IDA chief says more tech losses on the way

The tech sector could take up to 18 months to recover and further job losses are in the pipeline, IDA Ireland chief executive Mr Seβn Dorgan has warned. However, he continued to maintain the IDA's line that the problem is a slowdown, not a meltdown.

Mr Dorgan was speaking yesterday following a rash of recent job losses, including 200 jobs in Tellabs in Drogheda, and the closure of Gateway in Dublin with the loss of 900 jobs. He said it would be "12 to 18 months" before the sector starts to grow again.

"One has to foresee that there will be further job losses. We don't know to what extent nor do the companies themselves - nobody does," said Mr Dorgan, in an interview on RT╔ radio's This Week programme.

"Nobody knows when this will turn positive. The hope at the beginning of the year was that it might be a short-lived downturn, that there might be a recovery in the second half," he said.

"Realistically, that is not going to happen. It will probably be a year or so before we see real growth in this sector again".

Stating that job losses in multinational technology companies here were relatively light in the first half of the year compared to their US counterparts, he argued that the losses should be seen in context.

"Last year we gained about 6,000 jobs in companies in that sector. This year we are losing a gross 4,500 jobs but we are gaining some 2000 to 2,500 jobs," he said. But he rejected the suggestion that the IDA had been caught off-guard by the latest round of job losses.

The technology industry is in a serious downturn of a type it has not faced with such severity for quite some time, he said. But "we are not badly fixed at all... it is just one industry," he said.

IDA figures show that 55,000 people were employed in multinational technology companies here at the beginning of the year out of a total of 142,000 employed by multinationals. Employment at multinationals accounts for about 10 per cent of the total at work with technology multinationals accounting for about 4 per cent of total employment. But every job in a technology multinational supports one to one-and-a-quarter jobs in other support sectors and multinationals account for about a quarter of Irish exports.

Asked if there was a risk that the downturn in the technology sector could spread to multinationals operating in other sectors here Mr Dorgan said: "No... our healthcare, medical devices and pharmaceutical sector is very strong and growing and we see further investment coming in, financial services and other international services are still strong".

It is important that the things that make Ireland attractive as an investment location are protected in an environment where attracting investment is becoming more difficult, he stressed. These include continuing to upgrade skills, maintaining good flexible operating conditions and low corporate tax rates, improving infrastructure, including roads and electricity, developing broadband telecoms services and controlling costs.

Mr Dorgan said he believed the Irish economy had done relatively well in the international technology jobs bloodbath because "over the past five to 10 years we have moved significantly from basic assembly, basic manufacturing into higher level activity, more sophisticated manufacturing or more and more service activities and there are plenty of good companies who have brought in new products and new activities and they are still doing that. That probably is not getting attention."

On IBEC's criticism of inaction by the IDA, Mr Dorgan commented: "On the ground IDA cannot control this, it's companies responding to whether they can make more sales or not... what we are doing is staying very close with companies and working with the Irish general managers of companies and seeing what new activities, what new products can be brought in here.

"There are some very good companies doing that even now and because of that they are not facing the sort of hits that some others have faced...

"Companies such as Compaq and Ericsson have been doing that. Motorola, which closed a large manufacturing plant in Dublin at the beginning of the year, now they have several hundred people employed in software development and integrated circuit design in Cork. That is where our future lies".

While he said it was disappointing and distressing for the individuals who lose their jobs and for the towns like Macroom which are heavily dependent on one industry, he said there were positive signs that many of them would find alternative employment.