Cantillon

Inside the world of business

Intel’s vote of confidence

IN THE last two years you didn’t have to search too hard to find sceptics who claimed that with no new investment on the horizon there was little chance of Intel seeing another 20 years as one of Ireland’s largest private sector employers. Even yesterday Intel’s general manager in Ireland Eamonn Sinnott admitted that 18 months ago things looked very different as the firm’s Leixlip production lines were under capacity and it had just made 300 staff redundant.

The turnaround has been quick, with the US corporation beginning a $500 million construction project which will ultimately lead to a new generation of computer chips being manufactured in Co Kildare. Intel HQ in California has yet to formally confirm that. But a company so notoriously cautious that one of its co-founders wrote a management book called Only the Paranoid Survive, does not invest half a billion dollars if it does not intend to follow through.

The move will support more than 1,000 jobs in construction and technology manufacturing over the next two years. This once again raises the question as to whether our industrial policy is too focused on the smart economy at the cost of manufacturing jobs. Sinnott calls what Intel does “advanced manufacturing” and points to the opportunities it presents for Ireland – not just in technology but also in areas such as biopharmaceuticals where we have also attracted some of the biggest global players.

With a general election looming, politicians local and national will no doubt rush to bask in the reflected glow as Intel’s good news emerges today. Intel is mindful of the support it has received from IDA Ireland and successive Government’s pro-business policies. But this hard-won investment is really a vote of confidence in a productive, flexible and creative workforce.

Intel is a shining example of how manufacturing and innovation can be mutually beneficial as we attempt to rebuild our shrivelled economy.

State sector a political campaign minefield

The future of State companies such as RTÉ, the ESB and the CIÉ group looks set to be the latest minefield that politicians will have to negotiate in the run up to the election.

It is understood that economist Colm McCarthy will present his review of these and other State assets to the Government by the end of month.

McCarthy, who chaired the body that helped come up with last year’s €5 billion savings plan for the Exchequer, is understood to have been asked hard questions of the various managements and executives in the State sector, and ruffled a few feathers along the way.

There have been lots of rumours about his report’s content, none of which turned out to have any substance. But there is a general consensus that he is unlikely to recommend that things remain as they are, that is, that the State continue to own three energy companies, three public transport companies, train stations, properties and so on.

The bigger State companies employ more than 30,000 people between them and they are unionised from top to bottom, so any attempt to change the status quo could potentially upset many voters. The Government commissioned the report last summer, but already one its members, Minister for Energy Eamon Ryan, has said he thinks it would be a bad idea to sell energy companies such as the ESB and Bord Gáis.

What will be interesting is how it affects the Opposition. Labour is more likely to be against a large-scale sale of State assets, but Fine Gael could be more likely to entertain the idea. If the two were to form a coalition, their future could well end up being discussed as part of the overall process of creating a new Government.

The current one is probably regretting having asked McCarthy to carry out his review, and it didn’t expect to be this close to an election when his review turned up. The EU and International Monetary Fund also want the sector tackled, and the Government effectively committed itself to doing this when it signed up to the bailout. This could turn out to be one of the more explosive political minefields of the campaign.

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