Dell’s Limerick decision

Astute comment in The Register about the implications of Dell’s decision to close its manufacturing plant in Limerick.

As the shockwaves of Dell’s dreaded but expected withdrawal from Limerick manufacturing reverberate around Ireland’s mid-west region, some lessons are emerging.

The big theme emerging in many reports and commentaries is that the boom in semi-skilled assembly line jobs is well and truly over. There doesn't appear to be any other business likely to come to Ireland and employ 1,000 plus workers on an assembly line. It’s cheaper to do it elsewhere, in a low-wage economy, and ship the goods to the geographies that would be served by an Irish base.

For suppliers like Dell that need a responsive assembly/manufacturing operation in the EU, the accession of Poland and other east European countries into the EU was a godsend; for Ireland, it has been a disaster. Where Dell is going other hi-tech employers may follow – Intel has a chip plant in Ireland, and HP makes printer cartridges there too.

For both of them the annual cost of an Irish worker will be more than the annual cost of a Polish worker. They too will be looking at the numbers and doing a what-if-we-moved-to-Poland spreadsheet calculation. The EU wants a level playing field, and limits what member countries do in the way of bribing businesses to come to them via grants, subsidies and tax concessions.

The conclusion is:

A dawning realisation in Ireland is that it will have to expand university and technical college education. If it’s a white collar future and not an assembly-line one, then that means the current generation of semi-skilled workers have had it. There’s more of them than the country currently needs and they’ll have to do the best they can whilst the country educates their children for the hi-tech R&D jobs.

These jobs will come in dribs and drabs, 20 here, 40 there, not in thousand-plus lumps. The IDA has got to attract many more firms to Ireland. For every Dell with almost 2,000 workers the IDA will need to attract, say, 50 businesses to provide the same number of jobs, and the Irish education system will have to provide 2000 graduates in the right disciplines to gain the jobs.