The South African diamond group, De Beers, has described the Republic as a high-cost location compared to other markets it operates in like South Africa and the Far East.
In a recent presentation on the 2003 annual results, the company's chairman Mr Nicky Oppenheimer said De Beers took the right decision to scale back its Irish industrial diamond division in 2001 with the loss of over 100 jobs in Shannon.
Since then a smaller company called Element Six, of which De Beers owns 60 per cent, has been operating in Shannon. Element Six provides superabrasives and industrial diamond materials.
Mr Oppenheimer said if executives had not taken action to reduce the company's presence in the Shannon industrial zone, De Beers could have been seriously damaged.
He said if executives had "not acted as they did three or four years ago to lead a lot of the production capacity away from expensive areas like Ireland and move to relatively inexpensive areas like South Africa, this company would surely be under water by now".
The loss of De Beers jobs in March 2001 was a major blow to the region because the industrial diamonds facility was serviced by several local companies. For example, Seabrook Research was able to double its workforce to 40 after winning a $1.3 million contract to supply software to De Beers in Shannon. Mr Oppenheimer did not comment on the precise reasons for Ireland's high cost base.
Mr Christian Hultner, Element Six's chief executive, told the Financial Times recently that De Beers realised in 1999 that it was in trouble because of the entry of new competitors that were pushing down prices.
"More of our products were turning into commodities and we knew we had to do something dramatic to avoid a big erosion of profitability," he said.
De Beers decided to shift more production to low-cost countries and to put more resources into a new way of making artificial diamond, using chemical vapour deposition. Staff were shed in high-cost countries like Ireland.
At the time SIPTU described the job losses as a major setback for the region. However, De Beers said they were necessary "to achieve the required cost-efficiencies and improved economies of scale for the overall group synthesis operations".
"De Beers Industrial Diamonds are committed to the future of the Shannon operation and will now consolidate this site's position as a world-class value-adding operation," said managing director Mr Christian Hultner at the time.
Several companies relating to De Beers and Element Six are registered with the Companies Office. A company called Element Six Ltd has yet to file accounts or financial statements.
