The ISME has called on the government to address the growing problem of Irish job losses to other destinations due to high business costs here.
The small firms association said that Ireland is facing a "torrent" of job losses to cheaper locations unless action is taken quickly.
It said this week's decision by Philips to relocate 150 jobs to Poland is part of a process that has been underway for the last 18 months.
"If affirmative action is not taken the current stream of job losses out of the country will turn into a torrent," said ISME chief executive Mark Fielding.
A recent survey by ISME revealed that 35% of indigenous manufacturers are considering outsourcing all or part of their business to cheaper locations, including Eastern Europe.
ISME has called on the Enterprise Strategy Group, the body charged with developing industrial policy up to 2010, to conduct a comprehensive review of costs to benchmark Ireland against competitor countries.
It said this will enable the group to develop a "comprehensive policy" to address costs.