John Perry (Sligo-Leitrim, Fine Gael)
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Question 107: To ask the Minister for Enterprise, Trade and Employment his views on whether the 20% failure rate of start-up companies can be lowered; and if he will make a statement on the matter. [12075/05]

Ruairi Quinn (Dublin South East, Labour)
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Question 116: To ask the Minister for Enterprise, Trade and Employment if his attention has been drawn to the recent report showing that one-fifth of all start-up companies supported by Enterprise Ireland between 1989 and 2004 failed; if he is concerned at this rate of failure; his plans to take action to reduce the failure rate; and if he will make a statement on the matter. [12102/05]

Micheál Martin (Cork South Central, Fianna Fail)
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I propose to take Questions Nos. 107 and 116 together.

The statistics referred to arise from the Review of Enterprise Ireland Supported High Potential Start-ups 1989-2004 conducted by Enterprise Ireland. The report is an internal report of Enterprise Ireland and as such is an operational issue for the agency and not one in which I have a direct function.

Enterprise Ireland has informed me that the report is a review of the performance of 470 Enterprise Ireland supported high potential start-up companies, HPSUs, that started between 1989 and June 2004. Of the 470 HPSUs that started in this period, 357 — 76% — firms are still trading as EI clients 21 — 4% — were taken over and 92 — 20% — are closed. In other words 80% of the companies are still trading in one form or another. Enterprise Ireland considers that the failure rate is low by most standards given the normal risk of starting a new business.

The average number of start-ups per year has also increased significantly between 1989 and 2004. It has risen from an average of 17 new HPSUs per year in the 1989 to 1996 period to an average of 58 HPSUs per year in the period 2001 to 2003. During 2004, 65 new HPSUs were started and supported with a projected employment in these businesses of 1,900 within three years, the majority of jobs in which are high skilled positions. The review also found that there has been no appreciable increase in the failure rates, despite the substantial increase in the volume of start-ups.

The economic importance of HPSUs is not underestimated by Enterprise Ireland. In 2003, the 357 companies still trading as EI clients had a combined direct employment of 7,458 people — the majority of positions in which were highly skilled jobs — and total sales of €979 million. This represents a very substantial positive economic impact.

EI will not be complacent and will seek to further increase the success rate of HPSUs. For half of those HPSUs that fail, this failure occurs within the first three years. This "valley of death" period has been highlighted as an area where EI is to devote more resources and effort, including: a team based approach to bring the extensive experience and a range of expertise to bear at this critical stage; a joint approach by EI staff in Ireland and overseas to assist early stage companies to identify and secure key customer reference sites; a more direct and supportive approach to assisting companies to develop and augment their management team and board capabilities; and a milestone funding based approach to the provision of EI funding to an increased number of the start-ups phasing funding in line with realistic targets.

Cecilia Keaveney (Donegal North East, Fianna Fail)
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Question 108: To ask the Minister for Enterprise, Trade and Employment the number of tours taken into the north-west region, into north-east Donegal in particular, by the IDA in the past two years; and if he will make a statement on the matter. [12008/05]

Micheál Martin (Cork South Central, Fianna Fail)
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During the years 2003 and 2004 IDA client companies made a total of 39 first time visits to the north-west region. Of this number, 14 visits were made to Letterkenny and two were made to Buncrana.

On 31 March 2005, I announced that 423 jobs were to be created in the north-west region in IDA supported companies — 300 in Toucan, the consumer telecoms business of IDT Corporation, at its new customer service centre in Sligo and 123 software development jobs at SITA Inc., in Letterkenny. Discussions on further job creation in the area are ongoing with a number of other companies.

IDA Ireland, which is the agency charged with attracting foreign direct investment, FDI, to Ireland, has indicated that 2,778 jobs were created by IDA client companies in the north-west region in the last five years. IDA is working closely with its existing base of companies in the north-west. One of the challenges facing companies in the north-west is in the area of competitiveness and this has resulted in job losses in sectors such as textiles and clothing and low-end manufacturing. Where a company has plans to introduce new functions, new technologies or products, IDA will assist the company where possible to make new investments that lead to new jobs.

IDA Ireland is also involved with Invest Northern Ireland in the creation of a virtual cross-Border technology park incorporating business parks in Letterkenny and Derry city. The project rationale is to create a business zone with sufficient critical mass to allow the north west region to compete more favourably for inward investment.

IDA Ireland has assured me it is committed to regional development, that it forms a core part of its strategy and that it is working with relevant national and local partners to develop and build the infrastructure necessary to make locations like the north-west competitive for international businesses.

I am confident that the strategies and policies being pursued by IDA Ireland in Donegal, together with the ongoing commitment of Government to regional development will continue to bear fruit in terms of delivering the maximum possible level of additional jobs for the north-west region.