High-tech cheer continues but redundancies leave no room for complacency

 

If nothing else, this year illustrated the volatile nature of the electronics sector. The segmentation of the industry is such that one company can be taking on thousands of extra staff while another is closing its doors.

The redundancies in manufacturing operations, in particular, have reinforced the IDA's determination to diversify its portfolio of businesses to be targeted for inward investment.

The IDA has been extremely successful in the past at attracting high-tech companies and, just as importantly, at tempting them to stay. The employment figures speak for themselves: around 35,000 people are now employed by non-indigenous electronics companies. In general, 1998 was another extremely successful year, despite some high-profile closures.

The year started on a high note with the announcement by Dell Computers that it would seek 3,000 new employees for its operations in Bray, Co Wicklow, and in Limerick. A senior executive promised more new jobs over the next three years "because our order books are continuing to grow so fast".

Even companies whose order books weren't filling up quite so quickly worldwide were keen to establish themselves in Ireland. Xerox, despite being in the midst of cutting 9,000 jobs from its global workforce, announced in June that it would create 2,220 jobs in Dundalk and Blanchardstown.

Other prominent expansions in the electronics sector this year included Kostal, which promised 850 new jobs in Mallow, Co Cork, manufacturing electronics systems for cars. Celestica, the third-largest electronics manufacturing services company in the world announced it would create around 500 jobs in Swords, Co Dublin.

In general, the State escaped the worst of the global slowdown in the computer industry this year but there were enough redundancies to set the alarm bells ringing.

The previous year had ended on a sour note with the closure of the Seagate disk-drive manufacturing plant at Clonmel, Co Tipperary, with the loss of 1,400 jobs. The trend was to continue this year. In January, Applied Magnetics in Dublin announced it would close its plant with the loss of 278 jobs. The company had been manufacturing disk-head assemblies in Coolock for more than 18 years and, as if to underline the vagaries in the market, just the previous month the workers had been doing overtime to meet a booming order book. Also in January, Limerick was hit by trouble at AST Computers, which initiated a series of redundancies among its 430 workers. In future, its Irish operations would concentrate solely on customer and technical support, with manufactured units being imported from cheaper locations.

Despite a number of large jobs announcements this year by companies involved in the manufacture of printed circuit boards, the sector proved to be extremely volatile. Between July and September, Apple Corporation in Cork let go 150 full-time staff, a further 150 temporary staff and accepted 200 voluntary redundancies. The company's PCB production unit moved from Cork to the Far East.

The IDA's chief executive, Mr Kieran McGowan, admitted after the cuts were announced that the agency had been concerned at one point that all of Apple's operations in Cork would move elsewhere. Apple was reported to have seriously considered basing its iMac personal computer production facility in Singapore. The redundancies at Apple, AST and Seagate underlined the need for Ireland to avoid relying too heavily on manufacturing plants for employment. The IDA is now placing greater emphasis on attracting software, telecommunications, data-communications and multimedia companies. Already, 45 per cent of all overseas electronics companies undertake activities here outside of manufacturing, compared with 10 per cent in 1986.

But the slowdown which claimed so many jobs worldwide could have bitten far more deeply. The Apple restructuring could have been much worse for Cork and the rationalisation that resulted from the Compaq/Digital merger cost jobs in Scotland rather than at the Digital plant in Galway. Also, in April, the vice-president of Intel, Mr Frank McCabe, promised the slowdown in the chip-maker's profit growth would not affect its investment here and he promised that the company would proceed with its $1.5 billion investment in the next stage of its production facility in Leixlip, Co Kildare.

Motorola, which lost its place as the world's top mobile phone producer to Nokia this year, sought 125 voluntary redundancies in its Dublin operations as part of a global rationalisation plan. However, earlier in the year it announced it would create 120 jobs at a new semiconductor design centre in Cork, with most of the jobs going to experienced graduates.

IDA projections for the industry reflect the galloping pace of new technology. The agency predicts a fall in the number of jobs generated by inward investment from technology firms - from about 4,500 this year to around 3,500 in 1999. Although it does not expect any major closures in the IT area, it does predict the loss of small numbers of jobs across all industry sectors. Temporary job numbers are expected to fall by 50 per cent annually from next year.

But the head of electronics at the IDA, Mr Frank Ryan, is still confident that Ireland is far better equipped to cope with any concerted downturn than it was before the last recession in 1986. Part of the reason for such optimism lies in the fact that multinationals really do seem to like doing business in the State.

In 1997, more than half the IDA's job announcements involved companies which wanted to extend their facilities in the State. According to Mr Colm Donlon of the IDA, the authority's resources are now split 70:30 in favour of consolidating investment already located in Ireland. At the start of this year, Mr McGowan predicted that at least two thirds of the jobs created in 1998 would be through companies already located in Ireland.

Industry analysts say there is still strong potential for growth in the high-tech sector in Europe where computer ownership is relatively low compared to the US. Calling for the development of broadband telecommunications infrastructure, Mr McGowan said that if the issue was addressed at least 25,000 new jobs could be created in electronic commerce by 2010. The Irish Software Association has been even more optimistic about its sector, arguing that if the current skills shortage is addressed, the sector could sustain another 20,000 high-skilled jobs by 2002.