realised that a shortage of technicians was looming. They told the Government there would be a crisis. The result, she said, was an industry-linked education programme.

Nevertheless, if HewlettPackard was looking at the Republic now it "would be asking different questions", said Ms Halligan. Skills shortages, house prices and traffic congestion had become problems for companies like HewlettPackard, which employs 2,400 people at its printer cartridge plant in Leixlip.

At the Mountain View, California headquarters of pharmaceutical company Alza, executive vice-president Peter Staple said that the Irish tax rate "was one of the factors we considered but it was not decisive by any means" when deciding to invest in the Republic. The nicotine-patch maker chose Cashel for its 100- employee operation over sites in Asia. "A high-skilled workforce was more important than a lowcost workforce," he said. "The deciding factor was an available workforce with the right skills plus the fact that there was already an established health service industry."

The "critical mass" in the Republic of pharmaceutical companies was also a strong factor. As in the technology sector, it meant back-up services and skilled workers were in place.

Defying the downturn in the US economy, the San Jose-based advanced-chip-design company Xilinx announced last month that it would invest $41 million (#45 million) in Dublin and increase its workforce from 360 to 850. "We live in a cyclical industry," said president and chief executive Mr Willem (Wim) Roelandts. "The down cycle is the best time to start a new expansion because there is time to build something."

When deciding to locate a new low-cost design centre outside the US, Xilinx looked for an English-speaking European location with a pro-business environment and a good educational infrastructure. The tax incentives "were probably a deciding factor in the end" in choosing the Republic over Scotland, the Netherlands and Israel, he said. Xilinx, whose workforce is 80 per cent graduates, is now an IDA Ireland role model for future investment, which is aimed at companies looking for a high intellectual level among employees.

Xilinx was "very impressed" by the way the Government responded to an urgent need for engineers by increasing education placings within six months and with the ability to hire top-quality management. "I had not counted on that, to be honest with you," Mr Roelandts said.

"Irish people are designers, creators and that's a huge difference," said Mr Roelandts. `The Irish are a people with a hard head and a soft heart. They are troubadours. When you are a troubadour you have to innovate and it's difficult to be an innovator if you haven't emotion."