Tony Killeen (Clare, Fianna Fail)

I thank the Deputies for raising these matters. The difficulties being experienced by Waterford Crystal have been well known for some time. In summary, difficulties in the marketplace combined with a weak dollar have been putting pressure on the company's sales targets and competitiveness. Enterprise Ireland has continued to work with the company, including a recent investment approved in 2003, which was designed to assist the company in reducing its cost base, increase home sales and maintain employment. Nevertheless, the announcement by the company of job losses of this magnitude is regrettable and my concerns are particularly for those who will lose their jobs.

The overall Waterford Group has announced a restructuring programme, which, I understand, is designed to reduce excess capacity and overheads and improve manufacturing efficiency across the group. The group intends to restructure its business fundamentally in order to ensure its long-term future. The combined effect of these restructuring actions will be to reduce the number of people employed across the group by 1,785. This figure includes 485 at Waterford Crystal.

As regards Waterford Crystal, I understand that a minimum cost reduction of €25 million is required to ensure the company returns to profitability. The company has said that its current sales volume cannot sustain two viable manufacturing plants. As a result, manufacturing operations will have to be consolidated into one plant and the company has decided to close its Dungarvan plant.

There is the further problem that, at present, the company is manufacturing ranges of products which are generating insufficient margins to justify the continuation of their manufacture in Ireland.

I understand that the company intends to transfer 76% of the current Dungarvan output to its Kilbarry site. A total of €6.8 million is to be invested in the Kilbarry site, enhancing facilities there and also improving its competitiveness. The cost base throughout the business will continue to be reduced with the planned reduction in staff levels being achieved through changes in the company's business model.

At present, the company has 1,456 employees of which 485 will be leaving and 971 remaining. The company will be meeting with employees' representatives over the coming days to engage in the detail of the restructuring programme. I understand that the redundancy terms on offer will be six weeks per year of service, inclusive of statutory entitlements, up to a maximum of two years' pay.

FÁS has been in contact with the company regarding the current developments and will have a full range of supports available for redundant staff. I understand that FÁS will follow up by meeting the company at the earliest opportunity to discuss these interventions.

The industrial development agencies will be making every effort to secure alternative employment for the area. I do not consider that the establishment of a task force is appropriate. The county development board is best placed to oversee and co-ordinate the industrial needs of the area, and a task force would only add another layer to this process.

The Government's strategy for the south-east region is to promote the development of Waterford city as a gateway location with which to attract industry to the city and the region. There has also been success in attracting new knowledge-based industries with the location in Waterford of Sun Life Corporation, AOL and Genzyme. In addition, there is a strong indigenous presence with companies such as Dawn Meats and Radley Engineering.

Enterprise Ireland has invested over €9 million in indigenous enterprise in Waterford over the last three years alone. Employment in IDA Ireland supported companies in 2003 in Waterford had increased by 30.4% since 1997 and by 7.9% over the 2002 employment figures. Employment in Waterford is concentrated on the pharmaceutical, medical technology and engineering sectors, which account for 85% of employment. New projects and expansions announced by IDA Ireland client companies include Ubiqus, ABB Transformers, Biopin and AOL.

As regards indigenous industry specifically, Enterprise Ireland activity is focused on the creation of new jobs through supporting entrepreneurs in setting up new high potential start-up companies, the retention and creation of new jobs in existing companies and in enhancing the innovation capability of Ireland at a national and regional level through support of research in companies and third level institutions.

Enterprise Ireland is continuing to work with companies in its portfolio to assist them in growing their sales and exports and to improve innovation in order that they can compete on world markets.

In the last few years Irish manufacturing firms, particularly in the more traditional sectors, have operated against a backdrop of significantly declining external demand, downward price pressure, and an increasingly competitive international environment — for example, from China as well as central and eastern Europe — together with upward pressure on costs and the strengthening of the euro against our key trading partners' currencies.

Despite these pressures experienced in some manufacturing sectors, total unemployment in Ireland remains relatively low at 4.4%, down from 4.6% for the same period last year. Economic growth is forecast at 4.5% for 2005. Furthermore the projected growth rates for the United Kingdom and the United States are promising for the Irish economy as we continue to trade and also to compete successfully for high quality jobs.

The sustainability of employment levels in Enterprise lreland client companies, operating in both manufacturing and internationally traded services, is heavily tied to the sustainability of their competitiveness both in terms of delivering products and services in Ireland and in export markets.

The enterprise strategy group, chaired by Mr. Eoin O'Driscoll, last year published its report Ahead of the Curve — Ireland's Place in the Global Economy. This provided a blueprint for the actions that need to be taken to secure and build on Ireland's position as a developed economy. It clearly focused on the need to accelerate the development and internationalisation of the Irish-owned business sector as a priority for future economic development. Following Government consideration of this report, the Minister published the enterprise strategy group's action plan, which specifically detailed actions for implementation across a range of Departments. In particular, the Minister asked Enterprise Ireland to creatively rethink how best to help business as we deliver on the ESG recommendations.

Earlier today, the Minister for Enterprise, Trade and Employment launched Enterprise Ireland's strategy 2005-07. Entitled Transforming Irish Industry, the strategy is focused on implementing the recommendations of the enterprise strategy group's action plan to accelerate the development and internationalisation of Irish-owned business. The Minister also launched a new €20 million productivity improvement fund for Irish industry.

Announcing the new strategy, the Minister said Enterprise Ireland's new strategy clearly represents a major change in approach. It will make a substantial contribution to the further internationalisation of Irish companies in an increasingly knowledge driven global economy. Transforming Irish industry is a significant challenge in the context of globalisation and increased competition.

The reality is that Ireland is at a turning point in its economic development where the low-cost model is no longer an option. If we are to succeed, Irish companies must increasingly compete through innovation, superior market knowledge and a relentless focus on productivity gains and increased automation. In addition, to be successful, companies need to be outward looking in their development strategies and this is where Enterprise Ireland can add real value by partnering with business to harness the inherent development opportunities that global markets offer.

Enterprise Ireland has undertaken a complete business process and organisational re-engineering of its overseas and marketing supports with a clear focus on client need linked with a performance driven mission. Enterprise Ireland will be taking initiatives to underpin future performance of Irish industry making it central to industrial policy going forward.

The Government's decentralisation programme, announced in budget 2004, will see the transfer of 210 jobs to Dungarvan, adding a considerable economic stimulus to the town. Initial data from the central applications facility indicate that while 15 staff of Ordnance Survey Ireland have applied to decentralise to Dungarvan, there are a further 47 expressions of interest by civil servants in decentralising to the OSI in Dungarvan.

As regards property acquisition, I understand from the Office of Public Works that it has chosen a site for the decentralisation project in Dungarvan and details of the deal are being finalised with the land owner.

The overall decentralisation programme is being overseen by a decentralisation implementation group, which published a list of early movers in November last. While this list, accepted by the Government, did not include Ordnance Survey Ireland, all organisations, not just those identified as early movers, have been requested to review their individual implementation plans having regard to a range of matters including information on property, applications on the central applications facility, and previous reports of the decentralisation implementation group. In its next report the decentralisation implementation group will deal with locations and organisations not covered in its November report. I am satisfied the combined efforts of the State agencies and local business and entrepreneurs will serve to lessen the impact of the job losses and provide positive future employment opportunities for the Waterford region.

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