Some Irish companies will go to the wall - and their employees to the labour exchange - because of the millennium bug, according to Enterprise Ireland.

A new survey published by the agency says that while companies in the Republic are aware of the computer problem, many have not done enough to protect their businesses, and most have failed to draw up a contingency plan.

The survey, which questioned the chief executives or business managers of a representative 300 companies, shows 90 per cent of Irish companies are confident that the "Y2K" issue will not disrupt their businesses, and half consider the issue has been overblown.

But Enterprise Ireland warns: "This confidence level is not matched with the kinds of activity that would suggest that these companies have completed suitable compliance plans. Indeed, the high level of survey respondents that consider the problem exaggerated - 51 per cent - suggests that many may have seriously underestimated its potential for disruption of their businesses."

Enterprise Ireland says 55 per cent of companies still believe in a "Lone Ranger-Silver Bullet" scenario, where someone will arrive in the nick of time to kill off the Y2K problem.

Two-thirds of the firms that have reviewed their key business systems have found one or more key functions that will not function normally because of the millennium bug, the survey reveals. These tests uncovered problems across a wide range of areas, including information technology, finance, inventory, purchasing, production, security and environmental controls, and supply chain.

According to the survey, carried out by Lansdowne Market Research, the most common response to the millennium bug is to review equipment, in most cases without the help of outside expertise.

"However, the majority of even technically sophisticated businesses will need external help to do so. In Ireland, where most businesses acquire rather than produce the equipment they use, the ability of companies to review compliance in this way is limited. The failure to access external expertise or concentrate resources on resolving the issue is therefore a key weakness in many companies," Enterprise Ireland says.

The agency is particularly shocked by the lack of contingency planning - considered a vital step in addressing the Y2K issue. Just one in five Irish companies claim to have such a plan in place, but when probed, one in four of these cannot recall what it consists of.

The Republic's businesses tend to select the most conservative contingency steps in addressing potential Y2K failures - such as shutting down systems, stopping the manufacturing process or holding inventory. A third or less choose more positive steps, such as seeking new suppliers, or adding skilled staff to address the issue, according to the survey.

"Economic growth could be constrained as much by the contingency actions as any disruptions from the millennium bug," Enterprise Ireland says.

Seven out of 10 firms are convinced their suppliers will not be affected by the millennium bug, yet only one fifth have had direct meetings to discuss the issue with key suppliers, according to the report.

"Even when aware of the potential for de-listing, legal actions, loss of insurance cover etceteras, most companies adopt a casual approach to providing for their survival in case of supply disruptions," Enterprise Ireland says.

The report concludes that the Republic's businesses are aware, but not prepared for the millennium bug.

"Actions are not sufficient to address the issue, and the majority has ignored the key step of putting in place a contingency plan. Business failures can be expected to result from the millennium bug. The extent of those failures will depend on the actions taken by Irish business between now and December," the report warns.

Mr John Brady, manager of information services for Enterprise Ireland, said last night the survey results were "worrying", adding that 750,000 people in the Republic depended for their jobs on companies that could be affected by the millennium bug.

He said Enterprise Ireland estimated that companies with fewer than 50 employees involved in manufacturing and operating outside Dublin appeared to be the worst-prepared and therefore most vulnerable category.

"A lot of these companies don't think they are high-tech, but where they are going to be hit is not inside their own four walls but somewhere up or down their supply chain," Mr Brady added.