Dell finally announced yesterday that they are winding up their manufacturing operations in Limerick, and instead focussing their European manufacturing investments in Lodz, Poland.
Dell has been a major employer in Ireland, responsible for 5% of GNP according to one estimate. The immediate loss of jobs in the Limerick plant will be 1,900; and with estimates of consequences for a further 1,500 jobs which in firms which directly supply the plant, and a further 7,000 jobs in other industries at risk.
Although the demise of Dell’s manufacturing was not a surprise, I was frankly surprised and disappointed by aspects of the way the announcement was made. Dell quite rightly insisted that they would tell their own staff first before anyone else. However I believe it was unprofessional and pusillanimous of Michael Dell, the Dell CEO, not to make the announcement in person himself in Limerick in front of his own staff. He instead sent his VP Operations, EMEA. Michael has been the beneficiary not only of professional work by his own manufacturing staff in Limerick, but also personally of the plaudits by the local community on his several visits to Limerick over the years, not least an honorary degree from the University of Limerick. He was a gentleman enough to receive these accolades, but not man enough to deliver his savage news in person to his own staff.
I was also astonished that the Minister for the Department of Enterprise, Trade and Employment (DETE) and co-incidently also the Tanaiste (Vice Prime Minister), Mary Coughlan chose not to appear in person in Limerick. Instead she relied on the local Limerick Minister, the Minister of Defence Willie O’Dea, to be present. In my recollection, previous Ministers of DETE have usually been on hand at the times of major job losses. In fact, as a result of her absence and residence in Dublin Mary Coughlan may have sent the Irish public a not so subtle message: maybe she does not support Willie O’Dea in Limerick and his statements about the future prospects with Dell.
Mary Coughlan is apparently due to travel with the Taoiseach (Prime Minister) Brian Cowen to Japan next week to lead a trade delegation from the Irish business community. The timing of this trip could probably not be worse relative to the Dell announcement and the general poor economic condition. One can only hope that Brian Cowen and Mary Coughlan will return to Ireland with very major significant positive news of substantial Japanese investment and business contracts: presumably that is why they are still travelling despite the rapidly deteriorating domestic economic situation and the anxious Irish public.
I said in my opening statement above “finally announced”. I think there was a strong fear for some time – maybe even two years or longer – that Dell would stop its Irish manufacturing sooner or later. That being said, I personally do believe the stated Dell corporate position that the decision was only made within the last week, despite some Irish media accusations to the contrary. In a public company, such major announcements are generally material, from the legal perspective, to the public investor community. Public announcement of a major decision thus usually follows immediately after the decision itself: otherwise there is a danger of leaks and the strong possibility of criminal “insider trading”. The actual decision was therefore in fact almost certainly only made very recently.
Nevertheless, there was indeed a fear and suspicion for some considerable time that Dell would stop its Irish manufacturing. It is surprising therefore that our Government appears to have poorly handled the announcement. There was plenty of time to prepare a well considered contingency plan, and immediately initiate it. Indeed, I suspect that such a plan was almost certainly prepared by agencies such as the IDA, Forfas and Enterprise Ireland – they are staffed by competent professionals. Perhaps the apparent mismanagement of the consequences of the announcement by the Cabinet and Ministers is symptomatic of a much deeper issue: the Cabinet is overcome by the tsunami of bad economic news, does not know what agencies and advisors to work with or even trust, and is frankly paralysed and frozen in the headlights of the media and of public anxiety.
A senior civil servant today commented to me that it is amazing to consider the turn around in Prime Minister Brown’s performance and public perception in the UK. From a period just last July, when he faced a back benchers revolt and the opposition leader David Cameron looked to be the inevitable victor, Brown has executed a stunning turnaround and is now neck and neck with Cameron, if not ahead.
Prime Minister Brown is performing. He is taking visible and urgent actions and steps, and has set out a direction to lead his people…
Looking ahead here in Ireland, it is very clear that we cannot rely on manufacturing activities to sustain our economy. We do have very valuable operations continuing here, not least in IBM, Intel, Apple and HP. The challenge is whether we can nurture our own cohort of Irish companies to leverage such multinationals as a global distribution channel. Are there products and services which we can supply to these companies regardless of where they happen to currently position their own manufacturing operations (hopefully yes in Ireland, but not guaranteed to continue to be so) ? What new products and services can we build, offer, license to them that add value regardless of where they happen to have their operations ?
The answers of course include both new innovations and more efficiently produced current products and services. But amongst the answers is also the strong possibility of building businesses by sublicensing results from the multinationals themselves, with early and nascent markets – I wrote about this in an earlier article.
Our enterprise strategy must evolve – quickly – in Ireland. We need to focus increasingly hard on innovation in Ireland, and building our own companies by exploiting the opportunities which the presence of the multinationals here create.
The doomsday is that Ireland deteriorates to become a domestically traded services economy: services sold within Ireland to support the goods and services we import.
We do not need to “up-skill” so much as “core-skill”. “Upskilling” is nice political camouflage, but frankly a shallow aspiration. We instead need to ensure that we have a strong foundation in the core skills – not the “up” skills whatever they are – which are necessary for innovation, insight, and the development of a true indigenous enterprise culture.