Bernard Durkan (Kildare North, Fine Gael)
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Question 77: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the steps she will take to combat the ongoing possibility of the relocation of manufacturing and service jobs to low cost economies having particular regard to recent experiences in both sectors; and if she will make a statement on the matter. [31777/08]

Mary Coughlan (Donegal South West, Fianna Fail)
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Decisions to relocate companies or elements of their supply chain are a reality of the modern globalised economic environment. Companies adjust their plant location and utilisation strategies to address matters such as accessing new markets, moving production nearer to customers, meeting firm or market specific customer relationship issues and accessing technology in addition to business takeovers and consolidations. Such decisions inevitably result in flows of investment and employment across borders. In the main, Ireland successfully manages this process through its policies on enterprise and foreign direct investment. These policies, such as competitive tax rates, investment in skills, education and research and development and investing in critical physical and communications infrastructure, have positioned us to win many prestigious and high value added investments and enabled us to replace lost jobs with others of equal or higher value in the economy.

Ireland is no longer a low cost economy. Therefore, we must seek to develop economic competencies higher up the value chain. In that regard, we continue to work to maintain and enhance our framework competitive conditions and promote new areas of competitive advantage. The level of foreign direct investment in Ireland, relative to the size of the economy, remains one of the highest in the world. While competition from emerging markets for FDI has intensified, Ireland continues to punch above its weight when it comes to attracting overseas investment. The pipeline of new business for which IDA Ireland is competing is strong. Already this year 28 new IDA investments have been announced with the potential to create 2,100 jobs over the coming years, demonstrating that we remain a location of choice for mobile investment.

Irish companies also benefit substantially from globalisation as new markets and business opportunities open up. While off-shoring can contribute to job losses for firms in some sectors, productivity gains achieved through off-shoring some activities represents an opportunity to develop higher-end manufacturing and related activities domestically. The model of manufacturing in developed countries is changing and Irish enterprises are adapting to those changes and engaging in higher value added activities in order to compete in the global marketplace. This has been achieved as a result of increased productivity, technology levels and the sophisticated skills of Irish employees.

To sustain and grow the manufacturing sector, Irish based manufacturing enterprises will have to continue the progression to high value added sectors and activities and continue to increase productivity through investments in human capital, technology and innovation. Innovation and the productivity gains that flow from it are the new foundations for competitiveness. The recently launched report of the high level manufacturing group contains some 26 recommendations directed at key areas of innovation and productivity leading to transformational change, reskilling and management development which will ensure Irish manufacturers can continue to compete successfully on international markets and provide high value sustainable employment.

We continue to be one of the world's leading service exporting countries and are currently ranked the 10th highest exporter of services in the world. Earlier this month, I launched the report of the Services Strategy Group, Catching the Wave: A Services Strategy for Ireland. This report sets out new policy proposals on how we can ensure the continued development and growth of Ireland's services sector and outlines how to maximise the future returns to the country from services activities in all enterprises, both current and potential. The implementation of these recommendations will enable Irish service companies to exploit new and exciting opportunities, such as e-learning, business and financial services and professional and consultancy services. The Government is fully committed to strengthening the competitiveness and productive capacity of the economy. Our priority remains the creation of high quality, sustainable employment, driven by companies with higher profitability, that are technologically advanced and prove a better fit with the competitive characteristics of our economy.