Enda Folan remembers well the emotions which accompan­ied the announcement that computer manufacturer Digital Electronics Company was closing its Galway manufacturing plant in early 1993.

"Everyone was just sick in the stomach, that's the only way you can put it," the 17-year Digital veteran recalls.

"Some people are in a situation where they are the breadwinners in the family, and people have pride. So it's not just about the money."

Back then, much of the focus was understandably on the loss of some 760 jobs in the company, and the many more potential job losses in industries dependent on Galway's major employer.

But while it may not have seemed apparent at the time, the closure of the plant would lead to the development of a hugely successful cluster of software-based businesses in the region.

For example, not long after the announcement was made, Folan decided to set up an IT-based company with a group of other former Digital employees.

They based themselves in the then nascent Galway Technology Centre, located in the Mervue Business Park. The enterprise continued for about five years, before Folan went on to use the skills he had learned at Digital to work with a range of other companies. This culminated with him setting up his IT support business, Computer Troubleshooters, in the Crescent in Galway city five years ago.

Folan is now the Irish director of the international IT franchise, overseeing nine franchises here. He hopes to expand further. "I wonder why people would be negative. You can go around moan­ing. Yes it's a shock, but you should deal with it, park it, and move on," he believes.

Folan's experience is by no means unique. According to IDA figures, six years after Digital closed its doors, 90% of those made redundant had returned to full-time employment. Some 70% were earning equal to or greater than what they earned with Digital. Around 10% had gone on to manage their own businesses, often in IT-related areas, thereby creating fresh employment opportunities. Others set up businesses as taxi drivers, retailers, and in other service industries.

For Joe Hurley, an engineer with Digital for 21 years, the redundancies were also the spur he needed to pursue his own plans.

"I started out assembling and manu­facturing personal computers, a bit like Dell, but on a much smaller scale," he says of his subsequent business venture. "The two years we spent in the Galway Technology Centre were great for the camaraderie, with ex-Digital employees there to talk to. And you had a place provided for you."

It is a camaraderie which continues to this day, through formal and informal contacts between "ex Deccies" scattered around the region, and the country, often at senior management level.

Hurley's company, Quicktec Computers, employs 10 people in Ballybrit Business Park. It provides IT products and support services to the corporate, education and small-to-medium enterprises sectors.

"When you work for a big multinational, you develop skills you could never get in a university," Hurley says. "So no matter what they think, anyone who is in a redundancy position now should have great confidence in themselves."

Dr James Cunningham, director of the Centre of Innovation and Structural Change (CISC) at NUI Galway, says that the loss of such "big-ticket" companies, while initially devastating for those involved, can unleash previously dormant creative potential. "The Digital pullout struck a huge blow to the local economy at the time, but what has transpired since is that out of adversity comes opportunity," he says. "Regions, companies and individuals do recover from these setbacks, but it does take a considerable period of time... The Digital response is a good example of how to do it right."

The approach in Galway, which has since been used as a model for responses to job losses elsewhere, involved the bringing together of a range of stakeholders – including the Galway Chamber of Commerce, government agencies, Digital's management, and third-level colleges like UCG – to work together to chart a way forward for "Galway Inc".

Galway faces a serious challenge in the current recession; live register figures have passed the 10,000 mark in the city alone.

But Dr Chris Coughlan – who worked with Digital at the time of the redundancies, and who is now chair of Westbic, the regional business and innovation centre – says the Digital story both typifies the attitude of local people, and should serve as an inspiration.

"[In Galway] we have an attitude of not sitting back and reacting to events," he says. "And I think Digital proved very much the mettle of this attitude."