The Irish Exporters Association (IEA) yesterday called on the Government to provide more financial assistance to manufacturers to help them compete with overseas rivals.

In its pre-Budget submission to Minister for Finance Brian Cowen, the association said something must be done to reverse the decline of manufacturing in Ireland. As many as 30,000 jobs had been lost in the sector over the past four years, it said.

"We cannot afford to erode our competitive position if we are to continue to compete in world markets," John Whelan, the group's chief executive, said in the submission.

"There are numerous factors, both domestic and international, affecting the Irish manufacturing sector and its profitability, and ultimately its ability to remain open for business. We cannot continue to sit back and watch this happen."

Factors such as the persistent increase in labour costs, which have risen by 36 per cent between 1999 and 2004, and gains in the price of oil, which has risen by 80 per cent over the past 18 months, have both contributed to a weakening of the manufacturing sector, said Mr Whelan.

Growth in the industry has slowed from 10 per cent in 2001, to 0.5 per cent last year, and so far this year manufacturing output is 4 per cent below the year-earlier level. Another contributor to the Irish decline is the trend by manufacturers to relocate to countries with lower cost bases, such as eastern Europe and China.

The association is calling for financial assistance for retooling operations a more flexible interpretation of R&D reliefs.