Warning medical device companies will go abroad

The high end of the Republic's manufacturing industry - the medical devices business which is worth €6 billion a year in exports - will substantially lose out to lower-cost economies in Asia, an Engineers Ireland conference in Dublin was told yesterday.

Addressing a session on bio-engineering, Peter Walsh, the vice-president of global medical devices company Medtronic Vascular, said the Republic had strengths in terms of an educated and flexible workforce, but in terms of manufacturing costs it was "probably too late".

Mr Walsh said multinationals considering outsourcing were seeking reductions of 30 to 40 per cent in their costs. While the Republic was once 50 per cent cheaper than the US, that was no longer the case.

He predicted that many global companies, including those which employ up to 50,000 people in the Republic, would "bypass eastern Europe" and go direct to Asia or Mexico for manufacturing services. It was a situation that we in the Republic need to think about "because there is no doubt about it, it will happen".

Mr Walsh, an Irishman who now lives in California, said since he had moved to the US with Medtronic Vascular, he himself had moved 1,000 manufacturing jobs out of the Republic. However, he had "fortunately been able to replace them" with knowledge-driven jobs in research and development.

He said US multinationals were notoriously reluctant to outsource their research and development facilities but this was an area where the Republic could make gains. In this respect the State had a number of strengths in that it had good grant and tax breaks, was politically stable and was aEU member.

He said that while the tax breaks had been much publicised, he believed the IDA set-up grants could be just as attractive.

He said the IDA had been successful in locating many companies involved in the knowledge economy in the midlands and the west. However, costs of services and supplies such as energy could prove to be an issue.

Another issue was the lack of willingness of Irish engineers to go abroad to further their careers.

There was a time when Irish engineers went abroad and brought back their experience, but now the lifestyle in the Republic was too good.

The lack of experience could lead to an inability to think globally, and when multinationals were making decisions "the Irish needed to be at the table".