Ireland set for fight to keep DEC plant: Inducements to move production to Scotland may be challenged, reports Alan Murdoch

A HEAD-ON confrontation between London and Dublin seems inevitable if Digital Equipment Corporation, the US electronics giant, shifts production of mainframe computers and software from its Galway plant in Ireland to Ayr in Scotland.

Irish ministers have warned they will challenge any British inducements that breach European Community competition rules - a reference to pressure over pounds 400m worth of public contracts allegedly being used to keep the Ayr plant at Galway's expense.

The Irish government fears losing 1,350 jobs at Digital and another 2,500 in direct suppliers to the 20-year-old plant, not through local failings but because of greater British bargaining power.

The Irish facility, at Ballybrit, Galway, includes sophisticated mainframe and software sections alongside R&D activities linked to DEC's advanced Alpha chip. Although many fear a complete closure, there are hopes of retaining the jobs of 350 elite software experts serving European, Middle East and North African markets.

Ballybrit injects up to pounds 60m a year into an area with few large employers, and buys from 1,000 local suppliers. DEC, founded with a corporate ethos that its workers should be the best-paid in the industry, pays average salaries of nearly Ir pounds 30,000 ( pounds 31,200), according to company sources. The stakes dwarf those in the recent Anglo-French battle over 600 lower-paid Hoover jobs.

Particularly alarming for the west of Ireland is that a plant so well integrated locally can be suddenly uprooted. Since the early 1970s, local education has evolved in line with Digital's needs. One example is the master's degree in information technology offered at University College Galway.

Nationally, the case has prompted a wider fear that, despite sacrifices made to stay with the EC monetary union process, the single market may see Ireland continually outbid in such contests by stronger neighbours, for whom large inducements are proportionately cheaper. Britain accounts for up to half DEC's EC sales of pounds 2bn, against just pounds 40m in Ireland.

Dublin last weekend despatched Ruari Quinn, the Enterprise and Employment Minister, to DEC headquarters to counter pressure reportedly exerted on Ayr's behalf by Michael Heseltine, President of the Board of Trade.

Lobbying by Irish-American figures is also being orchestrated. Long-standing links exist between Galway and Digital's home base of Boston. The Mayor of Boston, Ray Flynn, this week agreed to take up its case with Digital's chief executive, Robert Palmer. At the personal request of Albert Reynolds, the Irish premier, the Heinz president, Tony O'Reilly, also agreed to make representations on behalf of the Galway plant.

DEC aims to cut its workforce worldwide from 102,100 to less than 90,000, after already reducing staff by 30,000 in three years.