Polish aid for Dell plant approved

 

The European Commission has approved a plan by the Polish government to grant €54.5 million in aid to Dell for a new manufacturing plant to which the firm is moving production from Ireland.

In January Dell announced it was planning to move its Raheen operation in the mid-west to a lower-cost environment in Lodz, shedding some 1,900 jobs. Some 230 jobs were also lost in March from the company’s Cherrywood operation in south Dublin.

The European Commission opened an investigation after saying it had doubts about the compatibility of the aid with the rules on regional aid for large investment projects.

The Commission had said it was unsure of the market definition of the products made at the plant, the increase in production capacity generated by the project, the possible decline in the desktop market and Dell’s market share for servers.

However, following an assessment, the Commission has concluded that the investment project will contribute to the regional development of the region and that the benefits "outweigh any potential negative effects of the aid on competition and trade."

The decision to approve the Polish plan was granted despite protests from the Irish Government.

The Commission's investigation found the aid provided an incentive for Dell to locate its manufacturing plant in Lodz by compensating for less favourable investment conditions in comparison with another envisaged location in Eastern Europe.

The new plant, which will produce desktops, notebooks and servers, was opened in January 2008 and currently employs 1,700 workers although this is expected to rise to 3,000 in the near future.

“Our assessment shows that the project’s contribution to regional development and job creation in a disadvantaged region of Poland outweighs any potential negative effects," said Competition Commissioner Neelie Kroes.

"For cases like this, which could present a high risk of distorting competition and where job losses in other Member States have been pointed to, we need to conduct a detailed economic analysis of the market and of the impact of the aid before taking a decision," she adds.

On Saturday it was confirmed that the European Commission has approved a grant of €14.8 million to help former Dell workers in Ireland find work under new EU crisis measures.

The funding application relates to 2,840 redundancies - 2,130 in Dell and 840 in eight of its suppliers and producers.