Rebound due to readiness to take harsh decisions

Just as the Macintosh was supposed to be (according to the ad pitch) "the computer for the rest of us", Apple itself has always positioned itself as the computer company for the rest of us, a kind of Jimmy Stewart corporation in a world of James Cagneys.

At the time of Apple's inception in 1976, computer companies were primarily tough, faceless corporate monoliths. The IBMs and Digitals of the world made great big machines for other big companies. Men in suits and ties sold them to other men in suits and ties. A home computer, on the other hand, was something you built from a kit you ordered from the back pages of Popular Mechanics magazine or created with your electronics hobby club. Apple was pivotal in altering those images.

Looking back now from the middle of the computer-infused 1990s, one can easily underestimate the impact Apple had on changing the way people viewed computers and computer companies. But it was Apple which made computers accessible to millions by making them easy to interact with and, with the introduction of the Macintosh in 1984, appealingly attractive as well. It was Apple which forged a corporate culture based on rebellion (a skull-and-crossbones flag flew over the building in which the Mac was developed), jeans in the workplace, full benefits for unmarried, gay or lesbian partners, great company t-shirts, and sushi in the cafeteria.

From the amusing, non-techie company name, to its warm and friendly, rainbowstriped Apple logo, Apple evoked personality, fun, and a company that cared about people. That atmosphere carried over to its Irish operations. "There was definitely a different air about the place," says one former employee who knows the firm and its workings well.

But the loss of 450 jobs at the Cork Apple facility - 390 part-time and 60 full-time positions - has left many feeling betrayed by a firm that has often cultivated a warm image. But, notes the former employee, cutbacks have "always been on the cards, at a number of different stages". In particular, there was a move about eight years ago to have Apple's large facility in Holland take over some or all of the assembly work done in Cork, he says, but that never happened.

"It's been on the cards for so long," agrees another former employee, who thinks there's been some overreaction to the job losses. He adds that employment has risen and fallen there for many years and is only now coming back down to earlier levels.

Indeed, says the first former employee: "Apple in Cork has always been based around the idea of trying to cope with seasonal fluctuations in demand by hiring contract workers". This mirrors a trend over the past five years in the computer industry in general. As margins on product lines are tightened, companies try to keep inventory low. By employing large numbers of contract workers, companies can ramp production up and down as needed.

Such a model would seem to suit the iMac, the popular consumer machine whose production will be pulled from Cork (one of three global manufacturing sites) and outsourced to a Korean firm - hence the job cutbacks in Cork. But because the iMac comes in one configuration (albeit five colours) and is a very narrow margin machine, it is more cost effective to mass-produce it at a specialised facility, says an industry source.

Apple's higher-end G3 line of desktop computers, on the other hand, suits the Cork facility and its highly-skilled workers better. G3s sell in lower volumes but at higher margins, and in a range of configurations which can be further customised to order.

One actually could argue that the Cork plant has led a charmed life compared to other Apple sites, and has not suffered at times when Apple made massive employee cutbacks globally in previous years. For example, in 1993 Apple axed staff by 2,500, in 1996 by 2,800, and in 1997 by 4,100, the latter nearly a fourth of its workforce. In contrast, Cork typically added employees over those years.

Partially this is because Cork was seen as an Apple "flagship" for test manufacturing, says the first former employee, "because it had such a skilled workforce". When Apple had a new computer to market, it would often send the components to Cork first, to have employees there find the most effective way of assembling the final computer.

But, he says, Cork management also realised it needed to expand the role of the site away from simply manufacturing, or risk cutbacks or a shutdown. So, in recent years it has managed to move some software and development work to Cork as well.

The current cutbacks may be painful, but they are a typical part of any company's attempts to streamline production in a world of vicious competition and tight margins. Apple's stunning rebound, from deathbed to five profitable quarters, is largely due to interim CEO Steve Jobs's willingness to take such unpopular decisions when needed.

"What they're doing makes a lot of business sense," argues the former employee. "It's a tough business decision. But it's the same tough business decisions that brought these companies to Ireland in the first place." Thus, he says: "Cork is the first warning shot that what was, isn't any more. We're not the same nation that we were when these companies came in" - an underpaid, skilled, enthusiastic workforce in a State with a low cost of living.

The Government sold the Republic on the economic advantages it offered. "When those advantages stop making sense, you have to expect companies to go." Fifteen years ago, the Government made an effort to establish the infrastructure - thephone system, the tax benefits, the support packages, the changes to the education system - which would create the environment in which the "Celtic Tiger" could flourish. But that's not enough. The world changes, and no industry changes faster than technology.

Ireland's current prosperity comes with no guarantee - for all the same reasons that Apple cannot guarantee the remaining 500 posts in Cork. The climate may not be there to support it down the line.

What is needed is the strong infrastructure for the next generation of companies - broadband telecommunications systems, continued tax incentives, a pro-entrepreneurial environment and Internet-age legislation. "It's not as obvious that we need to do it," says the former employee. "But now is the time when they need to do it most."