Dell plan may put 1,000 Irish jobs at risk

As many as 1,000 jobs at Dell's Irish operations could be at risk as the company looks to cut rapidly rising costs. John Collinsreports.

An internal e-mail circulated to the US computer manufacturer's Irish employees yesterday said that "redundancies will vary across geographies, regions, customer segments and functions, reflecting business considerations and local requirements".

The e-mail confirmed that the number of jobs at risk in Ireland had not yet been established.

Dell employs approximately 4,500 people in Ireland. Its Limerick site, which predominantly manufactures PCs for the European market, employs 3,000. Another 1,500 are employed in Cherrywood, Co Dublin in sales, support and marketing roles.

Sources in the company suggest that job losses in Ireland were most likely to be in "low- end sales", eg volume selling to consumers and back-office functions which are among the jobs carried out at the Dublin operation, and manufacturing which takes place in Limerick.

Dell may also seek to reduce its middle management as it has done in the past.

The e-mail sent to staff from Dell's internal communications team stated that the company would look to "expand spans of control". This suggests that management is likely to be consolidated.

The communication said that Dell would "take the difficult but necessary step of eliminating positions not critical to delivering maximum customer value. We will do this carefully and thoughtfully."

It went on to say that the company was carrying out a "comprehensive review" of all organisations and processes.

The e-mail said that Dell's "costs are still too high as operating expenses and headcount continue to grow much faster than revenue".

It noted that operating expenses at Dell were at their highest level for seven years and that this was not sustainable for any business. "We need to make fundamental changes to continue progress," the e-mail cautioned.

Dell's second European factory, at Lodz in Poland, will open this autumn.

The company has always maintained that facility would complement the Limerick operation rather than replace it.

With the company now seeking to reduce its headcount by more than 8,000 globally in the next 12 months, some reduction of jobs in Limerick seems more likely.

Dell stock continued to trade higher yesterday following the announcement of better-than-expected results for the three months to May 4th.

Analysts have cautioned, however, that the company benefited from lower component prices during its first fiscal quarter and it would be another three months before it was clear if Dell had turned a corner.

Fine Gael TD Seán Barrett, in whose constituency Dell's Dublin facility is located, laid the blame for the job cuts at rising costs.

"For the past 10 years, the FF-PD Government has driven up the cost of doing business in Ireland by imposing at least 45 stealth taxes and charges since 2003, including on essential services like energy and waste," said Mr Barrett.