Comment: Can human capital keep up with working capital?

15 Dec 2004

The way this year is ending could simply read like a gift list to IDA Ireland that right now is busy compiling its end- of-year figures and looks set to report a bumper year on the job creation front.

Back in the early to mid-Nineties when I was writing about the electronics sector almost every week would see hundreds of new jobs being created in a variety of industries, ranging from printed circuit board manufacturing to CD-Rom manufacturing. In any one year job creation figures worked out at anything from 20,000 to 50,000 jobs.

In recent weeks, the spirit and feeling of the mid-Nineties returned when a number of major players announced significant job creation plans. US semiconductor manufacturer Altera Corporation has created 20 jobs at a new shared-services centre for the European market based in Cork Airport Business Park. The news followed a similar announcement by software firm Sage that it is hiring 30 staff at its new offices in Cork’s East Gate Business Park. Cork was also blessed by the news that security software vendor McAfee is to establish a software operation centre, creating 152 jobs over the next three years. In recent weeks, a further boon to Cork’s coffers materialised in the creation of 60 IT sales jobs at EMC’s plant in Ovens.

Dublin was also in the limelight in the job creation stakes with the news that computer giant Dell is to create 420 jobs in Ireland and has announced that it will be consolidating all of its Dublin and Wicklow operations at a single campus. The 420 new jobs will be in place by 2007. In total, the consolidated Dell operation at Cherrywood will house a staff of 1,650. The single campus facility has an additional capacity for a further 350 employees, the company said.

The good news from Dell was preceded by news that software giant Oracle has announced it is establishing a Consulting Centre at East Point Business Park in Dublin as well as its first Northern Ireland office. Between them the new facilities will lead to the creation of 70 jobs — 50 in the consulting centre and 20 in the new Belfast office.

The midlands also appears to be on the cusp of good news on the employment front also with news that three US companies have announced projects that will lead to 170 new jobs in the years ahead. Pharmaceutical company Innocoll will establish a €6m operation in Roscommon and will employ 60 people. Californian medical device company Conor MedSystems will create 40 jobs in a manufacturing operation while fellow Californian company Cooper Cameron will establish 57 jobs in the oil and gas exploration business.

All of this good news is welcomed but the Ireland of 2004 is vastly different to the Ireland of 1994. In 1994, most college graduates were steeling themselves for the potential reality of having to work overseas if they wanted any kind of future at all. Suddenly, thanks to strong efforts by IDA Ireland, the arrival of players such as Intel and Hewlett-Packard to name a few, have made Ireland the economic darling it is today and the graduates could stay. According to figures recently released by the Central Statistics Office, unemployment in Ireland is at its lowest in two years, with a Live Register of unemployed standing at 162,100.

The downward trend in the Live Register confirms what economists and the computer industry have been telling us for months — we are about to witness the onset of a second skills shortage. We don’t have the huge resource of unemployed people to draw upon that we had in 1994 and, at the same time, we will face a continued spate of jobs announcements.

Looking to 2005, as multinationals gear up for growth, indigenous companies will suffer as they struggle to compete with salaries and career opportunities that workers aspire to. This will result in an emphasis on better management skills within indigenous companies whereby employees’ expectations, talents and motivation will need to be better harnessed and managed effectively. In effect, good people will be harder to find and the mindsets of management in Irish small businesses will need to change if they want to hold on to their only competitive advantage — their people.

By John Kennedy