18 September 2008

Is DELL planning to leave Ireland?

US computer manufacturer Dell is apparently planning to end its production line in Ireland, which would mean a loss of a further 3000 jobs on the Emerald Isle. The company is under pressure from a downturn in world-wide sales of its computers and laptops, and only a few days ago I received a special offer from them in my mail, with knock-down prices for laptops I have never seen before.

A recent article in The Wall Street Journal claims that their Limerick facilities would be vulnerable should Dell decide to outsource manufacturing. According to US sources the company has been discussing a closure of operations at its Raheen factory in Limerick for nearly two years.
Dell has already approached contract manufacturers with offers to sell most of its factories around the world (and not only in Ireland).

Dell executives have privately discussed closing the Irish plant for two years," said two people with knowledge of those discussions. One of them stated that Dell bosses decided to close the factory early last year, though they did not yet establish a firm time line.
The same source says that the goal is to move production capacity from Ireland to Poland, where Dell opened a factory early last year, "though the company is moving cautiously to limit any disruption of manufacturing and defections of sales and operations staff they want to retain".
In addition to their 3000 factory workers in Limerick, Dell has more than 1000 office staff which are "likely to remain in Ireland”.

A new Dell manufacturing plant in the Polish city of Lodz has opened indeed last year, and a number of Polish workers were trained for their new jobs in Limerick. Poland, which was not a member of the EU when Dell began production in Ireland, has far lower wage levels and also much lower costs of living than Ireland. It is clear that the cheaper workforce there would reduce overall costs, and producing in Poland would give the company also easier access to new markets in Russia, other Eastern European countries and the Middle East.

So far Dell has refused to comment on these reports, but in a business statement the company notes that the slowdown in demand for its products is continuing. The statement says that "the continued conservatism in IT spending in the US" had now "extended into western Europe and several countries in Asia".
In a number of filings to the US Security and Exchange Commission, Dell confirmed that it continues to expand its use of "external partnerships" or outsourcing for manufacturing.
The company says that it "expects to incur costs" as it "realigns the business to improve competitiveness, reduce headcount, and invest in infrastructure and acquisitions".

However, the only recent change in its existing manufacturing operations was the closure of a desktop plant in Austin, Texas last March, with a loss of 900 jobs.

But the writing is on the wall, and anyone with only a little business experience and common sense can see that a restructuring of Dell's operations - which are even more likely now under the newly increased economic pressures - will mean a drastic reduction of its Irish workforce, if not a complete end of production here.
This would of course be another heavy blow to our already weakened and shrinking economy. Thousands of people, families and local businesses would be affected, and Limerick's Mayor John Gilligan said it would be "dreadful news" if the 3000 people in the Raheen factory would be laid off.

But so far he is the only Irish politician or public representative willing to speak about the matter openly.

Sean Lally, President of the Limerick Chamber of Commerce, said that he did not want to make any comment that would "probably add fire to the speculation".
"Dell is a very important part of the economic fabric of Limerick and the region, and people should support the company when they come to buy their PCs," he added.

Well, the timid businessman and chamber president might be right, and I am seriously thinking about the extremely competitive offer I have just received from Dell. But I also wonder if they might just sell off their existing stock in Ireland at knock-down prices, before pulling out. What would be the conditions of the maintenance and long-term customer services after a closure of the Irish operation?

With horror I remember the story of another US computer manufacturer - Gateway - who entered Ireland with fanfares and the highest praise from senior government ministers and even the then Taoiseach.
For a few years all went well, and many Irish people bought computers from them. And then, almost over night, it was all over. Gateway closed its Irish plant when they ran into problems at home and left the country, with no provisions for follow-up customer service. I was not one of their customers myself, but several of my clients were. And they had a lot of trouble with Gateway computers after the company was no longer present in Ireland.

It is understandable that Dell is playing their cards close to their chest, in order to avoid unrest and a further drop of sales figures in the Irish market.
One would however expect to hear a word or two from the government, since it is its job to protect Irish interests and jobs.
But, as usual, our elected leaders are either ignorant, uninterested or both. And they are too shy to say anything that could perhaps be seen as controversial.

Speaking at the announcement of a € 30 million investment by IBM in Ireland, Tánaiste (and Minister for Enterprise, Trade and Employment) Mary Coughlan (right) said it was "very important that we do not speculate about these issues".

I see. If you don't mention the flood, you will not get wet feet...
It is almost unbelievable how naive and incompetent this woman is! And it beats me what qualifies her to be the deputy prime minister of this country and the minister responsible for the economy!

Pressed for more information, she said that the IDA had "been in touch with the company on numerous occasions and is aware that from a global perspective a decision has been taken to re-evaluate Dell's global operations".

Well, thank you, Tánaiste! To know that, we don't need you or the IDA. All we need is to read the Wall Street Journal.

The Tánaiste did say that her predecessor in the department, Micheál Martin, went to see Dell and spoke to them about the issues, before he became the Minister for Foreign Affairs.

Well, and what did he find out? Nobody seems to know. She certainly doesn't. One wonders if Micheál Martin made a vow of silence when he changed departments. Isn't it normal practice to brief one's successor about important matters during a hand-over of responsibilities? Well, apparently not in a Fianna Fail led government in Ireland. Here ignorance rules, and the most naive people are promoted to the most important positions.

Mary Coughlan added that the government would "keep closely in contact with Dell", but admitted she had not recently met with the company. So what is she doing all the time? Certainly not her job, for which Irish taxpayers remunerate her with a very generous salary.

It is almost certain by now that Dell will close the factory in Limerick, or at least scale down their operation significantly. When it happens, the government and many other politicians will be shocked and 'surprised' and blame it on the global recession. And thousands of ordinary people will suffer for it.
Would those we elected to govern the country actually care and do their jobs properly, there might be ways and compromises found to soften the blow, which is to come anyway, sooner or later.

But since a majority of Irish people prefers to be led by fools and ripped-off by scoundrels, they have confirmed Fianna Fáil in government last year. Now we all have to live with the consequences.

The Emerald Islander


Anonymous said...

I have worked for Dell for over 12 years and the inside word at top level is that Dell are closing their limerick plant in the next 4 wks


Thank you for your comment, which confirms my own information (though I was not given an exact time frame).

Anonymous said...

Honly shit man!

Irish Recruiter said...

So no more cheep Dell laptops on the Dell Outlet web site?

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