FORBAIRT assisted companies created 10,678 jobs last year, boosted mainly increased sales as the economy continued to perform strongly.

However, when jobs lost were subtracted the net increase is 2,688 - the largest such increase since 1979.

Forbairt, which is charged with helping develop indigenous industry, said it was a major improvement on the "break even figure" recorded in 1994.

Forbairt chief executive, Mr Dan Flinter, said yesterday that the 7 per cent increase in sales - which reached £12.6 billion last year - proved that there was a significant link between sales and job creation.

He warned that Irish companies still needed to grow their businesses to compete in world markets.

Approximately £100 million in additional sales was generated by the consumer foods sector last year, according to Mr Flinter.

Ironically, this was one sector - like the clothing sector - which Forbairt said had problems because of the pound's increasing strength against sterling. The extent of the BSE scare on the sector had not become clear yet according to Forbairt.

Mr Flinter said that Irish companies which could face difficulties - if Ireland joins EMU, and Britain does not, were preparing for such a scenario.

In many ways Irish companies had been preparing for a strong pound for the past seven years. "Year on year, the pound had been gaining 1-1.5 per cent against sterling for a while now.

Irish companies would have to look at their internal structures, examine the labour/capital relationships and get their cost base right to maintain a competitive edge after EMU.

"It will be a substantial challenge," he said.

Forbairt committed just over £100 million to Irish owned companies, which in turn spent £400 million on expansion plans, building, and in funding research and development.

Almost half of Forbairt's funding went on helping firms expand capacity. A further £20 million was given to companies carrying out research and development and £12 million was given to companies to complete feasibility studies and build management capability.

Forbairt also invested £18 million in companies through preference and ordinary shares. It also recovered £6 million in equity which it had previously invested in companies.

The cost of a job was also coming down (defined as the cost per job, sustained over a seven year period). It now cost £9,441, compared to £19,162 in 1981.

Forbairt chairwoman, Ms Eileen O'Mara Walsh, said 1995 had been exceptionally successful for firms involved in the software and consumer products sectors.

She said these markets were extremely competitive, but Irish companies had been able to compete in terms of quality, price performance and delivery.

The outlook for this year was extremely positive. Sales by client companies in the first quarter increased by 8 per cent over the same period last year. Forbairt was confident of achieving its target of 7,500 first time jobs in 1996 - and a net increase of 3,000 jobs.

Mr Flinter said in 1995 Forbairt had set a net jobs target of 12,000 by the millennium. "I am confident that by the end of this year we will be more than half way there."

Mr Flinter said investment under the Industry R&D initiative had increased by 50 per cent, to £37 million during the year. A key target is to increase the spend in this area from 2 per cent to 4 per cent of sales by 1999.