John O'Mahony (Mayo, Fine Gael)
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Question 120: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the contact that she has had with major computer manufacturers over potential closures; and if she will make a statement on the matter. [31039/08]

Aengus Ó Snodaigh (Dublin South Central, Sinn Fein)
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Question 144: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the contact that she has had with representatives of companies (details supplied) in view of speculation that jobs could be lost with those firms here. [30840/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 120 and 144 together.

The fact that Dell is undertaking a fundamental review of its manufacturing operations and global business model has been in the public domain for some time. More recently, Hewlitt Packard announced plans to implement a restructuring programme for one of its business groups. It is standard IDA practice, where any of its client companies is undertaking restructuring of this type, to engage with the company with a view to mitigating the impact on the company's Irish operations. I can confirm that IDA has been engaged in extensive discussions with the companies concerned at the highest level.

I have been fully briefed on these discussions as they have occurred. I need hardly say that such contacts always proceed on a confidential basis and it is vitally important, if the best possible outcome for the Irish plants is to be secured, that such confidentiality is respected.

The ICT sector has played a hugely significant role in the development of Ireland as the location of choice for foreign direct investment. Specifically, it:

Directly employs 70,000 people

Has enabled the development of sophisticated management and leadership capability in the economy

Contributes circ. €30 billion to the Irish economy on an annual basis in wages & salaries, services and corporate tax

Represents 43% of exports, estimated at €46 billion

Has led the innovation agenda in new technologies and business models

Has assisted the national science & innovation agenda and

Has spawned much of the indigenous ICT portfolio development.

The transformation of the Irish economy has been greatly influenced by the scale and quality of ICT related multinational investments over the last number of years. Many companies, both large and small, commenced operations in Ireland with single mandate manufacturing or a services function. They transformed over time to take on new responsibilities in other areas such as complex high end manufacturing and higher value services including Research and Development, and technical support functions.

IDA's ICT portfolio now spans the entire ICT industry from semiconductor design and advanced manufacturing, to telecommunications software to IT Services from many of the world's leading companies and thought-leaders.

Since 2006, IDA has seen significant wins across the sector with no fewer than 43 different projects approved. The projects were spread across the country and with overall investment volumes doubled from 2006 to 2007 yielding an employment potential of 3688 jobs. The capital investment over this period was in the region of circa €700 million while RD&I investments was in excess of €217 million.

The quality of new investments from global companies in Ireland reflects the continuous transformation of the industry and the development of the operating environment in Ireland. Ireland is now an advanced economy with a cost base and living standards comparable to some of the wealthiest nations in the world. We must compete against these developed economies as well as many emerging economies as a location of choice for FDI.

In a time of relative economic turbulence overall cost competitiveness will place some operations in Ireland under pressure as they are benchmarked against sister sites. Lower level or less complex manufacturing operations as well as low end service activities such as call centres are under increasing pressure from lower cost locations such as Eastern Europe and Asia. We can anticipate a churn in the region of 15-20% as the industry transforms and more cost sensitive operations move to alternative locations. IDA expects most of the associated job losses to be offset and replaced by higher level activities.

The risks, however, are not confined to the obvious categories outlined above as Ireland adjusts to the changing economic realities brought about by globalisation of markets and the ever-faster pace of technological change. Rapid industry transformation will lead to earlier product obsolescence and faster replacement needs. The consequence of this is that higher end manufacturing and services operations will not be immune from rationalisation. Ireland must adjust to the changing economic realities brought about by globalisation of markets and the ever-faster pace of technological change. IDA success in developing the ICT sector will hinge on our ability to differentiate ourselves in a meaningful way from our competitors. Given their remarkable record in meeting similar challenges in the past, I am satisfied that the strategy being pursued by IDA will secure the continued success of this vital sector in the future.