Written answers

Wednesday, 11 October 2006

Department of Enterprise, Trade and Employment

Economic Competitiveness

9:00 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 174: To ask the Minister for Enterprise, Trade and Employment if he is satisfied that manufacturing industry here can adequately compete with imports or on world markets with competitors; and if he will make a statement on the matter. [32377/06]

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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Ireland can no longer compete long-term in commoditised markets against low cost economies. This is demonstrated by the decline in the number of firms and persons employed in the Textiles, Leather and Electrical machinery sectors over the past five years. Competitiveness in commoditised, low value added sectors such as these is largely based on low-wage and non-wage costs. The rising cost environment in Ireland since 2000 has put Ireland at a significant competitive disadvantage for these types of manufacturing activities.

However, Irish manufacturers engaged in specialised, sophisticated, high technology and value added activities, and/or operating in non-commoditised markets (e.g. the medical technologies and chemicals sectors) can continue to compete successfully on international markets going forward. These sectors require specialised skilled staff, specialised technologies and flexible operations, and other factors which are not readily available in many low cost economies, such as modern Intellectual Property (IP) protection laws, a business friendly regulatory environment, etc.

The issue of cost competitiveness and the health of manufacturing depends on a wide array of issues, from the availability of suitable skills to the impact of higher wage costs. The difficulties being faced by some manufacturing sectors in Ireland is mainly due to shifting patterns of international comparative advantage and the process of structural change, with capital and labour resources tied up in declining firms and industries being allocated to other 'higher value-added' activities more suited to the new, higher cost, Irish operating environment.

The Irish manufacturing sector has been a key component of the Irish economy over the last two decades and it will continue to be a significant contributor to exports, employment and economic growth in the future.

To assist industry to maintain competitiveness and increase productivity, the economic development agencies are working on an ongoing basis to promote the adoption of new technology and best practice at company level. The agencies aim to support sustainable, high value added enterprise in Ireland through the provision of mentoring and developmental supports, the enhancement of management capabilities and critical workforce skills in client companies, support for the creation and implementation of strategies for market entry, development and growth, and strong supports for innovation and for research and development.

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