Higher-value work has foreign technology firms more embedded

FOREIGN TECHNOLOGY firms are now far more embedded in Ireland than when manufacturing was their primary activity, according to new research published by the Economic and Social Research Institute (ESRI), writes John Collins.

The report looks at the decline of the computer hardware sector in Ireland since the late 1990s, when about one-third of all PCs sold in Europe were assembled in Ireland. About 10,000 or one-third of the jobs were lost in the hardware sector between 2000 and 2004.

"I would be very sure Dell is on the way out of Ireland given the trend in the sector," said Prof Frank Barry from Trinity College, Dublin, one of the report's two authors.

However, he said that if Dell decided to cease manufacturing here it "won't be as catastrophic as you might think" as less than half of its staff were now engaged in manufacturing.

Intel's investment in Ireland is much more capital intensive, and is far less likely to move, said his co-author Dr Chris Van Egeraat from NUI Maynooth's department of geography

Experience has also shown that workers in the technology sector have been able to transfer their skills to new jobs in the sector.

"Even when hardware manufacturing shifts out of Ireland the human capital doesn't disappear," said Prof Barry. "They are still valuable skills. It's not like closing a textile plant where the skills have no particular value."

Dell is one of the few firms still carrying out computer manufacturing in the Republic. Firms such as Gateway, AST and Digital pulled out of Ireland, while Apple and IBM ceased manufacturing and moved into other areas.

International tech firms based in Ireland now carry out higher-value functions such as R&D, sales, business development and finance.

"Even if there is a sharp fall in the US, and they pull back activities to their home market, they will still have to sell in Europe," said Prof Barry. "The current jobs are much better protected than manufacturing was."

Dr Van Egeraat said: "The quality of jobs and services the sector provides is very high. Even the call centres in Ireland are carrying out higher functions and are better paid than in the UK or the rest of Europe."

The article, which is published as part of the ESRI's Quarterly Economic Commentary, looks at the impact of high-profile manufacturing closures such as Apple in 1999 and Digital in Galway in 1993.

The Digital closure resulted in 760 redundancies from the companies total Irish workforce of 1,700. By 1998, employment numbers were back up to 1,400 and the study notes that a number of successful start-ups were started in the region by ex-Digital employees. The availability of a skilled workforce also helped attract new investors such as Siebel Systems and facilitated expansion by existing ones, including Nortel and Compaq.

Prof Barry said the spin-off benefits for Irish suppliers to the computer manufacturing sector may have been exaggerated but conceded that the benefits generated by the services sector would be "theoretically smaller".