When multinationals yawn the Irish economy shudders - such is its dependence on inward investment companies which have become a fixed part of the landscape since the 1970s. Or have they? The announcement of corporate restructuring plans by two major North American companies, Nortel Networks and Apple, this month is yet another reminder that the subsidiaries around the State are so many sleeping giants who might wake up and walk away.

The Canadian telecommunications equipment provider, Nortel, announced last month that its 80,000-strong worldwide workforce would be reduced by 8,000 through lay-offs, shifts, retraining or attrition. Specific plants would be identified for restructuring or would be sold in the programme as it progresses over the next 18 to 36 months, said the chief executive, Mr John Roth.

But Nortel's plant manager in Galway, Mr John Corcoran, says the corporation needs to make the change from being a vertically integrated organisation, meaning that it controls everything from manufacturing to post-sales service, to "virtual integration", a buzzword meaning to outsource activities while maintaining control.

"The company cannot move with the speed and agility that it needs to in the future," Mr Corcoran says.

The Galway subsidiary has been in Ireland for 25 years, changing its role during that period from being a manufacturing unit to increasingly moving towards customising solutions and research and development.

"We are not making a hell of a lot here, not as much as we used to," he says.

Subsidiaries now have to be "stand alone" and give good reason for their existence. "I think multinational subsidiaries redefine every year the value they give to a corporation," Mr Corcoran adds.

Nortel Galway employs 1,000 people, and ships about $500 million (€441 million) of product to Europe annually. It has a £30 million wage bill and provides an estimated £25 million of business in local supply services. Mr Corcoran describes how the plant has already embarked on its own streamlining process, shedding low-tech manufacturing work such as circuit piece manufacture and repair to Cwmcarn, Wales, and focusing on higher technology operations. He is preoccupied with "having to figure out the reason why we exist here". "We have constantly had to re-evaluate our worth to the corporation, to keep ahead of whatever happens."

The city has its own unique drawbacks, namely its airport, or rather airstrip, which, with a limited size, has a limited access to the outside world.

"We are hampered by it. There are a lot of companies here and we are working with the Chamber [of Commerce] very hard to change that a little bit."

Mr Corcoran says the pace of technological change is such that products now have a six- to nine-month shelf life, so short that they hardly have a chance of being effectively evaluated.

"You have a whole telecoms industry that would be traditionally viewed as stable.

"Suddenly we are being hit by the pace of technological change," he says.

That means the company has lost control over its external environment and its pace of change. "The external environment is dictating everything . . . We are in a kind of tailspin, I would say. I feel sorriest for the individual user who is trying to keep pace with the technology changes."

He feels a certain blankness being registered by residential users on the emerging telecommunications revolution. But the Internet and mobile phones are already well established within the national psyche, while digital television is starting to rear its head. Soon the TV aerials will disappear for ever and homes will have one access point to service their electronic needs. The battle lines between competitors will be defined by the deregulated market and how telecoms carriers will differentiate themselves. It will not be just cost that will define companies but the product they offer.

"Most people have trouble understanding the tariffs," he says.

Originally from Tipperary, he jumped midstream in his career when he abruptly left the Army after nine years to work with a local Galway company, Precision Steel Components "making pieces of metal components". "It taught me the value of work and the value of understanding what happens at every level of an organisation," he says. Having already qualified as an industrial engineer, he says the value of the Army is the experience it offers young people. Leaving Precision, he joined computer company Cabletron Systems as a quality manger before being recruited by Nortel three years ago. He has been plant manager for more than a year. He believes Irish business is behind in accessing new technologies, although he cites Dell Computers's direct selling system as the exception to the rule.

Nortel's experience in North America, Britain and Germany is that the rate at which the Internet is playing a role for online transactions is so rapid that the role of a business is blurring between the manufacturer, the supplier and the seller.

"A lot of Irish businesses will start to realise that to compete, they will have to focus on their transaction costs and their means of selling," he says.

In the past few years Nortel has benefited from the call centre revolution in Ireland. Call centres currently employ more than 6,000 people. It also provides the equipment for voice switch systems for large companies and institutions.

Following the acquisition of the San Francisco-based data networking company, Bay Networks, last year, the corporation is now moving into the field of network installing for data transmission, a market that is Internet-driven.

Traditional competitors to Nortel are Lucent, Siemens and Ericsson. "But the convergence of voice and telephony is so powerful and immediate, we would certainly regard Cisco as starting to play in our space," Mr Corcoran says.

The one area of public service he admires is its development agency side. Enterprise Ireland and the IDA made good strategic decisions in creating the environment for the new service industries.

But the latest strategy to make the State a centre for e-commerce is moving too slowly, he believes, and the broadband fibre optic infrastructure is inadequate.

"One of the fastest ways of transmitting is on optical networks, effectively using light. The speed of optical networking is quadrupling every year," he says.

The bureaucratic process at Government level is now a luxury which cannot be afforded. It is tripping up the development response.

"Speed is of the essence," he warns.