initiative and are actually leading Europe. Their business has grown out of all proportion.
This is where the future of small Irish industry lies. The IDA have a part to play and the Minister of State responsible for Science and Technology recognises that it is necessary to identify viable Irish industries and to give to them the necessary technology and machinery to enable them to manufacture a competitively priced product which will sell on the European market. If we can succeed in doing this it would go a long way towards solving our unfortunate problem of unemployment. Many of these small companies who as the previous speaker has indicated, lack the necessary expertise, avail of distant markets in the Far East and in the Middle East. The only reason they are operating and selling into these markets is that they cannot get access to the more lucrative UK and European markets.
Unfortunately, the emphasis has switched and, because of the drop in oil prices and the war in Iran and Iraq, these markets are no longer expanding. These small Irish companies are now very exposed because they have got to fall back on the home based market, which is not very buoyant at the moment, in particular in the services sector and they are finding it impossible to gain access to the more lucrative UK and European markets.
This report, if one reads through it, clearly recognises this fact. For that reason I am pleased the Minister has stated that it will be circulated to second level centres of education and, indeed, to third level centres of education. It should also be circulated via the small business association to every small company in this country. That is a priority because any company reading this report, analysing it and spending the time to go through it, will benefit greatly. I would go so far as to say it could save them from liquidation.
Chapter 5 deals with State investment, services and incentives. There has been a shift away from grant-aiding fixed assets towards what is now defined employment grants. I would not disagree with this. It does inhibit business in certain instances. I would like this approach to be flexible because, in certain instances, small companies need the more comprehensive grant package which traditionally gave grants towards fixed assets, rent subsidy grants, interest subsidy grants and in particular, and this is very important, training grants. There is still money available for feasibility studies which are very necessary and there is also money available for the acquisition of new technology, which is very necessary. The report clearly identifies that companies must avail of new technology. I am pleased to see that the Minister for Industry and Commerce has organised 250 industrialists from Europe to come to Ireland in the summer to meet with Irish firms with a view to forming joint venture agreements. This would be one way of getting the necessary technology transfer into the small Irish companies.
We have a lot to offer. We have probably the best educated youth in Europe. They have proved themselves to be very adaptable and they have got the necessary training and education to adapt to new technology. I am aware that very large Irish based American computer companies are amazed at the level of productivity of our young people. I know that companies are prepared to expand their operations because of this level of productivity from our youth.
I am amazed by the level of learning young people have attained. I had better not speak about the educational system, but it is the envy of Europe and the United States of America. This is our great natural resource. We have a responsibility to our young people to implement every aspect of this report, because it is a formula for success. If we implement the report in its totality, in a few years we will be able to provide excellent opportunities for our youth and then we will get away from the heartbreak of emigration.
I want to speak briefly on biotechnology. I am particularly interested in this field because in the course of my travels I have been to many of the Middle East countries and I am aware of the disaster of famine. There has been a very recent development in the field of plant biotechnology which is receiving particular attention at present due to its connotation as a food provider for the developing world. It is reasonable to assume that this developing field could create, or would create, a substantial number of jobs but I honestly believe that is of secondary importance.
The problem with plants is that traditionally constraints on food production derive from the traditional methods of cultivation and production. Biotechnology is pushing back the horizons of plant production and facilitating the rapid multiplication and hence the production of a wide variety of disease-free food plants. These plants — and this is the point I want to make — are particularly suitable for growth in countries with scarce natural resources such as Ethiopia, Sudan and other Sub-Saharan countries. It is my earnest wish that this technology will be used, and that we will act swiftly in association with other world bodies, the EC, the United Nations, the World Bank and other agencies, to develop this new science of biotechnology particularly in the propagation of food plants and apply it in Third World countries to ensure that a disaster similar to the Ethiopian disaster is averted. We have the technology.
The Minister has recognised that. He has set it up. In my own constituency, the Minister of State at the Department of Agriculture and Food with responsibility for horticulture, Deputy Kirk, has recognised this and has set up a research unit in the University in Cork. This research should be implemented and implemented quickly because there is a need for it as we all know. To explain in a little more detail, for use in genetic engineering and biotechnology, it is possible to take very tiny parts from a plant — for example, let us take a date palm from one of the Sub-Saharan countries. From the palm tree which is producing the choicest fruit year after year, it is possible with this new technology to reproduce clones of that plant which will produce exactly the same type of fruit with the same yield year after year. It is possible to produce this in sterile conditions in a laboratory, and it is something we must move on. I am disappointed that the world agencies have not moved to date, but I am confident that Ireland will act on this research. We have the technology; now let us apply it.
There are many other points I wish to speak on. As regards the recommendations, it is obvious the Government recognise what this report is saying because the Minister has advised us that he has implemented them in one way or another, or he is acting on the implementation of the majority of these recommendations. It is very good to have this commitment from the Minister. I believe the new board which takes over from the IIRS and the National Board for Science and Technology, namely EOLAS is moving in the right direction under the right leadership of the Minister. I take this opportunity of commending him for his initiative and his achievements in presenting this Bill.
Finally, once again I pay tribute to the Joint Committee on Small Businesses and to its chairman on a very comprehensive and important report. I am pleased the Minister has taken note of it and is acting on it.
First, I compliment the committee on formulating this report. I would like to refer briefly to Recommendation 8.3.1 headed: "Getting Public Service Data Bases On-Line." This recommendation states:
We recommend that the NBST prepare a study under the auspices of the EEC's star programme to devise an action plan for electronic business communication with particular reference to getting public service data bases, particularly those in the State Agencies and Companies Office ‘on line' to manufacturers, retailers and professional firms.
One problem facing business today is the lack of access to a rapid and effective supply of information and training. We should not allow agriculture to be excluded from this recommendation. We must include agriculture units as small business.
The traditional philosophical division is becoming irrelevant as farmers now are entering into the challenging era of raw material disposal. This translates into added value and small industrial enterprises. I will cite examples such as dairying, that is the cottage cheese process; beef, leather and glue-making; forestry, furniture, wood processing and paper. All of these activities need effective access to up-to-date information, that is, on the physical environment, soils, climate, water and land use, a management efficiency system, the demographic situation in a particular area, and the availability of transport and marketing techniques.
At present, in my own constituency of Wexford a pilot scheme on the setting up of a natural resource and land use data base system is underway. Expertise at the Johnstown Castle research centre is being applied to maximise the vast pool of knowledge and scientific findings that have been gathered there over the past quarter of a century. Johnstown Castle research has done the surveying and mapping of soils and land use, nowhere else has this been done, and I urge the Minister that the Johnstown Castle scheme be incorporated in any plans for extra funding or upgrading of technological infrastructure in the south east.
In conclusion, may I compliment the Minister and the Joint Committee on Small Businesses and I have no doubt that the Minister will bring these excellent recommendations to fruition.
I gave a second turn to the Government side of the House. I did not realise, Senator Daly, that you wanted to come in.
This Bill has been debated fairly well by the previous speakers. They have covered all the details. I do not have too much to say because I would be repeating what has been said already.
I compliment the Minister for accepting the many recommendations in this report. I also compliment the Minister for thanking the members of the committee, presided over by Deputy Ivan Yates. The reason I am on my feet now is that I had the privilege and the pleasure of being a member of that committee. I know that we issued more reports than any other committee. Of course, it was a joint committee of all parties; we never had an argument, we never had hassle, it was a great committee. On the change of Government I asked the Leader of the House at the time the committees were being set up — I think there was about five or six of the previous committees set up — if he would use his influence with the Government to set up the Joint Committee on Small Businesses again, and he promised me he would do so. He thought it would only be a matter of time. I reminded him a few months later of this and he said he would do his best. I appeal to the Minister to use his best efforts to set up this committee, in view of the tributes he paid to their work and to the reports they issued. I do not think anybody could pay a greater tribute, and for that I thank the Minister.
I would like to thank the Members of this House for the constructive comments which have been made. I am glad to say as I said in my opening address, that the Government have had the opportunity to implement most, if not all, of the recommendations contained in the report. Members will agree that it is an achievement and quite unprecedented that this should have been done in the short space of time of just one year.
There were various points raised by a number of Members of this House to which I would like to refer. Senator Kelleher and Senator Jack Daly are anxious that we would set up a committee on small businesses with a wider mandate. I do not want to give a specific commitment at this particular stage, but certainly it is something to which I would give very serious consideration. I am most anxious to ensure that small businesses will benefit from all forms of help and advice and I can see the merit in the concept of a committee. In regard to my own brief, I am particularly concerned that we ensure the new technologies are introduced into small businesses. I am particularly concerned about our indigenous firms. I am arranging through the aegis of EOLAS, the new Irish Science and Technological Agency, to ensure that we will have technological audits done on many firms to determine exactly the level of technology being used, because in my opinion — and this is confirmed in this fine report, and from all my investigations — that the introduction of new technologies into industry is absolutely vital to ensure the continuing viability of industries.
Companies must learn to plan ahead and in a position to generate new products and not to continue on the basis that the products they have today will satisfy the demand next year or the year afterwards. This is not so. New technologies should ensure that companies that are producing products today will be in a position to put new and more advanced products down stream for the marketplace next year and the year afterwards and they should be planning one, two, three or four years ahead.
As a consequence of the introduction of new technologies into companies, I believe we will be able to increase the competitiveness of these companies, because if they do not have these new technologies they will not be able to compete with their international counterparts. They will end up going the sad old road of closing down. If we can ensure that they introduce new technologies and new products as a result, they will maintain their competitiveness internationally, they will survive and be viable, and we will maintain the jobs that exist and ensure continuing employment for the people who are being employed by these companies up to now. The other objective of the introduction of new technologies into industry is that they will help, as we increase our technological development on a broad basis, to create many more small start-up high tech companies and these will create jobs. This is one of the objectives which the Government set out to achieve. As Senator Kelleher said, we have looked at the examples of success in other countries. He referred to Denmark, Austria and Finland. I would agree that they are good developmental models for this country. I would like to assure him and the other Senators that we have extremely good contacts with their development agencies and their science and technological institutions and we have adopted some science and technological programmes which have been started up in these countries, especially in Denmark. We are not ashamed to admit that if we see something has worked successfully in another country, and that it is a type of programme that would be ideally suited to what we have here, then we have no hesitation in adopting that type of programme because, we are quite prepared to learn from the success of other countries, and we will continue down that road.
I have had numerous discussions with my colleagues in the European Communities — the various ministers for science and technology from the EC and other countries. We compare programmes on both a formal and informal basis.
Senator Kelleher also referred to the need for companies to have up-to-date information. I would totally agree with this viewpoint. One of the functions of EOLAS is to create an awareness of information technology. EOLAS is introducing a system of technology audits, whereby they will send experts into companies to advise them directly of their specific technological needs and to what extent they have developed in a acquiring up-to-date technology within their companies. During the next decade, the new science and technology agency will place increased emphasis on assisting firms to be aware of the importance the role of technology will play in the future development of the firm, and they will intensify activities in that area. In addition the new agency will concentrate some of their resources in assisting the development of industrial sectors that are important to the future economic growth of the country, for example, the toolmaking industrial sector.
I wish to refer briefly to the European programmes. The comprehensive framework programme on research and technological development adopted by the EC research Ministers offers Irish companies an opportunity of participating in the Community-wide research effort. The new science and technology agency will play a major role in assisting Irish firms to participate in these programmes and bring their research capability in selected areas up to the European level. These programmes include ESPRIT on information technologies; RACE on telecommunications; DELTA on health care and the transport sectors; BRITE, and S & T programme for manufacturing industry biotechnology; and SPITT which is an acronym for Strategic Programme for Innovation and Technology Transfer. The new agency will place particular emphasis on assisting firms to build up their own capability in research and development so that the firms themselves have the capability of absorbing new technology.
The first framework programme concluded at the end of 1986 and Irish firms did extraordinarily well in obtaining contracts. In fact they had twice the success rate of many of their European counterparts. We have agreed on the second framework programme, although there was an unnecessary hold-up because a fellow member state — the United Kingdom in fact — delayed proceedings for quite a while but it has been finally agreed. The amount of moneys which are being offered in the various programmes in which we would have a specific interest are quite substantial, and I must say that we feel we achieved a lot in getting this framework programme through. I anticipate that Irish companies will not alone do as well as they did in the first framework programme — the second one goes on until 1992 — but will do better in fact. In the last framework programme they gained something in the region of £30 million. They can achieve considerably more from this programme.
Senator Kelleher also referred to the poor innovative capacity of indigenous industry. A key aspect of this, he said, is the lack of personnel with appropriate up-to-date information on new technology skills. I can assure him that this is being addressed by us in a number of ways, through FAS, through teaching companies, through university-cum-industry co-operation in research. There is no doubt that the innovative capacity of Irish industry is improving. Our programmes will ensure that this continues. We are aware of the fact that we have highly skilled personnel ready to get involved with these companies. Our young people, from an educational point of view in terms of computer literacy, are more computer literate per capita than those of any country in Western Europe. They are more computer literate per capita than young people in the United States. In the past, because we had not the infrastructure which we have since this Government were formed, many of our young people had to emigrate. Even in the short period since we came to office, approximately 100 highly-skilled Irish graduates have been strategically placed in centres of excellence by our advance manufacturing technology and teaching companies' programmes. They are now in the process of developing new products from which companies will benefit, but they are being employed in Ireland. Were it not for what we have done, they would have had to emigrate.
Senator Mulroy referred to the miniaturisation of computers and the lack of development in this field. We can be very proud of our achievements and of the degree of excellence as regards the development in the miniaturisation of computers which we have secured for Ireland based in the National Microwave Electronic Centre in Cork, which is an attachment of University College, Cork. It is a facility to develop computerised controls for the European Space Agency. At times we are inclined to minimise the quality of our people and our achievements. The skills here have developed to the high extent that, in the face of keen competition from other countries, the European Space Agency decided to locate this facility in Ireland, and, as Senator Kelleher will be delighted to know in Cork. The standard of expertise there is at the highest level and would stand up to any international scrutiny. Our challenge in the future is to further the use of these technologies in industry. The level of research work in our third level colleges is very high. This is evidenced by the amount of moneys we have got from the European funds.
Senator Cullimore raised the question of getting public service status on line to firms. I would like to assure him that the Companies Registration Office have plans in this regard. The National Board of Science and Technology were studying this and the new body, EOLAS, are studying it at present. He mentioned the excellence at Johnstown Castle in Wexford. Being a Wexford man, I can compliment him on taking care of his local ventures. I visited Johnstown Castle recently. I was highly impressed with the work being done there. There is potential for increasing development in many areas.
Senator Daly, who is a very prominent member of the joint committee which produced this absolutely excellent report has, like Senator Kelleher, appealed to me to set up this special committee for small businesses with a wider mandate. As I said at the beginning, I will give it every consideration and will bear in mind the recommendations which have been made.
An Leas-Chathaoirleach
Is the motion agreed?
Question put and agreed to.
An Leas-Chathaoirleach
When is it proposed to sit again?
At 10.30 a.m. on Friday, 25 March 1988.