IBM move worries Ahern

Taoiseach Bertie Ahern fears IBM's decision to relocate its European business to the Far East could be the start of a trend.

Commenting on the US multi-national's decision to cut up to 13,000 jobs from its European operation and move them to low-wage locations in the Far East, he warned yesterday that it had ramifications for this State and for the EU.

"I think looking at IBM, it's almost a bigger story in that they are abandoning Europe," the Taoiseach said. "If that kind of trend were to happen, I think it would be of huge concern."

An IDA Ireland spokesman said yesterday the agency did not think that the announcement by IBM would have a "significant impact" on the firm's Irish unit.

However, it is understood that up to 400 positions at IBM Ireland are likely be made redundant, forcing the firm to redeploy employees to other divisions.

IBM, which is nicknamed "Big Blue", announced the 13,000 job cuts in Europe and the US following publication of poor financial results last month. The vast majority of the redundancies will be sought in Europe, with Germany, France, Italy and Britain expected to be the worst affected in the restructuring.

Following the rationalisation, IBM will employ close to 90,000 in Europe.

Addressing the Leinster Society of Chartered Accountants, Mr Ahern said: "We have to be absolutely conscious that it is Europe being competitive and Europe doing the right thing by Europe to keep jobs in Europe."

He stressed that the Republic would have to focus on its ability to continue competing globally. "We have to be very conscious of wage rates and watch for market forces," he said.

IBM would make no official comment on the restructuring; however, it is understood the firm is planning to launch a voluntary severance scheme. Staff who do not want to apply for a redundancy are expected to be offered relocation to other divisions.

About 400 staff at the affected unit test the microchips that power a range of electronic devices from mobile phones to computers. It is understood that this business will be shifted overseas as part of IBM's current outsourcing deal with a Singapore-based company called Amkor Technology. It is most likely that this work will now be conducted at its factories throughout the Asian region.

The US firm's other divisions in the Republic - software development, manufacturing of computer servers, treasury, and IT services - are expected to escape major cuts in the restructuring.

The Taoiseach pointed out that the fall in the dollar had hit the competitiveness of exports to the US, which last year bought €16.5 billion worth of Irish goods, making it the Republic's biggest market.