MANY headlines have been made this year by news of major new investment projects, with a large proportion of them in the electronics sector. Thousands of jobs are promised and more significant announcements in the sector are on the way, most of them in the fast growth areas of telecommunications, network computing and software. Electronics is now one of the State's biggest employers, providing work for 30,000 people and exporting £20 million a day.
But there is another side to the industry. Like any big industrial sector, some of the companies are at risk and this is particularly the case in the fast moving world of electronics where, for every "hot" sector, there is another going out of fashion. It is just as important for policy to focus on trying to retain the existing jobs as it is to create new ones.
In a speech in Cork this week, IDA Ireland chief executive, Mr Kieran McGowan, estimated that nearly nine out of every 10 jobs in the sector were in what he termed low or medium risk companies. However, that still leaves the remainder - employing around 3,000 people - at "high risk".
The "high risk" companies would fall into a number of categories. Many would be in sectors of the industry now experiencing difficulties worldwide, such as some areas of peripheral manufacturing. For example, keyboard company Mitsumi announced a cut in its 170 strong workforce by 80 earlier this year. Others would simply be firms under pressure because they have failed to keep pace with the changes in the industry, or are operating in areas of manufacturing which could be done much more cheaply in low cost locations.
Plants owned by multi nationals currently assessing their whole international strategy would also be at risk. For example, it is no secret that Apple Computers is looking at its global operations, although the Irish management insists that Irish expansion plans remain on course in Cork, where it employs more than 1,500 people.
What can the Government and IDA Ireland do to hold on to the existing jobs?' Taking a broader view, policies to improve overall competitiveness apply to the electronics sector as to all others. With increased mobility of international investment projects, Government policy in areas like taxation, telecommunications, infrastructure and education must continual focus on improving Ireland's position. This is all the more important with monetary union approaching, as having a fixed exchange rate will put an additional premium on competitiveness and flexibility in the economy.
However, other policies apply directly to multi national investment and to the electronics sector. A key consideration for IDA Ireland is to encourage existing companies to deepen their involvement in the economy through adding research centres, software development or marketing centres to their existing manufacturing plants.
According to Mr McGowan, 40 per cent of the 135 companies in the sector have such added responsibilities. The "half empty" view of this, of course, is that 60 per cent are pure manufacturing operations with no added functions.
In general, companies at the least risk "tend to be those where the Irish plant has most responsibility for its own future, acting as a centre of excellence for particular productions, processes or markets within the overall corporation", he said.
In most cases, in seeking such responsibilities, Irish managers are in competition with other subsidiaries of a parent multinational. IDA Ireland would like them to think of their responsibility as being not only to run successful production plants, but also to persuade the parent company to invest more here.
Fortunately, the omens are good for at least another year or so. But such is the pace of change that developing and redirecting existing operations here is a vital task, even if it is not as glamorous as unveiling shiny new projects.
