The Schneider factory in Celbridge, Co Kildare is to close next April with the loss of 315 jobs; its operations will be moved to the Czech Republic. The 3Com plant in Blanchardstown in Dublin will close its doors in February and 640 jobs will go out of existence; the manufacturing will be transferred to China and Mexico.
Last week's announcements reflect a worrying trend that shows no sign of abating. On the contrary our economy, which in recent years earned a world-wide reputation for exports of goods, may be better known in the years ahead for exporting jobs. The unemployment rate of 4.5 per cent may be low by European levels but the jobless numbers are rising at a rate of 1,000 a month and are now at a four-year high.
Rising costs, especially labour costs, are a significant factor in the decision of foreign industries to abandon their Irish factories and transfer production to low-cost countries. It is a long time since this State was able to boast that its labour costs were among the lowest in the developed world but it is only recently that non-labour costs have put Irish industry at a distinct disadvantage.
The leader of Fine Gael, Mr Enda Kenny, targeted some of these costs in a useful address to the Waterford Chamber of Commerce last Friday. In proposing a "New Agenda for Irish Business", Mr Kenny highlighted the chronic need for reform in insurance, in banking and in the professions. He pointed out that a year and a half after the Government received recommendations on lower insurance costs in the MIAB report no legislation has surfaced. The Taoiseach, Mr Ahern, said last week that the issue of insurance costs is being tackled. Industry would be excused for thinking otherwise.
The need for competitiveness will intensify. The recent economic boom owed much of its strength to a sharp drop in interest rates while exporters in particular enjoyed the benefit of a huge currency depreciation. But the euro has appreciated significantly this year and the next move in interest rates is likely to be upwards.
There is much that the government can do to ease the cost pressure on business. The next Budget must not contain any increase in VAT or any rise in excise duties above the rate of inflation. Greater competition must be encouraged through swift and decisive responses to the recommendations of the Competition Authority, particularly any measures which would tackle restrictive practices. Above all, the Government itself must stop feeding inflation with its sanction of large price rises in the State sector.