The seepage continues. The loss of 200 jobs at Intel comes after a spate of redundancies this year at international employers like Pfizer, Procter & Gamble, O2, Vodafone, Motorola, Bourns Electronics and Thomson Scientific.

Intel indicated that there was no threat to its Irish operation at large, which employs more than 5,000 people in Leixlip, Co Kildare. But the loss of any jobs from the biggest private-sector employer in the State illustrates that even the mightiest of companies are not immune from the relentless forces of competition in international business.

For the Government and others with their hands on the levers of economic power, the development shows again that the loss of national competitiveness has very serious consequences for workers and their families.

In Ireland since 1989, Intel's computer chip plant in Leixlip is its largest outside the US. Intel no longer enjoys the low business costs that once made a compelling case for inward investment into Ireland. Thus the job losses, all voluntary, were characterised yesterday as a local management exercise to reduce costs.

"The purpose of taking this action is to make us more agile and efficient not only this year but for years to come," said Intel Ireland's chief spokesman.

There were soothing words also from Micheál Martin and IDA Ireland, but they cannot diminish the extent to which the erosion of competitiveness has prompted many large organisations to think again about their presence here.

Consider this. As a heavy user of electricity, Intel has endured huge increases in its production costs. Intel's electricity costs in Ireland were 15 per cent below the EU average four years ago - now they are 30 per cent higher than average. Utility costs in Ireland were once the lowest in Intel's global manufacturing system. Now they are highest.

If big beasts such as Intel are not impervious to the pain, what of other companies large and small? The answer lies in the flow of manufacturing away from Ireland to less expensive locations, many of which offer government incentives on a par with those of IDA Ireland.

Only this month, Intel turned the sod on a $2.5 billion (€1.8 billion) plant in the Chinese city of Dalian, which will open in 2010. This factory will be Intel's first advanced manufacturing unit in Asia, though initially it will not make Intel's most advanced product, the microprocessors that constitute a computer's brain.

However, Intel chief executive Paul Otellini suggested in March that the Chinese operation might one day make microprocessors. "The opportunity to do other products in there is really wide open," he said then. Such remarks show a clear appetite for advanced production in low-cost economies, although US restrictions on the export of chip equipment to China stand in the way for the moment.

Still, it's hard to escape the conclusion that the Irish operation will come under increasing pressure as Intel develops its presence there and in other Asian locations. The company already has significant investment in Vietnam, but no advanced manufacturing.

Otellini was in San Francisco on Tuesday, demonstrating the company's latest generation of microprocessor. Intel is preparing two of its factories to make the new product, codenamed Penryn. The Irish unit will not be involved.

Intel's spokesman here said there was nothing unusual in that because its factories typically skip a generation of product before taking on a new line of production.

That means Intel Ireland should be in the running to win the rights to produce the post-Penryn generation of chip. Otellini used his presentation to demonstrate this technology, codenamed Nehalem. "We'll be better placed to seek all new business in the future," said the spokesman when asked if the Irish unit will be in contention to produce Nehalem.

With jobs now being cut to rebalance Intel's cost base in Ireland, the clear implication is that the unit's exposure to cost increases is out of kilter with other international divisions.

For all that, Ireland's ability to capture multinational investment still appears resilient. Even as news emerged yesterday of Intel's cutbacks, US medical technology firm Kinetic Concepts said it planned to hire up to 250 new staff in Athlone in the next five years. Another US group, Blizzard Entertainment, plans to employ up to 100 people in Cork within three years.

"There is still a lot of interest in Ireland, particularly in the US. There's a changing environment at the moment. Two hundred jobs going here at Intel is not a huge difficulty when you see Kinetics is bringing in 250, so there's always swings and roundabouts," said a senior banker with inward investment responsibility.

This individual said there was considerable interest in Ireland in the US media sector, from which groups such as Google and eBay have established a significant presence here. "The law firms particularly are creating a lot of that interest, moving intellectual property and licensing to Ireland, head office and treasury operations," he said.

But if the reduction of jobs at Intel looks like an effort to get fit amid the onset of flab, the problem for Ireland Inc is that the flab of high costs are now endemic to the economy. When the brightest in the class points to a constant problem, it pays to listen and take action.