Jerry Cowley (Mayo, Independent)
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Question 174: To ask the Minister for Enterprise, Trade and Employment, in view of the fact that IDA factories in County Mayo are being sold off as car showrooms and that west of Ireland manufacturing companies are being encouraged to move their business as far away as China, his views on whether manufacturing, fishing and agriculture are all in decline in the west; his plans to improve this constantly deteriorating situation in the western region (details supplied); and if he will make a statement on the matter. [37062/05]

Micheál Martin (Cork South Central, Fianna Fail)
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I can comment only on that part of the question relating to my remit. The Government facilitates the creation of an environment attractive to businesses and business creation. Government policies in this regard have helped propel economic growth and employment expansion and these have encouraged deeper and stronger links to both international and enlarging EU markets. Clearly, having an open economy has greatly assisted Ireland's economic development and has benefited the country. However, an open economy also presents threats, in particular where the country no longer operates as a low cost location for investment. Our strengths and competitive advantages have inexorably changed.

High output and productivity together with high returns to labour in the form of wages, salaries and better living standards now typify Ireland's economy. The low technology production that characterised our economic output in the past is being replaced by higher technology and services enterprises. A more attractive cost environment abroad will inevitably entice some firms that are unable to generate the required return from the modern enterprise economy into which we are transforming ourselves. A continuing structural evolution of our economy is both unavoidable and necessary to maintain present levels of growth and low unemployment.

Part of this evolution entails some inevitable plant transfers and other adjustments but, where relocation has occurred to date, it has largely been limited to relatively low technology, labour intensive activities. It is imperative that our companies survive and grow. If high value functions such as research and development, design, marketing and management are retained in Ireland then outsourcing a low value activity, which has no hope of being profitable, is a viable business decision.

That is not say that we can do nothing. In fact, the opposite is true. To counterbalance the competitive threat from lower wage competitor economies, our policy is to encourage a move to higher levels of productivity and value added products and services. We are continuing to develop those infrastructures, both physical and intellectual, to create and maintain an attractive environment for investment and expansion in Ireland. Such investment will be sourced by a combination of developing existing clients and new investors in existing or new activities or sectors.

Given the critical mass of foreign direct investment in Ireland and its linkages with indigenous companies, one of the greatest potential contributions will come from developing companies already operating here. The enterprise development agencies have a clear mandate to align their operations around this policy objective and are continuing to encourage companies into more sophisticated activities, reducing the likelihood of our competitive advantage being eroded by cost based competition.

Enterprise Ireland will continue to work and co-operate with all agencies in the region on any initiatives that are deemed appropriate for the area. Enterprise Ireland has approved funding support of over €22.3 million and paid over €16.8 million to companies in the western region in the period 2003 to date. Of this, EI client companies in County Mayo have been approved funding of €2.6 million and received payments of €2.4 million. This financial support will enable the companies to fund their plans for innovation and new product development. As further support to client companies, Enterprise Ireland has arranged for staff from each of its 33 overseas offices to be available both in Galway and Dublin in January 2006 to meet clients who wish to develop their exports.

The campus incubator units at the Galway-Mayo Institute of Technology in both Castlebar and Galway, together with the units at National University Ireland, Galway, received approval for capital grants of €5.45 million from EI, together with grants of €314,000 towards the cost of centre managers. The centres will serve the needs of the west, with companies starting at these centres moving out in time to locate in other areas.

I am advised by IDA Ireland that it has not disposed of any factory buildings that are, or have been, used as car showrooms. IDA owned buildings are normally sold to clients on a freehold basis with a restricted use covenant attached. However, there are instances in County Mayo where IDA clients have, as part of their restructuring, sold their building which then been used as car showrooms, such as the Volex building at Castlebar. This was constructed by Volex itself on a site it acquired from a third party and as such could be disposed of as it wished. The enterprise development agencies are focusing attention on the elements of investment that now best fit Ireland's competitive characteristics and which will provide the maximum positive sustainable benefit to the economy at both a national and regional level.