The Irish Times view: road ahead looks more challenging for the multinational sector
The policy platform of president Trump and move to Brexit change the backdrop for seeking investment into Ireland
The loss of close to 500 jobs at HP Inc in Leixlip is a reminder that while foreign direct investment has brought huge benefits to this State, it also carries risks. Decisions taken thousands of miles away, driven by wider corporate concerns and investor demands, can sometimes have a devastating impact. Those losing their jobs will move into a reasonably buoyant jobs market but there can be no denying the difficulties this will lead to for many.
IDA Ireland was insistent on Wednesday that this closure was due to company-specific factors and that the wider technology industry continues to thrive. This is true, and the tech sector will remains a key part of Ireland’s economic future. However the HP closure illustrates one key fact – if the Irish part of a multinational is not at the cutting edge of the company’s operations, then it is vulnerable. This is especially so if the sector the company is in is itself under pressure, as is the case with HP’s printer and PC business.
In general, IDA Ireland and the Irish company management of major US multinationals have worked well together to bring higher value activities to Ireland, sometimes involving research and development. In the case of HP, unfortunately it now appears that the Irish plant was vulnerable once the company announced last October that it was to make 3,000-4,000 people redundant worldwide.
The former Hewlett Packard split in two in 2015 and both parts of the resulting restructuring have been significant employers in Ireland. HP Inc, the more traditional consumer business, is now to close while Hewlett Packard Enterprises , which services business customers, remains unaffected. HP Inc is profitable and it appears that the work done in Ireland will be reallocated to other parts of the company’s operations in the US and Asia.
It would be a mistake to over-interpret the HP Inc closure. The story of foreign direct investment in recent years has been generally positive and the outlook for the tech sector remains strong. But it would be unwise to ignore the warning signs. Irish operations need to continually move towards higher value functions, while competitiveness, in all its aspects, remains vital.
These factors are all the more important as the policy platform of President Trump and the move to Brexit change the backdrop for seeking investment into Ireland. In particular, the Trump agenda is to attract jobs back to the US. In the short term companies are likely to put projects on hold to see what the new president will actually do. In the longer term aspects of his plans, particularly to hit those importing products back to the US from foreign plants, carry threats for Ireland.
After a long run of positive news in relation to foreign direct investment, the signals are that the road ahead will be more challenging.