Ericsson's move deals a blow to Ireland's image as a 'smart' economy, writes John Collins
ERICSSON’S DECISION to effectively shut down a Dublin research and development (RD) unit with the loss of 300 jobs should send shockwaves through the highest levels of Government and the State’s business development agencies.
Those responsible for economic development cannot console themselves that these are “low value” jobs that can be done more cheaply in lower-cost locations such as Poland, China or Hungary.
These are exactly the kind of jobs that we are pinning our economic recovery on.
Although the firm yesterday played down the significance of the roles being eliminated, describing them as low-level product development and maintenance, the loss of such jobs is a warning sign on the weakness of our economy.
One of the key elements of the “smart economy” recovery plan which was launched by Brian Cowen just days before Christmas is investing in RD.
The Government will provide €25 million a year to attract matching funds from international venture capital firms who will back RD-led start-ups.
The skilled staff losing their jobs in Ericsson will be hoping those firms get off the ground quickly and need their skills.
There are parallels with the closure of Motorola’s software development centre in Cork in 2007 with the loss of 330 jobs.
Other technology firms – both indigenous and multinationals – quickly moved in to hire some of the skilled staff. Others sank their redundancy into their own ventures.
Ericsson has been in financial difficulties before, not least in 2001 when it controversially laid off 40 Irish staff just days before Christmas, but it is still a major player in the telecommunications marketplace.
Its equipment is in use in 140 countries around the world and 40 per cent of mobile telephone calls pass through its equipment.
It is also a long-term investor in Ireland having first established an operation here in 1957.
A manufacturing facility was opened in Athlone in the early 1970s and by 2001 half of its 2,400 Irish staff were involved in RD.
As recently as 2007 the firm’s Irish managing director, John Hennessy, featured in a booklet produced by ICT Ireland to sell the virtues of investing in Ireland to high-tech multinationals.
“Ireland’s major investment in infrastructure projects, its grants and corporate tax rates, coupled with an enterprise-friendly attitude, continue to make Ireland an attractive location to invest in,” Mr Hennessy said in the booklet.
Clearly those advantages were no longer enough to prevent jobs moving off-shore.