Despite the doom and gloom prevailing in the clothing sector, companies such as Magee's in Donegal continue to prosper. Employing 550 people, the group - which weaves high quality fabric and manufactures a range of clothing - is coping well with industry pressures.

Managing director, Mr Lyn Temple, says a mixture of high quality, design and marketing is required to ensure survival. "The only way we can compete is to make sure our quality is as good as out competitors, that our marketing is better and our service is superior," he adds.

Every week the group produces 3,600 jackets and skirts for the Irish, British and European markets. It has annual sales of £20 million, with the bulk of its range sold in Britain. It also weaves wool and linen fabric for use in its Magee collections, for export to markets ranging from the US to Japan and for use in the major international designer collections. In the US, Ralph Lauren is one of its biggest customers. Mr Temple maintains that its Irish-based manufacturing operations offer enormous advantages to the group. Aside from giving it greater control over the entire manufacturing process, it also allows it to offer specialist service packages and a fast response to customers.

But everyday Magee competes against high-quality garments, mainly produced in Germany where some production is increasingly outsourced to cheaper locations such as Morocco and Eastern Europe.

Mr Temple says it is inevitable that some of its range will ultimately be outsourced to such locations as well. In particular, it will have to examine contracting the production of basic garments such as trousers and blazers to manufacturers there, to remain competitive.

"The trick is to try to balance home production with some outsourcing of commodity type products. This is necessary to protect the Irish workforce," he says.

Around 90 per cent of Irish designer, Ms Louise Kennedy's clothes, are still manufactured in Ireland. She works on a contract with a factory in Limerick and is happy enough with the situation at present.

"I made a conscious decision to keep as much of the production in Ireland as possible from the start. In some instances we have to go to Italy for the knitwear manufacturing, which tends to be as expensive as it is here."

Ms Kennedy says if her relationship with the Limerick manufacturers were to break down, she would almost certainly be forced to move that production elsewhere.

Enterprise Ireland's marketing adviser to the clothing sector, Ms Rosemary Craig, acknowledges that the trend in the industry is definitely towards increased outsourcing of products. But she argues that this can yield many benefits for the companies concerned.

"It is becoming increasingly difficult to be competitive and companies are being forced to outsource some of their production to complement the manufacturing process in Ireland. And while this may lead to some job losses, it can yield other benefits to clothing companies, increasing their overall marketability and enhancing the range of products they are able to offer," she adds.

The key to maintaining production in Ireland is flexibility, she says. Manufacturers must be able to respond quickly to client's needs to keep ahead of low-cost countries. Ireland is nearer to the major European markets than many of these cheaper locations - a factor, she argues, which should be used to our advantage.